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Japaul Oil changes name as it tests market with N27bn offers

Barring any unforeseen circumstances, Japaul Oil & Maritime Services Plc will change its official name to Japaul Gold and Ventures Plc at the forthcoming 15th Annual General Meeting which will come up on July 29, 2020 in Lagos.

Other ordinary business activities that will be deliberated upon on that day include the re-election of directors, re-appointment of auditors plus the fixing of their remunerations.

Meanwhile, the forthcoming AGM will also be for the deliberation of some special business activities such as the raising of the company’s share capital from six billion ordinary shares to sixty billion ordinary shares/preference shares, as well as the authorisation to raise the company’s equity capital by additional N27 billion by rights issue, public offer or private placement. The pulse of the equity market, measured by the All Share Index, closed last week at -7.51 percent year to date returns.

“ That the company be and is hereby authorised to raise additional equity capital up to N27 billion whether by way of rights issue, public offer, private placement through book building or offer for subscription, and/or other securities at such time for such consideration and upon such terms and conditions as the directors may deem fit”, Michael Edeko, company secretary said in a note to the market participants.

“The name of the company be and is hereby changed from Japaul Oil & Maritime Services Plc to Japaul Gold & Ventures Plc, and the company be and is hereby authorised to engage in mining and technology business activities, through partnerships and acquisitions, and in an attempt to raise equity, the company is hereby authorised to carry out share reconstruction”, Edeko added.

Japaul Oil & Maritime Services ended 2019 with N4.69 billion in equity. In the previous year, its equity was in the negative to the tune of N35.5 billion partly due to the N55.8 billion loss it sustained in that year.

The mineral sub sector has received much attention from the federal government in recent times due to the diversification strategy being implemented by Africa’s biggest economy. Reliance on crude oil sales with its attendant volatility, has sent the Nigerian economy into tailspin thereby affecting the national budget implementation which had to be revised with a higher budget deficit that is skyrocketing the nation’s public debt.

At the end of the first quarter of 2020, the mining and quarrying sub sector contributed 7.93 percent to the nation’s gross domestic product (GDP). In Q1 2019, its contribution was 9.89 percent; Q2 2019 was 8.74 percent; Q3 2019 was 9.59 percent, and 6.49 percent in Q4 2019.

The low contribution of the sector manifested in the amount of credit it was able to attract. In Q1 2019, the total sectoral credit to the mining and quarrying sub sector was N8.91 billion representing 0.06 percent of the total credit allocated to all the sectors in the Nigerian economy in that quarter.

The Q2 2019 sectoral credit was N8.66 billion which also amounted to 0.06 percent. sectoral credit rose to N11.4 billion in Q3 2019 to account for 0.07 percent, and N11.3 billion in Q4 2019 to also account for 0.07 percent of the total credit that the financial institutions advanced to business entities in 2019. In all, N40.3 billion credit was given to players in the mining and quarrying sub sector in 2019 compared with N47.5 billion in 2018. The sector’s non-performing loans fell to N10 million in 2019 in contrast to N80 million in 2018.

Japaul Oil earned N725.5 billion as revenue in 2019, much lower than N936.2 billion it realised in 2018. Respite came its way in 2019 due to the disposal of assets through which it generated N43.8 billion as ‘other income’. Consequently, a whooping N40.9 billion was made as the profit after tax for that year.

Its recent move into the mining subsector may be due to the emerging opportunities in that sector. However, in spite of the attractiveness of the nation’s mining and quarrying sector, a number of factors must bee addressed in order to attract the desired capital and manpower, according to Cyril Azobu and Habeeb Jaiyeola, both of PwC Nigeria.

‘A private sector funding policy initiative needs to be worked on immediately. This should be targeted at encouraging commercial banks and other private sector fund providers invest in the mining sector while being deliberate in managing their risks especially from exploration. Necessary incentives should be made available for commercial banks to embed this within their corporate strategy and achieve set levels of implementation’, Azobu and Jaiyeola said in their advisory outlook.

In 2018, Kian Smith Trade & Co was announced as the first gold refinery in Nigeria. Apart from that, Thor Explorations Ltd also has the Segilola Gold Project in Osun State, South west Nigeria. Africa’s biggest economy, Nigeria, has over 44 untapped minerals across different locations in the country.

 

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