Small Cap Wrap: Month: December 2012

AIM Breakfast - Archive

11 December 2012

This week: ACS advances learning, OMG captures growth, OVG swaps gold for POLY

The last week was one with split trends in the UK financial markets with the FTSE rising by some 40 points to close at 5,910 points and the AIM All Share closing a few points down at 689. Interest rates in the UK stayed at 0.5 per cent though no further QE stimulus was announced. UK manufacturing output saw a 1.3 per cent fall in the month of September, whilst on the other side of the pond, US “fiscal cliff” talks came to something of a standstill. Asia has also seen some weak economic data, with Japanese data suggesting recession with a shrinking in the economy by 0.9 per cent on the July-September quarter, and Chinese exports were weaker than expected with growth coming in at 2.9 per cent versus the 9 per cent expected by analysts. The week ahead sees UK jobs figures, UK construction output numbers and US Federal Reserve policy announcements all being made.

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Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

ASW Acquisition, ACU Preliminary results, AGL Business Update, AVG Trading Update, BZT Option Variation and Share Subscription, CON Exploration update, CRG Offer for 2IL extended, ERU Update, FOGL Completion of Drilling Operations, GAS  BenGaz JV, IKA Renewal of Contract, IMTK New contracts, MONI Additional Listings, MWA Interims, NEW Operational update, OMG Preliminary results, OBT Additional Forest Concessions, OMI Production Update, OVG Divestment, PGL Refinancing, PSL Licensing agreement, SCLP Update on SCIB1 Phase ½, SRT New order, SYM Trading Update, TRE Disposal of Investment, TYR Head Lice Product, ZYT Preliminary results

Advanced Computer Software (LON:ASW 69.25p/£257.61m)
Advanced Computer Software Group, the provider of healthcare and business management software and services, has agreed to acquire Serco Learning, an education software provider, for a total cash consideration of £7.25m, payable £6.25m to Serco Group and £1m to iGate for the novation of a material services contract. Completion is expected on 31 December 2012. Serco Learning provides solutions to over 2,000 local authorities, academies, independent schools and higher and further education providers, and will be integrated into the Company’s Advanced Business Solutions division, which already has 49 university college customers taking its back-office and student records solutions. In the year ended December 2011, Serco Learning had revenue of circa £13.5m, generating approximately £1.2m of adjusted EBITDA.

African Copper (LON:ACU 1.75p/£16.25m)
African Copper announced results for the 6 months to 30 September 2012, which saw an 18 per cent increase in revenues to $27.2m from $23.1m in the corresponding period in the last year, with operating income from mining operations of $4.3 m, compared to an operating loss of $4.3m for the corresponding period last year. The loss for the period decreased by 44 per cent to $9.0m, compared to $16m for the corresponding period last year. Copper produced in concentrate during the six-month period increased by 29 per cent compared to the same period last year, and by 31 per cent compared to the six-month period from 1 October 2011 to 31 March 2012.

Angle (LON:AGL 29.75p/£12.11m)
The specialist medtech company announced an update on Parsortix, its non-invasive cancer diagnostic business, and Novocellus, its IVF embryo viability investment. Development of the Parsortix non-invasive cancer diagnostic product and its swift launch in the market is ANGLE’s over-riding priority. ANGLE’s patent-protected Parsortix technology enables the simple and effective capture and counting of very rare circulating tumour cells (CTCs) from cancer patient blood. Firstly, a new automated machine for running blood separations has been designed and built. Secondly, a new separation cassette has been designed and manufactured as the consumable to work with the MK1 machine. The progress made with the MK1 machine and GEN3 cassette now means that blood separations can be undertaken by lab technicians without the need for any specialist training or experience. Angle plans to release machines to its research partners, the Paterson Institute for Cancer Research and the University of Surrey Oncology Department, within the next few weeks. Among other things, these partnerships will enable testing of the system with actual cancer patient blood. Following confirmation that the system is working successfully in their hands, Angle expects to be able to release a product for research purposes for sale early in the New Year. Novocellus is ANGLE’s investment in EmbryoSure®, which is a technology for assessing the viability of embryos for transfer in IVF (in vitro fertilisation). On 27 June 2012, ANGLE advised the market that The Cooper Companies, Inc. (Cooper) had acquired ORIGIO, ANGLE’s partner for the development of EmbryoSure®. Following the acquisition, Cooper merged ORIGIO with its other ART (Assisted Reproductive Technology) subsidiary, SAGE IVF. As part of a rationalisation programme, ORIGIO has now decided to cease a number of development programmes including the EmbryoSure® study. As a result of ORIGIO’s decision, all the intellectual property and ownership rights in EmbryoSure® revert to Novocellus and ANGLE’s ongoing financial and management resources committed to Novocellus (other than costs to maintain the company’s intellectual property) are currently being re-directed to Parsortix.

Avingtrans (LON:AVG  103p/£26.81m)
Avingtrans, the manufacturer of critical components and associated services to the global aerospace, energy and medical sectors announced an update on trading in light of the recent transactions completed by the Group. Revenues for the year are expected to be in line with original Board expectations. However, in the short term, the margins realised from sales at PFW and Aerotech will not compensate for the loss of margin in respect of Jena Tec, which will impact profitability for the 2013 financial year. The Group will realise an exceptional profit in respect of the disposal of Jena Tec of approximately £8m and will incur exceptional costs of £0.35m in respect of the acquisitions of PFW and Aerotech. Net debt for the full year will be materially lower than previous Board expectations, with the cash proceeds received from the disposal of Jena Tec, partially offset by the cash consideration in respect of the PFW and Aerotech acquisitions, further capital investment, particularly in respect of China, and the immediate working capital requirements at PFW. However, the Company has chosen not to pay back all of the Group debt at this time. The Board is confident that the Group will see both revenue and margin improvement during the 2014 financial year, which will deliver results marginally above previous Board expectations. Coupled with an improved and more robust balance sheet, the Board believes that the recent transformational transactions place the Group in a much stronger position for the future, both financially and strategically.

Bezant Resources (LON:BZT  24.62p/£16m)
In October 2011 Bezant received a US$7m non-refundable upfront payment from Gold Fields Netherlands Services BV (Gold Fields) for an option to buy Asean Copper Investments; which holds the Group’s entire interest in its flagship Mankayan copper/gold project in the Philippines.  US$63m was to be paid if the Option was exercised and expiry is 31 January 2013. It is now proposed to alter the terms of this option a follows: A further US$2.5m non-refundable upfront payment to be made to Bezant: Gold Fields to fund the Company’s 2013 licence commitments on the Mankayan Project; expiry to be extended to 31 January 2014 with a revised consideration of US$60.5m to be paid on future exercise of the Option; and Gold Fields to subscribe for US$7.5m of equity in Bezant at a price of 25.97 pence per ordinary share representing a premium of 5 per cent. to the average price over the 25 days  preceding the announcement. The management also plan an initial return of capital to Bezant’s shareholders in the first half of 2013 with a minimum amount of US$7.5m, being the subscription proceeds, intended to be returned to shareholders, excluding Gold Fields, subject, inter alia, to shareholder approval at the appropriate time. Approximately 50 per cent of the gross US$60.5m sale proceeds will potentially be available for further distribution to all Bezant shareholders, assuming future exercise of the Option and completion of the sale of Asean. The proposals are subject to the approval of Bezant’s shareholders.

Connemara Mining (LON:CON 8.75p/£2.25m)
Connemara, the diversified exploration company with principal assets in base metal zinc/lead exploration licences as well as shear hosted gold exploration licences in Ireland, has reported that a recently completed reconnaissance soil sampling programme in the Wicklow/Wexford Gold area has resulted in the discovery of a series of anomalous zones of gold enrichment and these will now be explored in more detail. Connemara Mining holds five licences in the Wicklow/Wexford area and Hendrick Resources Ireland Ltd, a Canadian gold explorer is spending EUR1m to earn a 75 per cent interest in the licences.

Corin Group (LON:CRG 69.25p/£29.63m)
On 12 November 2012, the Boards of 2IL Orthopaedics Limited (2IL) and Corin Group announced that they had reached an agreement on the terms of a recommended cash offer to be made by 2IL for the entire issued and to be issued ordinary share capital of Corin. 2IL announces that it has chosen to extend the Offer until 1 p.m. on 12 December 2012. 2IL reserves the right to further extend the Offer in its absolute discretion. 2IL also announces that it has chosen to reduce the threshold for the acceptance condition under the Offer to Corin Shares carrying not less than 75 per cent. in nominal value of the shares to which the Offer relates, and not less than 75 per cent. of the voting rights carried by the shares to which the Offer relates. If 2IL receives acceptances under the Offer in respect of, or otherwise acquires Corin Shares, representing 75 per cent. or more of the existing issued share capital of Corin, or otherwise believes that a resolution to de-list Corin will be passed by the requisite majority, it will seek to de-list Corin Shares as soon as reasonably practicable.

Eruma (LON:ERU 2.38p/£600k)
On 5 October 2012, Eruma, the specialist provider of counter terrorism, intruder prevention and intelligent lighting solutions, announced that it had raised £330,000 by way of a placing. On 8 November 2012 it was announced that £200,000 of the placing proceeds remained outstanding and that the Company was pursuing the placee for the outstanding amount. The £200,000 placing proceeds remain outstanding and the Company continues to seek the recovery of this amount. Meanwhile the Company has entered into a £50,000 loan agreement with a shareholder of the Company. The loan will pay 2 per cent per month and be repayable on completion of certain contracts. Two on-going contracts are nearing completion phase, which should generate cash inflows of approximately £200,000 by the end of March 2013. The terms of the loan described above provide that the loan will be repaid from this cash in-flow.  Furthermore, the Company announces that Nick Marks, who acted as the Chief Financial Officer no longer works for the Company. The Company will seek to appoint an appropriate replacement in due course.

Falkland Oil and Gas Limited (LON:FOGL 30.5p/£97.6m)
FOGL, the oil and gas exploration company focused on its extensive licence areas to the South and East of the Falkland Islands, announced the completion of the 2012 drilling programme. The Scotia well (F31/12-01) has been successfully plugged and abandoned, bringing to an end FOGL’s 2012 drilling programme. Both the Loligo and Scotia wells have been completed safely and within budget. The Leiv Eiriksson will now be demobilised and transit to Norway in the near future.

Gasol (LON:GAS  11.38p/£3.68m)
Gasol, the West African energy development Company, announced that it has signed a Joint Venture Agreement with Societe BenGaz S.A. following the agreement in principle between the two companies announced on 3 September, 2012. Under the terms of the Agreement, Gasol and Bengaz will form a JV company branded Cogaz S.A, which will market gas in Benin, Togo and other countries in the West African region. All natural gas to be sold by Cogaz will be purchased from Gasol or one of its affiliates. Furthermore Gasol and Bengaz have also signed an asset management agreement, under the terms of which Gasol will provide management assistance to BenGaz in respect of its 2 per cent stake in the 690km offshore West African Gas Pipeline established to transport natural gas from Nigeria to consumers in Benin, Togo and Ghana. Gasol is working to station a Floating Storage and Regasification Unit in Cotonou harbour to take on and store gas supplies for transmission through local infrastructure and the WAGP to Cogaz’s customers, which will include power plants and other major industrial consumers in the region. Cogaz has already signed a Memorandum of Understanding for gas supply with Communaute Electrique du Benin, the electricity authority for Benin and Togo.

Ilika (LON:IKA 24p/£11m)
Ilika, the advanced cleantech materials discovery company, today confirmed that further to the trading update on 22 October it has renewed and extended the scope of a significant contract with a major existing customer for the development of lithium-ion battery technology. This is the seventh phase of this contract which extends the relationship into its fifth successive year. The order value of ca. £330,000 corresponds to ca. 20 per cent of the expected annual revenue for Ilika’s current financial year. Additional discussions with the same customer regarding a broadening of the scope of technical engagement within the battery field are currently in an advanced state and are expected to yield a further similarly sized order within this financial year.

Imaginatik (LON:IMTK 0.32p/£2.75m)
Imaginatik, the provider of collaborative innovation software and processes, announced a new three year contract to provide software and consultancy to the Research and Engineering division of one of the world’s largest publicly traded multinational oil and gas companies. This will be through the provision of Imaginatik’s innovation software platform, Innovation Central, supported by a significant element of consultancy to ensure high levels of engagement from the 1,000 employees. The Company also signed two new pilot projects- one with a U.S.-based aerospace manufacturer with global service operations and the other with a well known UK building society.

Monitise (LON:MONI 30.75p/£352.52m)
Monitise previously announced that it had entered into a legally-binding agreement to acquire the entire issued share capital of mobile payments acceptance business eMerit Solutions Limited for an initial consideration of £1.5m with up to £1m payable in addition by way of earn-out, in an all-share deal. In respect of the initial consideration for the acquisition of eMerit, the Company has issued 4,724,409 new ordinary shares of 1p each. Further to the Company’s announcements on 25 June 2012 and 26 June 2012, regarding anticipated additional listings and completion of the acquisition of Clairmail Inc., the Company announces that it has made application for 32,171 Ordinary Shares to be admitted to trading on AIM. A further amount of up to 1,053,151 Ordinary Shares is expected to be issued and admitted to trading over the course of the coming weeks as the remaining letters of transmittal are received from Clairmail shareholders. Monitise will have 1,265,950,283 Ordinary Shares in issue. Monitise is a leading technology and services company that delivers mobile banking, payments, and commerce networks worldwide.

Mwana (LON:MWA 5.22p/£58.3m)
Mwana Africa, a pan-African, multi-commodity resources company with operations and exploration activities in Zimbabwe, DRC and South Africa, has reported its results for the six months to September 2012. Consolidated revenues increased by 61 per cent to $60.7m while profit before tax rose from $0.7m loss to $10.1m of profit. During this period, a share subscription and placing of 383m shares in April 2012 raised approximately $32.8m net of expenses. The main operational highlight was Freda Rebecca increasing production by 66 per cent to 36,335 oz of gold.

New World Oil and Gas (LON:NEW 9.38p/£33.63m)
New World Oil and Gas, an oil and gas exploration and development company focused on Belize and Denmark, has provided an update on operations across its portfolio of highly prospective exploration projects. In Belize, the presence of a working hydrocarbon system has been confirmed by results of the Blue Creek #2 well. In Denmark, it is acquiring 75km2 of 3D seismic over Jensen, a Zechstein oil prospect, which, as reported in the Admission CPR has a prospective resource estimate of 48m barrels of oil (adjusted to an 80 per cent working interest).

OMG (LON:OMG 32.62p/£23.34m)
The mobile motion capture (mobile mocap) technology group announced preliminary results for the 12 months to 30 September 2012, which saw a 11.7 per cent increase in revenues to £29.5m (2011: £26.4m), improved by the stronger performance by 2d3 and Vicon group, and profit before tax up to £1.8m (2011: £0.7m). Net cash on the balance sheet at the year end stood at £4.3m (FY11: £2.8m). The Company also proposes a 17 per cent increased dividend to 0.35p (FY11: 0.3p). Performance at Vicon has improved significantly, with the launch of the Bonita Video, the world’s first reference video camera designed specifically for motion capture, and the introduction of a lower cost Bonita camera range (Vicon tech was used in the film “Avengers Assemble”, as well as the games “Call of Duty: Black Ops II” and “Assassin’s Creed III”). 2d3 achieved maiden profits having secured two defence software license contracts worth over $1m each. Other important events included a major national survey contract with Highways Agency Traffic Speed Condition Survey (TRACS) in the Yotta division and Launched OMG Life’s first consumer product on time.

Obtala Resources (LON:OBT 18.25p/£45.65m)
Obtala Resources, the natural resource investment and development Company, has announced that it has increased its forest land holdings in Mozambique by 43,000 hectares with the successful application for two additional concessions in northern Mozambique. These concessions are located adjacent to existing operational infrastructure. Recently completed management and inventory plans on the concessions indicate the presence of numerous species of exotic hardwoods, including African Blackwood, Kiaat and Panga-Panga. The plans further indicate that the annual allowable cut, which corresponds to the annual volume of timber that can be exploited to ensure the sustainability of the resource, is 9,432m3 per year, based on a 20 year cycle.

Orosur Mining (LON:OMI  37p/£28.92m)
Orosur Mining announced that its production for the second quarter ended 30 November 2012 was 13,970 ounces and the Company remains on track to achieve its forecast production target of 63,000 to 68,000 ounces for the full year. The Company notes that the development of the Arenal Deeps ramp is on track for completion during the quarter ending 28th February 2013 with 352 meters completed during the second quarter. As at 30 November 2012, 180 metres of development remain to be completed (out of a total of 1,990 metres). Completion of the ramp will enable the Company to access higher grade ore at the Arenal Deeps in the last quarter of the financial year ending 31 May 2013.

Ovoca Gold (LON:OVG 9.5p/£8.3m)
Ovoca Gold, the Dublin and London-listed gold miner focused on Russia, has agreed to sell its subsidiary Olymp Ltd., which holds a mining and exploration license for the Olcha gold-silver deposit, to a subsidiary of Polymetal International PLC (LON:POLY 1,087p/ £4,159.80m) for 775,000 Polymetal shares, worth about £8.4m. Olcha is an epithermal gold-silver deposit that covers 2.5 sq. km on Ovoca’s Rassoshinskaya license in the north eastern part of the Magadan Region about 200 km from the town of Seimchan. Following completion of the proposed disposal, Ovoca will continue to develop its projects – Rassoshinskaya and Stakhanovsky.

Peninsular Gold (LON:PGL 18p/£15.48m)
Peninsular Gold, the gold production and exploration group focused in Malaysia, has announced that its wholly owned subsidiary, Raub Australian Gold Mining Sdn. Bhd. (RAGM) has obtained an Islamic financing facility for up to US$6m from its existing financier Alkhair International Islamic Bank Berhad. The new facility will be utilised to completely refinance RAGM’s existing one year working capital facility with Alkhair Bank which was obtained last year. The repayment of the new facility is over 48 months with a grace period of 24 months from the date of first disbursement.

PhotonStar LED Group (LON:PSL 11.62P / £11.55m)
PhotonStar LED Group, the British designer and manufacturer of smart LED lighting solutions, has signed its first licensing agreement for its next generation chip design patents with a leading LED chip manufacturer. Whilst financial terms have not been disclosed, the deal is expected to start to have an impact on PhotonStar’s revenues in 2014, when the resulting LED chips are to be brought to the market by the manufacturer. An associated design services supply agreement has also been signed. In October, the Company was invited to provide a demonstration of LED lighting with embedded microprocessors as part of a future markets showcase at the ARM TechCon in Santa Clara, California, on 30 October 2012- a significant profile enhancing event, according to the Company.

Scancell Holdings (LON:SCLP 49p/£95.29m)
Scancell Holdings, the developer of therapeutic cancer vaccines, announced preliminary results from Part 1 of the Phase 1/2 clinical trial of its DNA ImmunoBodyÒ vaccine in patients with Stage III/IV malignant melanoma. Of the six patients allocated to the 2mg and 4mg dose cohorts and who received at least four doses of SCIB1, four have shown a vaccine-induced T cell response to treatment. Although the study was not designed primarily to measure tumour response, one patient in the 4mg dose cohort with multiple tumour lesions at study entry had a differential response to treatment including partial or complete regression of all lung metastases. A further two patients who had all their tumours surgically removed prior to SCIB1 treatment have remained disease-free more than a year after first dosing. The vaccine produced very few side effects, none of which were serious. These encouraging results provide the first evidence that Scancell’s ImmunoBodyÒ vaccine approach is producing an immune response in cancer patients which may also be associated with clinical benefit. In view of the positive results and minimal side effects seen with the 4mg dose the Company intends to evaluate an 8mg dose in parallel with Part 2 of the Phase1/2 study.

Software Radio Technology (LON:SRT 18.62p/£21.56m)
SRT announced a $280,000 order for its recently launched AtoN product, which is for the OEM version of the product and is expected to be delivered within the current financial year. AtoN’s are being used to enhance electronic navigation with their deployment expected to grow substantially in the future. This particular order will see the products being deployed on buoys operating in an existing network located in the Middle East. In November, the Company announced interim results which saw revenue and profit after tax of £3.47m (2011: £4.66m) and £0.15m (£1.22m) respectively.

Symphony Environmental Technologies (LON:SYM  4.12p/£5.28m)
Symphony, the specialist in advanced plastics technologies, announced a trading update for the financial year ending 31 December 2012. Revenues for the second half of the financial year have reflected the Company’s normal weighting towards the latter six months of the reporting period and will be significantly higher that the first half (H1: £2.12m). However, revenues for the financial year will be substantially lower than the previous year (2011: £8.5m) and market expectations. A trading loss of approximately £1.1m for the financial year is expected to be reported (2011: £0.5m). The principal reason for the fall in revenue is a decline of approximately 30 percent in d2w(R) additive sales. The Group is also in advanced negotiations with a global pharmaceutical company, which may lead to the granting of substantial distribution rights to the Group for what is believed to be a unique plastic master batch. This technology is expected to be complementary to Symphony’s existing d2p technologies. The Company will update the market as appropriate.

Trading Emissions (LON:TRE  26.75p/£66.82m)
Trading Emissions announced that, in line with its current investment policy, the Company has disposed of its holding in Chapel Street Environmental LP for USD4m, equivalent to approximately £2.5m. This compares with a carrying book value in the last audited financial statements at 30 June 2012 of £2.3m and brings the aggregate proceeds received from Chapel Street Environmental LP during 2012 to approximately £3.7m.

TyraTech (LON:TYR  5.88p/£5.64m)
TyraTech, the natural life sciences company, announced that the Company has received notification from the U.K. regulatory body, the Medicines and Healthcare products Regulatory Agency (MHRA), that the Company’s head lice product VaMOUSSE!TM has been registered with the MHRA as a Class I medical device. As a Class I medical device, VaMOUSSE!TM will be subject to the lowest level of regulatory oversight. David Paton, TyraTech’s Head of European Operations, said, ” We are actively seeking retail partners to distribute our product under their own store brands or through other channels under our brand. We expect the product to be launched in the first half of 2013.”

Zytronic (LON:ZYT 342.5p/£51.04m)
AIM listed specialist manufacturer of internationally award-winning touch sensor products announced preliminary results for the year to 30 September 2012, which saw revenues at similar levels to the previous period at £20.4m (£20.5m), though an 18 per cent increase in profit before tax to £4.2m came through (2011: £3.6m) on the back of a continued rise in gross profit margins from 33.7 per cent to 36.3 per cent. Cash on the balance sheet increased by £0.5m to £2.3m, whilst a dividend was announced taking total dividends for the year up by 10 per cent to 8.5p (2011: 7.7p). PCT touch products (projected capacitive technology) continue to be the focus of sales for the Company, now representing 71 per cent of revenues, with the UK, USA and Asia showing good progress as territories for sales, whilst Europe saw an 8 per cent decline. MPCT (mutual projected capacitive technology) products developed by the Company were showcased at the Society for Information Displays conference in Boston in June, and at the Electronica exhibition in Munich in November 2012, and represent the next step forwards for the Company in terms of opportunities for growth. Strategic management of the Company’s non-core activities also continues, with for example the ceasing of ballistic visor production expected at the end of December.

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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.

5 December 2012

This week: High-grades for AFCR and NYO, HCM nestles into a JV, PFP clears more hurdles

Last week, the main indices held on to their recent gains, with the AIM All Share largely unchanged at 692 and FTSE 100 finishing up 37 points to 5,866. Positive sentiment was maintained by German Bundestag’s approval of the latest Greek bailout by a large majority, a strong jump in US pending home sales and an 18-month high for UK GfK consumer confidence in November. While the economic calendar this week is busy including the release of the US ISM Manufacturing index and the BoE interest rate decision, newsflow relating to the US “fiscal cliff” as we approach the critical year-end deadline may be the main drivers of markets this week.

If you would like to unsubscribe, please email enquiries@hybridan.com with “unsubscribe me”.
Disclaimer- This document, which does not constitute research, has been issued by Hybridan LLP for information purposes only- please refer to the disclaimer in full below.

AFCR Preliminary Economic Assessment, ALU Acquisition, AMA Yaoure Gold Project, AKT tax credit for R&D in France, AVG Rolls-Royce Contract, BAO Ruoni Flats resource update, CEN unaudited interims, CGNR financial results, DTE final results, HCM Nestlé Health Science JV, IDEA  Trading Update, INS Contract Win, MSG new agreement, MIRL Definitive Feasibility Study, NYO Tulu Kapi drilling results, PFP Court Success, PPT iPay® Gateway on Magento®, RENE interim results, RLD Graphite Production Restart, SGZ Fundraise, SRES Discovery at Cue diamond, THR Dundas and Spring Hill project updates

African Consolidated Resources (LON:AFCR 3.25p/ £19.27m)
AFCR Preliminary Economic Assessment
African Consolidated Resources, the resource and development Company focused on Southern Africa, has provided further information following its announcement on the 14 November 2012.  The Company has completed a Preliminary Economic Assessment (PEA) on what was referred to as Pit 2 of the Pickstone Gold project in the earlier announcement. The Company employed a Johannesburg based mining consultancy, PDNA Minxcon, to undertake this study, which focused solely on an open-pit operation on the Pickstone sheer zone and has considered neither the Pickstone underground nor the Peerless sheer zone open-pit and/or underground potential. The PEA confirms early indications of a high grade open pit able to produce at a rate of 50,000 tpm and a mined grade of 4.6 g/t by applying a mining cut-off of 2 g/t derived from a resource grade of 5.1 g/t. At this cut-off grade the open pit will produce an estimated 720,000 gold ounces over a life of mine of ten years. Applying a 1 g/t cut-off at the same production rate, the open pit will yield 850,000 gold ounces for a life of mine of 16 years.

Alumasc Group (LON:ALU  84p / £30.35m)
ALU Acquisition
Alumasc, the premium building and engineering products Company announced the acquisition of Rainclear Systems Limited for a purchase consideration of £770,000 on a cash and debt free basis. Rainclear is an internet based business offering metal rainwater products to the building industry and has a reputation for exceptional service and product availability. The acquisition of Rainclear will complement the group’s existing product range whilst broadening routes to market, particularly via independent merchants and the high growth internet sector. Rainclear will continue to trade independently within Alumasc, and the existing management team, including its former owners, will remain in place to continue to drive the expansion of the business. Rainclear’s profit before tax was £208,000 in its last financial year to 30 April 2012 and it had gross assets of £712,000 at that date.

Amara Mining (LON:AMA 65.5p/ £110.07m)
AMA Yaoure Gold Project
Amara Mining, the West African focused gold mining Company, has announced further significant sulphide drilling results from its Yaoure Project in the Cote d’Ivoire. Drill results to date continue to confirm the potential for a large, moderate-grade sulphide deposit underlying the previously mined oxide resources at Yaoure. All of the 90 holes reported to date have encountered mineralisation, and inferred mineral resource update is targeted for Q1 2013.

Ark Therapeutics Group (LON:AKT  3.335p /£6.98m)
AKT tax credit for R&D in France
Ark Therapeutics announced that the French Government Ministry for Higher Education and Research has granted it qualification for tax credit in France for Research and Development activities. The approval, which is valid through years 2012, 2013 and 2014, allows companies paying tax in France to claim tax credit against amounts paid to Ark for research and development services. Ark’s capability is centered on its expertise and facilities for GMP manufacturing and development of viral-based medicinal products, including gene therapies, oncolytic viruses and viral-based vaccines.

Avingtrans (LON:AVG  103p / £26.81m)
AVG Rolls-Royce Contract
Avingtrans, a manufacturer of critical components and associated services to the global aerospace, energy and medical sectors announced that Sigma Precision Components UK Ltd, part of Avingtrans’s Aerospace Division, has signed a long term agreement with Rolls-Royce plc. The contract is to supply rigid pipe assemblies and precision components and is valued at £80m over its duration of 10 years. Following the disposal of Jena Tec for £13.45m, and the subsequent acquisitions of Aerotech Tubes and aerospace assets from PFW, the Board continues to seek value enhancing acquisitions to build on the Group’s position in the Aerospace and Energy & Medical markets.

Baobab Resources (LON:BAO 12.125p / £32.09m)
BAO Ruoni Flats resource update
Baobab Resources, the iron ore, base and precious metals explorer with a portfolio of exploration projects in Mozambique, has reported the results of the resource estimation at the Ruoni Flats block of the Tenge/Ruoni prospect, one of six resource blocks in at its 85 per cent owned Tete Pig Iron, vanadium and titanium Project (the International Finance Corporation holds the remaining 15 per cent of the participatory interest). Tete global resource base has expanded to 665 million tonnes (JORC), over 490 million tonnes of which is defined at Tenge/Ruoni, firmly establishing the prospect area as a standalone asset. The Tete Pig Iron Pre-Feasibility Study is on schedule for completion this year, with results expected to be announced in early February 2013.

Centurion Resources (LON:CEN  1.05p / £2.41m)
CEN unaudited interims
The recently listed AIM resource exploration and development Company announced its unaudited interim results for the six month period ended 31 August 2012. It has acquired the 33 sq km Mitterberg Copper Licences in the Mitterberg district of Salzburg, Austria, with an exploration target of 11.0Mt-11.7Mt with a grade range of 1.0 per cent-1.15 per cent copper. It has defined the development programme to further delineate mineralisation – believed to continue to the east & below thereby expanding the existing target. It has continued the evaluation of synergistic resource assets. In tandem with the listing, Centurion successfully raised £1m before expenses by way of a placing which provides a solid cash position to enable work to be got underway.

Conroy (LON:CGNR 1.25p / £3.38m)*
CGNR financial results
The Irish based resource Company exploring and developing gold and other projects in Ireland announced its results for the year ended 31 May 2012.  Conroy now has the entire 30 mile gold trend, which it has discovered in the Longford-Down Massif in Ireland, under licence. A series of significant gold targets have been discovered along the trend. During the period, it updated the Clontibret resource evaluation – 600,000 oz indicated and inferred. The economic evaluation based on 20 per cent. of Clontibret has a payback period of two years. Conroy has made an agreement with Gold Fields Limited to undertake mineralogical characterisation and prefeasibility metallurgical test work. The proposed process BIOX® is a well-established bacterial oxidation process. In-house studies, though conceptual in nature, suggest that the total gold potential in the Longford-Down Massif could lie in the 15m – 20m ounce range.  Chairman, Professor Richard Conroy commented: “We continue working on the pre-feasibility study at Clontibret where we have an economic mine project whilst also continuing to assess additional targets along the 30 mile gold trend discovered by and which Conroy now has under licence. We have continued the infill drilling at Clontibret to further expand the identified resource whilst also continuing the drill programme at the targets which are potentially significantly larger. We have established that a gold mine is viable and we are now working towards bringing it into production.”

DATONG (LON:DTE  29.5p / £4.08m)
DTE final results
A leading provider of covert intelligence gathering solutions announced its final results for the year ended 30 September 2012. Revenue of £9.69m (2011: £11.75m) was reported, reflecting the economic climate in Europe and delays relating to the election in the US. The Company made an operating loss before exceptional items of £0.03m (2011: profit of £0.05m) and an earnings per share of 2.93p (2011: 1.03p). The Company had net cash of £2.48m (2011: £1.27m) and no debt on the balance sheet. Significant orders have been received for new products from major markets giving a pipeline of £1.03m. A strategic review is underway aimed at improving the predictability and sustainability of future growth. Operational improvements and cost reductions are now seen to be delivering tangible benefits. A major new project opportunity is expected to support strong revenue growth in 2013.

Hutchison China MediTech Limited (LON:HCM  445p / £231.62m)HCM Nestlé Health Science JV
Nestlé Health Science SA, a fully-owned subsidiary of Nestlé SA, and Chi-Med, announced that they have agreed to form a 50/50 joint venture to be named Nutrition Science Partners Limited (NSP). The purpose of NSP is to research, develop, manufacture and market worldwide novel medicines and nutritional products derived from botanical plant origins. NSP will focus on gastrointestinal indications, and may in the future expand into the metabolic disease and brain health areas.  Nestlé Health Science will make an initial capital investment in return for its 50 per cent shareholding in NSP; while Chi-Med will provide exclusive rights to its extensive botanical library and well-established botanical R&D platform, in the field of gastrointestinal disease.  Such botanical library contains over 1,500 purified natural products and over 50,000 extracts/fractions derived from more than 1,200 different medicinal plants. NSP will also progress HMPL-004, a novel, oral therapy for Inflammatory Bowel Disease (IBD) developed by Hutchison MediPharma Limited and derived from a botanical extract, through Phase III registration trials for ulcerative colitis and Crohn’s disease.  The Phase III program for HMPL-004 is scheduled to start in early 2013.

Ideagen (LON:IDEA  18.875p / £14.7m)
IDEA  Trading Update
Ideagen, a leading supplier of compliance based information management software announced a trading update for the six months ending 31 October 2012. The Company has continued to trade comfortably in line with management expectations. Strong operating cash flow during the period has resulted in net cash of £1.2m after the payment of costs associated with the Company’s Admission to AIM and deferred consideration on acquisitions of approximately £0.6m in aggregate. Since the period end, the United States Department of Veterans Affairs (VA) has fully executed year two of its contracts with Ideagen. The value of this VA contract is US$1.65m (approximately £1m), of which circa 70 per cent. is expected to be recognised in the current financial year.

Instem (LON:INS  90.5p / £10.65m)
INS Contract Win
Instem, a leading provider of IT solutions to the global early development healthcare market, announced that it has signed a contract with one of the world’s largest biopharmaceutical organisations. The customer has purchased multiple modules of the Centrus software suite supporting the Standard for Exchange of Nonclinical Data (SEND). This six-figure US Dollar order is the most comprehensive suite of Centrus modules purchased to date. Instem’s software will be used to reduce time and effort by translating study data to controlled terminology and automatically checking against SEND guidelines to ensure compliance. The SEND standard, named by the US Food & Drug Administration (FDA) as the preferred standard for electronic study submissions, is expected to revolutionise the process for both pharmaceutical companies and regulators. Currently, FDA reviewers receive paper or electronic paper submissions, which require time-consuming manual data input. The SEND format enables electronic submissions of nonclinical data, thereby improving efficiency as well as data quality, accessibility and predictability. This order is one of a number of contracts currently under negotiation which have a possibility of closure before the year end. Some of these are required to meet revenue and profit expectations for the year. Instem expects to update on trading prior to closing the financial year ending 31 December 2012.

Milestone (LON:MSG  0.8p / £3.14m)*
MSG new agreement
AIM quoted  provider  of digital media and technology solutions announced  that  it  has  entered  into a Definitive Agreement with Spirituality for Kids International Inc (SFK), which will allow Milestone to deliver educational materials to schools that meet the Government’s expectations  and  Ofsted  requirements  with  respect to teaching of Spiritual, Moral, Social and Cultural Education (SMSC). SFK is a non-profit organisation founded in Los Angeles, California, whose programmes provide parents and children with online classes to foster spiritual awareness and dialogue.  Milestone has been working with Prospects Improve, a leading education, employment and training company, to modify these materials into a format that meet the standards for SMSC within the UK Curriculum. Prospects Improve is one of the country’s leading school and academy improvement service providers and is a part of the Prospects Group. The revised materials are now being trialled in 50 UK primary schools across the UK and will form the feedback forum to enable the materials to be finalised before a full commercial release which is expected to take place in the summer of 2013.

Minera IRL (LON:MIRL  53.75p / £81.65m)
MIRL Definitive Feasibility Study
Minera, the Latin American gold mining Company, announced the results of a Definitive Feasibility Study (DFS) on its Ollachea Project in Peru. The Project is 100 per cent owned by Minera’s subsidiary Minera Kuri Kullu SA. The DFS was carried out by AMEC in conjunction with Coffey Mining, who contributed the resource estimation and underground mining aspects of the study. Using a gold price of US$1,300 per ounce, it has an NPV @ 7 per cent real of US$264m (pre-tax) and US$155m (post tax); and an IRR of 29.2 per cent (pre tax) and 22.1 per cent (post tax). Up-front capital costs are estimated at US$177.5m and life-of-mine cash operating cost of US$499 per ounce.

Nyota Minerals (LON:NYO 4.515p / £29.84m)
NYO Tulu Kapi drilling results
Nyota Minerals, the East African focused gold exploration and development Company, has reported high grade drilling results from its flagship Tulu Kapi Gold Project in Ethiopia, which underpin the Company’s belief that the ore body has further significant resource potential beyond the current drilled ounces. High grade intersections of new Feeder Zone area include 26m at 5.24 g/t Au, 14m at 8.35 g/t Au, 11m at 8.30 g/t Au and 4.5m at 13.6 g/t Au. Mineralisation is now sufficiently well-defined to warrant further continued step-out drilling in a NNE direction. A Prefeasibility Study is expected to commence in Q1 2013 to assess the viability of underground mining of the high-grade Feeder Zone.

Pathfinder Minerals (LON:PFP  1.625p / £16.85m)
PFP Court Success
The Mozambique court has revoked an interdict previously obtained by General Veloso, JV Consultores Internacionais Limitada and Diogo Cavaco (The Defendants) against the Company’s wholly owned subsidiary IM Minerals Limited (IMM). The Defendants had sought to prohibit IMM from taking action in the English courts. The Company reported that not only does the Maputo Judgment make it clear that the current English proceedings were never covered by the interdict, but the interdict itself has now been completely dismissed.   Pathfinder, and IMM, had previously obtained judgment from the English High Court against the Defendants to the effect that, IMM validly acquired 99.99 per cent of the issued shares of Companhia Mineira de Naburi (CMDN). The Company notes that there are further hearings in Mozambique on 6 December 2012 at which the position relating to the ownership and control of CMDN will be considered.

Planet Payment (LON:PPT 182.5p/£90m)
PPT iPay® Gateway on Magento®
Planet Payment, the international and multi-currency payment processor, has announced that its iPay Payment Gateway will now be available on Magento, an Open Source eCommerce platform. Merchants on Magento will now be able to connect to the iPay Gateway and its multi-currency payment solution, Shop in Your Currency™. This solution allows merchants to target international markets by enabling international customers to view pricing and pay in their home currencies, while merchants still get paid in their own.

ReNeuron Group (LON:RENE 2.15p / £16.66m)
RENE interim results
A leading UK-based stem cell Company announced its interim results for the six months ended 30 September 2012. Amongst the highlights, with respect to ReN001 stem cell therapy for stroke, nine patients were treated in the PISCES Phase I clinical trial, with the three remaining patients on track to be dosed by March 2013. A Phase II clinical trial application was filed in the UK; the study is expected to commence in mid-2013. Concerning ReN009 stem cell therapy for critical limb ischaemia, a pre-clinical development programme has been completed. Phase I clinical trial applications have been filed in the UK and Germany; the study is expected to commence in mid-2013. ReN003 stem cell therapy for retinitis pigmentosa has seen further pre-clinical efficacy data generated and the late pre-clinical development programme is underway. Phase I/II clinical trial applications are planned for the end of 2013 in the US and UK. A share placing and Open Offer was completed in May 2012, raising £6.1m, providing funding for core therapeutic programmes to Q4 2013. The loss for the period was reduced to £2.9m (2011: £3.0m); cash outflow from operating activities was reduced to £2.9m (2011: £3.2m); and cash and cash equivalents at 30 September 2012 was £6.7m (2011: £6.5m). Commenting on the results, Bryan Morton, Chairman, said: “During the period under review, our therapeutic programmes have continued to progress to plan. We have well-defined and costed development plans for each of these programmes and we see a clear route to value inflection through commercial deals over the next two to three years if the potential of these therapies can be further demonstrated in the clinic.” Separately the Company announced that it will be participating at the UK Stroke Association’s 7th UK Stroke Forum conference taking place in Harrogate on 4-6 December.

Richland Resources (LON:RLD  5.375p / £6.35m)
RLD Graphite Production Restart
Richland Resources, the gemstone producer and developer, has commenced a feasibility study to evaluate restarting production at the Merelani Graphite Mine located within the company’s existing Block C licence area, where the Company has mined tanzanite since 2004. The Merelani Graphite Mine was in production until closure of the operations in 1998, when flake graphite prices were between US$480 to US$550 per tonne. Despite the recent softening of graphite prices, flake graphite currently fetches over US$2,500 per tonne. Having re-established profitable production at its tanzanite mining operations the Company is looking at the graphite mine as a low cost source of revenue and positive cash flows.

Scotgold Resources (LON:SGZ 3.375p/£6.62m)
SGZ Fundraise
Scotgold Resources has conditionally raised approximately £475,000 through a placing and direct subscriptions with the Company of, in aggregate, 15.3m new shares at a price of 3.1 pence per share. As part of the fund raise, the subscribers and placees have been issued with one warrant for each new share. These warrants are exercisable into ordinary shares in the Company on a one-for-one basis at a price of 4.5p per ordinary share at any time within 18 months from the date of Admission. The Company will use the equity and debt finance to develop its Cononish project and specifically to finish the detailed designs of the tailings plant and to finalise the development study currently being carried out by Australian Mining Consultants UK Ltd. Once the study is complete, the Company will be in a position to determine the optimum funding structure for construction of the Cononish mine.

Sunrise Resources (LON:SRES 0.95p/£3.47m)
SRES Discovery at Cue diamond
Sunrise Resources, the diversified mineral exploration and development specialist, has announced the discovery of two new surface occurrences of kimberlite on its Cue diamond Project in Western Australia. A large area of kimberlite float was discovered at Target 5 within a parallel trend to Cue 1 kimberlite. Kimberlite float was also found outside of licence area at Target 8 and a new licence application has been made to cover this target.

Thor Mining (LON:THR 0.625p/£5.65m)
THR Dundas and Spring Hill project updates
Thor Mining, which holds a 60 per cent equity in the Dundas project in Western Australia along with rights to increase that equity to 100 per cent, has reported encouraging preliminary results showing nickel and copper indicators. The results are from further analysis of surface geochemical sampling on just a small portion of the tenement holding and indicate three areas of elevated nickel, one area of elevated copper and one area of coincident copper and nickel. The Company has also reported progress on the staged acquisition of the Spring Hill gold project south of Darwin in Australia’s Northern Territory. Thor has received a signed instrument of transfer for a further 26 per cent interest in the Spring Hill gold project, for lodgement with the Northern Territory Department of Resources for approval, from Western Desert Resources, its co-venturer in the project. Subject to the receipt of ministerial approval to the transfer, Thor’s total interest in the Springhill gold project will increase to 51 per cent.

*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.