Daily Brief Energy/Materials: Royal Gold Inc, Valeura Energy Inc, Arrow Exploration Corp, Orica Ltd, Pan African Resources and more

• The MV J-Gold Miners index represents the performance small-cap gold and silver mining companies listed around the world.
• This index is reviewed semi-annually in March and September. During these reviews, names can be added or deleted from the index.
• In this insight, we take a look at the potential ADDs and DELs and our flow expectations for the index rebal event in March 2024. 

• YE23 1P and 2P reserves are estimated at 29.9 mmbbl and 37.9 mmbbl respectively. This represents a reserve replacement ratio of 219%.
• The reserves addition is much greater than we expected.
• Valeura has booked 7 mmbbl at Wassana (we expected only 5 mmbbl) and has replaced 112-147% of the 2023 production at each of the other fields. 

• The CN-5 well encountered 45 feet of Ubaque pay to base of sand with 25% porosity and 5 Darcy permeability.
• The well targeted the Carrizales Noroeste prospect, west of the Carrizales Norte known pool boundary.
• The boundary fault was not encountered in the Ubaque, which suggests that the Ubaque at Carrizales Norte and Carrizales Noroeste consists of a continuous larger pool that extends to the West.

• Orica Ltd (ORI AU) is looking to raise up to A$400m (US$260m) in its primary placement. The proceeds will be used to partially fund the acquisition of Cyanco. 
• The deal is a large one to digest, representing 21.3 days of three month ADV and 5.2% dilution. 
• In this note, we’ll run the deal through our ECM framework and comment on deal dynamics.

Pan African Resources’ (PAF’s) H124 results were released on 14 February, with earnings (and headline earnings) within 1.5% of our forecast and normalised headline earnings within 1.2% of our forecast (see Exhibit 4). While only one asset (BTRP) achieved record adjusted EBITDA, PAF’s three other main assets all recorded adjusted EBITDA numbers that were close to record levels in rand terms to result in a record adjusted EBITDA outcome for the group as a whole of ZAR1,512.6m – 20.2% above H222 and a comfortable 19.6% above the next highest number, of ZAR1,264.8m, set in H122.