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Fox-Davies Capital

Fox-Davies Capital Tuesday News Wrap

Faroe Petroleum (FPM) the independent oil and gas company focusing principally on exploration, appraisal and undeveloped field opportunities in the Atlantic Margin, the North Sea and Norway, announced that the Topaz well (operated by RWE Dea UK SNS Limited) (Faroe interest 7.5%) has been successfully drilled and tested by the Noble Al White drilling rig. Flow rates on test achieved commercial thresholds and the joint venture has agreed to take the project forward to development.

Gold Oil (GOO) reported that The testing of the target zones encountered in the recent San Alberto-2X well on Block XXI Onshore Peru has now been completed and the conclusion is that the well does not contain producible hydrocarbons.

Indago Petroleum (IPL) indicates it plans to consider asset or corporate transactions in order to diversify the Company's value proposition.

Comments: this supports our view that corporate activity could accelerate in the near term.

Solana Resources reports that the Costyaco-4 development well test results have confirmed
reservoir productivity and the Costayaco-5 delineation well test results suggest a larger field size requiring an increase in the scale of the full field development plan. Production was previously expected to peak at 35kbopd in the first quarter of 2010.

Gasol (GAS) announced that it has signed a Memorandum of Understanding with Electricité de France and Afren plc to examine establishing a gas aggregation joint venture to identify and develop onshore and offshore stranded gas assets in certain identified West African countries.

Comments: It is still very early stage given the reshaping of the domestic gas industry and the ongoing unstability within Nigeria. We do not expect Afren (Buy – TP £1.65) share price will react to this news relative to the market.

According to DJ, Chesapeake Energy Corp. will cut production levels and spending as the natural-gas producer tries to deal with falling gas prices and fears of a glut in the next few years. The largest producer of U.S. natural gas is cutting its planned budget for drilling by 17%, resulting in about $3.2 billion less spending from now through 2010.

Comments: Given the maturity of the US oil industry it is not surprising for companies to quickly react to commodity prices move by increasing or reducing production target. Other producers may follow suit if gas prices remain low.

Zhaikmunai L.P. (ZKM LI) the oil and gas exploration, development and production enterprise, today
announces the results of an independent reserves evaluation of its Chinarevskoye field in northwestern Kazakhstan as at 1 July 2008. Proved plus probable gross reserves (2P) increased by 35% to 535   million barrels of oil equivalent. Proved plus probable plus possible (3P) gross reserves estimate now exceeds 1 billion boe, at 1,091 mmboe (1 July 2007:756 mmboe)

Comments: Zhaikmunai offers significant production momentum in the near term underpinned by a very large resource base.

Tanganyika Oil Company Ltd. advises that the Company is in exclusive discussions with a third party relating to the acquisition of all of the issued and outstanding shares of the Company. Tanganyika is a Canada-based international oil and gas company focused on its properties in Syria.

Comments: this piece of news may generate interest in players operating in the region. On AIM companies very active in the region includes Gulfsands Petroleum (GPX).

Discovery Metals announced the results of the latest thirteen infill drill holes. The intersected mineralisation typically contains above average widths and grades. All holes were drilled within the Plutus prospect at the company's 100% owned Boseto Copper Project in North West Botswana.

Comment: The drilling continues to yield copper grades above the current Inferred Mineral Resource grade of 1.3% copper, suggesting that when the ore resources are next recalculated both tonnes and grade will increase.

African Eagle Resources (AFE, 3.5p) announces significant high-grade nickel results from 20 new drill holes on its Dutwa project in Tanzania. Highlights of the recent drilling programme include 30m at 2.26% nickel from 12m depth, 63m at 1.07% nickel from surface, 48m at 1.32% nickel from 3m depth, 51m at 1.22% nickel from surface, 36m at 1.67% nickel from 15m depth.

Comments: This is starting to look like an interesting new discovery with good grades near surface.

Petra Diamonds (PDL) announces an updated statement of the Group's reserves and resources, financial results and the disposal of Calibrated Diamonds to Gem (see below). The statement has been prepared in accordance with the guidelines of the JORC code. The updated carat base of 121Mct (US$13.7 billion in situ value) attributable marks a transformational increase for the Group over the October 2007 figure of 9.33Mct attributable. The increase increase is due to the inclusion of Cullinan, the world's second largest indicated diamond resource by in-situ value at 208 million carats; Williamson, a major resource of over 40 million carats; and Kimberley Underground, at over 6 million carats. The acquisitions by Petra of majority interests in the Williamson and Kimberley Underground mines are expected to complete by end October 2008 and end December 2008 respectively. Petra have posted a net profit for the year to end June of $1.9 million, from a loss of $20.9 million the previous year.

Comment: This update reflects Petra’s rapid expansion to an important and profitable diamond producer. The large resource at Cullinan is of secondary importance to Petra than the operational changes being implemented. We note that the share price is being actively supported by Saad Investment Company, who now own 36% of Petra.

Kiwara Plc (KIW) the Zambian based exploration Company, has announced the results of its initial drill programme at Kawako. Highlights include, 53.50m grading 1.07%Ni from 29.50m; 5.58m @ 3.20%Ni from 89.22m and 10.87m @ 6.73%Ni from 104.30m.

Comment: These are positive results for Kiwara and are of sufficient interest to warrant further drilling at Kawako.

Gem Diamonds (GEMD) the FTSE250 diamond company, has announced the acquisition of Calibrated
Diamonds Investment Holdings (Pty) Limited, together with its diamond processing assets, intellectual property and management expertise from Petra Diamonds Limited (“Petra”) for a total cash investment of US$5.9 million. As part of the agreement, Gem Diamonds will provide Petra with access to its beneficiation technologies to cut and polish their high value diamonds, subject to terms and availability.

Comment: This forms part of Gem’s drive to derive maximum value from its production of high quality diamonds through the beneficiation process.

Rambler Metals and Mining (RMM) announced further positive drill results from its underground diamond drilling exploration program at the Ming Mine. These latest holes have exceeded all historically reported mineralization, including the 2004 drill hole, reconfirming that that Lower Footwall Zone is capable of supporting 2% and better copper grades over significant distances. This new drilling information will upgrade most of this area into the indicated category or better in-turn strengthening the reported resource estimate. An updated resource estimate for the entire Ming Mine is expected during calendar 1Q2009.

Comment: These drill results confirm copper grades of better than 2% over mineable widths. A very positive outcome.

LDK Solar (LDK, US) plans an equity raise of US$200m to fund its expansion plans. The Chinese solar wafer manufacturer expects to use up to 60% of the proceeds for construction of its polysilicon manufacturing plant. LDK’s 6,000 tonne capacity polysilicon plant is expected to commence production by year end, with capacity rising to 15,000 tonnes by the end of 2009. Remaining proceeds will be used for expanding wafer production facilites (30%) and general corporate activities (10%).

Comment: With Schott Solar reaffirming that it intends to press ahead with its IPO later this month, Solar companies are showing a resilient ability to raise capital in spite of turbulent market conditions. LDK’s intention to bring a significant volume of Polysilicon on-stream should contribute to an ease in feedstock prices, which in turn should help ease prices downstream.