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Northland Capital Partners View on the City Rockwell Diamonds and Nektan

Northland Capital Partners View on the City Rockwell Diamonds and Nektan

Rockwell Diamonds (TSE:RDI) – CORP: FY15 results

Market Cap: CAD$12m; Current Price: 23c

Saxendrift to wind down as Remhoogte/Holsloot wind up

  • Loss for the year attributable to equity holders of parent Co. (14.0) (9.4) 49
  • Source: Northland Capital Partners estimates
  • Rockwell expects to close the acquisition of the Remhoogte/Holsloot Project at the end of May 2015 as all the conditions precedent have been met.
  • The declining grades at Saxendrift mean that Rockwell is planning to reduce operations at the Mine and redeploy the plant at its other development projects.
  • Forecasts, rating and price target remain under review.

NORTHLAND CAPITAL PARTNERS VIEW: Wednesday’s announcement was the start of what we hope will be the rebirth of Rockwell Diamonds. FY15 has been difficult year for Rockwell with a 54% increase in total income for the Company YoY outweighed by a 52% increase in total costs, resulting in a 49% increase in the attributable loss YoY. During the financial year the Company closed the Saxendrift Hill Mine, put Niewejaarskraal on care and maintenance while the geological model is refined and the processing capacity is increased and is now looking to close operations at the flagship Saxendrift Mine due to the declining grades. The securing of a bridge financing facility (27/05/15) is a major development for Rockwell Diamonds that allows the Company to close the acquisition of the Remhoogte/Holsloot Project, associated fleet and three plants. Once Rockwell closes the transaction with Bondeo, expected at the end of May 2015, and owns the projects outright it should then be easier for the Company to secure a longer term finance facility. The acquisition of the Remhoogte/Holsloot Project will be a transformational event giving the Company a higher margin operation that should move Rockwell forward.

 

Nektan (LON:NKTN): Financing

Market Cap: £37m; Current Price: 166p

£8m financing complete 

  • Nektan raised a further £0.9m through the fundraising over-allotment which will be used to further support the growth strategy. The amount consists of £0.75m non-VCT convertible loan notes at the same terms as the previous notes announced on 28 April 2015. Furthermore, a total of 89,552 new ordinary shares have been placed at 167.5p (£0.15m) makes up the remainder.
  • This takes the total funds raised to £8m including the financing of c. £6.7m from existing, new institutional and private shareholders announced on 28 April 2015, of which a proportion to the value of £4.7m was comprised of convertible notes at c. 167.5p and a DTL loan facility for a further £0.6m. DTL has agreed to exchange £0.45m of the remaining £0.6m drawdown under the loan facility for a subscription of non-VCT notes of equivalent value.
  • The funding will support the Company’s expansion in the US tribal and commercial casino market where it has now signed 18 contracts and/or letters of intent with licensed casino operators. Furthermore, the funding will support the continued growth of the Company’s European business where 16 white label partners have gone live on the Evolve platform with a further 14 contracts signed in the past 90 days and finally the funding will enable the business to launch its partnership with The Sun in the UK where it will operate white-label real money gaming from the end of the current financial year (June 2015). 

NORTHLAND CAPITAL PARTNERS VIEW: As alluded to previously despite the funding (£8m) being secured at what looks to be a c. 29% discount to the IPO price in November 2014, the additional funding not only puts the business in a good position to execute on recently signed contracts in the US and white-label solutions in Europe but also provides additional firepower for further growth so the news should be well received by the market in this regard.     

1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.

 

 

DISCLAIMER

This document is provided solely to enable clients to make their own investment decisions. It may therefore not be suitable for all recipients and does not constitute a personal recommendation to invest. It does not constitute an offer or solicitation to buy or sell securities or instruments of any kind. If you have any doubts about the suitability of this service, you should seek advice from your investment adviser. This document is produced in accordance with UK laws and regulations. It is not intended for any person whose nationality or residential circumstances may render its receipt unlawful.

The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at www.northlandcp.co.uk 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

Published by/copyright: Northland Capital Partners Limited, 2013. All rights reserved

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