Small Cap Feast

Small Cap Feast – 14 February 2020

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Dish of the Day:

Admission of Gemfields Group. No Capital Raise. Currently listed on JSE. (GML:JNB GEM.L) at circa £122m.  The Group’s key producing assets, the Kagem emerald mine in Zambia  (believed to be the world’s single largest producing emerald mine) and the Montepuez ruby mine in Mozambique (one of the most significant recently discovered ruby deposits in the world), are both expected to have long mine-lives with potential for expansion. Also owns the  Faberge brand.

 

Off the Menu:

No Leavers Today

 

Dish of the Day:

Off the Menu:

What’s Cooking in the IPO Kitchen?

AIM

Inspecs, a UK designer, manufacturer and distributor of eyewear frames to global retail chains announces its intention to IPO onto AIM raising £94m with a market cap of £138m.  Admission expected 27th February.  FY Dec 2018 numbers show revenue of $57m and underlying EBITDA of $11m

Main Market (Standard List)

The Proof Of Trust has announced its intention to list on the Standard Market.  The Blockchain based business, owns patents to a protocol which facilitates dispute resolution based upon smart contract disputes.  Transaction details TBC.

Main Market (Premium)

DRI Healthcare—investment company focused on investments in healthcare Royalty Assets  looking to raise $350m. Due 11 Mar.

Ninety One –proposed demerger and public listing of  Investec’s  global asset management business on LSE and JSE. 30 Sep 2019 AUM £121bn. Sale of existing shares. Expected free float of >60%. Due 16 march.

Cabot Square—Closed ended investment fund focussed on alternative assets and asset manager. Looking to raise £200m.  Will target investment opportunities that are expected to generate an attractive risk adjusted return and that can also make a positive ESG impact by focusing on some of the biggest challenges facing societies and economies.  Due 14 Feb.

The Global Sustainable Farmland Income Trust will invest in a diversified portfolio of operational farmland assets located in major agricultural markets including the United States, Europe, New Zealand, Australia and certain countries within Latin and South America. Raising up to $300m.   Due 28 February.

Investment firm Nippon Active Value fund is seeking to raise up to £200m at an issue price of 100p per share via an IPO.   The company aims to invest in a portfolio of quoted Japanese stocks with market capitalisations of up to $1bn.   First day of dealings expected early February.

NEX Exchange

Zapp Scooters, a developer and manufacturer of electric two-wheeled vehicles announced its intention to IPO on the NEX Exchange Growth Market.  The Company intends to raise up to £3.5m. Admission is expected to occur on NEX in February 2020.

 

Breakfast Buffet

Mosman Oil & Gas (MSMN.L) 0.16p £1.4m

£300k placing at 0.15p with a one for 1 warrant at 0.23p. In addition to the Fundraising, two Directors have indicated their intent to subscribe for up to a further AUD 120,000 on the same terms and conditions as the Placing in lieu of certain consultant and director fees due or owed for the year to 30 June 2020 to demonstrate their ongoing commitment to the Company.

New strategic focus to Stanley and other similar projects in East Texas (including Challenger and Champion) and to continue with the exploration in EP 145 in Australia. As a result, the Company expects that its Welch and Arkoma projects will be sold in an orderly process.

Announce its fifth successive production increase since reporting started in June 2017 and provides the following production information for the six months ending 31 December 2019.  Net Production attributable to Mosman for the six months was 13,253 boe, an increase of c 13% which follows the c 81% increase in the six months to June 2019.

 

Yourgene Health (YGEN.L) 14.9p £89.4m

The  international molecular diagnostics group, announces that its chemotoxicity diagnostics assay – Elucigene DPYD – which tests to identify cancer patients at risk of lethal side effects from chemotherapy, has been approved for sale in Australia by the Therapeutic Goods Administration (‘TGA’) as an IVD (in vitro diagnostic). The TGA is the regulatory body for therapeutic goods in Australia. It is a Division of the Australian Department of Health established under the Therapeutic Goods Act 1989.

In September 2019, Yourgene announced the launch of Elucigene DPYD assay, the Company’s first oncology product. It is a simple-to-use genotyping test that can identify cancer patients with Dihydropyrimidine Dehydrogenase (DPD) deficiency, which can cause severe and sometimes lethal side effects in patients being treated with chemotherapeutic drug 5-Fluorouracil (5-FU). It is estimated that globally over 2m people are treated with 5-FU every year and of these up to 20% will be hospitalised due to DPD deficiency and up to 1% may die.

 

Metal Tiger (MTR.L) 1.525p £23.2m

Further US$1.5m equity investment into Botswana focused explorer, Kalahari Metals Limited. Following the Investment, Metal Tiger will be interested in approximately 62.2% of KML.

As part of the Investment, Metal Tiger has been conditionally granted a 2% net smelter royalty over all of KML’s wholly owned licences, being seven licences covering, in aggregate, 6,650km2. The five exploration licences owned by Triprop Holdings (Pty) Limited (in which KML has a 51% interest) do not form part of the Royalties. The Royalties will fall away should Metal Tiger invest a further amount at a lower valuation than the Investment, subject to a cap of US$500k.

Proceeds to fund exploration drilling programmes at the Kitlanya East (‘KIT-E’), Okavango Copper Project (‘OCP’) and Kitlanya West (‘KIT-W’) projects, located in the Botswana portion of the Kalahari Copper Belt.

Environmental approvals are now in place for drilling on all of KML’s projects. Drilling and soil sampling programmes are planned to start at KIT-E in March 2020, followed by further target drilling at the OCP and KIT-W project.

 

Ariana Resources (AAU.L) 2.925p £31m

Receipt of due diligence drilling results by Proccea Construction Co. and the Proposed Partner on the Salinbas Gold Project in Turkey. A detailed independent review of the Kiziltepe, Tavsan and Salinbas projects by international consultants of the Proposed Partner remains underway

  • 600m of Reverse Circulation (“RC”) drilling was undertaken to twin four holes previously drilled by Ariana: ARD019, 20, 22 and 23.

 

  • Assay results from the independent laboratory, ALS Global in Izmir, have been received and good correlations are confirmed between Ariana’s drilling results and the due diligence drilling results.

 

  • The Proposed Partner, Proccea and Ariana have completed an extension agreement to enable the conclusion of the due diligence work up to 31 March 2020.

 

Draper Esprit (GROW.L) 562p £663m

Investment and Exit update.

Sold its stake in Pod Point, the UK’s largest independent provider of electric vehicle charging, to EDF Energy for a transaction value ahead of September 2019 fair value and representing a return of 2.3x, with an IRR of 39% over three years.  Brings the total value of cash generated by the Company from exits or partial exits to £36m in this financial year.

In February, Aiven, a Finland-based software company combining the best open source technologies with cloud infrastructure, raised $40m in Series B funding in a round led by IVP, the leading US based VC firm. Aiven is a Draper Esprit portfolio company via the partnership with Earlybird Venture Capital. Transaction has driven an £8m fair value uplift.

 

Knights Group (KGH.L) 464p £348m

Exchange of contracts to acquire Fraser Brown Solicitors (“Fraser Brown”), a full-service law firm in Nottingham.  This acquisition strengthens the Company’s presence in the East Midlands, in line with the Group’s strategy to accelerate its organic growth through carefully targeted acquisitions which are a strong cultural fit and strengthen existing offices, add new geographies or bring complementary business services.  In its unaudited accounts for the year ending 30 June 2019, Fraser Brown achieved revenue of circa £7.5m with corporatised PBT margin of circa 10%. Knights hopes to drive this to 15%.  A total consideration of up to £8.28m

Has also agreed a new extended revolving credit facility with HSBC UK and Allied Irish Bank of £40m. . It replaces the Group’s existing £27m facility with AIB (GB) and is on improved terms.

 

Verona (VRP.L) 64p £67.4m

Publication of Phase 2b clinical trial results for ensifentrine as a maintenance treatment for chronic obstructive pulmonary disease in the leading peer reviewed journal, Respiratory Research. The study met its primary endpoint demonstrating that ensifentrine produced clinically and statistically significant improvements in lung function at all doses. Also, clinically relevant secondary endpoints were met. Results from the 4-week 400-patient study were first reported in March 2018 and further positive analysis was presented in May 2019 at the American Thoracic Society International Conference.  “We look forward to discussing these results, along with positive data from previous clinical studies, in an End-of-Phase 2 meeting with the FDA, anticipated for 2Q 2020. We expect this meeting to provide key guidance with respect to the design of our Phase 3 program.”

HydroDec (HYR.L) 7p £1.99m

FY Dec 19 update from the cleantech industrial oil re-refining group.

Revenues c. US$11.6m (2018: US$14.9m), impacted by working capital constraints

Gross unit margins declined reflecting the higher cost of feedstock in H1.Group adjusted EBITDA loss of approximately US$3.2m (2018: US$1.2m loss)

Demand for SUPERFINE products remains robust. Canton plant utilisation at 45% on average for the year (2018: 55%) – feedstock remains key constraint to higher throughput and strategic initiatives.·   Progress made in securing sustainable, increased supplies going forward, with the Group seeking to achieve utilisation rates at the Canton facility of at least 60% in 2020. Reduction in corporate costs to US$1.8m. Good commercial traction post year end.

 

Brickability (BRCK.L) 74p £170.5m

First acquisition since listing on AIM. McCann Roofing Products  for £2.75m . In the year ended 31 December 2019, McCann reported PBT £0.7m on revenues of £8.2m.  Increases and diversifies Brickability’s European material supply as well as product range and will expand the distribution of roofing products into new regions across the UK.

 

SDX Energy (SDX.L) 22.5p £46.06m

The SD-6X (Salah) well at South Disouq in Egypt (SDX 55%) has commenced drilling operations. Expected to a reach its targeted depth of c. 9,000 feet in late March/early April and is targeting gross P50 unrisked prospective resources of c.71 bcfe. The primary targets are in the same Kafr el Sheikh and Abu Madi formations that the  existing four wells are already producing from.

 

Head Chef:

Derren Nathan
0203 764 2344
derren.nathan@hybridan.com

*A corporate client of Hybridan LLP

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