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Northland Capital Partners View on the City: Global Energy Development and Kibo Mining

OIL & GAS: GLOBAL ENERGY DEVELOPMENT (LON:GED)

OPERATIONS UPDATE: IN LINE

 

  • Llanos Gross production is ahead of last year, though the easing of the oil price has offset some of the production gain. The company has also benefited from cost reductions due to lower water disposal costs.
  • In the Magdalena portfolio, farm-out talks are continuing for Bolivar. In Bocachico, the company successfully completed an intervention of its existing of Torcaz-2 well and achieved sustained production at 75 bopd which is material. 
  • No change to forecasts, price target or BUY rating.

 

NORTHLAND UK VIEW:  No news as yet on the farm-out process where talks continue but a pleasing rebound from last year’s operating difficulties at Llanos. The Rio Verde water disposal well and more consistent production (last year Tilodiran-2 experienced 120 days of downtime) should significantly enhance this year’s profitability as per our forecasts. The company remains inexpensive on earnings and robust given cash generation. On reserves metrics, the shares are exceptionally cheap and the Magdalena assets remain potentially high impact. We await further news as to the appraisal and farm out prospects in Bocachico and Bolivar respectively. 

 

MINING: KIBO MINING (LON:KIBO)

15 MONTHS RESULTS: SCOPING STUDY TO COMMENCE IN H213

 

  • 15 month results to 31/12/12, following a change in the Company’s financial year end from September to December.
  • LBT for 15m FY12 was £4.5m up from £2.4m for 12m FY11.
  • LPS for 15m FY12 increased to 0.83p per share from 0.74p per share for 12m FY11.
  • Cash and cash equivalents for 15m FY12 decreased to £0.1m from £0.9m for 12m FY11.
  • Since FY12 Kibo has raised £1.5m (gross).
  • Price target and forecasts under review.

 

 

NORTHLAND UK VIEW: Initial exploration work by Kibo conducted over the 15 months of FY12 have resulted in the definition of follow up trenching and drill targets at its Lake Victoria, Haneti and Morogoro projects. On the Haneti Ni-PGM-Au project JV partner Brazilian industrial group, Votorantim is expending £2.7m on exploration over three years to earn a 50% interest in the project. Kibo anticipates that £0.5m will be spent at Haneti during H213. At Lake Victoria, Morogoro and Pinewood Kibo is deferring all exploration work until 2014, to preserve funds. In H113, Kibo secured the Tanzanian Government’s support for its Rukwa Coal to Power project and selected Korean East West Power Co., owned by the Korean Government, as its preferred partner for the development of Rukwa. A scoping study is expected to commence at Rukwa during H213, likely to be a significant milestone for the company.

 

TMT: 1SPATIAL (LON:SPA)

FINALS: SPATIAL OPPORTUNITY

 

  • Revenue +133% to £12.1m but this included a full contribution from the 1Spatial acquisition (revenue of £9.7m) versus two months last time. Avisen division revenue -39.4% to £2.0m and Storage Fusion revenue flat at £0.4m. 
  • All trading businesses made positive adj. EBITDA contributions but overall an adj. LBITDA of £0.5m, reflecting central costs of £2.0m. There were also impairment charges of £2.5m associated with the Avisen and Storage Fusion goodwill.
  • During FY12 restructured and rebranded the 1Spatial business; launched 1Edit, a spatial editing tool; and won contracts with the US Census and Ordnance Survey Ireland (for new 1SMS product).
  • Post period end announced the placing to raise £17m to fund the acquisition  of 90% of Star-Apic, a European GIS business, for £5.2m; additional working capital; sales and support centre in the Middle East; product development, marketing and further potential acquisitions. 
  • Pro forma cash of £14m.

 

 

NORTHLAND UK VIEW: Focus of management is on the opportunity around spatial data and the extension into Big Data, a technology area generating considerable interest. In the 1Spatial business there is a strong competence in providing the tools for handling and analysing large volumes of data. This capability has been bolstered by the Star-Apic stake and with the recent placing, it has firepower to pursue the opportunity. The Avisen and Storage Fusion businesses look increasingly non-core.

 


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