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This week: A deeper hole for Polo, Silence announces a new agreement and a new diversion for DDD

Last updated: 10:24 26 Oct 2011 BST, First published: 09:24 26 Oct 2011 BST

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Ups and downs again in the financial markets last week, with the FTSE 100 moving between 5,540 and 5,360, and the AIM All share between 720 and 700 points. Another Eurozone crisis summit was announced based on the ongoing debt crisis facing Greece and other nations, which contributed to the volatilities, though finance ministers have now approved the latest tranche of funds (£8bn) for Greece’s bailout and have agreed the outline of an overall solution to dealing with the European crises. Other news during the last week included the announcement that UK public sector borrowing had fallen to a lower than expected £14.2bn in September (though it is quite possible that the figures will be higher next year on the back of anticipated increases in benefits payments), and also that consumer confidence had fallen for a fourth month in a row, based on Nationwide’s Consumer Confidence Index. The week ahead sees details of the outlined agreement on the European crises being ironed out by Wednesday and further discussion points around the BoE’s quantitative easing program. 

AGL progress of Portfolio Company, AVCT Final results, DDD Update, ETX H1 results, FPM strikes oil, FITB licence agreement, FBT chosen by Platform Post, GAL New Finds, GDP Update, IMM regains Lupuzor rights , MDM Trading Update, MCHL Two disposals, OMG trading update, OMI Targets increased, OXB IND application approved by FDA, POS Strong pipeline, POL operational update, SCLP new patent, SLN Collaboration, SMS Update, STEL Update, TND H1 results, TCM Profit Warning, TMZ Update, TRT order and TSTL FY results


Angle (LON:AGL

AIM listed Angle which focuses on the commercialisation of technology announced that its 33 per cent owned portfolio company Geomerics, which specialises in computer games middleware, has made significant progress on a number of fronts. Sales continue to grow at an encouraging rate. Geomerics’ Enlighten technology is now being employed in 18 titles worldwide and is currently in evaluation and under consideration for many more. Among these titles are two of the most hotly anticipated games of 2011; Battlefield 3 and Need for Speed: The Run. Geomerics is also delighted that it has secured its first deal inside Korea, which will see Enlighten used in multiple titles. Geomerics has been awarded new grant funding to research applications of its technology on mobile devices. All in all great progress for the non lifescience Company in its portfolio of Companies.

Avacta  (LON:AVCT)   

Avacta, a leading provider of proprietary analytical and diagnostic technology, consumables and re-agents, to the drug development and healthcare sectors, this week announced its preliminary results for the year ended 31 July 2011.  Group underlying revenue grew by 42 per cent to £2.45m (2010: £1.72m) driven by the sale of fourteen of its Optim analytical units compared to two in 2010. The reported operating loss reduced to £1.13m (2010: loss £2.03m).  The Company also reported that a further eight orders have been taken this financial year, ahead of target, and highlighted the extension of the Optim distribution agreement with Pall into South East Asia as further validation of the product and its potential.

DDD (LON:DDD)  
 
DDD, the 3D solutions company, announced this week that it had signed a licensing agreement with Sony, which has launched its latest VAIO S-series laptop PC using the Company’s TriDef 3D solution. The TriDef technology converts 2D to 3D automatically and enables delivery to 3D TVs, PCs and mobile devices. The partnership between DDD and Sony marks the first time that 2D notebooks will include 3D features, bringing 3D to the PC mass market. The chief executive highlighted that this is the Company’s biggest PC licence to date and shows the progress in delivering a market leading 3D content solution for the PC market. 
e-Therapeutics (LON:ETX

The drug discovery and development company last week announced its interim results for the six months ended 31 July 2011. A new wave of work has begun using the network pharmacology platform, with a focus on cancer and neurodegenerative diseases. The platform has gained further intellectual property protection and clinical development programmes have been advanced. Four drugs have been prioritised, targeting cancer, infections and psychiatry; preparations are on course for four trial starts in early 2012, and extensive clinical data is expected in 2012 and 2013. The business is evolving to meet new challenges as the first scientists are hired for a new network pharmacology discovery unit in Oxford. The balance sheet has been strengthened with an equity placing raising net £16.7m to invest in discovery and development, whilst the half-year net loss was £1.5m (2010: loss of £1.0m). During the period Dr Daniel Elger was appointed as CFO. During 2012, ETX expects to see the first data from the new programme of clinical trials.
 
Faroe Petroleum (LON:FPM)  

The independent oil and gas company announced an oil discovery in well 8/10-4S on the Butch prospect located in the Norwegian North Sea. The 8/10-4S exploration well discovered oil in the Butch prospect which is situated in 66 metres water depth in the Norwegian North Sea. The well encountered net oil pay of approximately 50 metres in the Upper Jurassic reservoir of the Ula formation. Preliminary results show that the well has encountered a light oil in good quality reservoir sands with a very high net to gross ratio. The entire reservoir section was found to be oil bearing and an oil water contact was not penetrated. The joint venture has decided to proceed immediately to drill a down-dip side-track well to appraise for additional volumes of oil further down on the large salt induced structure in accordance with the success case contingency plan.

Fitbug Holdings (LON:FITB)  

The AIM traded provider of online personal health and well-being services, announced that it has signed a device and software licence agreement with Boston-based MeYou Health, a wholly-owned subsidiary of Healthways. MeYou Health delivers web and mobile technologies designed to transform social networks into support systems and improve the well-being of users.  This agreement will see Fitbug’s technology support MeYou Health propositions and is in line with the Company’s corporate strategy to expand its presence in the US health market. Paul Landau, Fitbug CEO said that while the revenue from this pilot stage project is modest, it offers significant future potential and presents an exciting opportunity to partner with an innovative leader in the US health App and mobile health challenge arena.

Forbidden Technologies (LON:FBT

The AIM quoted developer of the market leading Cloud video platform FORscene today announced that Platform Post has chosen to provide FORscene as its logging, rough cut editing and review / approval platform. The share was up 6 per cent in early trading. 

Galantas Gold Corporation (LON:GAL

Galantas the gold mine producer and explorer in Northern Ireland, reported that its 100 per cent operating subsidiary, Omagh Minerals Ltd has identified more significant gold intersections in drilling and channel sampling on its Omagh, County Tyrone property. President & CEO Mr. Phelps commented that it had been possible to fund the drilling program so far out of on-going cashflow from the operating mine thus enabling a further expansion of the whole program to receive active consideration. 

Goldplat (LON:GDP)  

The AIM quoted gold producer, provided a position exploration update at its 246 sq km Nyieme gold project in the prospective Birimian Greenstone Belt in southern Burkina Faso, West Africa. The Company completed a 30 hole 3,100m reverse circulation programme at Nyieme which concentrated on the Nyieme Village, A1, and D1 Zones, three of the 11 prospective target areas originally identified on the licence. RC holes NYRC32 and NYRC57drilled to the north of the Nyieme Village Zone intersected gold values of 1m at 3.11g/t and 1m at 1.85g/t. Also, hold NYRC32 returned anomalous gold values over the first 44m of the hole and NYRC57 showed multiple gold anomalous zones including one 10m thick zone. Programmes for further work include testing the depth and strike extensions of the existing zones as well as prospecting other identified artisanal workings. Demetri Manolis, CEO said that with these latest results they have increased the current JORC resource by 61 per cent to 92,589 ounces, a figure that they expect to increase significantly as they implement the planned development programmes which will tests the 11 identified prospective zones as well as the zones with extensive artisanal workings. 

ImmuPharma (LON:IMM)  

The specialist discovery and development pharmaceutical company last week announced that following discussions with Cephalon Inc, its licensee for Lupuzor(TM), it has regained rights to Lupuzor(TM) due to the acquisition of Cephalon by Teva Pharmaceutical Industries Ltd. ImmuPharma entered into an option agreement with Cephalon in 2008 while in the middle of a Phase IIb study, which ImmuPharma designed, managed and funded. Given the fact that Teva has a competing drug candidate for Lupus (laquinimod) and the existence of key provisions of the agreement between ImmuPharma and Cephalon, Immupharma requested the return of the rights for Lupuzor(TM).

MBL Group  (LON:MUBL

MBL announced the sale of Global Media Vault (GMV), its Digital and eCommerce businesses, to Sainsbury's Supermarkets Ltd for a consideration of £1m.  The sale follows a decision previously announced within the Operating Review of the Group plc's Preliminary Announcement dated 26 August 2011 to withdraw from this business due to high development costs.  In the financial year to 31 March 2011, GMV made a loss before tax of £2.9m and had net liabilities of £3.9m. The sale proceeds will be used for working capital purposes.
 
MDM Engineering Group Ltd (LON:MDM)  

The minerals process and project management  company gave an update on trading and announced that it anticipates that results for the year will be substantially ahead of current market expectations. Since the recovery of the Company’s project pipeline during the last quarter of the year to 31 March 2011, the number of new projects and studies awarded to the Company has continued to grow. This has helped the Company return to profitability in the first half of 2011 following the profitable second half of the previous financial year. Due to this better than expected trading, the Company anticipates that its results for the 2012 financial year will be substantially ahead of current market expectations.

Mouchel Group (LON:MCHL)

Beleaguered Mouchel has sold two businesses in the last week.  They raised £3.4m (plus a further £2.5m in working capital) from the sale of Mouchel Rail  to an Australian rival, Sinclair Knight Merz, and their gas pipeline design business has been sold to Mott MacDonald for £2.55m (plus a potential further £0.85m).  The money raised will be used to help pay off debts that stood at around £87m in July.  The work continues. 

OMG (LON:OMG

The mobile motion capture (mobile mocap) technology group provided a trading update for the year to 30 September 2011. The Company believes that it has had a good second half of the year following a difficult first half, expecting revenues in excess of £27m and a small pretax profit. A net cash balance of £2.8m was on the balance sheet at the year end. The Company’s core Vicon business reported growth over the first half, whilst the 2d3 defence business won some new contracts and continued to grow. OMG Life, the consumer facing business, continues to be invested in ahead of a key product launch expected during the financial year. 

Orosur (LON:OMI

Orosur the gold explorer and miner with assets in Chile and Uruguay took the opportunity to update investors and analysts in London.  This year’s gold production is in line at 55,817 ounces; though cash costs came in below - $754 per ounce (vs target $825). Production targets have increased for next three years  to  60,000 (2012); 65,000 (2013); & 75,000 (2014) ounces respectively.  They have $20m cash and $30m  cashflow (2011).   Projects at San Gregorio & Talca adds high grade pipeline potential to the company’s current projects.

Oxford BioMedica (LON:OXB

The leading gene-based biopharmaceutical company last week announced that the FDA has approved its Investigational New Drug (IND) application for the Phase I/IIa clinical development of UshStat(R), a novel gene-based treatment for Usher syndrome type 1B. UshStat(R) was designed and developed by Oxford BioMedica using the Company's proprietary LentiVector(R) platform technology and is the third programme to enter clinical development under the Phase I/II ocular collaboration agreement signed with Sanofi in April 2009. The Phase I/IIa study is expected to be initiated by the end of 2011. Usher syndrome is the most common form of deaf-blindness which affects approximately 30,000-50,000 patients in the US and Europe. On the basis of pre-clinical data, it is anticipated that a single application of UshStat(R) to the retina could provide long-term or potentially permanent stabilisation of vision. There are currently no approved treatments available for Usher syndrome type 1B. UshStat(R) has received European and US Orphan Drug Designation which brings development, regulatory and commercial benefits. 

Plexus Holdings (LON:POS)  

Plexus, the oil well head engineering group announced full year figures to June 2011. Record sales of £15.42m (+17 per cent) led to a PBT of £1.57m (+144 per cent).   The Group also made significant progress in winning orders, both during the year and since. This has resulted in a strong order book and consequently strong visibility.  A 10 per cent increase in dividend, to 0.43p, has been proposed. The Board remains confident that the combination of growing organically and new business initiatives will underpin future financial performance.

Polo Resources (LON:POL

The natural resources investment company provided an operational update on its recently acquired subsidiary (51 per cent owned), Nimini Holdings Limited. Second phase drilling at Komahun (Sierre Leone) has commenced, which is a 5,000 metre drill project of an existing deposit, and which will also help define the strike and depth extensions of the newly discovered Western Extension. Drilling earlier in the year of the western side of the deposit showed signs of gold near the surface, and the current programme is also covering the Sendekor prospect, 4km to the southwest of Komahun. The Company also plans a gold exploration drilling program on its Matotoka License, on the northern border of Cluff Gold’s 1.5m ounce Baomahun gold deposit. 

Scancell Holdings (LON:SCLP

AIM listed developer of therapeutic cancer vaccines announced that it has been awarded a composition of matter patent for its lead vaccine, SCIB1, which is being developed for the treatment of melanoma (currently in Phase I clinical trials). This is a key step for the Company which began trials back in June 2010 and which has secured licensing agreements with The National Institutes of Health and Cancer Research Technology Ltd. The Company also announced that it may qualify for a second tranche payment of £2.85m from the sale of a portfolio of antibodies to Arana Therapeutics (in December 2006), subject to the first patient being treated with a drug derived from the portfolio before 6 December 2011- an announcement on ClinicalTrials.gov announced that a Phase I study of CEP-37250 is expected to commence in October. 

Silence Therapeutics (LON:SLN)* 

A leading RNA interference (RNAi) therapeutics Company yesterday announced that it has entered into an agreement with Mirna Therapeutics Inc., a biopharmaceutical company pioneering microRNA-based therapeutics for cancer, to assess the delivery capabilities of Silence’s proprietary AtuPLEX™ and DBTC delivery systems for Mirna’s novel microRNAs. Under the terms of the agreement, Mirna will provide Silence with specific miRNA sequences, which Silence will formulate with its AtuPLEX™ and DBTC delivery systems in order to develop multiple candidate drugs.  Mirna will undertake in vitro and in vivo studies of the candidate drugs developed under the agreement and select lead candidates for further evaluation. 

Smart Metering Systems (LON:SMS

Smart Metering Systems last week provided an operational update on performance since 30 June 2011. The Company is a provider of gas infrastructure connection and gas meter asset management services and a developer of advanced smart metering technology solutions to the UK’s key gas suppliers. The Company has concluded two new contracts for gas metering services bringing the total number of gas supplier customers to twelve. These suppliers represent over 80 per cent of the UK’s industrial and commercial market and over 30 per cent of the domestic market. The Company currently manages in excess of 245,000 meter assets, an increase of about 8 per cent since 30 June 2011. 

Stellar Diamonds (LON:STEL)  

The diamond mining and exploration company provided an update on the resource drilling and bilk sampling at the Company’s high-grade Tongo kimberlite diamond project in eastern Sierra Leone. Tongo Dyke-1 intersected at 204m vertical depth and along a strike length of 1km. Drilling with two core rigs has been focussed on the 2.5km long Dyke-1 with 14 holes for 1,833m being completed to date. 36 holes are planned for 5,000 metres, to include drill testing of parallel kimberlite dykes. Bulk sampling of Dyke-1 continues to yield high grades. Diamond valuations indicate a potential for $205 per tonne in-situ value for Dyke-1. Processing of some 1,730 dry tonnes of kimberlite and wall rock granite mix have been completed to date which has yielded 1,149.51 carats for a diluted grade of 66.45 carats per hundred tonnes (cpht) and as undiluted grade of 110.74cpht based on the 1,038 tonnes of kimberlite processed. The initial resource estimate on track is to be completed in the first quarter of 2012.

Tandem Group (LON:TND

Designers, developers and distributors of sports and leisure equipment, provided results for the 6 months to 31 July 2011. A 15 per cent fall in pre-tax profits was announced to £553,000 (2010: £648,000) on the back of revenue falling to £16.7m (2010: £19m) - both bicycles and sports/leisure faced challenging trading environments. Despite a share buyback during the period, purchasing approximately 900,000 shares, the Company was able to generate an increase in net assets to £7.8m (2010: £7.7m), though cash on the balance sheet now sits at £1.1m (2010: £2.8m). Looking ahead, the Company remains encouraged by the interest in its wheeled products for the Olympics, with sales expected to peak between Easter 2012 and the start of the games.  

Telit Communications (LON:TCM)  

Telit, a manufacturer of wireless machine-to-machine communication modules said revenues for the year ending December 31st will be lower than current market expectations and profits will be significantly below current market expectations due to the impact of a delay in the deployment of a few significant projects which were originally expected to take place during 2011. They reported a 31 per cent rise in revenue for the nine months ended September 30th to $128.5m, compared with $98.0m for the year ago period; revenue for the final quarter of the year will apparently be strong.

Toumaz (LON:TMZ)  

Toumaz, a pioneer in low cost, ultra –low power wireless communications technology, this week announced that Telran, its flagship low voltage and low power communications microchip has passed the FCC regulatory requirements of three international standards for radios. The FCC (Federal Communications Commission) is the regulatory authority for radio and telecommunications equipment in the USA. Target applications include the development of two way communication remote controls for consumer electronic devices, wireless sensor networks for environment monitoring and room temperature control, remote control toys and games and smart metering.  

Transense Technologies* (LON:TRT)  

The Company announced that it is wholly owned subsidiary, Translogik Limited, has received an order for its commercial vehicle tyre inspection tools, and a number of its ‘TruckSense’ Tyre Pressure Monitoring Systems from Pirelli Brazil. The tools will be used as part of Pirelli’s new nationwide commercial tyre inspection system; Pirelli Tyre Check. Marcio Takimoto, Product Manager and Strategic Marketing of Truck Tyres operations in Latin America said that the Translogik Tread and Pressure Probe will be a real benefit to their organisation and will be used as part of a company-wide initiative to improve their service offering to the existing clients and enable them to gain new truck and bus fleet customers with the subsequent improved service.

Tristel (LON:TSTL

The manufacturer of infection control, contamination control and hygiene products, announced its preliminary results for the year to 30 June 2011, in which turnover was up 6 per cent to £9.29m (2010: £8.76m), though profit before tax was down to £0.5m (2010: £1.7m). This was largely due to the costs of expansion, for example the costs associated with the construction of a clean room, the expenses of GMP and an increase in the Company’s headcount from 50 to 90. Though the increase in revenues has not matched that of costs, the Company is optimistic about its prospects, having seen international growth of above 30 per cent, with direct sales forces now in place in China, Germany and Australia, and distribution agreements in a further 24 countries. 

*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.  

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