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Northland Capital Partners View on the City - Savannah Resources Plc, Fishing Republic, Altona Energy

Published: 09:08 25 Sep 2017 BST

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SAVANNAH RESOURCES (LON:SAV)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £31.6m

CURRENT PRICE – 5.6p#

Second phase of drilling at Mina do Barroso commences

 

NORTHLAND VIEW

 Savannah Resources has commenced a second round of reverse circulation drilling at the Mina do Barroso Lithium Project, located in Portugal. This drill programme aims to define a JORC compliant mineral resource estimate at the project before the end of the year.

 Drilling will focus on the NOA target and potential extensions to the zones of mineralisation defined at the Grandao and Reservatorio targets. Continued mapping of the mining lease is also underway.

Savannah Resources second drill programme at the Mina do Barroso Lithium Project follows rapidly on from the receipt of assay results from the first round of drilling at the project. Results from the first round of drilling include: 36m at 1.26% Li2O from 29m (17RESRC05); 33m at 1.15% Li2O from 16m (17RESRC07); and 25m at 1.01% Li2O from 36m (17RESRC03).

COMPANY DESCRIPTION

Savannah Resources is an exploration and development company with copper-gold projects located in Oman, a mineral sands project in Mozambique and lithium projects in Finland and Portugal.

 

Fishing Republic (LON:FISH)

SECTOR – LEISURE GOODS

RATING – BUY*

MARKET CAP – £15.9m

CURRENT PRICE – 42.0p#

TARGET PRICE – 53p

 

FY17 Interim results: 5 stores added, revenue +64%

NORTHLAND VIEW

 For the 6 months to 30 June 2017 Fishing Republic reported revenue in line with management expectations  +64%YoY to £4.09m, with store sales +85%YoY (£3.17m) and total like-for-like sales +22%YoY (£2.53m).  During H1 the group expanded significantly, opening  5 new ‘destination’ stores, in Milton Keynes, Ipswich, Reading, Kings Lynn and Clavering Lakes, Essex, and adding a further two in Q3, in Gloucester and Huntingdon,  taking the total to 19. Store expansion was supported by investment of £833,000.  As a result of the pace of expansion, the interim operating loss was £(0.017)m, as expected.  PBT loss was £(0.118)m.

 Online sales overall accounted for 23% of total revenue, growing 23%YoY. Own website sales accounted for 57% of online (H116: 29%), growing 140%YoY. The company noted the positive impact of the introduction of a loyalty card system, and its ‘Click and Collect’ and ‘Click, Try, Buy’ initiatives.

 Fishing Republic’s H1 own brand sales totalled 6.8% (£0.279m), having refined its offering and increased exposure to leading brands.

Fishing Republic maintained the pace of its ‘destination’ out of town new store expansion ahead of the peak fishing season (May to September) - continuing this strategy into Q3 – as a result of which associated costs were H1-weighted. We maintain our full year forecast and note the pace of underlying revenue growth as new stores become established, also indicative of the impact of Fishing Republic’s ‘destination’ store format on a sector which remains highly fragmented and open to consolidation.  We maintain our Buy rating. 

COMPANY DESCRIPTION

Specialist fishing tackle retailer, providing leading branded and own-branded equipment and products via stores and online. Focused on out-of-town large format ‘destination’ store expansion and sector consolidation.

 

Altona Energy (LON:ANR)

SECTOR – MINING

RATING – CORP*

MARKET CAP – £2.7m

CURRENT PRICE – 0.28p#

Default judgement and Arckaringa update

NORTHLAND VIEW

 The Board of Altona has been informed that a default judgement has been entered against it for £238,680 in respect to a claim by a former Director, who has alleged entitlement to a termination payment under a settlement agreement. The Company is making an application to the Court to set aside the judgement on grounds that it has a real prospect of successfully defending the claim. The Company is considering various financing options to increase its working capital as a prudent measure.

 A report by WSP Australia to assess the potential for dry coal that would not need to be dewatered has concluded that there is insufficient information to rule out the presence of dry coal in the Wintinna, Murlocoppie and Westfield coalfields. While much of the area covered by the coalfields is below the water table, there may be areas that are less wet. Of particular interest is the Westfield coalfield which is disconnected from the major water system.

 The report concluded with a recommendation to proceed with a more detailed and accurate data analysis and mapping using the seismic and water table data focusing on the Westfield coalfield.

Altona Energy is continuing to assess the potential for dry coal at the Arckaringa Coal Project, located in Australia, while the majority of the deposit is located below the water table the Company is hiring a consultant to assess the Westfield coal field in more detail as it is believed to be disconnected from the main water system. The default judgement against the Company is disappointing but it believes it can contest the claim and Altona is seeking to increase its working capital as precautionary measure.

COMPANY DESCRIPTION

Altona Energy is seeking to develop the Arckaringa UGC Project, located in South Australia.

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