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Another deal in the Potash, Shifting up a Gear4music. A quantum leap for ServicePower

Published: 12:48 09 Sep 2015 BST

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This week’s small cap wrap is dedicated to the life and memory of Nigel Roberts of the Proactive Investors’ team who sadly passed away recently.
Nigel was a frequent interviewer of the Hybridan team and will be fondly remembered for his infectious sense of humour and personable character.
He will be sorely missed and our thoughts go out to his family, friends and colleagues during this difficult time.



AFPO Memorandum of Understanding, AAU Quarterly Newsletter, ATQT Directorate Change, COS Participation, FITB* Board Changes and Appointment of CEO, G4M Trading Update, MARL* Exercise of Warrants, Termination and CPR, MDZ* Final Results, MXO* Nigerian Update, OPTI* Half Yearly Report, PEG* Directorate Change and Half yearly Report, PLI* Expansion of Phase II, SVR Award and Patents, STEL Licence Application, ZEG Intention to Move to Official List

*A corporate client of Hybridan LLP

A full archive of previous weeks’ Small Cap Wraps can now be viewed on www.hybridan.com.

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.

African Potash (LON:AFPO)
African Potash, the exploration company focused on sub-Saharan potash assets, announced that it has entered into a Memorandum of Understanding with a Zimbabwean fertiliser supply company with a view to supplying it with 150,000 metric tonnes of fertiliser.  This is the third fertiliser Trading Agreement secured by African Potash following the landmark trading agreement with the Common Market for Eastern and Southern Africa and the Mask Africa Crowd Farm Fund Limited in August 2015, underpinning the Company's active growth strategy as it looks to build a vertical platform for the mining, production and distribution of fertiliser. Under the terms of the Trading Agreement, which is subject to the signing of definitive transaction agreements, African Potash will source and fund the delivery of fertiliser through its proprietary network and methods, with first delivery anticipated later this year.

Ariana Resources (LON:AAU)
Ariana Resources, the gold exploration and development company focused on Turkey announced the release of the Company's Quarterly Newsletter for shareholders detailing the recent progress across its portfolio of gold pre-production, development and exploration interests. There were several company highlights in the announcement. Firstly it broadcasted the initiation of Kiziltepe mine construction phase at Red Rabbit is imminent following the issue of forestry permits. They have secured $33m construction finance facility with Turkiye Finans Katilim Bankasi A.S. and are on track to deliver a first gold pour in H2 2016. Moreover continued exploration in the vicinity of Kiziltepe has highlighted exceptional prospectivity. In addition Kiziltepe has been granted Strategic Investment status, this provides enhanced investment incentives and demonstrates continued support for the mine’s development by the Turkish Government. Finally the company has announced support from a new strategic investor; two subscriptions of £0.25m during the period from Metal Tiger highlights the investment opportunity provided by Ariana. The company also announced that mine construction has commenced at the Kiziltepe Sector of the Red Rabbit Gold Project in western Turkey, which is being developed in partnership with Proccea Construction, to deliver its first gold pour in H2 2016.

ATTRAQT Group (LON:ATQT)
ATTRAQT Group, a leading provider of eCommerce visual merchandising, site search and product recommendation technology, announced the intention of the Group’s current finance director, David Stirling, to retire and step down from the board. David will remain involved in the day to day running of the finance function of the company in the short term, in order to ensure an orderly handover to Mark Johnson, who will take over as finance director. It is expected that David will leave the board and Mark be appointed finance director with effect from 25 September 2015. Mark Alasdair Smith Johnson, 45, has over 20 years of experience working with high-growth and developing companies in media, technology and service industries. Mark’s previous roles include various positions within the finance function of Total Office Group, a supplier of office furniture and ancillary services, being one of the key team members overseeing the company’s admission to AIM in 1996 and Gunpowder Limited, his consultancy, where he provided services to a number of companies including De Boer, a leading provider of temporary structures. Most recently, Mark acted as head of finance, and subsequently group commercial director, of Celador Entertainment Limited, a group of companies specialising in film production, radio broadcasting and music publishing, where he was a senior board member and responsible for a broad range of business affairs, including finance, audit, HR, back office operations and liaison with external advisers.

Collagen Solutions (LON:COS)
Collagen Solutions, the developer and manufacturer of medical grade collagen components for use in regenerative medicine, medical devices and invitro diagnostics, announced that it has been chosen to participate in a new research project to develop novel treatments for Parkinson's disease. The project is being led by CÚRAM, the Centre for Research in Medical Devices based at NUI Galway, who have secured €4m in funding through the European Horizon 2020 grant programme. The project, entitled 'Development of Biomaterial-based Delivery Systems for Parkinson's disease - an Integrated Pan-European Approach', facilitates collaboration between world class researchers and industry partners to develop the first disease-modifying therapy for Parkinson's, which could slow down the progression of the disease rather than offering mere symptomatic benefits. As a key member of the consortium, Collagen Solutions will receive significant funding to develop various types of medical grade collagens for investigation over the duration of the project. The company also announced that its long term client, NovaBone Products, has had a novel device approved by the US FDA, for use in the delivery of its collagen bone graft product MacroFORM. NovaBone has received FDA approval for the NovaBone MacroFORM MIS Delivery System designed for minimally invasive orthopaedic procedures.  The system was developed for surgeons requiring controlled and precise delivery of collagen bone grafting material to surgical sites that aren’t readily accessible. NovaBone’s MacroFORM technology allows the delivery of bone marrow aspirate and other bioactive formulations to a graft in a ready to use, minimally invasive cannula. NovaBone has introduced six new collagen products in the last 12 months for use in the wound care and bone graft markets based on the company’s novel regenerative medicine technology and core competencies in designing innovative and cost-effective medical devices.

Fitbug Holdings (LON:FITB)*
Fitbug Holdings, provider of online personal health and wellbeing services, announced it has appointed Anna Gudmundson as Chief Executive Officer.  Anna has over 10 years of management experience in the technology sector: successfully building and managing the services and applications department during her time as Head of Services at luxury mobile phone company Vertu, leading large scale multi-national projects at Alcatel-Lucent in the mobile and telecom sector, and developing new marketing solutions for large global brands and leading businesses into new categories and territories. Most recently she has been running her own consultancy, working directly with executive teams of SME's in the technology industry globally to help businesses with their product roadmap, product portfolio strategy, business strategy and values, price and product positioning, budget management, development processes, team structure and roles, software tools and technology, brand strategy, culture change and other core business areas. The company also announced that Fergus Kee, the Company's Chairman, has decided to step down from the Board after four years with the Company. The current non-executive directors Allan Fisher, former Chairman of the Company, and David Turner, former CEO of the Company, will jointly take over the position of interim non-executive Chairman. Allan founded Holmes Place and David was a founder member of LA Fitness. The Company has commenced a search for a new Chairman and will make a further announcement in due course. Further to this with the recent successful fundraise and the appointment of Anna Gudmundson as CEO, Fitbug is now well placed to implement its strategy to increase sales of the Company's integrated wearable health technology offering, including Kiqplan and Fitbug Orb.

Gear4music (LON:G4M)
Gear4music , one of the largest UK based online retailers of musical instruments and music equipment, announced a trading update for the six months to 31 August 2015. Highlights included a strong increase in sales in both the UK and Europe - a 29 percent rise in website visitor numbers compared with the same period last year, contributed to a 43 percent increase in Total like-for-like sales, with Active Customer database numbers up by 32 percent to 400,000. Further expansion in the range of products offered for sale, with 11 new brands signed up in the period and more own brand products launched, taking the Total number of products available to over 29,000 from 27,400 at the start of the financial year. IPO on AIM completed in June 2015 - the £10m IPO placing proceeds have enabled continued investment including further development of the ecommerce platform, additional marketing and extending the range of products held in stock.

Mariana Resources (LON:MARL)*
Mariana Resources, the exploration and development company with projects in Turkey and South America, announced that as at 27 August 2015 11,989,300 2p warrants were due to expire.  Mariana has received exercise notices Totalling 7,067,000 warrants for funds of £141,340. The company also reported further high grade gold-copper (Au-Cu) intercepts from ongoing drilling at the Hot Maden Project, north east Turkey. Following the initial mineral resource estimate published by Mariana on the 18th August 2015 further new complementary assays have been received from JV partner Lidya Madencilik Sanayi ve Ticarte S.A. for three drill holes (HTD-18, HTD-20, and HTD-22) which extend known Au-Cu mineralisation both down-dip and to the north.  Assays are also reported for two exploration holes (HTD-19 and HTD-21), the first drill testing of the southern extension of the Hot Maden system. Highlights from the 5 drill holes include: HTD-18: 108.2m at 3.0 g/t Au + 1.3 percent Cu from 292.0m downhole including 12m at 6.4 g/t Au + 2.8 percent Cu (330.0m - 342.0m)and 9m at 12.4 g/t Au + 0.8 percent Cu (384.0m - 393.0m). HTD-20: 88.5m at 1.8 g/t Au + 2.3 percent Cu+ 1.9 percent Zn from 1.5m downhole including 3.5m at 12.5 g/t Au + 5.7 percent Cu (48.5m - 52.0m). HTD-22: 43.8m at 7.7 g/t Au + 1.2 percent Cu from 342.2m downhole including 13.8m at 23.3 g/t Au + 1.6 percent Cu (98.0 - 114.0m). HTD-19: 12.1m at 2.1 g/t Au + 0.7 percent Cu from 209.3 m downhole, and 36m at 4.3 percent Zn and 13.3m at 7.75 percent Zn from 271.0 m and 312.0m downhole, respectively. HTD-21:  64.1m at 0.8 g/t Au + 0.3 percent Cu+ 140ppm Mo from 103.4m downhole Including 0.8m at 9.6 g/t Au + 0.4 percent Cu (157.9m - 158.7m). Additionally the company has provided Condor Resources Inc. with notification of termination of the earn-in option agreement for the Soledad Copper-Gold-Silver Project, Central Peru. Mariana completed 2,084m of drilling on the Soledad Project in 2014, which led to the discovery of near surface, high grade copper-gold mineralisation hosted in tourmaline breccia pipes. These high grade breccia pipes are of limited tonnage potential, therefore subsequent exploration activities (such as deep sensing IP) were focused on the targeting of a deep (>500m), potentially mineralized intrusive/porphyry source.  Drilling these deep targets represents significantly elevated discovery risk and cost to the Company, therefore Mariana believes it prudent to withdraw from this option agreement and focus on Turkey and the balance of Mariana's highly prospective portfolio.

MediaZest (LON:MDZ)*
MediaZest, the creative audio-visual company, provided shareholders with the Final Results for the Year Ended 31 March 2015. Key points of the year showed new clients Hyundai and Rockar, whereby MediaZest delivered the audio visual solution behind their ground breaking and multi-award winning Bluewater car dealership. There was successful development, testing and launch of MediaZest Retail Analytics. This unique system is the Group’s first product to generate intellectual property. There were successful live deployments leading to multiple new and ongoing opportunities in new financial year 2015/16. The Post Office Limited acquired as a new client with first project in summer 2014 and additional work secured and successfully delivered in current financial year. Revenue and year-end cash balance lower than previous year, partly due to delayed project in March 2015 falling into next financial year, but net loss for the year stable despite reduction in revenue. Subsequent developments: showed MediaZest awarded Digital Store of the Year at 2015 Retail Week Technology & E-commerce Awards for the Hyundai Rockar dealership. Project wins post year end with new and existing clients including Adidas, Ted Baker, Chivas Regal, Kuoni, Samsung and Virgin Active. Appointment of new Group Finance Director to the Board and New Business Director in the business following resignation of Sales Director and £114,000 of shareholder loans repaid within 1 month of year end.

MX Oil (LON:MXO)*
MX Oil, the oil and gas investment company, announced an update on the progress it is making in Mexico together with its partner Geo Estratos with regards to the on-going Bid Round 1 Licensing round and its efforts to secure onshore conventional concessions in the re-opening Mexican energy sector. The Company is now one of only 15 participating companies in Bid Round 1 to have completed the payment for the bidding inscription and is currently finalising information ahead of submission of the pre-qualification filing.  A Total of 25 Land Contract Areas in the states of Chiapas, Nuevo Leon, Tabasco, Tamaulipas and Veracruz will be awarded to companies that satisfy the pre-qualification requirements and win the subsequent tender process.  Following access being granted to the data room in June 2015, analysis and due diligence of the target blocks is progressing well, ahead of the anticipated award of concessions in December 2015.  The company has also been advised by its partners that the Aje-5 well in the proven Aje Field on licence OML 113 offshore Nigeria has reached targeted depth of 3,255 metres and has intersected hydrocarbon bearing intervals in line with the pre-drill geological model.  The Well is now being completed as a subsea oil production well.  Aje-5 is the first of a two well Phase 1 drilling programme, targeting first oil in December 2015.  Peak gross production from these two wells is estimated at 11,000 bopd, as stated in the June 2015 Competent Persons Report (CPR).  The CPR also states that Phase 2 is targeting gross production of 19,000 bopd from an additional two well development.  As announced on 13 July 2015, MX Oil has agreed to invest in a 5 percent revenue interest in OML 113 via Jacka Resources.

OptiBiotix (LON:OPTI)*
OptiBiotix Health, a Life Sciences business developing compounds to tackle obesity, high cholesterol and diabetes, announced its results for the six months ended 31 May 2015. OptiBiotix continues to make progress on its strategy of developing compounds which modify the human microbiome and commercialising these through partnering with food, health, and wellbeing companies. Highlights included the appointment of Jim Laird as Commercial Director to the Board to increase commercial capacity and capability.  The completion of preclinical studies and ethics approval received to enable human clinical studies to begin for the Company's cholesterol lowering product. The expansion of the OptiBiotic® platform to a wider range of microbial species broadening the number of product and partner opportunities has also been identified.  The filing of four new patents and creating a joint venture with Nizo Food Research to develop, manufacture and distribute weight management yoghurts to global markets.

Petards Group (LON:PEG)*
Petards Group, the developer of advanced security and surveillance systems, reported its interim results for the six months to 30 June 2015. Operational highlights showed June order book remained strong at £19m providing good revenue cover for the second half of 2015 and beyond. Circa 40 percent of order book currently scheduled for delivery in the second half of 2015. H1 2015 highlights included: Over £2.5m of orders for Petards' eyeTrain CCTV systems under the framework agreements held with Siemens and Hitachi, and a new project from Bombardier, with strong recurring revenue streams for eyeTrainspares and support. Financial highlights showed strong results for the six months to 30 June 2015, with higher margin revenues than 2014 Totalled £6.1m (2014: £7.2m), gross margins of 36.4 percent (2014: 27.4 percent). There was a 39 percent increase in EBITDA to £0.61m (2014: £0.44m), operating profit increased to £0.44m (2014: £0.35m) and a 30 percent increase in profit after tax to £0.37m (2014: £0.27m). Cash inflow from operating activities was £0.56m (2014: £0.18m), cash at 30 June 2015 £2.0m (31 Dec 2014: £1.4m) with no bank debt and basic EPS up 30 percent to 1.03p per share (2014: 0.79p per share) and diluted EPS up 23 percent to 0.76p per share (2014: 0.62p per share).

ProMetic Life Sciences (LON:TSX)*
ProMetic Life Sciences reported that its PBI-4050 has been confirmed to be safe and well tolerated in the first 12 metabolic syndromes with associated type 2 diabetes patients, following review of the safety data by the Data Safety Monitoring Board. ProMetic is now proceeding with the enrolment of an additional 24 patients, as planned in the study protocol design. Since the beginning of the metabolic syndrome Phase II clinical trial, the first 12 patients have received on average the equivalent of more than 2 months of dosing per patient. PBI-4050 has now therefore exceeded more than 24 months of patients/product exposure and the Corporation anticipates having partial read out on biomarkers available before the end of this year.

ServicePower Technologies (LON:SVR)
ServicePower Technologies, a market leader in workforce management technology, announced that it has been honoured by Jones Lang LaSalle (JLL) with an EMEA IFM Supplier of Distinction Award. The award recognises the exceptional performance of supply partners and their contribution to JLL's success. The company has applied for three new patents related to Quantum Annealing Optimisation for field service and workforce management solutions. The Quantum Annealing algorithm, which is the first new algorithm developed for field service in many years, can drive greater productivity enhancements and route efficiencies by making the optimisation more efficient. This algorithm was developed as part of a KTP (Knowledge Transfer Partnership) initiative with Dr. Alan Crispin and Alex Syrichas from the Manchester Metropolitan University.   This new algorithm is expected to be utilised in ServicePower's latest product launches, including NEXUS FStm and Optimization on Demandtm, as well as an enhancement to the proven ServiceScheduling tm product that uses ServicePower's version of the simulated annealing algorithm.

Stellar Diamonds (LON:STEL)
Stellar Diamonds, the diamond development company focused on West Africa, announced the results of the preliminary economic assessment (PEA) from its Tongo kimberlite diamond project in Sierra Leone. Independent consulting company Paradigm Project Management (PPM) was retained by the Company to conduct the PEA over the 1.45 million carat inferred resource of the Tongo Dyke-1 kimberlite, one of four kimberlite dykes at the Project. The company cited several highlights of the PEA in its announcement. Firstly it points to the PEA’s projection that the mine will have an 18 year life from both surface and underground mining yielding 955,930 carats. Additionally the company is targeting a yield of 117,806 carats from surface mining in years 1-4 providing early cash flow. There is a modelled diamond resource grade of 120cpht and diamond value of $270 per carat.  A further highlight of the PEA is the low cost capex requirement of $24.2m to establish a surface and underground mine. It projects gross mine revenues of $286.7m and a pre-tax NPV10 of $53.2m and IRR of 31 percent. The PEA determined there to be significant potential to increase mine life and revenues with resource open at depth. As a result of this a mining license application has been submitted. Mine construction has commenced at the Kiziltepe Sector of the Red Rabbit Gold Project in western Turkey, which is being developed in partnership with Proccea Construction Co., to deliver its first gold pour in H2 2016. The Forestry Department is currently clearing land within the permitted areas of the mine site and freehold land acquisitions are essentially completed. Final negotiations on major Turkish supplied plant components are complete and long lead orders have been placed. A mining contractor has been assigned and is currently expected to commence site works in October 2015. Installation of the perimeter security fence for the mine site is underway and four pre fabricated building are now complete and awaiting delivery to the site. Ariana drill rig mobilised this week to commence drilling at the foundation site of the process plant.

Zegona Communications (LON:ZEG)
Zegona Communications, a media investment vehicle firm has recently indicated its intention to move to London Main Market after beginning floatation in the AIM in March 2015. Zegona Communications' directors stated that this change is needed in order to achieve their ambitions for Zegona. The London-headquartered firm was established with the objective to execute a Buy-Fix-Sell strategy targeting the European TMT sector and is looking to build a portfolio of assets worth £1bn to £3bn in enterprise value. The firm is set to have identified 60 potential opportunities and has recently acquired Spanish Telecoms Telecable de Asturia for €640m in enterprise value. Zegona is yet to release its unaudited interim earnings on 30 September 2015. Prior to AIM listing, Zegona Communications raised £30m from Institutional Funds and is expected to exit AIM trading when moving to London Main Market on 25 September 2015.

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