Amur Minerals Corp (LON:AMC) (5.5p/ £11.59m)*
On 1 September the Company announced it had received a 2 year extension to its Kun-Manie exploration licence to explore for nickel and copper. This has been a very quick process – barely 3 months since it was applied for and is testament to both the Company’s ability to navigate through the Russian mining regulations and procedures, and the contacts that management enjoys inside the Russian Mining Ministry.
This all bodes well for the Company’s outstanding application for the mining licence to accompany its certificate of discovery of the nickel sulphide deposit within the Kun-Manie property. The granting of a right to mine the deposit will focus the industry’s attention on the huge potential within Amur’s licenced areas.
The total approved reserve currently stands at 31.7 million tonnes of ore and averages 0.64 per cent nickel and 0.18 per cent copper. An independently compiled pre-feasibility study of Kun-Manie carried out in 2007 incorporating a $7.50/lb nickel price, indicates a Post Tax NPV (10 per cent) of $84 million.
Peer group analysis suggests that Amur Minerals could attract a valuation similar to nickel sulphide exploration companies such as Starfield Resources or Victory Nickel of around £23.7m to £25.7m. The Pre-Feasibility Study gave the project a NPV of $84m which equates to 23.5p per share (note that this does not take account of the material rise in the nickle price as highlighted in our previous Small Cap Wrap comment). Thus 23.5p should be a very conservative target price when the Mining Licence is granted. At these levels, we recommend picking up stock.
Anglesey Mining (LON:AYM) (31.25p/£47.86m)
Anglesey’s 41 percent owned associate company and Toronto Stock Exchange listed Labrador Iron Mines Holdings is now on a fast track of constructing its iron ore project after agreement was reached with the Quebec Innu who had been blocking access to mining properties. This follows the recent award of a mining certificate approving the construction of the Company’s mining facilities. With the positive news flowing through, Anglesey offers plentiful prospects. Dig in to this one.
Ant (LON:ANTP) (24p/ £5.83m)
ANT, the software company that allows TV operators to manage their content and provides customers with the ability to self-select services on demand, announced its interim results for the 6 months to 30 June 2010. Financial performance was better than for the prior year, with revenues up by 5 per cent to £2.1m, and gross margins improving to 85 per cent (2009: 83 per cent)- a change in the sales mix, with Professional Services revenue increasing and the Group's licence and royalty revenue decreasing, explaining this result. Loss before operations fell by 44 per cent to £500,000, mostly as a result of a 23 per cent decrease in operating costs. ANT signed 5 new licences during the period for various components of the ANT Galio Platform. With HbbTV expected to be adopted across Europe as a standard, the market for connected TV (broadcasted TV being coupled with internet related services) is expected to reach over $1.3bn by 2014. This rapidly evolving technology market is served well by the specifications of ANT's offerings and we look forward to the Company's second half performance. This little ANT looks to be on the march.
Biome Technologies (LON:BIOM) (0.13p/£7.65m)
Biome, the Company formally known as Stanelco, who primarily operate in the Bioplastics industry, announced its interim results for the 6 months to 30 June 2010. The Company, which recently moved to AIM, enjoyed a 40 per cent growth in revenue to £6.7m (2009: £4.8m), whilst operating losses fell from £1.5m to £1.2m- much of which has been obtained from a 53 per cent growth in the UK bioplastics business. Interestingly, while Bioplastics represent the bulk of the business, the Company has a second division known Stanelco RF Technologies which has seen 92 per cent growth. The cash position sits healthily at £4.7m, the bulk of which is due to a £3.5m cash-raising in June.
With 2 new product ranges, and new partnerships with large international customers (US customers in particular-personal care, food processing and confectionary businesses have been worked with during the period), Biome Bioplastics looks to be in a position to be able to leverage new relationships and take on new clients, whilst the RF Technologies business has seen both growth in new and repeat clients which signals the potential to be had.
Both divisions have been busy over the course of the last 6 months, and this looks set to continue for the foreseeable future, given the number and variety of clients the Company has. Dynamics to appreciate, we think.
Craneware Plc (LON:CRW) (401p / £101.65m)
Craneware, the provider of software to US hospitals to improve financial performance, has announced final results for the 12 months to 30 June 2010. Revenues increased by 23 per cent to $28.4m (2009: $23m), profit before tax increased by 24 per cent to $7.3m (2009: $5.9m), and EPS increased to 22 cents (2009: 18 cents). The Company currently has $89.8m of revenue under contract (2009 $60.1m), and has benefitted from signing reseller agreements with McKesson (to integrate Craneware’s Chargemaster Toolkit into their revenue management systems) and Premier Purchasing Partners (to market all of Craneware’s solutions to its customers) during the period. With US healthcare reforms currently underway, hospitals are being pressured into driving efficiency and reducing costs (40 million extra patients are expected to be treated by 2014, without increases in revenue from insurers)- Craneware’s product range facilitates this cost-cutting by improving supply chain management and allowing hospitals to continue to provide high levels of patient care.
Cubus Lux (LON:CBX) (16.5p/£3.94m)*
Cubus Lux, the Croatia-focused leisure resort operator and developer, announced the raising of £321,845 through the issue of 2,298,890 shares at 14p per share, which it intends to use to finance project costs and short-term working capital announcements. As mentioned last month, the Company continues to develop its operations in Croatia, and having extended its operator’s licence for 5 further years at the end of 2009, the Company continues to offer potentially exciting prospects. The fact that the Chairman (Gerhard Huber), Director (Christian Kaiser) and the CFO (Steve McCann) participated in the last placing demonstrates vested interest and aligned objectives- a signal for the markets to appreciate. Some big partners and commitments are needed for the projects Cubus has, but all things point to heading in the right direction.
Cyprotex (LON:CRX) (6.38p/£14.26m)
Since we commented on the Company on 10 August, the shares have risen by over 30 per cent. During this time, the Company has launched Cyprotox®, an in vitro toxicology service to accompany its other offerings to the clinical testing industry. The Cyprotox® service is offered from the Company’s Macclesfield laboratory that now houses its complete advanced array of pharmaceutical testing products and services, bringing it up to the same level of capabilities as the recently acquired businesses in the US. Thus Cyprotex will be able to offer its UK clients the High Content Screening (HCS) technology to determine multi-parametric indicators of toxicity. HCS is a recent breakthrough for early toxicology assessment that has been extensively validated, and is now being adopted throughout the pharmaceutical industry.
Additionally, the Company has announced that researchers can now access free online its database of the ADME and pharmacokinetic properties of marketed drugs (via its Cloe® Knowledge data visualisation and interpretation tool). Cloe® Knowledge categorises drugs according to the industry’s standard reference, allowing researchers to interrogate drugs and their impacts for a particular therapeutic area. This is a clever way of marketing the Company’s wider research databases and clinical testing capabilities, bringing them to the attention of precisely the analysts that could benefit from the Company’s service offerings. We can only see benefits from this initiative.
Further, the Company announced its half year’s results on 12 August that demonstrated despite the challenging environment and the strain upon management time resulting from the acquisition process of the North American businesses, the business continued to perform well. The comment that the growth experienced in the second quarter has continued into the second half of the year bodes well for investors. It should not be a surprise then to learn that the directors were immediate buyers of shares in the Company after the results announcement. Others should consider following their example.
Equatorial Palm Oil (LON:PAL) (11.75p/£13.48m)
The Liberia focussed sustainable oil palm plantation developer announced that it has signed a Memorandum of Understanding with Biopalm Energy Ltd. (a wholly owned subsidiary of Siva Ventures Ltd.) to form a $60m Joint Venture. Biopalm will invest $22.5m and guarantee a $30m loan facility to the JV, while EPO will contribute $7.5m and on completion hold all of the current land position in Liberia. The idea of the JV is to accelerate the development of EPO's 169,000 hectare land position- this serves to reinforce EPO's strategic development plan which is to plant 50,000 hectares of oil palm plantation within 10 years, targetting 250,000 tonnes per annum of crude oil produced.
The Company is currently in the process of assembling its processing mill, which we noted when we last wrote on the Company, and it continues to expect to commence production in Q4 2010. Funds will be used to facilitate and enable all operations across the plantation areas of Palm Bay, Butaw and River Cress, whilst the expertise and know-how of The Siva Group will help the Company realise the potential of the operation.
The Company appears to be on the cusp of great fortune, and in recognition of this Siva Group has invested substantially. It should come as no surprise that the share price of the Company has improved dramatically, though one should recognise that there is still room for share price improvement.
Goldplat Plc (LON:GDP) (9.5p/£10.65m)
A month ago, we commented on the news that the African precious metals recovery and mining company was in the process of finally receiving the long-awaited approval for a mining lease for its Kilimapesa Hill gold mining project in Kenya. The latest news is that whilst the Kenyan Director of Survey has still to issue the Company with a mining right number, the Commissioner of Mines and Geology has given permission for the processing plant to commence commercial gold production. The existing stockpiles are expected to provide enough mill feed until underground operations are allowed to resume, hopefully without much further delay.
Herencia Resources (LON:HER) (0.725p/£7.0m)
Just after having finished a very successful drilling programme at the Paguanta zinc-lead-silver-gold project in Northern Chile, Herencia announces high grade copper and silver assay results obtained through surface sampling at its Doris prospect. The Company is now planning an additional work programme at Doris which is located approximately 1500 meters from the main Patricia project just drilled. An update of the Mineral Resource Estimate is expected by the end of September which would allow Herencia to move to a Feasibility Study phase in the fourth quarter.
Hydrodec Group (LON:HYR) (8p/£28.95m)
Hydrodec, the oil recycling specialist, recently announced its first half results highlighting an 82 percent growth in Group revenues. Demand for SUPERfine transformer oil grew very strongly with a rise of 147 per cent in sales leading to record demand. It is now experiencing demand in the US that exceeds its production capacity there. We would not be surprised to see the Company raise its prices – certainly a bit of novelty in the current economic environment.
A strategic alliance in Japan coupled with increasing sales in South America combined with feedstock price reduction negotiations lead us to believe that the management’s expectations of positive net cash generation in the first half of 2011 is eminently achievable. This is certainly a super fine growth company that investors should follow.
Immunodiagnostic Systems Hldgs (LON:IDH) (780p/£218.17m)
The Company recently gave a brief trading update at its AGM. “Trading for the Company continues to be in-line with management expectations with demand for both our manual products and the IDS-iSYS being greater than the same period last year.”
Recent software upgrades and capacity increases that have enhanced customer offerings, combined with inaugural North American client accounts lead us to conclude that the Company should continue to enjoy increased investor support.
Motive TV (MTV 0.58p/£3.26m)*
Motive TV, the media company specialising in digital television technology, announced that its Dublin based TV production business has won a new live sports production contract with TV3, the Irish national commercial television broadcaster, valued at EUR1.1m. The fact that this new contract allows Motive to co-produce 62 UEFA Champions League and UEFA Europa League matches with Asgard Media suggests sound reasoning in keeping the business and helping to diversify the Company’s operations whilst it continues to work building its DTT business.
Speaking of which, good news was also to be had on the Company’s BesTV offering, with Motive recently announcing that it had separately reached agreement with both Antenna Hungaria ZRT, based in Hungary, and TV Nova, of the Czech Republic, to pilot a test programme for evaluating the BesTV technology. Antenna Hungaria is the operator of MinDig TV (which is essentially the same as Freeview), which is currently received by 6.3 per cent of all Hungarian TV households. With Antenna, Motive intends to test the addition of Video-on-Demand (VOD) and catch-up TV. A similar agreement was also achieved with TV Nova, and the Company continues in negotiation with a number of other broadcasters in both Europe and the USA for further pilot schemes.
Having had an abundance of good news, the Company’s share price rebounded from a 12-month low of 0.25p to 0.58p, though we feel there is room for further improvement given the prospects for the Company.
Polo Resources Ltd (LON:POL) ( 3.68p/£89.41m )
Since 10 August when we last wrote on Polo, they have completed the sale of their stake in Extract Resources, netting £94m (3.9p per share) and have paid a special dividend of 3p per share. In addition Weiss Asset management initially increased their stake by 19.5m shares to almost 260m shares, took the special dividend and then sold down to 238m shares. A director also took advantage of the special dividend by selling 36.2m shares with the dividend at 6.3p before repurchasing 10m post the distribution at around 3.5p. On top of that, the Company announced the purchase (at 3.36p) and the cancellation of 3m shares. One certainly cannot claim that this AIM share suffers from lack of liquidity!
At the end of the day, we believe that the NAV per share is of the order of 6.4p – a 75 percent premium to the current market price. For a company that has demonstrated its ability to distribute full value to shareholders, the current discount appears excessive.
Sunkar Resources (LON:SKR) (30p/£47.95m)
Phosphate fertilizer manufacturers are obviously a highlight at the moment with investors looking across sector operators following the acquisitive move by BHP on Potash Corp (and the increasing likelihood of a counterbid from China). Sunkar’s shares have risen 55 per cent since our last positive comment on 22 June.
Today Sunkar announced a Memorandum of Understanding with Eurasian Development bank (a Russian and Kazakhstan government backed institution) to finance Sunkar’s Chilisai phosphate project in Kazakhstan. The MOU envisages providing up to $200m of debt for 12 years and will add significant credibility for investors when the current bankable feasibility study is completed and announced. Being a fertilizer company, we would not be surprised to see the shares grow faster than their rivals!
Touch Group (LON:TOU) (1.75p/ £2.83m)
The business-to-business publishing group announced preliminary results for the 15 months ended 31 March 2010. Revenue was down by almost 10 per cent to £5.7m (due to factors including a depleted sales team), whilst losses for the period increased to £2.2m (2008: loss of £0.8m). Interestingly, gross profit margins have improved to 52.4 per cent (2008: 47.6 per cent), perhaps in part due to the business focusing more on supported content. Net assets on the balance sheet stand at £1.7m (2008: £2.8m), though cash available to Touch increased to £1m (2008: £0.5m). Performance for the Company was unfortunately subdued through difficult trading conditions, though it has implemented a number of initiatives to help turn the business around. Touch raised £0.8m at the end of 2009 to help build the sales team and improve revenue streams from its medical publications- relationships with clients such as GSK, Novartis and Bayer have been extended by offering online marketing and educational programmes, together with medical communications projects, which have in total helped build forward orders of the core journal business to £2.2m (2009: £1.4m) and the medical communications business to £0.6m (2009: £0.1m). The sales force has also been boosted to 40, which is a 70 per cent improvement on the average for the prior year. We keep watch for further updates on the Company’s trading, certainly the worst is behind it, and it can look forward with renewed confidence.
Valirx Plc (LON:VAL) (0.38p/£1.29m) *
AIM listed cancer diagnostic biotech company announced that it has entered into a licensing agreement with Cancer Research Technology for the rights to VAL201, a compound which has been shown to inhibit the growth of tumors that are unresponsive to hormone treatments. Whilst VAL201 moves towards the first clinical trials, ValiRx has obtained the rights to exclusive development and commercialisation of VAL201 in the diagnosis, treatment and prevention of cancer and other diseases. There are 35,000 men per year being diagnosed with prostate cancer in the UK alone, and 10,000 deaths per year from the disease- the market for treatment is expected to grow to $7.7bn by 2015, from $5.2bn in 2008, therefore offering a significant opportunity for a product based on VAL201. ValiRx will be responsible for performing the pre-clinical development and obtaining the regulatory approval required to perform clinical trials in patients. Having written positive news on ValiRx back in July, we continue to feel that this is a key opportunity to buy before the rest of the market realises the well diversified potential of the Company.
William Sinclair (SNCL 111.5p/£18.46m)
The shares have consolidated a little since we last wrote on the Company at the beginning of July and now would be a good time to “grow” holdings following the announcement of an additional distribution agreement.
The Company has secured a distribution contract with Monro Horticulture to distribute Monro’s range of Growing Success Organics (a wide product base of garden safe chemicals and consumer horticulture products) in return for working capital support. This initiative is expected to contribute an additional £3m to turnover through exploiting its current distribution network and marks a strategic move by the Company into a broader and higher value range of products. This is a distinctly positive move by management and it should be supported by investors.
*A corporate client of Hybridan LLP
This document should not be relied upon as being an impartial or objective assessment of the subject matter and is not deemed to be "independent research" for the purposes of the Financial Services Authority (FSA) rules. As a consequence the research (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research (although Hybridan does impose restrictions on personal account dealing in the run up to publishing research as set out in our Conflicts of Interest Policy).
The individuals who prepared this document may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result both Hybridan LLP and the individual partners and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document.
This document has been issued by Hybridan LLP for information purposes only and should not be construed in any circumstances as an offer to sell or solicitation of any offer to buy any security or other financial instrument, nor shall it, or the fact of its distribution, form the basis of, or be relied upon in connection with, any contract relating to such action. This document has no regard for the specific investment objectives, financial situation or needs of any specific entity. Hybridan LLP and/or connected persons may, from time to time, have positions in, make a market in and/or effect transactions in any investment or related investment mentioned herein and may provide financial services to the issuers of such investments. The information contained herein is based on materials and sources that we believe to be reliable, however, Hybridan LLP makes no representation or warranty, either express or implied, in relation to the accuracy, completeness or reliability of the information contained herein. Opinions expressed are our current opinions as of the date appearing on this material only. Any opinions expressed are subject to change without notice and Hybridan LLP is under no obligation to update the information contained herein. None of Hybridan LLP, its affiliates or employees shall have any liability whatsoever for any indirect or consequential loss or damage arising from any use of this document.
In the UK, this report is directed at and is for distribution only to persons who (i) fall within Article 19(1) (persons who have professional experience in matters relating to investments) or Article 49(2) (a) to (d) (high net worth companies, unincorporated associations, etc) of the Financial Services and Markets Act 2000 (Financial Promotions) Order 2005 (as amended) or (ii) are Professional Clients or Eligible Counterparties of Hybridan LLP (all such persons together being referred to as "relevant persons"). This report must not be acted on or relied up on by persons in the UK who are not relevant persons.
Neither this report nor any copy of part thereof may be distributed in any other jurisdictions where its distribution may be restricted by law and persons into whose possession this report comes should inform themselves about, and observe any such restrictions. Distribution of this report in any such other jurisdictions may constitute a violation of UK or US securities law, or the law of any such other jurisdictions.
Investments in general involve some degree of risk, including the risk of capital loss. The services, securities and investments discussed in this document may not be available to or suitable for all investors. Investors should make their own investment decisions based upon their own financial objectives and financial resources and, if in any doubt, should seek advice from an investment advisor. Past performance is not necessarily a guide to future performance and an investor may not get back the amount originally invested. Where investment is made in currencies other than the investor?s base currency, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Levels and bases for taxation may change. When Hybridan LLP comments on AIM or PLUS Markets shares investors should be aware that because the rules for those markets are less demanding than the Official List of the London Stock Exchange the risks are higher. Furthermore, the marketability of these shares is often restricted.
Hybridan LLP and/or its associated companies may from time-to-time provide investment advice or other services to, or solicit such business from, any of the companies referred to in this document. Accordingly, information may be available to Hybridan LLP that is not reflected in this material and Hybridan LLP may have acted upon or used the information prior to or immediately following its publication. In addition, Hybridan LLP, the partners, directors and employees thereof and/or any connected persons may have an interest in the securities, warrants, futures, options, derivatives or other financial instrument of any of the companies referred to in this document and may from time-to-time add or dispose of such interests. Neither the whole nor any part of this material may be duplicated in any form or by any means. Neither should any of this material be redistributed or disclosed to anyone without the prior consent of Hybridan LLP. Hybridan LLP is Authorised and Regulated by the Financial Services Authority and is a member of the London Stock Exchange.
29 Throgmorton Street, London EC2N 2AT
If you would like to receive other research reports from Hybridan, or would like to unsubscribe, please e- mail email@example.com, title e-mail "research reports" or "unsubscribe me" Hybridan LLP is authorised and regulated by the Financial Services Authority Member of the London Stock Exchange