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Northland Capital Partners View on the City Hummingbird Resources, TXO Plc and Accumuli PLC

Last updated: 09:27 07 Oct 2014 BST, First published: 08:27 07 Oct 2014 BST

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Hummingbird Resources (LON:HUM) – BUY*: $3m placing

Market Cap: £30.3m; Current Price: 37.5p; Target Price: 94.2p

  • Placing with exploration capital partners
  • Hummingbird Resources has completed a placing for £1.8m ($3m).
  • The company will issue 4,100,00 shares (4.8%) of the issued share capital to Exploration Capital Partners 2000 Limited Partnership, part of the Sprott Group of Companies.
  • Forecasts updated and price target downgraded to 94.2p per share from 98p to reflect the placing.

NORTHLAND CAPITAL PARTNERS VIEW: We have updated our price target and forecasts to reflect the dilution of the placing. We continue to assume a six month delay to the publication of the DFS for Dugbe 1 and the mine development due to the outbreak of Ebola limiting operations on the ground. We expect the Yanfolila development to continue on schedule with the optimisation study completed in Q4CY14 and initial production commencing in Q4CY15.

 

TXO Plc (LON:TXO) – CORP: Refinancing of convertible loans

Market Cap: £1.4m; Current Price: 0.185p

  • TXO has secured up to £1m through the issue of new secured convertible loan notes to an investor in the Bahamas. The convertible loan notes (CLNs) are convertible at the lower of 0.16p or a 20% discount to mid-market closing price (averaged over the previous 28 days). 
  • The company will give a charge over 254 shares in Grand Bahama Group (GBG) equivalent to 20% its share capital for the full drawdown.
  • An initial drawdown of £50k has been made with a further tranche of £400k available from the end of October. The balance will be available between 30th November and 31st December. The CLN will be convertible at the holder’s option subject to shares not exceeding 29.9% of TXOs’ issued share capital.
  • GBG will be issued 15m new shares (c. £28k) for introducing the investors.
  • Various amendments and restructuring has been made to the company’s existing CLNs some of which were due to expire this month, full details of which are available in the announcement (RNS 5917T). 
  • In summary, assuming full drawdown of the new CLN following 31st October and, all other things being equal, TXO would have net debt of £1.24m (and disregarding any current cash). This assumes a cash inflow of £545,000 and outstanding loan notes and CLNS totalling £1.79m, comprising; £284k CLN to October 2015; £200k loan note to October 2015; £304k zero coupon convertible to May 2016 (Bergen facility); the new £1m CLN due 31 October 2016.  
  • An EGM will be held on the 23rd October 2014 to outline the refinancing objectives and address other matters.

NORTHLAND CAPITAL PARTNERS VIEW: The new facility adds a strategic investor in the key territory. The refinancing extends the CLN’s nearing maturity and removes am immediate uncertainty to help TXO to concentrate on the advancing the underlying investments.

 

Accumuli (LON:ACM) – H1 Trading update 

Market Cap: £39.8m; Current Price: 25p

  • H1 trading in line
  • H1 trading in line with Q2 demonstrating strong order intake with a number of wins. These include the sale of its DDAM technology to the US and UK operations of a global professional services organisation, Technology Solution contract wins with two large financial institutions and the securing of two Professional Services engagements. Aiming to increase cross-selling within the customer base.
  • Armstrong Adams, the most recent acquisition, has been fully integrated and has contracted £0.6m of revenue with an existing group customer. 
  • Expanded 24/7 Security Operations Centre and Professional Services and headcount now exceeds 100. This includes a Strategic Partner Development director to increase indirect sales.
  • H1 cash balances of £3.6m.
  • Interim results 25th November.

NORTHLAND CAPITAL PARTNERS VIEW: Solid H1 performance (H2 tends to be the stronger half) with evidence of success in its strategy of increased sales into the customer base. Through selective acquisition, Accumuli can increase the product range and installed base. As the company carves out a role of a trusted supplier, product tie ratios should increase. Meanwhile the outlook for IT security spending remains buoyant. Share are trading on 14.7x FY15 and 13.9x FY16, having weakened somewhat over the past month.

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