Trading Day – OPEC+ cuts oil output

OPEC+ has cut its oil output target by 2 million barrels per day (bpd), double the analyst expectations of 1 million barrels per day.

The cut in real current production will be around 900,000 bpd, due to member countries struggling to meet the original oil production targets.

Meanwhile, Pan African has closed a transaction to acquire Mintails SA assets for R50 million.

In other news, Alphamin has beat production targets at its DRC operations, responsible for 4% of global tin production.

Here is the biggest news of the day.

• OPEC+ cuts oil output target by 2 million bpd, double the analyst expectations of 1 million bpd. Because many member countries have not been able to meet their targets under the previous production ramp-up program following Covid, the cut in real current production will be around 900 000 bpd. The move defies US pressure to keep up production to bring energy prices and inflation under control. A White House statement noted, “The President is disappointed by the shortsighted decision by OPEC+ to cut production quotas while the global economy is dealing with the continued negative impact of Putin’s invasion of Ukraine.”

• Pan African has closed a transaction to acquire Mintails SA assets for R50 million. Pan African will acquire the total share capital of Mogale Gold Proprietary Limited and Mintails SA Soweto Cluster (MSC) Proprietary Limited. Both of these entities are 100% owned by Mintails Mining SA Proprietary Limited, which was placed in provisional liquidation in 2018. According to the results of a Pan African feasibility study, the company believes they can achieve a 25% increase in gold production at the Mogale Gold tailings storage facilities with a lifespan of 13 years, while re-mining of the MSC tailings storage facilities has the potential to add further production upside and extend the Life-of-Mine to 21 years.

• Alphamin beats production targets. The company is responsible for 4% of the world’s tin supply, mined at its DRC operations. Production for the quarter was 3139 tons, exceeding guidance of 3000 tons. However, tin prices have dropped from $35 345 to $ 22 011 amid an overall slowdown in commodity prices. EBITDA is down 55% from the previous quarter, coming in at $30 million. This has led to a 32% drop in the share price year-to-date.

• Ascendis Health receives Competition Commission approval for second buyout offer. The offer is for their wholly-owned subsidiary, Ascendis Health SA Holdings Proprietary Limited, commonly known as Ascendis Pharma. Ascendis has an existing offer on the table from a Pharma-Q / Imperial Logistics consortium for R375 million, that has already been approved by the Competition Commission. The second offer from Austell Pharmaceuticals is higher at R432 million, but until now it had not been approved by the Competition Commission.

• Sirius Real Estate announces early refinancing of next major debt expiry. A €170 million facility with Berlin Hyp AG, due in roughly 1 year, has been refinanced with a 7-year, €170 million facility at a fixed interest rate of 4.26%. The new facility will replace and redeem the existing facility upon its expiry on 31 October 2023.