21 June 2011
This week: Green Compliance exhibits growth, a new strategy for Stratex and new penetration for Corero
A sign of the times?…a drop in the FTSE 100 last week of 130 points, together with a 30 point drop in the AIM All Share, was a sound reflection of the news releases for last week- there was news that UK retail sales fell some 1.4 per cent in May (compared to a 1.1 per cent rise in April) and the Greek debt crisis has taken centre stage once again. Early this week, the UK Government announced that public sector net borrowing fell during May, but borrowing for the year to date is still slightly ahead and there looks to be uncertainty around when spending cuts are likely to impact. Looking ahead, the focus on Greece looks set to continue with further bail-out money being sought from the EU and IMF and private investors are falling under pressure to extend their loans.
Atlantic Coal (ATC 35.5p / £125.98m)
Atlantic Coal, an open cast coal production and processing company with its primary asset at the Stockton Colliery, Pennsylvania, USA announces the appointment of Barney Corrigan to its management team as Project Development Officer. Mr Corrigan has 30 years experience in the resource industry, specialising in all aspects of minerals and waste planning. He will assist in the identification, evaluation, acquisition and development of coal sites both in the USA and potentially the UK, to increase the Company’s project portfolio, resource base and production profile. He has experience of planning feasibility studies for surface mine sites, the preparation and submission of planning applications and environmental assessments and project management of the whole planning application process.
Blue Star Capital (BLU 3.52p / £5.30m)
The AIM listed investment Company focused on the Homeland Security sector this week announced the acquisition of one of its investee companies, Zimiti Limited, by AIM listed Digital Barriers. The Company’s fully diluted holding in Zimiti of 26 per cent. is valued at £721,000 in its interim accounts to 31 March 2011 and this value will continue to be carried until the various earn out criteria are achieved and recognised. The initial cash consideration to the Company will be approximately £250,000 and this will be used to progress the Company’s investment strategy.
Corero (CORO 36.75p / £17.53m)
Corero, the provider of software solutions to the banking and securities and education markets, announced the release of a new product to its line up in the form of the DDoS Defence System, which has been created to detect and block network-layer and application-layer cyber-attacks. Network layer and application-layer DDoS attacks can quickly exhaust local server resources and go undetected by conventional DDoS detection solutions- Corero’s product (it believes) is unique in being able to provide a solution for both types of attack, which are increasingly common, thereby helping businesses and other types of user to minimise revenue and business disruption. One form of attack may take the form of bombarding a computer with communications requests such that it cannot respond to legitimate requests and rendering the computer effectively useless. This form of attack is very much on the increase and Corero’s solution, which is made of a hardware and software component, is a solution that is quickly installed and provides the market with a new type of solution. Such product and technological development demonstrates the key efforts being made to offer a comprehensive range of defence solutions which evolve with current trends in the IT security space.
DP Poland (DPP 82p / £16.22m)
Domino’s Pizza in Poland has opened its second store in central Warsaw. Located on a major street that runs through the centre of the city, the store has a densely populated delivery area. The store features a ‘pizza theatre’ window in the customer area which allows customers to view their pizza being made. The store roll-out programme is gathering pace with the third store nearly complete and construction about to commence on the fourth. The first store, opened at the end of February 2011, has just been awarded a five-star rating from the international franchisor which Peter Shaw, CEO, says is “an outstanding result”. An online ordering system was activated at the end of April and already accounts for five -ten per cent of sales, without any active promotion of the facility.
Frontier Mining (FML 3.88p / £72.11m)
Frontier Mining Ltd, the gold and copper exploration and development company focused on Kazakhstan and Russia, has announced that it has closed a copper off-take agreement along with associated funding with Red Kite Mine Finance. The off-take agreement is for four years from commencement of production and the funding is for $10m of which $5m has already been received. The additional amount is conditional on certain conditions being met, which the Company is confident of achieving. Erlan Sagadiev, CEO, said: “this is a further step in the advancement of the Benkala project. We welcome Red Kite’s involvement and funding in the project and this news further ensures that we will proceed to plan.” Frontier has a 100 per cent interest in the Benkala copper mine, currently under development with initial production planned in 2011. A CPR completed by Wardell Armstrong International in June 2010, estimated the oxide section of the Benkala project, which represents development of only ten per cent of the total resource at Benkala, to have a NPV of $190m, based on 0.5 per cent diluted copper grade, 63 per cent recovery and 185,000 tons of contained metal at a $6,000 per tonne copper price.
Green Compliance (GCO 1.32p / £24.11m)
Green Compliance, a leading provider of compliance-related business support services, announced results for the 12 months to 31 March 2011. Revenues were substantially higher for the period at £18.2m (2010: £547,000), whilst the Company was also able to make an adjusted profit during the period of £1.6m (2010: loss of £1.24m). Interestingly, the period was dominated by a large number of acquisitions (11 in all, with 3 in the area of water, 3 in the area of pest control and 5 in that of fire protection), and the Company is continuing to restructure and integrate its acquisitions going forward. John Prowse, Chief Executive Officer of Green Compliance, said: “…The demand for our services is strong. Our three markets of water hygiene, pest control and fire protection in the UK are all sectors which provide significant opportunity for organic and acquisition led growth due to the continued regulatory framework requirements and relative fragmented nature of the markets within which we operate”.
With £3.7m of net debt, Green Compliance has also received approval for a new £7.5m revolving credit facility with HSBC, creating additional headroom of up to £2.5m over existing facilities to support further growth- the Company looks well funded to take advantage of the acquisition opportunities it speaks of.
Herencia Resources (HER 2.50p / £31.50m)
The Northern Chilean miner has reported final results from the Doris drill programme which include 1.7 metres at 2.49 percent copper and 49 g/t silver and 2.05 metres at 1.78 percent copper and 226 g/t silver. A total of ten diamond drill holes have been completed with seven out of ten successfully intersecting copper and silver mineralisation. The results will be incorporated and evaluated into a larger Doris/La Rosa model. Herencia is now focusing on the Patricia feasibility study and the ongoing drilling programme.
Modern Water (MWG 48p / £28.56m)
Modern Water, the owner of leading water technologies for the production of fresh water and monitoring of water quality, this week announced that it had been awarded a contract to build and operate a desalination plant by Oman’s Public Authority for Electricity and Water. The contract, which was won in a competitive process, is worth £500,000 to the Company. The plant will likely be the first fully commercial application of forward osmosis which lies at the heart of the Company’s patented process and has been shown to achieve significant cost savings, use less energy and to be more reliable than conventional methods, particularly when operating in challenging conditions.
Patsystems (PTS 22.25p / £41.55m)
The AIM listed company that delivers tailored solutions to enhance derivatives trading performance and trade processing, announced a new agreement for software licences with Phillip Securities Japan, a securities brokerage firm based in Tokyo. Patsystems develops software for a wide range of securities based utilities, but focuses its key operations on the delivery of trading systems and risk management solutions through software and related infrastructure. The Company works with some of the largest names is the industry and has noted sizeable growth in demand from the developing markets, with particular interest from the Asia Pacific region. The agreement will allow facilitate Phillip’s retail brokerage and execution business on the Osaka Securities Exchange, with Patsystems more specifically providing low-latency connectivity and licenses for Patsystems’ J-Trader and Pro-Mark, together with a complete back-up system. This demonstrates the continued market penetration in the Asia Pacific region, which continues to be a significant revenue and profit generator for the Company.
Plethora Solutions Holdings (PLE 7.88p / £5.18m) *
AIM listed UK-based speciality pharmaceutical company yesterday announced that its subsidiary The Urology Company Limited has entered into an agreement with BioClin B.V. to become the UK exclusive distributor of the Multi-Gyn and Multi-Mam product ranges. Four of the Multi-Gyn and Multi-Mam products are available in the UK today. These products have been available since 2005 under the brand name Bio-Fem and have significant UK retail sales. The products are available over the counter without a prescription from the country’s leading retail pharmacies and consumer healthcare companies. Multi-Gyn is a range of intimate care products, designed to treat and prevent the recurrence of a number of female health conditions. At present there are seven products in the Multi-Gyn range. Multi-Mam is a range of products designed to prevent and treat discomfort before and during breastfeeding through total nipple care. The Urology Company will act as the UK exclusive distributor and will retain the product names and rebrand the products to their international identities: Multi-Gyn and Multi-Mam. The Urology Company intends to roll out the entire product range in the United Kingdom and ensure a national retail distribution.
Recently, the Urology Company significantly strengthened its UK sales and marketing infrastructure and indicated that it intends to expand its product portfolio to exploit this resource. The Urology Company intends to expand the UK retail distribution of the BioClin products through listings in a number of major UK retail pharmacies, and healthcare chains. The Urology Company believes that the Multi-Gyn products are highly complementary to its existing Hyalofemme and hI-Cran products and the Multi-Mam range is complementary to Dianatal.
As a new and exclusive distributor, we expect The Urology Company to retain and grow sales of this existing franchise, whilst expanding total revenue through launch of the remaining product line up. The Urology Company has delivered a steady stream of positive news flow in recent weeks adding to its impressive rate of product launches over the past 17 months into the UK and Europe. Recent announcements demonstrate management’s ability to build the business through enhanced sales and distribution and the exploitation of its existing product line up.
In order to support its current product line up and new additions to the portfolio, Plethora recently reinforced its sales capability through the signing of a deal with North-51 for a contract sales force. The agreement with North-51 provides Plethora with geographic coverage throughout the UK for the distribution of its urology, gynaecology and sexual health products. We also recently saw the launch of Hyalofemme onto the UK market as an over-the-counter product at the start of 2011. On 15 April 2001, Plethora announced the approval of Hyalofemme for reimbursement under the NHS. Plethora is well funded and we believe will continue to provide good news flow in the short and medium term.
Provexis (PXS 1.8p / £21.54m)
Provexis, the life sciences business that discovers, develops and licences scientifically-proven functional food, medical food and dietary supplement technologies, this week announced its audited results for the year ended 31 March 2011. The chairman reported that the business had made substantial progress through the development of its long-term, global commercial agreement with DSM for their lead Fruitflow technology. The Company also announced that it had entered into a conditional agreement to purchase SiS (Science in Sport) Limited for a consideration of £8m. SiS develops, manufactures and sells nutrition products for sports people. In addition to the synergies, the revenue generating, profitable nature of the new business will help the Company to achieve it strategic goal of adding a near term revenue stream to the longer term pipeline development bias. The acquisition is part funded by a £2.5m conditional placing announced alongside the results together with the £2.5m raised in 2010 via the company’s Equity Financing Facility.
Rambler Metals and Mining (RMM 35.75p / £44.08m)
Rambler Metals and Mining recently reported its financial results and operational highlights for the quarter ended 30 April 2011. The Company’s focus is on bringing the Ming Copper-Gold Mine in Newfoundland and Labrador’s Baie Verte Peninsula, Canada into full production. As of May 3, 2011, the Company raised CAD$15m (after expenses), which will be used to provide the working capital needed to substantiate production at the Ming Mine. In addition to receiving final permits from the Government of Newfoundland and Labrador for the Ming mine, continued exploration at this mine has resulted in the discovery of visible gold. Together with revenue being generated from the Nugget Pond Crown Pillar, the Company’s own mineral property, the Group’s performance over this period has been extremely positive. During this quarter, the Company reported a net profit of $193,000, with cash resources (including short-term investments) at $2.4m at the quarter end, followed by an increase to $11.2m by June 20th 2011.
ReNeuron Group (RENE 5.1p / £31.61m)
ReNeuron last week announced that it has signed a patent and know-how license agreement with Schepens Eye Research Institute, Boston, US, regarding the Company’s ReN003 stem cell therapy programme focused on diseases of the retina.
Based on the successful results of this initial collaboration, the Company has, through this license agreement, secured the relevant intellectual property rights to develop and commercialise its hRPCs in the field of human retinal stem cell therapeutics. Subject to regulatory advice and the results of IND-enabling late pre-clinical studies, the ReN003 programme is expected to enter its clinical phase in approximately 18 months. Importantly, although retinitis pigmentosa is the initial target disease, the hRPCs developed in the programme will almost certainly be applicable as cell therapy candidates for other blindness-causing diseases, such as age-related macular degeneration and diabetic retinopathy. Angel Biotech (ABH 0.3p/£8.19m)* is producing the stem cells used in ReNeuron’s trials at its Edinburgh facility and has been ReNeuron’s manufacturing partner for over three years and enjoys a strengthening relationship.
Sirius Minerals (SXX 6.88p / £70.99m)
Sirius Minerals, the globally diversified potash development group with properties in the UK (North Yorkshire), the USA (North Dakota) and Australia (Queensland and Western Australia) has announced the approval by the North York Moors National Park Authority of the planning applications for the first two drill sites for the York Potash Project. A further three applications have been submitted. Chris Fraser, Managing Director and CEO of Sirius said: “we are extremely pleased to be moving forward with our drilling programme. We believe the York Potash Project is world-class and of significant importance to the United Kingdom. It is our intent to commence site preparation works and then drilling as soon as practicable.”
Sunrise Resources (SRES 2.8p / £8.74m)
The diversified mineral exploration and development specialist announced that it has signed a drill contract for a second round of drilling at its Long Lake Gold project near Sudbury in Ontario, Canada. The drill programme is contracted to start on or before 4th July 2011. The drilling is to follow up on results of the Company’s first drill programme announced earlier this year which included high-grade gold intersections. The Company has recently extended its option to acquire the Long Lake claim group located to the south-west of Sudbury. The mine had been closed in 1939 at which time it had produced 57,000oz gold from ore having an average grade of over 11g/t Au down to a depth of just 55m from surface.
Stratex International (STI 8p / £23.87m)
Stratex International, in a joint venture with leading Turkish construction company, Avdeniz Group, announced a maiden assessment prepared in line with the guidelines of the JORC code for the Muratdere multi-metal porphyry copper-gold project in Western Turkey. The JORC-compliant resource, according to CEO Bob Foster, has considerably exceeded their expectations. It has demonstrated the potential for a substantial mineralized porphyry copper system containing multi-element credits of gold, silver, molybdenum, and rhenium. At the current metals prices, these add significantly to the potential value of the project. Since signing the joint venture agreement in November, the work development programme has resulted in the completion of 27 diamond drill holes for a total of 3,075 metres.
Metallurgical test work is currently being undertaken as these will determine the most appropriate way to recover the various metals. These are expected to take three months to complete. The Company will continue drilling to determine the “true lateral extent of the mineralisation and to enable it to upgrade and assign a substantial part of the resource to Indicated and even measured categories”.
Surgical Innovations Group (SUN 10.12p / £39.97m)
Designer and manufacturer of innovative medical devices recently issued a trading update alongside its AGM statement. The Company continues to recognise demand for the portfolio of products it develops and in anticipation of future growth has continued to invest in manufacturing facilities and research and development capacity. Geographical growth of the business continues also, having signed a new distributor agreement in the South Africa region with a large health insurer together as well as the establishment of new markets for the SI Brand in New Zealand and Saudi Arabia. This is in addition to the continued expansion of the YellowPort+Plus Resposable product in the US and Europe. This positive update follows the announcement last month of the Company’s results for the year to 31 December 2010, in which a very healthy performance was noted- revenue increased 55 per cent to £7.045m (2009: £4.541m), pre-tax profit increased 487 per cent to £1.549m (2009: £264,000), net cash of £2.2m was generated from operating activities, with a basic earnings per share of 0.48p (2009: 0.14p). With all of the product development that is taking place, and key areas such as arthroscopy being considered, we imagine the Company will keep its eyes open for potential acquisition targets also.
TEG Group (TEG 12.25p / £9.34m)
TEG, the AIM listed cutting edge green technology Company, which develops and operates organic composting and energy plants, this week announced a placing and open offer to raise up to £3.8m at 10 p per share, a 57 per cent. discount to the closing mid-market price at the time. The company reported that the contract to provide four IVC silo cage facilities to Greater Manchester Waste Authority has been the subject of delays and there are payments and retentions relating to the three facilities due to the Company that are now significantly overdue. There is also now reconsideration by the Authority as to whether or not to proceed with the construction of the fourth site and this has a further impact on anticipated cash flow. In the circumstances, the Board concluded that it would be prudent to undertake the placing. When the retentions are released to the Company and other payments made, these sums will be used to fund the plant roll-out programme, accretive acquisitions and for general working capital purposes.
Touch Group (TOU 1.5p / £3.15m)*
AIM listed Touch yesterday announced the launch of touchhealthsciences.com, and a new journal called iHealth Connections. The launch took place at the Drug Information Association Annual Conference in Chicago yesterday. The theme of the Conference is Convergence of Science Medicine and Health. This initiative is one of the most important Touch has ever undertaken; it relates to treatment and medicine of the future which is both radical and uplifting. The new peer-reviewed journal, iHealth Connections, explores the opportunities and challenges in the rapidly emerging field of health sciences, where healthcare and life sciences connect. With touchhealthsciences.com you will have online access to Touch Briefings extensive health sciences portfolio, from drug discovery to clinical development and safety, and health outcomes. Good to see Touch Group launching this journal and online access, and since the fund raise earlier in the year, Touch can certainly look forward with renewed confidence.
ValiRx (VAL 0.66p / £6.89m)*
AIM listed life science Company with a focus on cancer diagnostics and therapeutics for personalised medicine today reported that it has made an important advance in the production method of GeneICE drug candidates. The new technique simplifies the construction of GeneICE molecules and by extension makes them cheaper to produce. Moreover, the new GeneICE molecule has the potential to deliver better biological activity than observed in the successful trials using earlier molecules. The Board believes that as the new molecule is simpler in design, the remaining pre-clinical studies may be completed more efficiently and quickly than previously anticipated. The Board believes that the extra cost-saving that comes with the simplification of chemistry and a cleaner biological profile add further value to GeneICE and its attraction to potential licensees and partners. The new enhanced forms of GeneICE drug candidates and control molecules are currently undergoing efficacy and safety studies using model cancer and control systems. As a result of the cost saving in production of the therapeutic candidate created by ValiRx’s new chemistry and the reduction in the cost of other technologies, the grant monies received by Eurostars for the GeneICE development programme are expected to last for a further nine months, enabling ValiRx to conserve its own cash resource, whilst furthering and enhancing its GeneICE development programme. In essence what this is saying is that cost savings on the programme means that there is some cash left that can be put to use further out. Money was granted against an agreed and approved budget, but various items have cost less than all expected. The difference is to be applied to the GeneICE project. Despite ValiRx’s favorable share price development we continue to believe that the Company’s valuation does not fully appreciate its fully commercialised diagnostics business and progressing drug discovery programs.
Wasabi Energy (WAS 2p / £43.90m)
Wasabi Energy recently signed a licensing agreement with leading engineering, procurement, and construction provider, FLSmidth, to lead efforts to reduce the emissions from the global cement and lime industries. The agreement is expected to bring in substantial licensing and engineering revenues. In the first quarter of 2012, the Khairpur Kalina Cycle plant is expected to produce its first power.
Recently, Wasabi announced the signing of a term sheet to jointly develop, own and operate the Taufkirchen Geothermal Power Plant in Southern Germany. The Company will join an experienced consortium to develop a 4,500 KW geothermal Kalina Cycle power plant. This project is the first opportunity to build-own-and-operate a power plant with a Kalina Cycle licensee. Furthermore, this decision to develop this geothermal project as a Kalina Cycle power plant ensures the technology is positioned well to become technical solution of choice for the geothermal sector in Germany. The Company will earn a direct equity interest in the Taufkirchen project.
*A corporate client of Hybridan LLP
The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.
14 June 2011
This week: Animalcare’s pet projects, Andes looks higher, Boomerang gets back catalogue
Advanced Computer Software (ASW 35.5p / £125.98m)
The Company, a leading provider of software and IT services to the UK health, care and business sectors, this week announced its results for the year ended 28 February 2011. The results report on the Company’s second year of trading following the £99m acquisition of COA Solutions in February 2010. Revenue was up 216 per cent. to £95.4m and adjusted pre-tax profit (before one off restructuring costs, share based payment and amortisation of acquired intangible assets) up 209 per cent. to £21m. The Company also reported positive revenue visibility with approximately 57 per cent. of revenues from recurring maintenance, hosting and managed service contracts and a further 35 per cent. in repeatable business from an installed base of approximately 7,000 customers.
Originally established to consolidate the fragmented primary care software market, the Company now comprises three divisions addressing the needs of both public and private sector organisations. The Health and Care division sells a range of products to the NHS and private sector including patient workflow and case management applications. The Business Solutions division (of which COA Solutions is part) provides accounting, payroll, HR and document management systems to public sector organisations and the private sector. The third division, 365 Managed Services provides services in support of the Company’s products to a wide range of customers. The chief executive commented that the Company: “continues to perform well in a difficult economic climate with turnover underpinned by strong recurring revenues and all divisions reporting high levels of activity. We are confident about our prospects for the current financial year given that future contracted revenues at the yearend were £78m”.
Advanced Medical Solutions (AMS 79.25p / £122.63m)
The global technology company this week provided a trading update in conjunction with its annual general meeting. The Company reported that whilst economic conditions continue to be challenging, the Company is trading in line with current market expectations for the full year 2011 and it remains confident about the long term prospects for the Company. Feedback from the US market on LiquiBand, its key wound closure product continues to be very positive with end user sales showing strong growth quarter-on-quarter.
Amur Minerals Corporation (AMC 16.12p / £44.81m)*
Amur yesterday announced today that exploration has been resumed on its Kun-Manie nickel copper sulphide project located in the far east of Russia. Presently, crews are working in the areas of Maly Krumkon, Kubuk and Ikenskoe deposits. Geochemical sampling, ground based geophysical surveys, trenching and drill road construction have all been initiated. In addition, the Company plans to undertake engineering works including verification assaying for metallurgical sample selection, detailed metallurgical test work, resource and reserve updates along with production optimisation of the drilled reserves. Environmental studies will also be initiated. The exploration and engineering work will be focused on the mining licence area that is presently under review by the Ministry of Economic Development. Concurrent with the implementation of the field season, the Company has interviewed various qualified Russian and international engineering and construction companies. From this process, a short list of organisations skilled in base metal extraction and remote project construction will be identified and requested to bid on engineering and construction related activities. The market awaits news of the Mining licence.
Angel Biotech (ABH 0.34p / £9.13m)*
AIM listed biopharmaceutical contract manufacturer today noted that following the successful process development and validation work performed by Angel on behalf of Azellon Ltd. under a previously announced contract, Azellon has now been granted approval to run a Phase 1 clinical trial in the UK. Azellon’s product has received approval from the UK regulatory agency, the MHRA, to commence the world’s first clinical trial for the treatment of patients with meniscal tears (injury to cartilage tissues in the knee joint). The Phase I trial, one of the first in the UK to be approved using stem cells, will treat patients with a cell bandage product seeded with the patient’s own, expanded, stem cells. Gordon Sherriff, Chief Operating Officer, said: “Successfully assisting our clients into the clinic is Angel’s core skill. Contracts such as Azellon and ReNeuron utilize Angel’s experience and expertise to expedite their route to clinical. Each approval for clinical trials received by our clients further boosts Angel’s standing in the market as the premier choice for biotechnology companies wishing to take cell therapy projects into the clinic.” The market awaits news of progress as it adds the extra capacity it needs at the GMP manufacturing facility in Cramlington that it has recently taken a fifteen year lease on.
Angel Mining (ANGM 2.12p / £13.70m)
Angel Mining, a gold and zinc/lead mining company with two active projects in Greenland, is placing shares at 2p per share, further raising £2,182,00 before expenses. This will fund the construction of the cable car connecting the mine entrance to the mine camp at Black Angel zinc/lead mine; expand production at the Nalunaq gold mine; and provide capital for the Company at large. Furthermore, Angel Mining and Socius have agreed to terminate the second tranche of the medium term note programme for £3.0m. Production of gold is now commencing at Nalunaq, with the plant designed to process 200 tonnes of ore per day, and subject to grade, it is expected to build up to expected 2,000 ounces of gold per month. At the current gold price, the Company will be expected to start generating enough capital to finance the development of Black Angel projects, which is expected to see production in early 2013. Black Angel is believed to provide the significant value creation potential for the Company.
Andes Energia (AEN 20.75p / £27.68m)
Andes Energia, the oil and gas, electricity distribution and hydro-electric power Company in Argentina, has been awarded the block CN-01 Nirihuau Sur via a joint venture formed between Andes Energia and Kilwer S.A. With an area covering 4,538km, the block is located in the Northwestern part of the Chubut Province and is known to have oil springs in the Nirihuau basin. The exploration license has been granted for six years, with the first half dedicated to the collection of geochemical samples and the acquisition of over 200 km of 2D seismic. So far, the Company has an interest in 11 licenses covering more than 30,000 km in Argentina. Under the joint venture agreement, Andes holds a 60 per cent interest, with Kilwer and Petrominera Chubut each holding 20per cent. This is the first time the Company has been successfully awarded a license in an open round bid.
Animalcare Group (ANCR 165p / £33.60m)
Animalcare Group, the leading supplier of veterinary medicines, announced the addition of new products to their analgesia and anesthesia range. Following recent successful launches of several new products in Europe, Sedastart and Sedastop have joined the ranks of licensed pharmaceuticals after having received approval from Veterinary Medicines Directorate and the Irish Medicines Board on 27th April 2011. With an £1.0m net turnover for each of the target markets, Sedastart is an injection that’s used to calm an animal prior to a minor operation while Sedastop is administered after the operation to reverse Sedastart’s effects. Stephen Wildridge, CEO of Animalcare expects to increase the range of effective therapies at competitive prices by launching at least two more products before the end of the year.
Asterand (ATD 11.5p / £13.67m)
Main list leading provider of human tissue and cell-based services to pharmaceutical and biotechnology companies engaged in drug discovery research last week announced the exclusive licensing on a worldwide basis from Capsant Neurotechnologies Ltd. and the introduction of isletOrganDOT, a novel 3-D cell based assay platform for evaluating therapeutic compounds for diabetes. Dr. Thomas Mander, Vice President Sales and Marketing at Asterand noted: “Cell based models for diabetes research have relied on cell lines or intact rodent and human isolated islets, but both models have limitations. Asterand’s isletOrganDOT system offers advancements in functionality, throughput and study design, allowing us to provide our clients with relevant human data on the effects of test compounds in a rapid and reproducible manner.” Asterand’s UK service division offers exemplary scientific expertise in human tissue research. Through its PhaseZERO platform the Company provides pharmaceutical and biotechnology companies with compound evaluation, target and biomarker validation services.
Atlantic Coal (ATC 0.5p / £19.15m)
Atlantic Coal, open cast coal production and processing company with activities in Pennsylvania, USA, generated $10,720,103 in revenues over the last year, compared to $9,048,214 in 2009. A new excavator on site during the second quarter of the year resulted in increased production levels, while a second hydraulic excavator has been ordered which is expected to become operational in the first quarter of 2012. In conjunction with increased production capacity at Stockton Colliery, the Company mined 207,873 tons of run-of mine coal during 2010, with hopes to increase to 300,000 tons in 2011. Furthermore, the feed rate at the washing plant more than doubled from 2009 with an average of 1,000 tons per shift. With £12.3m raised (before expenses) in the first quarter of 2011, the Company has a healthy cash position and can now evaluate potential acquisition targets in line with its strategy to become a regional consolidator with a view to increase its resource base.
Boomerang Plus (BOOM 55.5p / £4.95m)
Boomerang Plus, an AIM listed media group, acquired the trade and certain assets and liabilities of Oxford Scientific Limited for a cash consideration of £516,250. OSF is a London based BAFTA & Emmy award winning Production Company focused on history and science programs. The acquisition will help Boomerang deliver its diversification strategy both in terms of its expanding geographic presence and customer base as OSF caters to audiences in the States, U.K, and Australia. It also strengthens the resource base as it provides the Company access to an extensive back catalogue of programming and experience in exploiting programs globally. Following the acquisition of Indus Films in October 2009, this move further solidifies the Company’s position in the Factual genre. Huw Davis, CEO of Boomerang Plus also observes that: “the acquisition allows us to build on the strong performance of our Advertiser Funded Programming business and the organic growth seen in Network productions and positions the Company for long term growth.”
Caza Oil & Gas (CAZA 21.5p / £33.11m)
Caza Oil & Gas, the U.S. focused exploration, appraisal, development and production Company, reported that its ongoing operations are progressing on, or ahead of, schedule. On the Windham property in Upton County, Texas, the Caza 158 #3 is the fourth well drilled and completed on this property. The Caza 158#1, 158#2, and 162#1 wells are all producing oil and natural gas whilst being in various stages in their respective fracture simulation programs. At the Bongo property in Wharton County, Texas, there was a discovery of presence of natural gas in the Frio formation. With the completion of remedial operations on the O.B. Ranch #1 well, the well is producing average daily rates of 92 barrels of oil, 674 thousand cubic feet of natural gas and 37 barrels of water, in line with the Company’s expectations. In the San Jacinto Property in Midland County, Texas, an acreage of 480 acres with five unproven undeveloped locations, the Company is targeting the Wolfberry, Strawn and Devonian formations, which produce oil in the vicinity. The progress and revenues generated by these projects contribute to the Company’s pursuit of maintaining a balanced strategy of developing both production and reserve base, and add to the strategy of building further shareholder value.
Ebiquity (EBQ 90.5p / £53.24m)
Ebiquity, which provides a range of business critical data, analysis and consultancy services to advertisers, media owners and PR professionals around the world, has announced the acquisition of a 50.1 per cent stake in its Russian media practice partner, The Joined Up Media Company. A consideration of £1.2m is being offered, with an upfront of £356,000 and criteria related payments spread across three years making up the balance. Ebiquity has an existing partner arrangement in Russia and the surrounding areas – with Joined Up Media already representing close to 50 per cent of the Russian media auditing market – the acquisition will offer significant cross selling opportunities to Ebiquity and its current portfolio of services. The new acquisition helps to further the reach of the Company’s Analytics division and follows the £10m (up to) acquisition last month of Echo Research, which is a well reputed analysis, media measurement and stakeholder research specialist with offices in London, New York, Paris and Singapore.
Falkland Oil & Gas (FOGL 61.25p / £126.93m)
The Company announced that the Leiv Eiriksson rig is expected to arrive in the Falkland Islands in Q4 and also that it expects to commence drilling in Q1 2012. They have made “significant” progress in establishing a drilling team, to be managed by Dave MacKay, a deepwater drilling specialist who previously worked for BHP Billiton for 12 years. On 24th May, the Executive Council of the Falkland Islands approved the withdrawal of BHP Billiton from the northern license area and transfer of operatorship to Falkland Oil. They also approved a six month extension of Phase 1 of the northern license area to June 15th 2012, from December 15th 2011. The latest site survey programme has now been completed; a total of 5 site surveys were carried out on the Inflexible, Vinson, Scotia, Hero and Loligo prospects. FOGL is in early-stage discussions with several parties who have expressed an interest in participating in an exploration drilling programme. The Company doesn’t anticipate concluding any farmout agreement until later this year.
Goldplat (GDP 11p / £18.38m)
The gold producer continues to “make excellent progress” at Kilimapesa Gold, announcing that the first phase of its drilling programme to seek to upgrade the resource towards a JORC compliant 0.5moz gold. The Title Deed, required for the issuing of the Mining Lease, has been issued with final documentation now delivered to the Commissioner of Mines and Geology in Kenya. Four key exploration targets have been identified for diamond drilling based on existing data and artisanal activity. The continuity of quartz veins at the Vim/Rutha target has been confirmed by recent geophysical IP surveys, laterally continuous over 300-400m. Three parallel quartz veins have been mapped on surface beyond the Vim/Rutha target over a 5km strike. Red Ray correlates positively to Kilimapesa Adit B, rock chip samples of up to 10g/t Au. Phase One (of two) of a drilling programme has commenced – a 28 shallow hole drilling programme over 1,120m focusing on the prospective Vim/Rutha and Red Ray target areas, 2km south of Kilimapesa Hill.
Herencia Resources (HER 2.7p / £34.05m)*
Last month the Northern Chilean miner reported that a possible new target area had been identified at Patricia where two drill holes had intersected a narrow base metal sulphide mineralisation.Herencia now confirms that it has intersected a broad 20 metre mineralised zone which includes a high grade core of six metres grading 5.9 per cent zinc, 2.6 per cent lead and 144 g/t silver. This new vein appears to be up to 750 metres in strike length with the deepest hole indicating a depth of mineralisation to 225 metres below surface.
The new vein may provide Herencia with another target to expand the resource base at the Patricia discovery.
Hydrodec (HYR 7.25p / £29.86m)
Hydrodec, the oil recycling specialist, provided a trading update at its AGM last week in which it stated that it had continued to perform steadily since its 2010 annual results and that it expects the current trend of steadily increasing volumes to continue into the second half of the year. Demand for its SUPERfine products has remained strong in the U.S. and Australia, whilst it is continuing to increase exports from its U.S. plant as the Company’s products gain market acceptance- the tight supply market has not impacted the prices of finished product and gross margins. A number of agreements have also been signed since the results. HydroDec has signed a three-year agreement with a major U.S. utility, which will supply used transformer oil for re-refining at its Canton facility, accounting for 5 per cent of current annual feedstock requirements. The Company has also signed a heads-of-terms for its first joint venture plant in Japan and a more formal agreement is expected to be signed shortly with the first site expected to be commissioned in the second half of 2012.
Leni Gas & Oil (LGO 2.8p / £25.74m)
The Company announced resumption of production from the Eugene Island-184 (EI-184) platform in the Gulf of Mexico. Operations were resumed safely on 3rd June following the transfer of operatorship to Marlin Energy LLP (as announced in late May). All (5) previously active wells were returned to production and operational reporting to the Joint Venture partners has now been resumed. During the initial five day ramp up period, gross physical production has averaged 1,199 mcfpd and 402 bopd (609 boepd). Once downtime is accounted for, this equates to an average daily rate of approximately 922 boepd. The Company holds a 7.25 per cent working interest in the EI-184 field. Early indications are that production has been re-established at a level higher than before shut down but stabilised rates are not yet available and some flush production after a 60 day shut-in period would be expected.
Monitise (MONI 27.75p / £195.05m)
Monitise, which provides end-to-end solutions that enable banks and their customers to undertake banking transactions via mobile phones, announced a new agreement with Visa which is expected to bring in revenues in excess of $10m in the first three years. Just last week that the Company announced that it had launched its first mobile money service in India with a range of smart phone and Java apps via Standard Chartered, and this new deal demonstrates the regular contracts being awarded to the Company. The agreement will enable Visa to offer a mobile service to its current account holders which replicates the features of traditional visa payments. Alastair Lukies, Chief Executive of Monitise, said: “Visa is the benchmark for trusted payments innovation on a global scale and it is a huge honour for Monitise to be playing our part in their mobile strategy. Mobile Money is an industry that will have a big societal impact as the 5+ billion mobile phone users around the world discover new ways to bank, pay, trade and shop. This agreement validates Monitise’s strategy of becoming the leading trusted enabler in the space and cements our role in this ever growing ecosystem”.
Pan African Resources (PAF 10.75p / £155.23m)
The Africa-focused precious metals producer announced the results of a drilling programme on the Bramber tailings dam at Barberton Mines (Pty) Ltd: the indicated mineral resource declared of 148koz (3.13Mt at 1.47g/t in situ) independently verified at a cut off grade of 1.5g/t. The initial metallurgical test work indicates recoveries of 45 to 55 per cent. The ‘Order of Magnitude’ study estimates capital for the project for a Carbon-in-Leach plant at ZAR120m (approx. £11m) to treat 1.2Mt of tailings per annum at Barberton Mines for a period of approximately three years. An additional 9Mt of dump material is currently being investigated that could increase the life of the project from 3 to 10 years. If viable, this project could increase production at Barberton by another 20koz per annum over the life of the project. The feasibility study on the project will be completed by Q2 of the 2011/12 financial year. The Company is encouraged by these results which show that Barberton is developing into a “significant” stand alone gold project with the chance of not only increasing the current production profile but also increasing the operating margin and reducing unit costs.
Plant Impact (PIM 27.5p / £13.81m)
Last week AIM listed agricultural play announced that it has entered into an exclusive licence and distribution agreement with Engage Agro Corporation, a Canadian based crop development, registration and marketing company covering INCA crop enhancement technology. The Agreement grants Engage the right to market and sell Plant Impact’s INCA crop enhancement technology in Canada on an exclusive basis for an initial period of five years and contains customary price and sales targets which, if not met, enable Plant Impact to terminate the Agreement. Engage has been working with INCA for over two years and the board of Plant Impact believe that the Agreement will lead to the development of several new technologies for the Canadian market.
Red Hot Media International (RHM 62.5p / £22.67m)
The advertising and media promotion business operating in the Malaysian, China and Hong Kong markets this week announced its results for the year ended 31 December 2011. Total revenue increased by 69 per cent.to RM 44.3m (£8.9m) and profit before tax was RM 9.2m ( £1.83m) representing a 95 per cent. increase. Income from the advertising businesses grew 79 per cent. and represents 95 per cent. of total revenue of the Company. The Malaysian business led the growth with 86 per cent. increase while the China and Hong Kong markets grew by 70 per cent. The growth has been supported by AxChange, the Company’s innovative distribution based business model under which the Company enters into a contract to draw down various lines of inventory and then, as the inventory is sold through RedHot’s distribution network, the proceeds from the sales are used to purchase media space for the same client. This model frees up working capital for clients and assists new entrants into the Malaysian and Chinese markets (where capital controls are still in place) in selling their products.
The high rate of growth impacted working capital and the company raised RM3.5m during the year through the issue of preference shares leaving cash balances available for use at the yearend of RM3.2m (£0.8m). The Company reported that the outlook for the current year shows promising growth as it begins to witness a recovery in the media and marketing sectors. It is also experiencing an upturn in advertising expenditure, especially in the Malaysian market where consumer spending on white goods and electrical products, two of its key market segments, is on the rise.
Serabi Mining (SRB 30.25p / £19.35m)*
AIM listed Brazilian focused gold exploration Company yesterday announced further results from its ongoing Phase 1 discovery drilling campaign at its 100 per cent owned Jardim do Ouro project in the Tapajos region. These results covering a total of seven further drill holes include the first three holes into the Currutela target area, as well as completion of the Piaui target and Panhandle targets. Drilling has commenced at the Currutela target area, with assay results now received for three of the holes completed to date on this target. Drilling has intersected multiple zones of hydrothermally altered granite. These alteration zones appear to be very similar to those hosting mineralization at the Palito deposit which lies along strike some two kilometres to the northwest of the Currutela target. The Company is also pleased to report it has also increased drilling capacity with a second contracted drill rig now operational at site. This increase will accelerate the current 8,100m target testing drilling programme on the nine integrated geophysical/geological targets derived from the 2008 airborne VTEM survey and 2010 ground geophysical surveys. The Phase 1 discovery drilling programme is scheduled to complete before the end of Q3 2011.
Synchronica (SYNC 22p / £21.56m)
The AIM listed Company, which develops and provides mobile device management and synchronisation solutions, announced that it has signed an expansion order with a tier-one mobile operator group targeting Latin America. This is a group-wide deal which will see the use of Synchronica Mobile Gateway 6 across all of its Latin American subsidiaries and sees Synchronica strengthening its presence across the Latin American mobile market- Synchronica’s contracts with operators in the region cover more than nine out of every 10 mobile users in Mexico and Argentina and five out of every 10 mobile users in Brazil. Specifically, monthly fees will be doubled which will significantly increase the recurring revenue received per active user per month- the increased charges are partly due to the increased services offered by Synchronica and could also in part be due to the new features offered by the updated platform, which was introduced in February 2011. Carsten Brinkschulte, Chief Executive of Synchronica, said: “This is the second contract expansion signed with a multi-national operator group in Latin America. It demonstrates Synchronica’s ability to provide additional services to customers gained via the acquisition of Colbria’s IM business in 2010 and increase the revenue generated from these contracts. We are confident that the addition of push email and synchronization to the operator group’s messaging portfolio will enrich the product offering and we look forward to a successful roll-out.”
UBC Media (UBC 2.5p / £4.47m)
UBC Media Group, the multimedia content and services Company, ended its fiscal year with a reduced overhead base, rising revenues in new areas of the business, a healthy cash balance of £4.3m and no debt or long-term liabilities. Digital video now comprises 11 per cent of group turnover, while software and video revenues increased by 22 per cent and 61 per cent respectively. Additionally, the Company will be supplying apps to Astral Media’s (Canada’s largest radio group) 83 radio stations in the next six months. In a challenging year within the traditional media space, the Company successfully developed the content businesses into digital video, moved the interactive business into mobile apps and removed its legacy digital radio liabilities. In spite of this, Simon Cole, Chief Executive, stressed that for the future, the Company will need to grow in the environment that it is in and use the balance sheet “wisely”.
ValiRx (VAL 0.7p / £7.26m)*
AIM listed life science Company with a focus on cancer diagnostics and therapeutics for personalised medicine, announced last week that it has agreed to vary certain terms of the sale and purchase agreement between Singapore Volition Pte. Limited and ValiRx in relation to the sale of its former subsidiary ValiBIO SA and the sublicence of its rights to hypergenomics technology that was associated with the sale. In consideration of a commitment by Volition to ValiRx to issue a further US$510,000 of ordinary shares in Volition (so now taking the aggregate value to US$1.11m), ValiRx has agreed to transfer its rights to a patent application for certain diagnostic applications for an endometriosis device; and novate the rights of a patent licence concerning hypergenomics technology to Volition, the rights were originally provided to Volition by way of a sublicence. The issue of US$1.11m worth of shares by Volition will take place on the earlier to occur of an initial public offering by Volition, or 7 October 2011 at a valuation by reference to the Volition IPO price or, if there has been no IPO, to the average subscription price between September 2010 and 7 October 2011. Dr Satu Vainikka, CEO of ValiRx, commented: “We are pleased to have been able to amend the agreements with Volition deriving substantive value from the transfer of a patent application, that is outside of our core technologies. ValiRx continues to work closely in association with Volition and I am pleased to see our stake and investment in Volition increase further to both companies’ mutual advantage.” It is good to see the two Companies working so well together and we look forward to the fruits of their mutual development work.
Victoria Oil & Gas (VAL 4.47p / £95.61m)
Victoria Oil & Gas, an oil and gas exploration and production company with assets in Cameroon and the FSU, has mobilised important pipeline and civil contractors. The Company has hired Austin Maritime, a local civil engineering contractor, to manage the pipeline jointing, installation, testing and commissioning procedures. The Company has also started work on production trees and baseline calliper logs of the wells to prepare for the commissioning of the wells, all of which will also be completed by the end of June. Victoria currently has 11 gas sales agreements (GSA’s) signed/executed with another 10 GSAs contractually agreed subject to legal due diligence and final approval. In all contracts, gas supplies are priced at £16 per million British thermal units or $96 per barrel of oil equivalent. Logbaba’s current proved and probable reserves of 212bn cubic feet of gas (bcf) (35.3m barrels of oil equivalent) and the Company expects gas sales of 8m standard cubic feet per day (mmscf/d) in the first year of operations rising to 44 mmscf/d by the end of 2014. 212 Bcf is sufficient to supply an average consumption of 30 mmscf/d for the next 20 years. Additionally, the Company also revised internal economic forecasts for the field, which highlighted improved post-tax NPV figures.
*A corporate client of Hybridan LLP
The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.
07 June 2011
This week: Omega one to watch, Range takes up Soca, Sound news from Silence
Earlier in the week, the International Monetary Fund provided support to the UK’s austerity plans and stated that it expects the UK economy to grow by 1.5 per cent in 2011, with inflation predicted to be above 4 per cent for the remainder of the year, though it anticipates this to return to the target rate of 2 per cent by the end of 2012. At the end of the last week, the FTSE 100 closed some 100 points lower than 7 days prior, whilst the AIM All share improved marginally to close at 880 points. The week ahead will see BoE announcements on the interest rates, which are widely expected to be held at 0.5 per cent, and producer price data, which has a wider impact on inflation rates.
Angel Mining (ANGM 2.88p / £18.53m)
Angel Mining has successfully completed a gold pour at Nalunaq. The Company now expects to be pouring gold weekly and making monthly shipments of ore to be refined in Switzerland. The cash that will come from gold sales will support operations in Nalunaq, corporate costs and contribute to the capital expenditure and debt repayment at Black Angel. Currently, the Company is engaging in discussions with Socius CG II Ltd with regards to Angel Mining’s drawdown of £3m through the medium term loan note program. Socius has agreed to extend the time over which one of the payment conditions relating to the drawdown can be satisfied to 31 May 2011. Nicholas Hall, CEO, observed that while producing gold will greatly aid in acquiring future financing, if the discussions with Socius “do not conclude satisfactorily”, the Company, currently, not only has cash to substantiate immediate commitments but also has access to other forms of medium and long term finance.
Arian Silver Corporation (AGQ 29.88p / £89.98m)
Arian Silver’s results for the three months ended 31 March 2011 highlighted developments at its San Jose property. The work over this period focused largely on mining and production of silver-bearing concentrate with further exploration drilling along the western extension of the San Jose vein. However, the Company’s transition from explorer to producer incurred challenges especially on the operational side. The custom mill and plant, in particular, were not tailored for the San Jose ore, but the Company is taking measures to upgrade accordingly. This led to improved revenues from production, and will see the company start another drilling program across the entirety of the San Jose vein within its concession boundaries. The Company expects that funding for the exploration and operations will be funded by working capital and cash flow from production. The working capital at the end of quarter 1 was £10.5m.
Beowulf Mining (BEM 41.75p / £67.73m)
Beowulf, the AIM and Aktietorget traded mineral exploration company which owns several exploration projects in Sweden, announced that initial results for the two Kallak license areas combined suggest the presence of substantial iron ore, estimated to be in the excess of 600m tonnes. The Swedish Raw Material Group, commissioned by the Company to determine the potential in its iron ore projects, recommended continued drilling in this region, especially now as the iron ore prices have increased since 2010. While an independent JORC compliant resource estimate as well as the Environmental Impact Studies for the Kallak sites will be soon available, one thing is certain: the Company has experienced success in its relations with local officials. The positive feedback from the communities together with the appointment of Fred Boman, a man of considerable experience and wealth of technical skills, as Production Director, the Company is gearing up to accelerate future production, especially in the Kallak area. Meanwhile, due to bullish sentiment on the market for supply and demand of copper, Beowulf sees potential in its joint venture project with Energy Venture Limited in Ballek. Beowulf raised £1.09m in May 2011, which will support the company in its promising exploration and development efforts.
Chariot Oil & Gas (CHAR 223p / £403.17m)
Chariot Oil & Gas Limited Chariot Oil & Gas Limited, an independent oil and gas exploration group, expressed positive sentiment in the Company’s strategic prospects for the future. The company raised $140m giving Chariot a current cash position of $148m. This will support the drilling campaign later this year. The Company further strengthened the Board, technical and management teams. On a technical aspect, over the last 12 months, the Company has gained significant knowledge and geological potential over the Namibian area, with a drill-ready inventory of 16 prospects. Additionally, Chariot increased the gross mean unrisked prospective resources to 15.5m barrels (Bbbls). They identified a “game-changing” mega structure, Nimrod, with gross mean unrisked potential resource volume of 4.6 bn barrels and estimated 25 per cent probability of success. Numerous majors with deepwater expertise have expressed strong interest in the farm-out data rooms, with further negotiations potentially seekers at advanced stage.
Craneware (CRW 551.25p / £147.70m)
Craneware, the Edinburgh headquartered provider of automated revenue integrity solutions for the US healthcare market, announced a new agreement with Kingman Regional Medical Center, a 235-bed non-profit medical center in Kingman, AZ, to provide Craneware InSight Denials(R) to the range of Craneware Revenue Integrity Solutions(TM) the organisation already uses to support optimal financial performance. The Craneware InSight Denials tool joins the suite of tools offered by Craneware as a result of the direct acquisition of ClaimTrust, Inc. of Murfreesboro, TN. Craneware InSight Denials is a tool to uncover the root causes leading to denied claims (a typical U.S. hospital can easily lose seven to ten per cent of its revenue to denied claims that could be successfully corrected and resubmitted) and then helps the hospitals identify and implement process improvements to permanently prevent specific denial types.
Designcapital (DESC 14.5p / £10.09m)
The AIM listed investment company dedicated to high end contemporary furniture design last week announced that the Board has decided to cease the trading activities of Artelano s.a., its Paris-based French subsidiary. The rationale for this decision comes from the international development strategy being implemented by designcapital for the Artelano brand, which is now being driven and managed through Artelano International Ltd, designcapital’s UK subsidiary that has a head office, and a show-room currently under development in Mayfair, London. The winding up of the business will result in a termination of the restructuring plan agreed as part of the “redressement judiciaire” process, including the obligation on Artelano s.a. to repay historical “frozen” trade liabilities amounting to approximately £1.4m. It will also result in a non-cash provision being made against designcapital’s investment in Artelano s.a. of £2.0m in the Company’s accounts for the year ended 31st December 2010. The Artelano brand and products will continue to be distributed in France through the Company’s Paris-based subsidiary, Forum Diffusion, the well-known distributor of high-end design furniture for both the home and office market. This move reduces costs and outflows of cash in France and is part of designcapital getting its house in order, with the focus being on a London show room.
Desire Petroleum (DES 16p / £54.77m)
Desire Petroleum, wholly focused on the North Falkland Basin, announced that its 3D seismic acquisition programme is now complete and that it anticipates the prospect inventory will continue to grow as the fully-processed seismic data are delivered and interpreted. The area covered is c.1416 sq kms in Tranches C, D, F and adjacent open areas. Combined with existing 3D data, this provides almost full coverage of the East Flank Play Fairway on Desire’s acreage and extended coverage of the Liz area, Ann, Pam and Helen prospects. The fully-processed data for the northern part of Tranche D and the Ann prospect area are being fast-tracked and are expected to be available in July. A fully merged data set, covering all prospective areas is expected to be available towards the end of 2011. Initial indications for new prospects from data on the area at the northern end of Tranches C and D are encouraging – two new leads, Beverley and Shona, have been identified so far. The Shona lead is at the same stratigraphic level as the Rockhopper Sea Lion discovery and extends northwards to the block boundary of Tranche D, while the Beverley lead is at a shallower stratigraphic level and is mapped wholly within Tranche D.
Equatorial Palm Oil (PAL 19.5p / £24.34m)
The palm oil development company with operations in Liberia, this week announced its maiden results for the year ended 31 December 2010. The Company reported a loss of $4.4m on the year with a year end cash position of $6.8m. The Company listed on AIM in February 2010 raising £6.5m towards the development of sustainable oil plantations on its 169,000 hectare land position in Liberia. This was followed by further significant backing initially through a £5m subscription agreement with BioPalm Energy Ltd and subsequently by a US$60m joint venture with BioPalm under which BioPalm took a 50 per cent. interest in the Company’s palm oil assets. The Company’s intention is to use the capital to aim to nearly double its previous planting targets from each year from 2011 to 2014. Subsequent to the year end the Company and the joint venture achieved the milestone of the first sales of crude palm oil from its palm oil mill.
IP Group (IPO 52.75p / £134.92m)
IP Group, the developer of intellectual property based businesses, last week announced a proposed placing and open offer of 110 million new ordinary shares to raise gross proceeds of £55m. The shares are being placed at 50 pence per share, a discount of 6 per cent. to the share price and their issue is fully underwritten. The funds are being raised for a number of reasons including to increase the Company’s overall rate of investment into its portfolio, to enable the company to maintain or increase its stakes through subsequent financing rounds and to provide the company with the flexibility to lead subsequent investment rounds thereby decreasing its reliance on external capital.
Leni Gas & Oil (LGO 2.88p / £26.43m)
The oil and gas company announced that the Malta Area 4 (Blocks 4, 5, 6, 7) in which LGO holds a ten per cent interest, have been granted an 18-month extension (to January 18th 2013) to the first exploration period of the Area 4 Production Sharing Contract by the Maltese Government. The following conditions apply to the extension: payment of an extension bonus of $300,000 in July 2011, commitment to acquire 1,000 sq kms of 3D seismic by January 2012, agreement that if a well is not drilled by January 18th 2013, that a further payment of $5m will be due to the Maltese Government, unless there are technical reasons for not having done so.
Lipoxen (LPX 9p / £15.95m)
AIM listed bio-pharmaceutical company specialising in the development of high-value differentiated biologicals, vaccines and siRNA delivery last week announced its financial results for the year ended 31 December 2010. The revenue figure was up 234 per cent to £1.57m (2009: £0.47m), but the loss per share was down 88.5 per cent to 1.13p (2009: 2.47p) and the cash balance at 31 December 2010 was £0.85m (2009: £1.02m). 2010 was a year of continuing success of the collaboration with Baxter Healthcare and phase II (a) trials of ErepoXen® were successfully completed by the Serum Institute of India. The period saw the first phase pre-clinical development studies completed for the H1N1 novel influenza vaccine product candidate and in general positive developments were made in the enhancement of the IP position. Sir Brian Richards, Chairman of Lipoxen, said: “The Board of Lipoxen is confident that the Company’s technology platforms and PolyXen® in particular, will prove their potential to further enhance shareholder value through both clinical and commercial development in 2011.” Lipoxen’s technology platform generates a large number of opportunities with each having a decent shot at returning considerable revenue streams to the company, a point that is still not reflected in the current pricing of the company.
Max Petroleum (MXP 13.75p / £126.92m)
The oil and gas exploration company focused on Kazakhstan announced that the NARS-1 exploration well on the Narmundanak South prospect in Block E has reached a total depth of 1,589 metres with electric logs indicating 4 metres of net oil play at depths from 1,280 to 1,290 metres in the Triassic Formation with porosities ranging from18 to 25 per cent. A fluid sample taken at a depth of 1,283 metres yielded 32 degree API oil. The Company is running production casing in the well and expects to test NARS-1 for commercial viability in the next 60-90 days, upon receipt of the requisite governmental approvals. The Borkyldakty Field has been placed on production after receiving the final approval of the trial production project (TPP) from the Kazakhstan regulatory authorities. The TPP, valid until March 2013, allows the Company to produce the field and drill additional exploration and appraisal wells in order to gather additional data necessary to prepare a full field development plan. The Company has returned the BOR-1 discovery well to production and is planning to drill the BOR-3 development well in June 2011 using the IDECO rig after it has finished the NARS-1 discovery well.
Monitise (MONI 27.75p / £195.05m)
Monitise, which provides end-to-end solutions that enable banks and their customers to undertake banking transactions via mobile phones, has launched its first mobile money service in India with a range of smart phone and Java apps. Whilst the apps are powered and underpinned by Monitise’s Globe mobile banking technology platform, they have been specifically developed for Standard Chartered Bank’s Breeze brand and will allow users to view bank and credit card accounts, transfer funds to other banks in India, pay utility bills (offering over 100 billers around the country), locate the nearest SCB branch/ATM using an ATM Locator, and have access to a range of extra feature services such as choosing a cinema, locating seats and purchasing their tickets, as well as finding, booking and paying for airline tickets. The application is compatible with more than 700 handsets and demonstrates continued growth into Asia, an important territory for Monitise.
Omega Diagnostics Group (ODX 14.75p / £12.57m)
AIM listed developer of medical diagnostics devices announced that it has signed a ten year deal with Toyota Tsusho America Inc. for the sale and distribution of its Food Detective(TM) product into the US market. The product is a test for particular food intolerances and is currently sold in over 50 countries, though it will first need to undergo a regulatory approval process with the US FDA. Toyota Tsusho America already has a portfolio of diagnostics tests that it supplies to the US market and, under the terms of the agreement, will cover the costs involved in obtaining relevant clinical data and information needed for an intended submission under the US FDA 510(k) clearance procedure which is expected to take one to two years.
Andrew Shepherd, CEO of Omega, said: “We’re very pleased to announce this deal with TAI for distribution of Food Detective(TM) in the US. The product has been sold in over 50 countries and is well accepted as being a reliable test for those people suffering from the effects of food intolerance. This cost effective test has great potential in the significant US market. The US FDA regulatory approval process is likely to take time and significant resources and having a strong partner such as TAI will greatly assist this process.”
One Media Publishing (OMPP 3p / £1.30m)*
PLUS quoted consolidators and acquirers of music and video content last week had two announcements. First, it acquired for a consideration of $10,000 a spoken word version of the Bible. Over 300 hours of both the New and Old Testaments will be made available through all digital stores that list spoken word products. Second it announced that it has agreed a further digital exploitation of its catalogue via the Amazon Create a Disc system. Initially, over 4,500 albums from the One Media catalogue will be made available to this service which allows customers to both download a digital file of an album and to request a physical compact disc version to be sent to them in the post. The service, which has been pioneered in the USA, will first be offered in Germany and may well be extended to other territories as Amazon expands this service. One Media has not historically supplied physical versions of its music content to date and welcomes this initiative by Amazon to supply compact discs of its digital albums via its new service. One Media put out a great set of financial results and certainly knows how to do deals in its space; we believe it will continue to build its portfolio.
Pan African Resources (PAF 10.62p / £153.43m)
Pan African, the Africa-focused precious metals producer, announced a significant increase in the resource and reserve for Barberton Mines (Pty) Ltd. The total mineral resource increased by seven per cent to 2.55Moz of gold (9.47Mt at 8.35g/t in situ). The Measured and Indicated mineral resource increased by four per cent to 1.9Moz of gold (6.96Mt at 8.48g/t in situ). A significant increase in the total resource grade by 33 per cent to 8.35g/t in situ (2010 was 6.29g/t in situ). The mineral reserve increased by 51 per cent to 1Moz (3.83Mt at 8.12g/t in situ). The Company’s attention is now focused on the prospecting permit where they have identified a geophysical anomaly close to surface that has a geographic footprint equal in size to the mining footprint at their Fairview Mine that produced 4Moz.
Patagonia Gold (PGD 43p / £315.85m)
Patagonia Gold, a mineral exploration company, announced that drilling at Monte Leon has intersected wide near-surface zones of potentially bulk mineable gold and silver mineralisation over a strike length of 1km, including 74 metres at 1.07g/t gold and 102g/t silver in drill hole MLN-003. The zones intersected correlate to the wide low grade intersections reported from trenching indicating good vertical continuity. Geological interpretation indicates the wide zones may become more focused at depth. The mineralisation remains open along strike to the north and south and down plunge. An Induced Polarisation (IP) geophysical survey has been initiated to provide IP coverage in the area from the Cap-Oeste project to Monte Leon, a distance of 10km and from Monte Leon to the Marciana prospect, a further 7km to the south east, giving a total IP coverage of 24km within the known Cap-Oeste corridor. A substantial follow-up drill programme will commence in Q3 to infill the current drilled area and to test for extensions both along strike and down plunge.
Range Resources (RRL 17.5p / £280.86m)
Range Resources has completed the 100 per cent acquisition of SOCA Petroleum. Thus, the Company now owns three exploration and production onshore oil and gas licenses together with a fully operational drilling subsidiary with five exploration and four production drill rigs, and associated equipment and operational personnel. Now, the Company is not only targeting the deeper and potentially bigger Herrara formation (and untested areas not currently part of the existing reserve base) but is also expecting to see a rapid increase in production from existing reserves. Range Resources is in the process of updating the current reserve and valuation reports across the Trinidad assets which include the Herrara potential.
Scientific Digital Imaging (SDI 15.5p / £2.79m)
The AIM listed group focused on the application of digital imaging technology to the needs of the scientific community, last week provided an update on trading for the year ended 30 April 2011. Revenue for the year is expected to be over £7.4m, an increase of over 4 per cent. over 2010. However due mainly to a number of difficulties encountered in the run up to the year end, including difficulties in sourcing key components, the Company expects to report a pre-tax loss of less than £0.2m. However, the order book is more robust than usual at the start of the financial year and continued positive customer response to the products introduced and updated during the year should contribute to improve trading in the year to April 2012. The Company also continues to seek complementary acquisitions in the life sciences sector and in other scientific markets.
SeaEnergy (SEA 39.25p / £27.13m)
SeaEnergy announced that it has reached agreement to dispose of its entire interest in SeaEnergy Renewables Limited (SERL) to Repsol Nuevas Energias SA (Repsol) in a deal which values SERL, created just under three years ago, at an enterprise value of approximately £50m. The Company will dispose of its 80.13 per cent interest in SERL, which has an interest in three offshore wind farm sites off the coast of Scotland, in return for a cash consideration of £30.7m and the full recovery of its £8.1m investment in SERL. SeaEnergy also separately announced that its subsidiary SeaEnergy Renewables Inch Cape Limited (SERICL) has signed an Agreement for Lease with The Crown Estate Commissioners which will lead to the development of around 905 megawatts of offshore wind generation capacity off the Angus Coast.
SeaEnergy will now focus on its existing assets, in particular its offshore renewables marine services business. SeaEnergy Marine has been in development for 12 months as a result of the Company’s efforts to identify complementary opportunities which offer potential cash generation in the near term. A proportion of the proceeds from the Disposal are intended to be applied to take SeaEnergy’s marine services business to the next stage. The Company believes that a significant opportunity exists as a result of the large numbers of offshore wind turbines expected to be installed in UK and European waters over the coming years. These installations are expected to result in strong and growing demand for construction and operations and maintenance service solutions. SeaEnergy has developed a vessel concept which it believes will address the challenges and therefore improve the delivery of offshore wind economics.
Silence Therapeutics (SLN 2p / £11.53m)
AIM listed global RNA interference (RNAi) Therapeutics Company last week provided a progress update following completion of its recently announced £5.9m fundraising. With the monies it will complete the ongoing Phase I trial of Atu027 for treatment of advanced solid cancer (H2 2011); initiate a Phase Ib trial of Atu027 in particular tumour types (mid-2012); file an investigational new drug application (IND) with the US FDA for Atu134 for the treatment of solid tumours (H2 2012); and advance the preclinical development of the Atu111 program for systemic delivery to the lung for the treatment of pulmonary disease.
Atu027, Silence’s most advanced internal drug candidate, is a liposomal siRNA formulation targeting PKN3 for the treatment of advanced solid cancer that incorporates Silence’s proprietary AtuPlex delivery technology. A Phase Ib/IIa trial is expected to commence in mid-2012. Silence plans to partner Atu027 during the course of 2012. Yesterday Silence announced positive data from its ongoing Phase I study of Atu027. The results were presented in a poster presentation at the 2011 American Society of Clinical Oncology (ASCO) Annual Meeting in Chicago. Silence expects to complete the ongoing open label, single-center, dose-finding Phase I trial in the second half of 2011. Atu134 is Silence’s second potential cancer therapy. Similarly to Atu027, Atu134 is also an anti-angiogenic drug that incorporates the AtuPlex technology. Toxicology studies are planned for H1 2012 and Silence plans to file an IND application to the FDA to initiate a Phase I trial of Atu134 in H2 2012. Atu111, for the treatment of acute lung injury, is the Company’s most advanced drug development candidate outside oncology. Silence believes Atu111 is an attractive opportunity for potential pharmaceutical partners.
Silence continues to work closely with its partners and looks forward to the initiation of a Phase IIb trial of PF-‘655, licensed to Quark Pharmaceuticals and Pfizer Inc., in diabetic macular oedema expected to commence in H2 2011. In addition, Silence expects Quark Pharmaceuticals and Pfizer Inc. to report results from the Phase II trial of PF-‘655 for the treatment for age-related macular degeneration later in 2011. Quark Pharmaceuticals is also developing QPI-1002 for the treatment of delayed graft function and acute kidney injury in partnership with Novartis. Quark plans to initiate a second Phase II trial of QPI-1002 in acute kidney injury during the course of 2011. Silence’s collaborations with AstraZeneca and Dainippon Sumitomo are ongoing. In conjunction with the recent fundraising, Silence announced plans to close its US operations. Actions have now been implemented to close the US facility in Q3 2011. As part of the reorganisation, Phil Haworth will step down as CEO once a successor is identified. With the promising results of Atu027, and its other programmes, we look forward to further results and news flow.
Synchronica (SYNC 21.5p / £21.07m)
The AIM listed company which develops and provides mobile device management and synchronisation solutions provided financial results for the 3 months to 31 March 2011 and an accompanying Management Discussion and Analysis. Highlights include a 271 per cent increase in revenues to US$1.93m (Q1: 2010, US$0.52m) and a profit after tax of US$0.865m (Q1: 2010 a loss of US$2.278m). Other interesting features of the period include a gain on the purchase of Neustar NGM Services of $3.8m; the acquisition of the remaining interest in iseemedia Inc. acquired in early January; and strong interest in the Company’s portfolio of products. The Company has continued confidence that it will meet its full year market expectations.
Transense Technologies (TRT 4.12p / £5.45m)*
Transense last week announced that its wholly owned subsidiary, Translogik Limited has taken a further order for a number of Truck Tyre Inspection Kits from Goodyear Dunlop for its FOS (Fleet Online Solution) Mobile programme. This relationship began 18 months ago when Goodyear Dunlop began integrating the Translogik tyre inspection probe to work with its FOS system. The FOS Mobile solution allows fleet operators to gather real-time tyre data from its technicians and field service engineers using the Translogik inspection tools. This data is then wirelessly transmitted back to the FOS servers, providing operators and account managers with instant access to tyre fleet data. Recently, Transense results showed a growing pipeline of active new projects and encouraging acceleration of progress in drive-line torque. However, it remains difficult to predict the timing of agreements and subsequent revenue recognition with any certainty. The Company remains confident in the quality of its technology, the strength of these relationships and value of its products to its customers.
ValiRx (VAL 0.68p / £7.16m)*
AIM listed life science Company with a focus on cancer diagnostics and therapeutics for personalised medicine last week announced its final results for the year ended 31 December 2010. Revenue for the year increased to £177,297 (2009: £29,326) and solid progress was seem with the pre-clinical programmes, VAL101 and VAL201. We also saw the expansion of the Company’s SELFCheck home diagnostics kits including the launch of the Chlamydia detection test kit and the successful $1m disposal of ValiRx’s non-core diagnostic subsidiary, ValiBIO S.A. was completed. During the financial year, the Company raised further capital and, since the year end, the Company completed a placing to raise £3.3m to accelerate the development of its therapeutic compound programmes. ValiRx made a small profit for the year of £133,644, mainly as a result of the sale of its Belgian subsidiary. ValiRx is well positioned to direct the therapeutics programmes toward clinical trials. The Company continues to look for further commercial opportunities and partners with the aim of ultimately being in the forefront of specific personalised oncology diagnostic and therapeutics.
Vatukoula Gold Mines (VGM 119p / £99.60m)
Vatukoula Gold Mines, the AIM listed gold producer, placed 4,800,000 ordinary shares at £1.25 per share to raise £6m. The proceeds will in part fund the development of the 18 level decline at the Philip shaft as well as the development of the biomass power project, the latter of which will aid in cost reductions at the Vatukoula Gold mine. With regards to their half yearly performance (ended February 28th, 2011), the Company has seen higher gold production to 29,743 ounces (2010: 24,092 ounces). The accelerated Underground Development Programme and the gradual introduction of the new mining method, the Company expects the change in mining method would reduce dilution and increase mining rates by the second quarter of the next financial year. The cash costs per ounce are also expected to fall with increased production, which, hopefully, will provide greater scope for growth. With increased gross profits and net cash generated from operating activities of £2.2m, the Company has been rather productive in its efforts to increase production at the mine.
Wasabi Energy (WAS 2.02p / £44.39m)
Wasabi Energy, which owns 50 per cent of Aqua Guardian Group, last week announced that AGG is set to enter a joint venture with leading Asian distributor and manufacturer Srithai Superware Public Company focused on water conservation in South-East Asia. As additional market opportunities have been spotted in South East Asia, the joint venture is expected to rapidly progress commercialization of AquaArmour in the region.
*A corporate client of Hybridan LLP
The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50m although we may occasionally cover larger companies.