26 July 2011
This week: Something new for Imperial, Bright news for Sirius, Summit ready to climb
Small Cap Wrap will be on holiday for the 23rd and the 30th of August. Back on 6th September after the holidays, but see you next week.
Gold Prices and Gold Miners
As the budget cuts stalemate in the United States takes over from the Greek default crisis as the focus of investor attention around the world, the risk appetite continues to weaken. The main beneficiary of this is gold which reached a new record of $1,622.5 per ounce before falling back to $1,614 per ounce. If these issues are resolved, gold prices may reduce slightly, but this is by no means certain and buying, particularly in China and India, is expected to remain strong. Yet while the dollar price of gold bottomed in 1999 and has taken off strongly since 2005, prices of gold mining shares have tended to lag behind that of the yellow metal as “company specific” issue de-link the prices. However the long prices remain at historic highs with little risk of downward movement, the more likely those gold producers will produce increased earnings and gold explorers will benefit from improved discounted cash flow valuations of their projects. We watch companies like Avocet Mining (AVM 230p/£458.96m) in West Africa, Centamin Egypt (CEY 136.4p/£1,489.30m) in Egypt, and Pan African Resources (PAF 13.25p/£191.34m) in South African and Mozambique, with interest.
Angel Biotechnology Holdings (ABH 0.3p/£8.07m)*
Angel yesterday announced the appointment of expert engineering company WH Partnership Ltd. (WHP) of Newcastle-upon-Tyne as a key milestone in the ongoing re-commissioning of its GMP bio-manufacturing facility in Cramlington near Newcastle-upon-Tyne. The facility will increase Angel’s manufacturing capacity approximately five-fold when fully re-commissioned. Under the contract WHP, who is an acknowledged expert in the field, will supply the specialist engineering support and services required for the next phase of the facility re-commissioning, taking it to GMP status. The Board expects the facility to be operational in early 2012.
Angel Mining (ANGM 2.08p/£15.64m)
Angel Mining has observed good progress with the construction of the cable car upper terminal at the Black Angel Zinc/Lead Mine. As the Company’s primary asset, the mine consists of a JORC resource of 4.425 million tonnes of high grade zinc lead ore. The Black Angel Mine has one of the highest quality ore bodies around as it contains very low levels of impurities. The Company is a now a producing mining firm, and as Angel Mining increases gold production there is a potential to decrease future capital requirements.
Arian Silver Corporation (AGQ 39p/£117.46m
Arian Silver, a silver exploration, development and production company with interests in Mexico, announced an 86 per cent increase in resource tonnage along the San Jose Vein from the August 2008 mineral resource estimate. With 34 per cent of the resource currently in the indicated category, there remains several intercepts of high grade silver and base metal mineralization within the existing SJV resource area, all of which remain to be completely quantified. Nearly 5 kilometres of SJV strikes remained to be drilled, and the Company has begun a Phase-4 drill programme to continue evaluating the various untested mineral systems. Commenting on the operations update, CEO Jim Williams said: “Today’s updated mineral resource confirms the potential for large scale silver mining at San Jose.”
Discovery Metals (DME 89.5p / £391.22m)
Discovery Metals, an ASX/AIM/BSE listed copper exploration and development company focused on the emerging Kalahari copper belt in northwest Botswana, has reported encouraging drilling results which confirm copper-silver mineralisation in the Mid-Kalahari Zone. DME is progressing its strategy of building a resource base in the Mid-Kalahari Zone in order to develop a new, stand-alone mining operation. The assay results from drilling at the Ophion Prospect in the Zone confirm the presence of copper-silver mineralisation over long strike lengths. The results (for 26 holes) show that 22 holes intersected copper-silver mineralisation at depths of between 45 and 150 metres below surface along a strike length of approximately 28km. Included among the results is one intercept showing 3m @ 2.1 per cent Cu and 20g/t Ag, one of 1m showing 2.6 per cent Cu and 20g/t Ag and another 1m intercept showing 2.2 per cent Cu and 29g/t Ag.
e-Therapeutics (ETX 36.5p/£50.42m)
e-Therapeutics, the drug discovery and development company, this week announced its preliminary results for the year ended 31 January 2011, together with an update on its progress and future plans. The Company has a pioneering position in a novel approach to drug discovery known as network pharmacology, which can be used to anticipate the effectiveness of a drug against a diseased cell or pathogen and to see whether it can have unacceptable side effects in healthy tissues. The clinical effort is now focused on four commercially attractive candidates spanning cancer, infections and psychiatry and is well funded following an equity placing to raise £16.6m (net of expenses) in March 2011. The Chairman concluded that: “with numerous trials set to report over the next two years and the prospect of new outputs from our discovery platform, we believe we are well placed to generate substantial value both in the near term and beyond”.
Hutchinson China MediTech Limited (HCM 445p / £230.26m
Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited, one of the three companies which comprise the China Healthcare Division of Chi-Med, will invest approximatelyUS$3.2m for a 60 per cent equity interest in a Good Supply Practice (GSP) drug distribution company, Nanyang Baiyunshan Hutchison Whampoa Guanbao Pharmaceutical Company Limited (NBHG). Until now the national over-the-counter drug commercial team of HBYS has been limited by its business license to only selling products manufactured by HBYS. The establishment of NBHG changes this and enables the HBYS commercial team to also sell third party products in all provinces in China. Christian Hogg, Chi-Med CEO said: “This strategic investment widens the scope of our existing OTC drug business and immediately lets us start leveraging our commercial strength to help build complimentary third party OTC products. In broadening the portfolio of products that it sellsthrough NBHG, HBYS will gain major scale synergies and improved efficiency in commercial operations.”
i-design Group (IDG 57.5p/£8.11m)
i-design, the developer and supplier of leading customer engagement software and advertising services for banks and ATM customers, last week issued a positive trading update. The positive revenue trend reported in the interim results to 31 March 2011 (released on 23 June) has continued into the second half of the financial year. This upward momentum is anticipated to be maintained such that the Board expects that the reduction in the company’s loss before tax for the year ending 30 September 2011 will be significantly ahead of market expectations.
Instem Life Sciences Systems (INS 227.5p/£26.65m)
A leading provider of software applications to the global early development healthcare market, announced that Battelle has purchased its Provantis® and submit™ preclinical software solutions to automate processes within its preclinical facilities. Battelle is the world’s largest independent research and development organisation. Provantis is a modern, fully integrated software system for single users and global organisations engaged in preclinical evaluation studies. Part of the Centrus solution suite, Instem’s submit™ software supports the US FDA sponsored Standard for Exchange of Nonclinical Data (SEND) initiative. Submit is the only fully integrated solution in production today for companies using SEND for the exchange, review and submission of research data. Phil Reason, CEO of Instem, commented, “We are delighted to have secured this contract with Battelle, the world’s largest independent research and development organisation. This is a strong competitive win for Provantis and an excellent early win for our newly launched Centrus suite. We continue to win the majority of new business placed in the early development healthcare market and look to the future with confidence.”
Imperial Innovations Group (IVO 352.5p/£351.27m)
The UK’s leading technology commercialisation and investment company has made a £4m investment in Stanmore Implants, a specialist in the design and manufacture of patient specific implants for complex orthopaedic reconstructions. The proceeds will be used to expand Stanmore’s US and UK sales forces for its current products including the Juvenile Tumour System, a non-invasive extendable implant, and to support Stanmore’s development of its innovative and differentiated new technologies; the Savile Row System, the world’s first fully personalised early knee replacement surgery system, and ITAP, a novel approach enabling the direct attachment of an exoprosthesis to the skeleton of amputees. Susan Searle, Imperial Innovations’ CEO, said: “This is an ideal opportunity for us to invest in a more developed business where we know and understand the value creation opportunities, particularly as some of the original IP emanated from two of the four universities on which we are focused. We have worked closely with the Stanmore management team for some time and with our extensive knowledge of their business we are well positioned to support them as they enter the next stage of their development.”
Leni Gas & Oil (LGO 2.6p/£23.90m)
Leni Gas, an international oil and gas explorer has signed an agreement to farm-in to the Advance Oil Company (Trinidad) Limited (Advance) North Moruga area leases and plans to work-over existing, producing wells and drill up to nine new wells on the leases.
The Heads of Agreement (HoA) with Advance sets out the framework for a full farm-in agreement and joint operating agreement by which LGO will: take over operatorship of the Advance leases; reactivate production from the existing wells on the leases; drill a minimum of three exploration and up to six development wells; obtain an immediate 33 per cent interest in net production revenues; on conclusion of the farm-in work programme and depending on the number of wells drilled, earn between 33 and 49 per cent interest on the Advance leases. A signature bonus of $39,000 has been paid to Advance and gives LGO exclusivity to conclude the definitive agreements and assignment of interests envisaged under the HoA. Advance has held the North Moruga leases for a number of years and has already drilled three exploration wells. They have also acquired the environmental baseline data necessary to facilitate the permitting of further new wells. The leases lie less than 5km east of the West Moruga Field, which has produced 25 million barrels of oil and 3.5km west of the Innis, Antilles and Trinity Fields, which have produced around 15 million barrels of oil.
Max Petroleum (MXP 15.5p/£143.08m)
Max Petroleum announced last week that ZMA-ET1 well has been connected to temporary production facilities for long-term production testing and is currently producing at a stable rate of 650 bopd. The production is from perforations in the T4 Triassic reservoir, at depths of between 1,282 and 1,288 metres. The current production rate has been restricted to 650 bopd while the Company monitors the level of gas production from the well. The Company has also perforated the ZMA-ET2 appraisal well, successfully flowing 48 degree API oil at an equivalent rate of 450 bopd from perforations in the T5 Triassic reservoir from depths of between 1,315 and 1,321 metres during a limited flow-back period. The well will be connected to temporary production facilities and brought onto long-term production testing in August 2011. The Company expects the well to produce at a stabilised rate of 500 bopd.
Metals Exploration (MTL 17.5p / £94.55m)
A natural resources exploration and development company, Metals Exploration, said that the extension of the Runruno gold mineralisation south of the proposed pit is confirmed by additional step out drilling. The potential of the Magnetite Creek area for porphyry copper-style mineralisation is confirmed by drilling mapping and sampling. Drilling also confirmed the potential for the Bocboc area for Runruno-style gold mineralisation. In addition, molybdenum recovery test work continues to be positive using synthetic solutions and this test work is to be continued. The planning for early works at Runruno is going well. The Company anticipates the issue of the Declaration of Mining Feasibility during Q3.
Proximagen (PRX 116p/£66.56m)
Proximagen, which focuses on the treatment of disorders of the central nervous system, this week, announced its interim results for the six months ended 31 May 2011. The financial year started positively with the acquisition of two neurology drug development programmes from GlaxoSmithKline bringing the company’ pipeline up to 14 programmes. Of the four clinical stage programmes in the pipeline, two advanced significantly during the period; in particular, Naluzotan, a candidate treatment for temporal lobe epilepsy began its phase II clinical trials in partnership with the US National Institutes of Health. The Company is also benefiting from a lower than expected cash burn as its partners on the two clinical programmes shoulder the clinical development costs and the balance sheet remains strong with a cash balance of £44.7m.
Sirius Minerals (SXX 7.91p/£81.68m)
The Company, a globally diversified potash development group, has announced the approval by the North York Moors National Park Authority of two additional planning applications for drill sites for the York Potash Project. Following the successful early completion of the preparation work at its first drill site near Hawsker in North Yorkshire and procurement of critical components, Sirius expects the first drill rig to be on site this week. We expect an update to announce that drilling has commenced. At that time, the Company will also provide an expected schedule for completion of the first hole. Site preparation has also commenced at the second drill site near Ugglebarnby, North Yorks.
Summit Corporation (SUMM 8.12p/£13.67m)*
AIM listed drug discovery company announced yesterday that it has raised £1.35m through a placing at 8.0 pence per share, a discount of 9.9 per cent to the closing mid-market price of 8.875 pence on 22 July 2011. The offering was oversubscribed and the shares were placed with existing and new institutional investors. Summit continues to progress confidential discussions with leading international pharmaceutical and biotechnology companies for its key programme assets and Seglin technology platform. The raising of these additional funds will strengthen the position of the Company during these discussions as Summit seeks to conclude deals and evaluate and further develop new opportunities that generate optimal value for shareholders.
Sunkar Resources (SKR 18.25p/£30.09m)
Sunkar Resources recently conducted pilot plant re-confirmation tests and acid post treatment tests, all of which produced results the Company was expecting. The Board is confident that its phosphoric acid technology is valid for phosphate rock collected from various areas of the large deposit.
Synchronica (SYNC 16.75p/£16.43m)
Synchronica, the international provider of next-generation mobile messaging solutions, has received an expansion order from an existing mobile operator customer based in the Middle East. This is the third order of this magnitude for the Company from this region in just seven months. This order for additional Mobile Gateway user licenses, with value of $740,000 comes after an initial $1.5m order received in December 2010. Mobile Gateway allows the operator to offer mass-market messaging services including push email and instant messaging. According to CEO Carsten Brinkschulte, this market leading product for mobile messaging in emerging markets provides subscribers access to various Internet communities, regardless of mobile phone type.
Victoria Oil and Gas (VOG 4.27p/£91.33m)
Victoria Oil & Gas has increased its working interest in the Logbaba gas and gas condensate field in Douala, Cameroon to 95 per cent after the serving of a Notice of Forfeiture on 18 July 2011 on RSM Production Corporation (which previously held 38 per cent interest in the Logbaba Concession). RSM failed to deliver on a cash call made on 15th July 2011, and a default notice was served 2nd July 2011. With several legal agreements between VOG’s 100 per cent subsidiary Rodeo Developments Limited and RSM, RSM’s failure to rectify the default resulted in a Forfeiture notice as per the operational agreements between RDL and RSM. RSM is required to withdraw from the Agreement and transfer RSM’s former interest to RDL. Societe National des Hydrocarbures, has indicated that it intends to take a 5 per cent participation in the Logbaba Concession.
Tertiary Minerals (TYM 8p/£9.51m)
The diversified mineral explorer announced that drilling of ten holes at the Storuman Fluorspar Project was due to commence and also added that the Metallurgical test work programme at Lassedalen project in Norway has been awarded to Wardell Armstrong.
The Storuman drill project will test immediate extensions to the recently announced Mineral Resource and more speculative distal (outer) extensions to fluorspar mineralisation. The secondary objective of the drilling is to sterilise potential plant and tailings sites. The programme awarded to Wardell Armstrong aims to produce acid grade fluorspar from drill samples and provide data for preliminary economic evaluation. This test work is expected to take six months to complete.
Tristel (TSTL 46p/£18.39m)
Manufacturer of infection control, contamination control and hygiene products yesterday gave a trading update ahead of the publication of its preliminary results for the year to 30 June 2011. Since the Licence Delays and Trading Update announcement of 28 April 2011, Tristel has now secured the licence to sell the Stella decontamination system in China and the VAH listing for the Wipes System in Germany. In the final quarter of the financial year, ended 30 June 2011, sales in Germany have increased significantly each month in percentage terms and sales of the Crystel products, sold into the pharmaceutical and personal care market, have commenced. In June 2011, 30 Stella System upgrades were also sold to its Chinese distributor network. The Board is pleased to report that it now anticipates pre-tax profit (before share based payments) will be greater than £500,000, exceeding its expectations at the time of the April announcement. The Company continues to pursue its expansion plan and remains debt free.
Tristel also announced separately and today that it has been granted a patent from the Chinese Patent Office for its Tristel Wipes: Traceability System. Tristel’s Wipes System is widely used worldwide for the decontamination of small and delicate medical instruments used in hospital departments such as ear, nose and throat (ENT), cardiology and ultrasound. The Wipes System is now going through the registration process with the Chinese authorities to enable it to be marketed. Full approval of the Wipes Systems is anticipated by the end of the calendar year.
*A corporate client of Hybridan LLP
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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.
12 July 2011
This week: Axis Shield on the defensive, Boomerang JV to bring better returns, Cello in tune with forecasts and sparkling valuation for Stellar
The FTSE 100 fared well during the middle of last week rising 50 points, but closed at similar levels to the week’s opening, whilst the AIM All Share increased by some 0.9%. The Greek debt crisis was helped by news that European banks were planning to club together to potentially allow Greece more time to repay its debts, but there was fresh worry in the form of the crisis potentially focusing attention again on Italy and Spain. Further, UK CPI inflation fell to 4.2 per cent in June, which was widely forecasted to hold at 4.5%, and interest rates continued at the 0.5% level they have been for the last 27 months. The week ahead sees unemployment figures released on Wednesday, US inflation figures and a BoE report on its programme of quantitative easing.
Activity on AIM- an update
Following our recent “Activity on AIM” comment market activity has continued in line with the trends outlined. The month of June saw thirteen companies admitted to the market of which nine came from the UK and four from overseas. During the same period eighteen companies left AIM, although three of those left the junior market to move to the main list Allied Gold Mining (ALD 192.5p/£384.93m), Cape (CIU 574.5p/£678.34m) and Park Plaza (PPH 294.5p/£123.15m).
This month has already seen the arrival of Smart Metering Systems (SMS 75p/£62.5m) and Waterlogic (WTL 158p/£122.62m) on AIM with a third, Bayfield Bayfield Energy a successful fundraise of £54.4m and admission to AIM next week. Last week Smart Metering Systems a provider of gas infrastructure connection services to the UK’s key gas suppliers, raised £10m of new investment at 60p per share (valuing the company at admission at £50m) and has seen its price rise to 75p per share. At the beginning of this week, Waterlogic, a leading manufacturer and distributor of point-of-use drinking water systems, announced it had raised £48.5m from institutional investors giving it a market capitalisation at admission of £112.5m.
The IPO momentum looks likely to continue through July but the professional advisers, having seen blips of activity before, remain cautious, even bearish. At a recent conference of nominated advisers, more than 40 per cent of those present thought that the number of companies on AIM could continue to fall from 1,151 – and bottom out at fewer than 1,000.
Angel Mining (ANGM 2.12p/£16.02m)
Angel Mining, a gold and zinc/lead mining company with two active projects in Greenland, provided an operational update last week in which it announced that further to its first successful gold pour at Nalanuq; a second one has now been completed, producing a dore bar of 1.2 kilograms. However, it was unable to measure the gold content of ore, carbon or tailings due to the failure of its atomic absorption machine which is used for measurement, but it is expected to be back in action within the next two weeks. In the meantime, the Company will continue to process ore within the plant and, thereby, increase the gold content resident within the carbon inside the plant. Furthermore, the team on site is completing a further assessment of the resource at Nalunaq having recently discovered what the directors believe is additional high grade ore that may be capable of being extracted from the old workings in the mine. We last wrote on Angel in June when the Company raised circa £2.2mbefore expenses to fund the construction of the cable car connecting the mine entrance to the mine camp at the Black Angel zinc/lead mine, expand production at the Nalunaq gold mine, and provide capital for the Company. Angel Mining and Socius also agreed to terminate the second tranche of the medium term note programme for £3.0m. The Company appears to be well positioned to further its projects.
Ark Therapeutics Group (AKT 4.88p/£10.2m)
Ark announced that it has been awarded a grant of up to €0.4m from the Finnish Funding Agency for Technology and Innovation to support the further development of Ark’s proprietary lentiviral vector production technology using baculoviruses to achieve the scale and GMP quality required for clinical use. Ark has also been awarded €0.2m grant from the Finnish governmental organization Centre for Economic Development, Transport and the Environment to progress validation work in its GMP3 manufacturing facility in Kuopio. Ark also announced that Nature’s Gene Therapy journal has published in its June issue a paper describing Ark’s latest advances in world leading Baculo-lentiviral vector production technology. Professor Seppo Yla-Herttuala, Ark’s Consultant Director of Molecular Medicine and the current President of the European Society of Gene and Cell Therapy, commented: “The TEKES and ELY-centre grants and the Baculo-lentiviral publication further demonstrate Ark’s international reputation as a world-leader in gene-based medicines and its pre-eminence in biotherapeutic and viral based manufacturing founded on Ark’s unrivalled viral manufacturing expertise. We look forward to announcing further progress in this area in due course.”
Axis Shield (ASD 496p £247.99m)
Alere Inc., a medical diagnostics company listed on the New York Stock Exchange with a market capitalisation of c US$3.2bn, announced last week that it had made an indicative proposal to acquire Axis-Shield, the international in vitro diagnostics Company by way of a cash offer of 460p per ordinary share .This offer represents a premium of 37 per cent to the Axis Shield share price on the day preceding the announcement and values Axis-Shield at approximately £230m. The board of Axis Shield confirmed that it had rejected the approach on the basis that it “fundamentally undervalued the Company and its future prospects”. The Axis Shield share price spiked to 496p in response and we await further developments with interest.
Bloomsbury Publishing (BMY 122p/£90.5m)
Yesterday, the publisher for the Harry Potter series announced that it had acquired Continuum for a total cash consideration of £20.1m from Nova/Paul Investments Capital and management shareholders. Continuum, which is based in New York and London, is an international academic and professional publisher with a small trade list. It has world class academic lists, some of which date back over 170 years and include a number of the most distinguished international authors in the humanities and social sciences; including Karl Barth, Martin Heidegger, Pope Benedict XVI, the Archbishop of Canterbury Rowan Williams, Chief Rabbi Jonathan Sacks and Alain Badiou. The Continuum lists are highly complementary to Bloomsbury’s existing academic lists, offering the Company the ability to improve revenue momentum within its Academic & Professional division, especially in the key US market, as well as opportunities for material cost synergies. Earlier this year, Continuum was awarded Independent Publishers’ Group Publisher of the Year 2011 and Academic & Professional Publisher of the Year. Continuum is forecasting EBITA of £0.6m for the year ended 30 June 2011 on turnover of £10.7m. Bloomsbury has identified potential cost synergies in excess of £1m in the first full year of combined operation. In the year ended 30 June 2010 Continuum reported a loss before taxation of £1.2m and turnover was £10.6m. Bloomsbury’s strategy has been to increase its proportion of academic and professional revenues compared to trade revenues through retail channels. Academic revenues are more predictable and have lower related costs of sale with resulting higher margins, and are much less reliant on retail bookshop sales. Around 60 per cent of Continuum’s sales are outside the UK, thereby increasing Bloomsbury’s exposure to the global book market. Through this acquisition, Bloomsbury will have an academic editorial and marketing team in the US.
Boomerang Plus (BOOM 55.5p/£4.95m)
Boomerang Plus, an AIM listed media group, announced a Joint Investment into a Welsh classical music agency, Harlequin Agency, alongside one of its artists, Bryn Terfel. Boom Talent is Boomerang’s existing agency, which will widen the scope of the new venture to include actors and presenters alongside classical singers, accompanists, conductors and West-End stars. The new Joint Venture will be 50 per cent owned by Boomerang and 50 per cent by Bryn Terfel. Harlequin Agency was established in Cardiff in 1986 by its Managing Director, Doreen O’Neill, whose main aim was to nurture young talent in Wales. It currently represents more than twenty-five artists including the world’s finest bass baritone, Bryn Terfel, international tenor, Gwyn Hughes Jones, singer, presenter and actress, Shan Cothi, The Three Welsh Tenors, mezzo-soprano, Leah-Marian Jones, and West-End Star, John Owen-Jones. This comes after news in June that the Company acquired the trade and certain assets and liabilities of Oxford Scientific Limited, a London based BAFTA & Emmy award winning Production Company focused on history and science programs, for a cash consideration of circa £516k. Both acquisitions demonstrate Boomerang’s intention to take advantage of the opportunities in this space and help expand the business geographically and in terms of product offering.
Cello Group (CLL 36p/£28.18m)
Cello Group, the independent insight and strategic marketing group, is quickly developing into a global research and consulting business, and it also has a focus on the pharmaceutical sector amongst with other international, high margin client sectors. The group has traded in line with the Board’s expectations for the first six months of the financial year. With more than five per cent growth in headline profits before tax, the group has concurrently accelerated the expansion of its international presence in New York, San Francisco, Philadelphia, Singapore, and Basel. Cello Group continues to focus on digital innovation, with the eVillage product seeing strong revenue growth and receiving industry-wide recognition; and E-Luminate showing good client uptake. CEO Mark Scott is confident that the focus on innovation, especially in social media based research, will be the strategy that will deliver strong shareholder growth.
Chamberlin (CMH 138p/£10.26m)
Chamberlin, the specialist engineering group, last week announced that it had raised £500,000 through a placing of new shares to a new institutional investor a t a premium of 8 per cent to the market share price. The proceeds of the placing will be used to support the Company’s strategy to deliver growth via acquisitions as well as organically – a number of which it has already identified.
Highams Systems Services (HSS 3.12p/£2.16m)
Highams Systems, a recruitment agency and niche provider of technology, business and professional services to the insurance and financial services sectors, announced full year results showing an increase of 131 per cent in annual profits on revenues of £9m, from £7.5m a year earlier. This is a remarkable turnaround from 2 ½ years ago when a fund raise was needed to save the Company from collapse. It is already considering resuming paying dividends. Its main focus is in the temporary or contractor market which accounts for around 65 per cent of the business and is the area in which the Company wants to grow. The Company is considering re-opening a London office, possibly by way of acquisition, if appropriate. The Company has a very good record with permanent placements with 83 per cent of candidates placed still in their jobs two years later. That kind of ‘stickiness’ clearly also applies to Highams own employees, with the consultants averaging fifteen years with the Company and some exceeding twenty years. It certainly seems that the recent ‘dark days’ are well behind them now.
Max Petroleum (MXP 14p/£129.23m)
The oil and gas exploration and development Company, focused on Kazakhstan, announced that it has begun testing the ZMA-ET1 appraisal well in the Zhana Makat Field , successfully flowing 47 degree API oil at an equivalent rate of approximately 1,200 barrels of oil per day (bopd) from perforations in a Triassic reservoir from depths of 1,282 to 1,288 metres during a five hour flow-back period. The well will be connected to temporary production facilities later this week and brought onto production. The Company expects the well to produce at a stabilised rate of between 500 and 1,000 bopd. Completion and testing of the ZMA-ET2 well is expected to begin shortly, with production beginning in the next few weeks. Both wells will initially be placed on test production, pending confirmation of reserves necessary for future inclusion in Zhana Makat’s full field development programme.
NCC Group (NCC 653.5p/£222.61m)
NCC Group, the Escrow and Assurance services business, provided preliminary results for the year to 31 May 2011. Group revenue improved 49 per cent to £71m, and adjusted profits were up 21 per cent to £17.3m. The Escrow business acquired Escrow Associates LLC, a complementary business in Georgia which helped increase its US presence and boosted Group Escrow revenue by some 8 per cent, whilst the assurance business exhibited 17 per cent growth and also built its US position through an acquisition (iSEC Partners). Interestingly, the Company forecasts that Group Escrow renewals are to increase by 12 per cent to £17m, whilst the Assurance Testing order book and renewals are up 23 per cent to £22.6m for 2011/2012. During the interims, the Company stated that there was a surge in demand for NCC’s services following the high-profile attacks associated with the Wikileaks website. Given the rise of malicious and illegal activities across the internet, NCC continues to believe that there will be considerable opportunities for the Assurance testing division, which could be the key driving force behind NCC’s growth.
Ovoca Gold (OVG 30.125p/£26.6m)
In an update the Russian gold mining company has announced a fresh mineral resource estimation for the Olcha Project. At a gold cut-off-grade of 1.0 g/t Olcha contains 9.2 Mt of Inferred Mineral Resources at an average gold grade of 2.20 g/t for a gold content of 650,000 ounces gold. Additionally the Inferred Mineral Resource includes an average silver grade of 12.12 g/t for a silver content of 3.59mn ounces silver.
Plexus Holdings (POS 61p/£48.91m)
The oil services company has made an agreement with Niko Resources (Trinidad and Tobago) to supply the POS-GRIP 10,000 psi wellhead equipment with mudline suspension systems for use on initially three and potentially ten oil exploration wells offshore Trinidad. This contract is worth between £1m and £3.25m and revenues are expected to start in the third quarter.
Plexus, who also recently signed contracts with Centrica and Statoil, is clearly benefitting from an increased awareness and demand in the oil and gas exploration industry for safer and improved operating practices post the Gulf of Mexico incident.
Rockhopper Exploration (RKH 243.25p/£627.93m)
A North Falkland Basin oil and gas exploration Company, Rockhopper has announced that it has entered into a further assignment agreement to secure an additional well slot on the Ocean Guardian drilling rig. Also, RKH will shortly drill well 14/10-6, its third appraisal well on the Sea Lion feature, followed by an additional three wells in succession.
Serabi Mining (SRB 30.62p/£19.59m)
The Brazilian focused gold exploration Company yesterday announced further results from its ongoing Phase 1 discovery drilling campaign from the Currutela prospect at the 100 per cent owned Jardim do Ouro project in the Tapajos region. Assay results have been received for a further five completed holes on the target. Drilling continues to intersect multiple zones of hydrothermally altered granite, similar to previously reported Currutela intercepts and to those hosting mineralisation at the Palito gold deposit along strike. We should see further results from the rest of the Currutela drill programme, which will be forthcoming over the next month. The share price rose 8 per cent on the news.
Service Power Technologies (SVR 11.75p/£22.27m)
AIM listed market leader in outsourced services and field management today gave an update on trading for the six month period ended 30 June 2011. The Company has enjoyed strong trading during the period and expects to report results for the six months ahead of expectations. Revenue for the half is expected to be approximately £6.0m; EBITDA approximately £1.0m and profit before tax in excess of £0.8m. The Company’s net cash position is expected to have improved to £3.9m (31 December 2010, £3.7m). This strong level of trading combined with a healthy pipeline of prospects for the second half of the year mean the Board expects EBITDA for the year ending 31 December 2011 to be ahead of current market expectations. In addition, the increase in new business opportunities combined with the increasing level of multi-year contracts being secured has resulted in a greater level of revenue visibility for subsequent years providing further confidence in the Company’s business model. The pipeline continues to bear fruit for the Company and it won several contracts in the period, including Steritech, one of the largest outsourced food safety and quality assurance companies in the US, and HomeServe, the international home emergency repairs business; an unnamed North American leading home appliance retailer; RicherSounds, the UK’s hi-fi, home cinema and flat panel TV’s specialist retailer; and, a transformational contract potentially worth £12.5m. The final contract listed above was the first to be won in partnership with Assurant Solutions, one of the world’s leading speciality insurance providers, demonstrating the early success of this licence and revenue share partnership agreement signed earlier in the period.
Stellar Diamonds (STEL 6.38p/£13.82m)
Stellar Diamonds, the diamond mining and exploration Company focused on West Africa, has updated on its Tongo Dyke project located in eastern Sierra Leone. The Company said that the valuation of the first parcel of diamonds, 639 carats, exported from Tongo is excellent at an average $191 per carat. The parcel comprised predominantly gem quality stones and the valuation suggests that the project has a potential in-situ kimberlite value of $209 per ton. With over 80 per cent of the phase 1 surface bulk sampling programme completed, a 6,000m drilling programme will commence in August, with the objective of defining an initial inferred resource on Dyke 1 to a depth of at least 200m. We look forward to the Company providing further updates on progress of this programme.
Sunrise Resources (SRES 2.8p/£8.74m)
Sunrise Resources, a mineral exploration Company, has announced that, following the completion of a positive concept study for the development of an underground mine; it has now commenced a drilling program at its Derryginagh Barite Project in south-west Ireland. Eight diamond drill holes have been planned to test the main vein system over a strike length of 500 meters and to a depth of up to 150 meters. The drilling, which is aimed at the definition of a JORC Mineral Resource, is expected to last about six weeks and results should be available approximately six weeks after completion of the drilling.
Toumaz Technology (TMZ 8p/£50.36m)
Toumaz, a pioneer in low cost, ultra low power wireless communications technology, announced this week that the Sensium disposable digital plaster has received 510(K) approval from the US FDA. The company expects the initial launch of the product into hospitals in the US to take place as planned, before the end of the year. The company then announced separately that it had established a new joint venture with California Capital Equity LLC to continue the development, commercialisation and distribution of the Sensium plaster in the US under which CCE will fund the joint venture over the next two years with up to $25m.
Victoria Oil and Gas (VOG 4.35p/£93.04m)
The AIM quoted oil and gas exploration and development Company with assets in Cameroon, gave an update on its appraisal and delineation programme in the West Medvezhye, (West Med) oil, gas and condensate licence area in Russia. VOG’s wholly owned subsidiary, ZAO SeverGas-Invest holds a twenty-year Exploitation Licence for West Med covering 1,224 sq km. West Med is located in one of the most prolific oil and gas producing areas of the world and is adjacent to Gazprom’s giant Medvezhye field that has already produced over 70 trillion cubic feet of gas. Whilst VOG’s principal focus has been the development and commencement of gas and condensate production at Logbaba in Cameroon which is scheduled for Q4 2011, SGI’s technical team and consultants have been utilising this time to acquire data and to carry out integrated multi-discipline studies in West Med. Initial studies have highlighted that an early production scheme of the Well 103 discovery could involve the sale of small volumes of crude into the local market with prices of US$60 per barrel achievable. The results of preliminary development assessment work on the Well 103 discovery indicate first oil sales in 2015 subject to further refinement and screening.
Wasabi Energy (WAS 2.78p/£60.91m)
Last week, WAS gave a trading update to the markets and said that it has further developed the Kalina Cycle technology in Asia, including the commencement of a Kalina Cycle Laboratory and Testing Facility in Shanghai by Chinese licensee Shanghai Shenghe New Energy Resources Science and Technology Co. Ltd SSNE; has had success with various engineering milestones for the Khairpur Kalina Cycle Power Plant in Pakistan with delivery progressing as scheduled for commissioning in Q1 2012; and has advanced its Build Own Operate (BOO) strategy for the Kalina Cycle power plants including the recent announcement of a 4.5MW power plant in Taufkirchen, Germany with Geysir and the Swiss utility AXPO and the 2.0 MW power plant in Husavik, Iceland. Over ten initial waste heat to power projects have been identified in the cement and lime industries by its new Kalina Cycle licensee FLSmidth, a leading EPC provider to that industry. The Company is in discussions with major industrial groups in the steel and petrochemical sectors for BOO waste heat to power Kalina Cycle plants (including a 20MW+ project currently under review) and has accelerated the commercial roll-out of the AquaArmour product following Aqua Guardian Group’s JV with Srithai for water conservation in South-East Asia. John Byrne, Executive Chairman of Wasabi, commented: ‘Overall we are well positioned in the green technology sector with products that provide significant benefits globally through greenhouse gas reductions and water conservation.’
*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.
05 July 2011
This week: Omega— one to watch, New recent highs for Summit, Reach into Trap
A 5% increase in the FTSE 100 together with a 3% improvement in the AIM All Share was welcome news, perhaps in part helped by news last week that European banks were planning to club together in helping Greece by potentially allowing it more time to repay its debts. UK manufacturing data released last week did little to stop the progress of the markets with growth having slowed in June to its lowest rate for more than 18 months, though the previously announced 0.5% expansion of the UK Economy is likely to have helped this as has UK service sector growth. The week ahead will see the BoE announce their interest rate decision which is widely predicted to remain at 0.5%, despite inflation at 4.5%, together with UK producer price data and UK industrial production figures.
Access Intelligence (ACC 3.5p / £9.00m)
Access Intelligence, a leading supplier of compliance Software-as-a-Service solutions for the financial services, procurement and media sectors, this week announced the sale of its subsidiary, Solcara, to Thomson Reuters for £2.5m. Solcara sells search technology to the legal profession and in-house legal teams and in the year to 30 November 2010 had sales of approximately £750,000 on which it generated a small profit. The Company also updated the market on trading for the six months 30 May 2011. Most of the group has been trading in line with expectations with Due North Ltd and AIMedia Communications Ltd in particular having had a successful first six months. During the first six months the company has completed the restructuring of its capital base creating positive revenue reserves in the parent company allowing it to pay dividends in the future. The group cash balance at 30 May 2011 was approximately £2.7m which will, following completion of the disposal of Solcara, increase to approximately £5m.
AFC Energy (AFC 44.5p / £77.14m)
AFC Energy, a developer of low cost alkaline fuel cells announced that it continues to make good progress. It has completed the first stage of its Beta alkaline fuel cell system where it has made significant progress on completing the hazard and operability study (HAZOP) and has incorporated the emerging improvements from that study into its first system. Once the HAZOP study is successfully complete, AFC remains on track to deliver its commercial scale Beta system.
Akers Biosciences (AKR 4p / £6.75m)
The company, a leading designer and manufacturer of rapid diagnostic screening and testing products, last week announced that it had secured a first purchase order totalling approximately US$3.2m from Pulse Health under the supply agreement announced on 11 April 2011. Manufacturing will commence immediately from the company’s New Jersey facility with the majority of orders expected to be fulfilled during 2011. The order is to manufacture and supply Revelar breath tubes which as part of the Revelar Free Radical Assay provides the first rapid, non-invasive way to measure the effectiveness of an antioxidant regimen and adapt accordingly.
Amur Minerals Corporation (AMC 12.5p / £35.43m)*
An exploration and development Company focused on Far East Russia last week announced its final results for the year ended 31 December 2010. Over the year, its application for a mining licence covering drilled resources at Kun-Manie, an area 15km by 3km, was submitted. The nickel copper sulphide project contains three JORC compliant drilled deposits. Total Russian approved reserve of 31.7m tonnes of ore with averages 0.64 per cent nickel and 0.18 per cent copper were reported. The Russian reserve inventory also contains 3,960 tonnes of cobalt, 189,400 ounces of platinum and 213,800 ounces of palladium. The exploration rights over 950 sq. km. licence area were extended to December 2012. Wildcat drilling identified a potential open pit 4km from the Maly Krumkon deposit. Trenching confirms that mineralisation could continue along strike towards Maly Krumkon. A geophysical anomaly to the south of Ikenskoe defines an area nearly as large as that of the drilled deposit. Amur had $3m of cash in the bank at the year end. Robert W. Schafer, Chairman commented: “We made significant progress in 2010 and this has continued into the current year. We have commenced a two year exploration programme to further extend and define the existing resource at Kun-Manie as we work towards bankable feasibility status.”
Angel Biotechnology Holdings (ABH 0.32p / £8.73m)*
AIM listed biopharmaceutical contract manufacturer has signed a new contract with ReNeuron Group (RENE 5.645p / £35.06m) to perform development and GMP manufacturing services in support of its development programme for its ReN001 stem cell therapy for stroke. The work programme is expected to continue through to mid-2012; the value of the contract was not disclosed. The programme includes the GMP manufacture and related work for future cohorts of patients in ReNeuron’s ongoing PISCES clinical trial with ReN001 in stroke. The contract is structured in such a way that it allows much more flexibility for both parties in terms of work scheduling, thereby giving ReNeuron the ability to match the needs and opportunities of their growing development programmes in real time.
Ark Therapeutics Group (AKT 5.2p / £10.88m)
UK listed Ark yesterday announced that the United States Patent and Trademark Office has issued Notices of Allowance in respect of two patents for which certain rights have been assigned by Ark to Boehringer Ingelheim. The patents cover the use of Boehringer Ingelheim’s compound Telmisartan for the prevention and treatment of stroke and the prevention of myocardial infarction related heart damage. Formal grant of these patents is expected in the next two months and will trigger significant milestone payments to Ark under the license agreement which Ark and Boehringer Ingelheim entered into in 2005. This good IP news is a step further to a potential milestone which will be an important contribution for the Company.
Beacon Hill Resources (BHR 12.12p / £89.80m)
Beacon Hill Resources, the AIM listed coal producer, will engage in their first production of export grade coal at Minas Moatize coal mine in Tete, Mozambique. This large open pit mine will expect to be mined in Q1 2012. The total estimated JORC resources of the initial open pit area is approximately 180,000, which is expected to be gradually mined over the course of the next twelve months. Additionally, the trial trucking of coal to Beira by road is to start in July will enable the Company to start stockpiling coal at the port pending a first export shipment. In Tasmania, the Group has recently completed phase 1 of a drilling programme at the Arthur River Project. The results will provide the Company information about the deposit including size, metallurgy and hydrology. These aspects will help confirm the economics of the project and the development of an initial conceptual mine plan. The latter is being finalized, with the expectation of it being completed before the end of 2011.
Beximco Pharmaceuticals (BXP 40p / £18.82m)
Beximco, the AIM listed pharmaceutical Company, last week held its AGM at which the chairman reported a strong performance from the company. Beximco is based in Bangladesh and manufactures and sells generic pharmaceutical formulation products, active pharmaceutical ingredients and intravenous fluids as well, as undertaking contract manufacturing for multinational pharmaceutical Companies. Its products are sold to retail outlets, medical institutions and other pharmaceutical manufacturers in Bangladesh, in regional markets including Sri Lanka, Nepal, Vietnam and Cambodia as well as other overseas markets.
Chariot Oil and Gas (CHAR 195p / £352.54m)
Chariot Oil and Gas has an updated Competent Person’s Report which confirms the Company’s estimate of prospective resource volumes. The results show a gross P50 unrisked prospective resources volumes of 14.4bn barrel with gross mean unrisked prospective resource potential of 16.1 Bbbls, a slight increase of 3.5 per cent or 535m barrels within the Company’s license areas offshore Namibia. Paul Welch, CEO of Chariot, comments: “These volumes have resulted from the extensive geological and geophysical work undertaken by the Chariot technical team across all our licence areas. It is very satisfying to continue to have third party endorsement of our prospective resources. Having established the potential of our assets, we now look forward to the next stage of our development and the drilling of our prospect inventory.”
Corero (CNS 42p / £20.04m)
Corero, the provider of software solutions to the banking and securities and education markets, provided a trading update for the 6 months to 30 June 2011. The Company acquired Top Layer Networks in March 2011 which it intends to use to build a network security technology business focused on delivering software and hardware solutions to mid-market commercial and enterprise customers and telecommunication service providers, through international channels. The period saw a number of other crucial achievements including the launch of the DDoS Defence System (an industry first network layer and application layer DDoS defence product), the recruitment of a sales team in France and Taiwan and the appointment of twenty new channel partners. Corero Business Systems, which operates as a standalone business, also saw the Company perform strongly with sales orders in the period of £2.5m (2010: £1.5m). Corero appears to be evolving as quickly as the market does, and in some ways even quicker- we keep close eye on how the Company continues.
EnCore Oil (EO 61.50p / £180.01m)
EnCore will acquire together with its partners in Block 15/21g (Nautical and Serica ) a 70 percent interest in the adjacent Block 15/21a from DEO Petroleum, Faroe, Maersk and Atlantic Petroleum. The primary target in the P218 license is the Spaniards/Gamma discovery well which was drilled by Amerada Hess in 1989 and which EnCore believes has significant upside potential and an attractive risk profile. EnCore will be the operator and plans to commence drilling in the second quarter of 2012.
Kibo Mining (KIBO 2.88p / £10.86m)
Kibo Mining, the mineral exploration and development Company with interests in gold and nickel projects in Tanzania, had an increase in share capital following the acquisition of Morogoro Gold Limited and the accompanying equity investment by Mzuri Gold Limited. The Company’s expanded position gives them access to one the largest mineral licence portfolios in this region, and it is also strategically located close to producing mines near Lake Victoria in northern Tanzania. Furthermore, it’s also in the vicinity of emerging gold areas of central and eastern Tanzania. With a completed listing on AltX of the JSE Limited and an additional placing of ZAR 12,002,200 (£1.1m), the CEO now looks forward to a raised profile to help them raise monies from these additional markets for prospective projects and further acquisitions in Africa. Currently, a successful exploration programme over 2011 is underway and he is confident that it will increase value in the Company’s Tanzanian assets. The Company is also observing good results from the Haneti nickel project and metallurgical testing of ore at the Itetemia project is now progressing.
Landsdowne (LOGP 21.38p / £17.42m)
Lansdowne Oil & Gas, the oil and gas exploration Company, has started 3D seismic operations on its Amergin, Rosscarbery and Midleton Prospects in the North Celtic Sea, off the south coast of Ireland. The surveys are expected to take 20 days to complete. This survey forms part of the planned pre-development drilling programme on the Barryroe oil discovery, in which the Company holds a 20 per cent interest. The drilling here is scheduled to start late this summer, with the belief that the 3D seismic data, along with the modern well completions in the current high oil price environment, will be key aspects that contribute to the value of Barryroe.
Max Petroleum (MXP 12.5p / £115.38m)
Max Petroleum, an oil and gas explorer announced that the Kazakh government has approved an extension of the trial production project for the Zhana Makat field until December 15th 2011 and added that it expects daily production to increase to more than 3,000 bopd during Q3 2011. Receipt of final approval will allow the Company to develop and produce the field for up to 25 years, as well as grant a right to sell 80 per cent of its crude oil production on the export market under the terms of the Contract. Current oil sales into the domestic market are generating after-tax net proceeds that are $15-$17 per barrel lower than comparable export sales. The Company is currently producing 2,200 bopd, generating $3.5m in net proceeds per month from domestic sales.
Medilink (MEDI 9p / £10.70m)
The Company, an electronic health card network service provider, last week announced its final results for the year ended 31 December 2010. Revenue increased by 44 per cent. to £1.79m (2009: £1.24m) as the result of the overall increase in activities across South East Asia and the China operations. Loss before tax was reduced by 26 per cent. but remained at £696,000 (2009: £942,000) because the increase in revenues was partly offset by a corresponding increase in operating costs for the China and Malaysian operations.
The financial year saw the company gain increased traction in China whilst the business activities in Malaysia continue to expand. Medilink won six additional Third Party Administrator contracts in China and offered a new service in Malaysia offering Medical Tourism programmes to foreigners travelling in the country.
Looking forward, the chairman reported that they anticipate the company sustaining minor losses in 2011 as the expected increase in revenues in 2011will not be sufficient to cover the group’s operating costs. The Board remains confident of being able to move into profitability during 2012.
Omega Diagnostics (ODX 14.12p / £12.04m)
AIM listed developer of medical diagnostic devices announced final results for the year to 31 March 2011. The year has been one with a number of important steps, including the acquisition of the in-vitro allergy diagnostic business of Allegropharma (€6m) to help the Company enter the Allergy Testing market, together with the establishment of an agreement with Immunodiagnostic Systems Holdings for the rights to develop and distribute allergy tests on its IDS-iSYS automated assaying device. A 27 per cent increase in revenue for the period to £7.9m (2010: £6.2m) and a 25 per cent increase in adjusted profit before tax to £0.74m demonstrate sound improvements in performance, with the acquisition already appearing to be earnings accretive- allergy and autoimmune revenues were up by 134 per cent to £1.56m. Last month we wrote on the Company’s announcement that it had 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. In addition to this, Omega, during the period also signed a distribution agreement for its Food Detective product in India. A good year which could potentially demonstrate good improvement.
OMG (OMG 28.50p / £20.12m)
AIM listed technology group providing image understanding products for the entertainment, defence, life science and engineering industries, announced that Yotta DCL, the Company’s highways surveying business, has won new contracts for business. Newcastle City Consortium has awarded the Company a three year contract to conduct its entire road network surveying work, whilst Cumbria County Council has awarded the Company a four year contract to carry out all of its Scanner and Scrim surveys whereby vehicles are used to survey the roads with a number of synchronised measurement devices such as laser profilers and cameras to accurately determine the condition of the road surface, covering 4,784 miles of network highway. In May, the Company announced a loss for 6 months to 31 March 2011, and whilst management were disappointed, these recent contract wins demonstrate the continued resilience of OMG.
Rockhopper Exploration (RKH 262.75p / £678.26m)
Rockhopper Exploration, the North Falkland Basin oil and gas exploration Company, holds a 100 per cent position in the May 2010 discovery of Sea Lion. Since then, the Company has been focused on reaching a final investment decision and progressing work streams to do so. The work streams include: appraisal to define the field size, engineering to define the field development, and financing to define the field economics. The Company is focused on the Falkland Islands and will be interpreting data from the recently acquired 3D seismic to spot further opportunities within the basin. The Company is fully funded to complete the field appraisal at Sea Lion; however, a development would require further financing.
Scancell Holdings (SCLP 63p / £10.05m)
AIM listed developer of therapeutic cancer vaccines announced results for the year ended 30 April 2011. A key development milestone was reached with the lead therapeutic melanoma vaccine SCIB1, phase I/IIa clinical trials began in June 2010 and licensing agreements were secured with The National Institutes of Health; and Cancer Research Technology Ltd. Scancell entered strategic collaborations with ImmuneRegen BioSciences, Inc and immatics biotechnologies GmbH. The loss before tax for the year was £1.72m (2010: £1.8m). The cash at the yearend was £1.1m, not including the net proceeds from the placing which was announced at the same time as the results, to raise £1.73m gross to fund working capital. At the same time as the results announcement, a new lung cancer vaccine, SCIB2, announced latest anti-tumour results to provide further validation of the ImmunoBody vaccine technology platform and its commercial potential. Richard Goodfellow was also announced as Joint Chief Executive Officer. Scancell should now have enough cash to complete the Phase I trials of the melanoma treatment and to advance the development of a series of new ImmunoBody cancer vaccines to the pre-clinical proof of principle stage.
SeaEnergy (SEA 28p / £19.35m)
AIM listed SeaEnergy last week announced that it has completed the disposal of its entire interest in SeaEnergy Renewables Limited to Repsol Nuevas Energias S.A. The Company has used the cash from the disposal to repay loans due to LC Capital Master Fund, Ltd and EDPR UK Limited totalling £6.9m. SeaEnergy will now focus on its existing assets, in particular its offshore renewables marine services business SeaEnergy Marine, and to ensure that shareholder value is protected with its existing Oil & Gas interests. The Board expects the Company to continue to be active in both the offshore renewables and oil & gas sectors going forward. SeaEnergy announced its audited results for the year ended 31 December 2010 at the same time. There was a loss for the year of £5.7m (2009: loss of £6.5m), the cash position at the end of 2010 of £0.1m (2009: £2.8m), and the disposal of the Company’s interest in SeaEnergy Renewables Limited resulted in a gain of £32m and increased the cash balance to £28m.
Sirius Minerals (SXX 9.68p / £99.90m)
Sirius Minerals, a globally diversified potash development group, has started a concept study on the York potash project. During this study, various options and development alternatives for the project will be analysed and tested. A thorough innovation analysis phase will be incorporated to ensure the latest breakthroughs in mine and process development and sustainable design are incorporated into the project. The Company expects this to be completed by the end of 2011. The appointment of a team of consultants to deliver the concept study has been finalised, via its subsidiary, York Potash Ltd.
Summit Corporation (SUMM 7.75p / £13.04m)*
UK drug discovery Company has seen a nice share price rise following reporting positive data from its programme to develop a treatment for Alzheimer’s disease and other neurological disorders, through the targeting of O-linked N-acetylglucosaminidase (OGA), an enzyme that represents a potential disease modifying approach for the treatment of the disease. The results were generated using Summit’s proprietary Seglin technology drug discovery platform. The enzyme OGA has emerged as a target in the search for drugs to treat Alzheimer’s disease as its inhibition reduces levels of abnormal tau protein in the brain, meaning that OGA has the potential to protect nerve cells and prevent formation of toxic protein tangles. Using the Company’s innovative Seglin drug discovery platform, Summit has developed novel, potent and very selective small molecule inhibitors of the OGA enzyme. Initial proof of concept has been established in human cell models with Seglin compounds being shown to significantly reduce the levels of abnormal tau protein. Further in vitro evaluation shows that the active Seglins exhibit no cell toxicity (cytotoxicity). The results will be presented at the Alzheimer’s Association International Conference on Alzheimer’s Disease 2011 which is being held in Paris on 16-21 July 2011. This news shows the potential of the Seglin platform to generate drug leads.
Tower Resources (TRP 6.62p / £74.34m)
Tower Resources, the oil and gas exploration Company with operations in sub-Saharan Africa, has recently completed detailed technical and economic evaluation of the 0010 License, of which it has a 15 per cent working interest. According to Chairman Peter Kingston, an independent reassessment of the prospectivity of Namibia License 0010 has cemented its potential as a world class group of oil and gas prospects. The 3D seismic survey has considerably increased the reserve potential of the Delta Structure and has led to an improvement in the chance of success with the first well. This well, which is still on schedule for the end of Q1 2010, is expected to have a resource potential of more than 5bn barrels of oil equivalent.
Trap Oil (TRAP 42p / £76.51m)
Trap Oil recently acquired Reach Oil & Gas for approximately £30m. This acquisition will bring 14 exploration licenses governing 24 Blocks and part Blocks in the UK Continental Shelf. Reach’s group portfolio consists largely of appraisal assets along with the aforementioned exploration prospects (with a range of risk profiles). This more than doubles the size of the Company’s existing exploration portfolio and near term drilling activity, which also includes an increase to a 15 per cent holding in the promising Orchid prospect that’s to be drilled later in 2011. The Company will now focus on identifying and acquiring producing assets that will provide cash flows to support the prospective drilling programme with suitable tax synergies.
*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.