Ghost Bites (African Rainbow Minerals | Crookes Brothers | Deutsche Konsum)

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African Rainbow Minerals acquires the other half of Nkomati Mine (JSE: ARI)

The mine has been on care and maintenance since 2021

African Rainbow Minerals currently has a 50% stake in the Nkomati Mine. This mine has a nickel sulphide orebody and established infrastructure, having been placed on care and maintenance in March 2021. It can quite quickly be put back into steady state production of class one compatible nickel sulphide concentrate, which is what battery manufacturers are looking for.

It also has other bi-metal products like copper, cobalt, platinum, palladium and chrome.

African Rainbow Minerals clearly likes the outlook here, which is why the company is buying the other 50% in the asset held by Norilsk Nickel Africa. The purchase price for the equity is just R1 million, but don’t let that fool you. There’s a much more complicated transaction in the background about environmental liabilities and other mine liabilities.

The transaction is expected to close during 2024.

Earnings at Crookes Brothers go bananas (JSE: CKS)

Is there anything more volatile than primary agriculture?

If you want a nice, steady investment that won’t cause you much stress, then stay right away from primary agriculture. Despite what certain political parties will tell you, farming isn’t a guaranteed road to riches.

The latest trading statement is proof of this. Crookes Brothers had a terrible time last year, but things look much better now. Headline earnings per share for the six months to September has come in at 321.2 cents, which is a whole lot better than a loss of 193.7 cents in the comparable period.

This massive improvement is mainly thanks to the sugar cane and banana operations, along with a drop in fertiliser and other agricultural input costs. The fertiliser price has been a headache for several other listed companies on the local market that play in that space.

You’ll struggle to trade Deutsche Konsum, but you can learn from it (JSE: DKR)

And the lesson is that European property doesn’t like higher interest rates

Deutsche Konsum is one of the most pointless listings on the JSE. This thing never trades. Despite this, they need to meet all the reporting requirements of the JSE, like releasing financial results.

Still, elements of the financials are interesting and potentially applicable to other companies that you might be looking at. Before we get into that, you need to know that Deutsche Konsum is a specialist REIT focused on German retail properties. In other words, don’t take these insights and try apply them to Poland.

Countries with historically low interest rates don’t like it when rates move higher. It does ugly things to property valuations, like the portfolio value dropping by 9% year-on-year. The devaluation of the properties and an impairment of loan receivables has moved the loan-to-value ratio from 49.7% to 60%. That’s not what anyone wants to see. In other bad news, funds from operations fell by 11.5%.

The company is currently in a fight about REIT status and hasn’t declared a dividend for this year.

Long story short: in any country in the world, property funds can get into trouble.

Little Bites:

• Director dealings:
  • An executive director of Richemont (JSE: CFR) has bought warrants with a value of R335 million. The announcements never name the directors (in true Swiss style), but I’m sure we can guess who is doing derivative trades with that kind of underlying value. In a separate announcement, a director executed warrants to buy shares worth R7.7 million.
  • Pay attention to this one: an associate of the CEO of Southern Sun (JSE: SSU) has bought shares worth R4.8 million.
  • An executive of Mondi (JSE: MNP) received shares under a long-term incentive scheme and couldn’t sell them quickly enough, selling the whole lot for a total value of £160k.
  • I always treat purchases by Value Capital Partners with caution, as this is an institutional investor that has board representation, so this is more of an institutional purchase that comes through as director dealings. The quantum maybe isn’t comparable to other director purchases, but the direction of travel is useful. With that out the way, the news is that Value Capital Partners has bought nearly R2.8 million worth of shares in Altron (JSE: AEL).
  • A director of Kumba Iron Ore (JSE: KIO) has sold shares worth R1.77 million.
  • The company secretary of Nedbank (JSE: NED) has sold shares worth R181k.
  • The company secretary of Datatec (JSE: DTC) has sold shares worth R62.4k.

• African Equity Empowerment Investments (JSE: AEE) has released the circular regarding the disposal of the 30% stake in BTSA for R290 million. You’ll find it here.

• The rules around the release of trading statements are designed to give shareholders an early warning when financial results will differ significantly from the comparable period. In the case of a mess like Efora Energy (JSE: EEL) that is suspended from trading, I’m not sure that the rule should apply. Case in point: a daft situation where the company has released a trading statement for the six months ended August 2021!

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