The results reported Wednesday are from seven holes drilled on the spodumene-pegmatite dyke, located on the Nama Creek claim block, the company said.

The aim of the second phase of the program was to add new resources to the NI 43-101 compliant estimate announced in October last year, of 2.36 million indicated tonnes of 1.17% lithium oxide (Li2O) and 4.36 million inferred tonnes of 1.08% Li2O.

The resource estimate was based on the spodumene-bearing pegmatite dykes located on the Nama Creek and Conway claim blocks.

Highlights of the latest drill results include 1.20% Li2O over 8.84 metres, 1.11% Li2O over 3.10 metres, and 0.82% Li2O over 1.0 metres in drill hole NC-11-23.

Drill hole NC-11-24 intersected 1.44% Li2O over 4.57 metres, 0.81% Li2O over 2.70 metres, 1.33% Li2O over 2.0 metres and 0.79% Li2O over 2.0 metres.

Other notable results included 1.44% Li2O over 5.83 metres, 1.11% Li2O over 3.14 metres, 0.70% Li2O over 1.58 metres, 1.70% Li2O over 1.0 metres, and 1.53% Li2O over 0.84 metres in drill hole NC-11-25.

In addition, hole NC-11-27 encountered 1.22% Li2O over 5.77 metres and 1.25% Li2O over 1.0 metres, while hole NC-11-28 hit 1.30% Li2O over 2.0 metres, 1.45% Li2O over 1.58 metres and 1.50% Li2O over 1.07 metres.

Finally, hole NC-11-29 returned 1.09% Li2O over 6.0 metres, 1.17% Li2O over 4.0 metres and 1.18% Li2O over 2.51 metres.

"With the complete set of assay results from Phase 2 of our exploration program received from the lab, we now look forward to an updated NI 43-101 compliant resource estimation from Caracle Creek International Consulting," said president and CEO, Eunho Lee.

"These results, in conjunction with the positive metallurgy, excellent infrastructure and a strong, mutually beneficial working relationship with the local First Nations, reaffirm our confidence in the potential of our Georgia Lake lithium project."

The company said that the second phase drilling also found anomalous values of rare metals, including rubidium, beryllium, cesium, niobium and tantalum.

The program consisted of 4,608 metres of diamond drilling over eighteen drill holes in addition to sixteen channel samples, testing pegmatite dykes located on the Nama Creek, Conway and Newkirk claim blocks.

Rock Tech has already reported very high purity levels from the property earlier this year. In late September last year, the company achieved a purity level of 99.988% lithium carbonate (Li2CO3) from a bulk sample. Battery manufacturers require a purity level of at least 99.5% Li2CO3.

Besides the battery industry, lithium has many uses, including heat-resistant glass and ceramics, casting for HVAC products, additives for greases and oil products, aluminum production, and as a pharmaceutical mood stabilizer.

The Georgia Lake lithium property, located some 145 kilometers northeast of the city of Thunder Bay, Ontario, consists of four claim blocks covering 11,481 hectares.

"The Project has been progressing well with encouraging results announced earlier from our 2011 exploration program.

"We look forward to taking the Project to the next level with WISCO International Resources Development & Investment Limited, a partner in Labec Century to fund $40 million for its further exploration for a 40% therein.”

Century Iron Mines is Canada's largest holder of iron ore land claims, with interests in several properties in the provinces of Quebec and Newfoundland and Labrador.

The company is backed by two Chinese strategic partners through financing and off-take agreements: MinMetals and WISCO International Resources, a unit of Wuhan Iron & Steel, also known as China's third-largest steel producer.

The K1-1 project is located roughly three kilometres to the east of the company's Thierry Mine project in northwestern Ontario, both being within the boundaries of the 11,538 acre Thierry property, occupying only a small portion of the asset.

In late 2011, the company released an initial inferred mineral resource estimate for K1-1 within a Whittle pit shell consisting of 19.89 million tonnes grading 0.10% nickel, 0.42% copper, 2.0 g/t silver, 0.03 g/t gold, 0.05 g/t platinum, 0.15 g/t palladium.

Cadillac also said an exploration target for K1-1 located outside and below the resource pit shell was estimated to contain between 45 to 55 million tonnes grading between 0.08 and 0.12% nickel, and 0.32 to 0.36% copper. But there was not enough "modern data" for the target to complete resource modeling, the company said.

The initial inferred resource reflected the first 16 exploration holes drilled by Cadillac, as well as limited historic data and other exploration carried out on the property.

Within the inferred resource, the company said there were gaps in data, "due simply to lack of drilling to model, which affect the behaviour of the pit, and therefore constrained the resource".

As a result, a 26 hole drill program was designed to address gaps within the pit shell area at K1-1, as well as test for extensions along strike and at depth.

The drilling campaign was also designed to intersect and upgrade mineralization from the exploration target category into the resource statement, and if successful, adding tonnage to both categories using infill drilling.

Cadillac said that including the drill results from the 26 holes in the re-calculation of the resource is expected to boost the estimate by extending the modeled mineralization.

Highlights of these assays included 110 feet of 0.626% copper and 87.5 feet of 0.546% copper.

During the drilling program, there was a total of 20,868 feet drilled over the 26 holes, and a total of 2,590 samples taken.

Cadillac said the update of the K1-1 resource estimate will affect a future production decision at Thierry, as the close proximity of the deposits to each other is expected to result in cost efficiencies - due to the sharing of the infrastructure and processing plant capacity.

"Sharing of facilities between the deposits should enable Cadillac to realize lower production costs, and therefore process material of a lower grade than would be envisioned based upon either deposit operating independently of the other," the company said in a statement.

Cadillac is a development-focused copper company currently advancing its 100 percent-owned Thierry property, near Pickle Lake, Ontario, which consists of the past-producing Thierry Mine and hosts two NI 43-101 compliant resources from the Thierry Mine and K1-1.

The Thierry Mine deposit has a current resource estimate consisting of 8.3 million tonnes measured and indicated grading 1.73% copper and 0.20% nickel, as well as 14.6 million tonnes inferred grading 1.70% copper and 0.16% nickel. The deposit remains open at depth and to the west.

Meanwhile, the K1-1 deposit is a potentially open-pit, large tonnage, low grade deposit located approximately three kilometres from the Thierry Mine.

Garnett has served as an independent director of the company since May 3, 2011, and is chairman of Great Panther’s audit committee.

He was recently the vice-chair of the South Coast British Columbia Transportation Authority, and serves on the board of VRX Worldwide (CVE:VRW), where he is the chair of their audit committee.

From 2009 to 2010, he was a director and audit committee member of Central 1 Credit Union, which is the central banker for credit unions in Ontario and British Columbia.

Further, he was an owner and president of Eaglequest Golf Centres, and has held senior financial roles within the residential and commercial real-estate sector.

This recent appointment is in line with Great Panther’s internal board mandate to further increase independence of board members, it said.

The company plans to add another independent director before its annual general meeting, which is being held in June.

Garnett replaces Kaare Foy, who stepped down after serving more than 18 years as a director of Great Panther and almost eight years as executive chairman.

Foy will continue as a consultant to the company.

Last month, the company reported improved fourth-quarter 2011 production results at its two wholly owned Mexican silver mining operations, Guanajuato and Topia.

For the three months to December 31, the company said metal production for the quarter rose by 13 percent to 545,294 silver equivalent ounces from the previous quarter.

Silver production of 354,754 ounces was up three percent from the previous quarter and gold production of 2,281 ounces was up 53 percent.

Mexico-focused Great Panther said that ore grades improved at Guanajuato to 235 grams per tonne (g/t) silver and 2.12 g/t gold in November and December, the highest since September, 2010.

The company, founded in 1965, mainly produces silver. It also produces gold, lead and zinc. It holds a 100 percent interest in the Guanajuato silver-gold mine, comprised of roughly 28 claims totalling 1,107-hectares located on the central plateau of Mexico in the state of Guanajuato.

Great Panther’s shares rose 1.53 percent to $2.66 each today in Toronto.

The positive reinforcement led to a 18.18 percent spike in the company's stock, to $1.95 per share, on the OTC Bulletin Board as of 3:47 pm EDT.

In February 2011, ImmunoCellular completed a private placement financing, raising $8.1 million, and welcoming many large life science investors to its shareholder base.

Additionally, it raised another $10.4 million in January 2012 through a public offering underwritten by Cowen & Co, with Summer Street Research Partners acting as co-manager. The company said is now well financed to continue its planned operations through the end of 2013.

Following the completion of these financings, ImmunoCellular has over $16 million in cash reserves to fund its operations, which should be sufficient for the next 24 months, the company said.

While pipeline advancement has increased its research and development expenses, the company said it continues to be conservative in its cash burn rate by maintaining a lean infrastructure, staying focused on product development while outsourcing basic research to leading specialty service providers.

In January 2011, ImmunoCellular announced the FDA’s acceptance of its investigational new drug (NDA) application, leading it to commence a phase two study of ICT-107, the company's lead cell-based vaccine candidate for the treatment of glioblastoma multiforme (GBM), a particularly aggressive form of brain tumour.

To date, ImmunoCellular has initiated the trial in 23 centres. There are currently more than 115 patients enrolled in the study. The company expects to enroll a total of 160 to 200 patients by the second quarter of 2012, in order to enroll 102 subjects in the various immunological subtypes.

Progression-free and overall survival times for GBM patients treated with ICT-107 during the company's phase one trial of the drug continue to be substantially longer than those associated with standard of care (SOC) alone, ImmunoCellular said.

In September 2011, ImmunoCellular reported its three-year data, which indicated an overall survival of 55 percent, compared to 16 percent based on historical SOC.

Of the 16 newly diagnosed patients who received ICT-107, 38 percent continue to show no tumor recurrence after three years, compared to the historic disease-free survival rate of 6 percent with SOC.

Out of these patients, 19 percent remain disease-free after more than four years.

Meanwhile, in October 2011, the company retained the services of Progenitor Cell Therapy (PCT), a cell therapy services and development company and a wholly-owned subsidiary of NeoStem (AMEX:NBS), to serve as the second manufacturing site to produce ICT-107.

As part of this agreement, PCT will transfer and qualify the manufacturing process for ICT-107 at its West Coast facility in Mountain View, California, for use in ImmunoCellular's phase two study, and provide subsequent manufacturing to support future trials and development efforts.

In collaboration with BioWa, ImmunoCellular announced the launch of Caerus Discovery, LLC, a new, privately-owned biotech company based on the Prince William campus of George Mason University.

In this joint venture, BioWa will fund drug-target discovery and antibody development activities using ImmunoCellular's proprietary monoclonal antibody technologies.

Lastly, in 2011, ImmunoCellular received two new patents and was granted allowance on one of the key patents on ICT-107. These patents expand the company’s issued patent portfolio to nine, with more than 18 additional patents pending.

One of the new patents relates to the use of the therapeutic antibody candidate ICT-69 in the treatment and detection of multiple myeloma and ovarian cancer, while one of the others cover the use of dendritic cells for the treatment of brain cancers, when used in combination with chemotherapy.

With encouraging data from its phase one study of ICT-107 in GBM, solid progress in phase two enrollment, a broad intellectual property estate, and a new strategic collaboration related to its antibody therapeutics program, ImmunoCellular said a busy 2012 awaits.

As it announced late last month, Great Western completed the first phase of its exploration program at the 474-hectare, former-producing Steenkampskraal rare earth property in South Africa.

The drill program had two primary goals: to provide information in support of a fully compliant NI 43-101 resource estimate report for the area, and to collect a representative mini-bulk sample for metallurgical testing.

The program consisted of 39 diamond drill holes totaling 3,780 metres, including 17 holes for resource delineation, totaling 1,932 metres, and 22 holes dedicated to metallurgical sampling, 1,848 metres. Assay results are pending and will be reported as they are received from the laboratories, the company said.

The company has also launched a 3,000-metre exploration program that will include on-strike and down-dip drill holes at the Steenkampskraal project, in order to test the extension of the mineralized vein system.

The drilling has started, and is currently targeting the strike extension of the vein mineralization that is located immediately west of the current mine site.

Great Western also announced that the first 125 metres of the decline at the Steenkampskraal mine has been refurbished, with 50 metres remaining to be completed.

Modern, high-volume underground ventilation continues to be improved with the installation of two new fans at the base of the underground workings, Great Western added. The ventilation distribution system is designed to substantially mitigate radon measurements in the working areas.

The Steenkampskraal mine now contains a full complement of ancillary buildings, including management offices, change houses, laundry service, mine workshops, and storage facilities.

Potable and mine recirculation water systems are also now in place. The reverse osmosis plant has been successfully installed with a capacity of 18,000 litres per hour. This capacity is important to management's priority of continuous re-use of the available water resource, thereby minimizing overall water use at site, it said.

In other news, Great Western and Ganzhou Qiandong Rare Earth Group of China established an incorporated JV last month, called Great Western GQD Rare Earth Materials Co Ltd, for the design, construction, and operation of a rare earth separation plant, which will be located in the Steenkampskraal region.

In addition to its Steenkampskraal rare earth property in South Africa, Great Western also owns four rare earth exploration projects throughout North America, and two rare earth processing plants through its subsidiaries Less Common Metals in Birkenhead, U.K., and Great Western Technologies in Troy, Michigan, where it makes rare earth element-based specialty alloys.

Last month, Great Western's joint venture (JV) partner in the Red Wine exploration project, Search Minerals, said its phase three drilling program had extended the rare earth element mineralization to 400 metres depth at the project.

Meanwhile, earlier in January, Search announced the discovery of high-grade rare earth element mineralization in the Merlot prospect at the Red Wine property in Labrador.

Less Common Metals (LCM) also announced in January that it received a significant capacity boost. LCM added a new furnace at Hooton Park, near its existing facilities, raising capacity by about 50 percent. LCM said it plans to add new furnaces in response to the increasing demand from its growing global customer base.

The property is located approximately 70 kilometres west of the city of Guadalajara.

The IP/Resistivity survey at La Paloma consisted of a total of 5.8 line-kilometres, which were surveyed along a series of seven lines targeting an 800 metre strike extent of the Main "Piedra Bola" Vein structure.

The survey represents the final stage in WestStar's phase one exploration program, which included property-wide geologic mapping, the collection of 194 rock grab and channel samples, 656 soil samples, and 174 stream sediment samples.

In addition, a total of 20.8 line kilometres of ground magnetic survey was completed, the company said.

WestStar is now selecting drill targets in preparation for a 2,000 metre diamond drill program at the property, which will target the most prospective anomalies within the Main "Piedra Bola" Vein structure, as well as evaluate the potential of additional mineralized veins on the project.

"We are extremely encouraged with the results of the Phase 1 exploration program and feel the work to date has culminated in potentially high success drill targets for WestStar," said president Mitchell Adam.

"Since acquiring this past producing gold and silver property WestStar has completed a series of work programs to focus our future drilling on the Property."

Indeed, three main targets have been outlined at La Paloma, the Main "Piedra Bola" Vein, the Ridge Showing and the East Vein.

The Main Vein has been defined over a one kilometre strike length, with rock channel sampling assaying up to 0.84 grams per tonne (g/t) of gold, and 64 g/t silver over 6 metres.

Individual mineralized rock samples of outcropping quartz veins returned assays of up to 7.81 g/t gold and 311 g/t silver.

The company said the Piedra Bola Vein is coincident with a broad 400 by 1,000 metre, 10 parts-per-billion (ppb) gold in soil anomaly that encompasses the nearby Ridge Showing. Individual soil samples within the Piedra Bola Vein soil anomaly have returned assays of up to 3.69 g/t gold.

The Ridge Showing, meanwhile, is situated about 300 metres southwest of the Piedra Bola Vein, and covers an area of around 100 by 30 metres. Individual soil samples within the Ridge Showing anomaly have retuned assays of up to 557 ppb gold.

Finally, a second East Vein structure located 195 metres to the northeast of the Piedra Bola Vein was traced for around 200 metres thus far. The company is hoping to increase this strike with further work, as rock channel sampling in this area returned assays of 8.6 g/t silver over 4 metres.

WestStar has an option to earn up to 80 percent of La Paloma, subject to a two percent net smelter royalty. The property lies at the very southern end of the Sierra Madre Occidental physiographic province, which is well known for gold and silver mineralization and mining.

The primary goal of the company is to define a compliant gold and silver resource at the site.

The property was, at one time, owned by Penoles, who relinquished it in 1980.

However its concentration in the blood stream cannot be measured in real-time.

Pelorus offers researchers the opportunity to monitor it instantaneously, rather than using retrospective sample analysis.

Sphere’s lead product is called Proxima, and is designed for use in intensive care units.

The blood monitor, which is the size of a match box, is designed to be fitted directly to the patient.

It is hoped it will be cleared for this use in the States by the middle of 2012, and earlier in Europe with the award of a CE Mark.

The company, spun out of Siemens, could be tapping into a very lucrative niche.

The intensive care market alone is worth an estimated US$1.3 billion annually with a total of 12 million patients passing through the developed world’s ICUs each year.

Other two stories covered today’s updates from mining groups Regency Mines (LON:RGM) and Rambler Metals and Mining (LON:RMM, CVE:RAB).

Starting with Regency, the group revealed further positive results from recent drilling at the Mambare nickel laterite project in Papua New Guinea.

Highlights of the work included one hole, which hit 35.6 metres at 0.99 per cent nickel and 0.09 per cent cobalt from 1.30 metres in depth.

This was the first result to come from Area 3 - infill drilling in the North Ridge part of the project -  and confirmed the thick laterite mineralisation, which was identified in this zone during 2008, the firm said.

On Friday, Regency revealed results from the Plateau zone of the project, which confirmed the " significant grade and tonnage potential" of that zone.

The company told investors the zone may have the potential to host one of the world's largest nickel laterites.

One of the holes there returned the highest nickel grades encountered to date at the project, with 3.28 per cent nickel and 0.12 per cent cobalt being encountered in a 1 metre interval.

Today's results were derived from 270 samples from 12 holes. Of these 12 holes, nine included assayed intervals with nickel grades above 1 per cent.

Sector peer Rambler, which is focused on precious metals, has begun the process of buying out net smelter royalty (NSR) over its flagship Ming mine.

It has bought Ming's 2 per cent NSR held by Philippine Metals Inc (CVE:PHI), formerly New Meridian Mining Corporation, for , it said today.

Chief financial officer Norman Williams explained: "As Rambler sees first revenues from production it is now fiscally prudent that we buyout any royalty encumbrances held over the property.

"While we will see some interest payments by drawing down an additional C$2.5 million from the Sprott credit facility, the total interest payable per month will be far less than the payments made under this 2 per cent net smelter royalty."

In December last year, the company announced it had poured its first gold dore at the Ming operation on Newfoundland and Labrador's Baie Verte Peninsula.

Before the buyout announced today, the company had a 4.5 per cent combined NSR held by four separate groups.

Of those four, two included a buyout clause allowing Rambler to purchase 3 per cent of the total NSR for a total of C$1.1 million.

Rambler said the one of greatest value to the company and the first to be purchased was Philippine Metals Inc's 2 per cent NSR.

Proactive also covered Synchronica’s (LON:SYNC) announcement of a joint venture with Toronto based technology incubator Intertainment Media Inc (CVE:INT, OTCQX: ITMFT).

The Canadian group is also investing up to C$10 million in Synchronica share-plus-warrant units priced at a minimum of 16 pence each.

Earlier this month, Synchronica’s Swiss rival Myriad tabled an all share offer worth 13 pence per share, valuing the group at about £20.6 million.  Synchronica has neither accepted nor refused the deal, and has merely advised shareholders to take no action.

The letter of intent announced today envisages Synchronica and Intertainment Media integrating Synchronica's flagship messaging platform, Mobile Gateway, with Intertainment Media's Ortsbo experiential language technology, enabling Mobile Gateway to provide its users with seamless and real-time translation between more than 50 languages.

Under a JV agreement, the parties will license their respective intellectual properties to a new subsidiary.

The jointly-owned new business will allow Synchronica and Intertainment Media to further develop each other's products, share R&D efforts, enlarge each other's business development activities and drive revenue and profitability for both companies from new projects.

Finally, another report was dedicated to one of today’s top performers in London markets DCD Media (LON:DCD), the company behind TV programmes Bridezillas and The Slap.

Shares in group jumped 1.58p to 5p after c racing broadcast group Timeweave bought a big chunk of its convertible debt.

Timeweave (LON:TMW) is best known as the owner of 50% of Amalgamated Racing, which broadcasts live pictures from 31 of the UK’s racetracks.

Its chief executive David Craven said the investment in DCD’s loan notes was consistent with its strategy of growth and delivering shareholder returns through investment.

“We have been following DCD Media for some time and took this opportunity to acquire the majority of the convertible loan instruments,” he added.

Conversion of the loan notes is allowed up to a maximum of 29.99% of the DCD Media’s issued share capital.

Timeweave bought the notes for £2.09 million from a group of institutional investors at a 32% discount to their face value of £3.07 million. They pay interest at 8%, which rolls up to the maturity date.

The loan notes bought by Timeweave mature on 1 October with £2.093 million convertible into DCD shares at 18p while a further £975,000 convert at 1p.

The move by ECB would reduce the struggling country’s debt burden by as much as €11 billion.

Greek policymakers are currently in talks over an agreement to impose further austerity measures, which are a condition of the next bailout package from the EU and the IMF.

The reports propped up equities on both sides of the Atlantic and the euro, while reducing demand for the US dollar, an alternative investment to gold.

Gold retreated later in the session as investors took profits after the yellow metal reached US$1,750 per ounce.

A study by Credit Suisse and London Business School found that gold is not a reliable hedge against growth in consumer prices. The report said gold provides no income flow and has generated low long term returns and can “fail to provide a positive real return over extended periods”.

Gold traded at US$1,737/oz, down US$7 from Tuesday’s close. Silver was headed in the same direction as gold, rallying 20 cents to US$33.95/oz, while platinum bucked the trend, falling US$5 to US$1,652/oz.

Orsu Metals (LON:OSU), up 9.5 percent at 12.75 pence at midday

Stratex International (LON:STI), up 9.5 percent at 8.35 pence

Central Rand Gold (LON:CRND), up 6.5 percent at 1.19 pence

Chaarat Gold Holdings (LON:CHAR), up 4 percent at 28.56 pence

Patagonia Gold (LON:PGD), up 3.5 percent at 42 pence

The top fallers were:

Oxus Gold (LON:OXS), down 10 percent at 1.28 pence

Greatland Gold (LON:GGP), down 9.5 percent at 1.11 pence

Peninsular Gold (LON:PGL), down 9 percent at 26.75 pence

GMA Resources (LON:GMA), down 8 percent at 0.23 pence

Caledonia Mining (LON:CMCL), down 6 percent at 7.63 pence at midday

"In our opinion, these revised terms for entry into OPL 281 are a very positive development, as they reduce SacOil’s capital exposure and indicate that the work programme will be expedited under a very credible local operator," said analyst Craig Howie.

Other notable fallers included engineering group Weir (LON:WEIR, down 1.7pct at 2,015p) and clothing retailer Next (LON:NXT, down 1.7pct at 2,709p).

US markets

Financial bookmakers are currently expecting US stocks to rise in early trade.

Futures for the Dow Jones Industrial Average (DJIA) rose 33 points (0.25 percent) in pre market and futures for the broader S&P 500 index climbed 2.5 points (0.2 percent).

Today’s US data will include weekly oil inventories from the Department of Energy. Analysts polled by Bloomberg forecast a gain of 2.5 million barrels in US crude stockpiles, indicating that energy demand in the US was in decline last week.

On the corporate front, wireless carrier Sprint Nextel (NYSE:S) reported a loss of US$1.3billion in the final three months of 2011, translating into 43 cents per share, up from a loss of 10 cents per share in the same period of 2010.

The bigger than anticipated loss despite a five percent increase in revenues to US$8.7 billion and was a result of the fee the company had to pay Apple to start selling the iPhone.

The earnings report from Time Warner (NYSE:TWX) was better, showing a bigger than expected profit of US$773 million on revenues of US$8.19 billion, up 4.7 percent from the fourth quarter of 2010.

UK corporate news

BHP Billiton (LON:BLT, down 1pct at 2,156.5p) posted its first decline in interim profit as euro zone uncertainty suppressed demand for commodities and pushed prices lower.

As a result, the world’s largest miner saw its net profits slump 5.5 percent to US$9.94 billion in the final six months of 2011 despite a 9.7 percent surge in revenues to £37.5 billion.

On top of the lower prices, the company’s performance was impacted by strikes at its Escondida copper mine in Chile and cost inflation.

Rio Tinto (LON:RIO, up 1.5pct at 3,925p) has decided to invest a further US$4.3 billion in the major expansion of its Pilbara iron ore operations in Western Australia.

This investment includes US$2.2 billion to extend the life of the Nammuldi iron ore mine and US$1.2 billion for Cape Lambert port and rail early works needed for the proposed capacity expansion to 353 million tonnes per annum.

The expansion project is currently in final feasibility study with a final investment decision expected later in the year.

In the FTSE 250, home maintenance insurer Homeserve (LON:HSV, down 10.5pct at 246.2p) admitted that rectifying issues in the UK business is taking longer than anticipated and it has decided to cut its workforce by 7 percent, or 200 staff.

In November 2011 the firm suspended all its UK telesales and marketing activities following a review by accountants Deloitte.

The review showed cases "where its (Homeserve's) sales processes did not meet the company's required standards," Homeserve had said.

In today’s interim management statement, the group said that, while it is making progress in reinvigorating its customer focus and restarting marketing activity, this is taking longer than anticipated.

Fellow midcap SuperGroup (LON:SGP, down 17pct at 582p), which owns the Superdry brand, said it expected pre-tax profit for the full year to be towards the lower end of "market expectations".

It came after the firm announced solid trading over Christmas but then a slowdown in the last three months of last month.

During the 13 weeks  to January 29, retail sales stood at £78.5 million - 27.8 per cent up on the same period last year.

Group sales were up 25.3 per cent at £102.5million, compared to £81.7 million a year earlier.

•      Greek PM Papademos and party leaders to meet at 1300GMT, according to sources.

•      Reports that the ECB are willing to exchange Greek bonds with the EFSF have prompted risk appetite.

•      RANsquawk European Morning Briefing Video:  http://youtu.be/U2qxVkYC7xM

Market Re-Cap

European stocks advanced today following reports that the ECB is said to be willing to exchange Greek bonds with EFSF. In addition to that, although a vast majority of officials remain adamant that no haircuts will be applied, WSJ report indicated that the concession by the ECB will contribute to the Greek debt reduction, and the concession depends on the overall debt agreement being set. However it remains to be seen what effect using the EFSF for such spurious purposes will have on the demand for EFSF issued bonds in the future. 

Still, the renewed sense of optimism that debt swap talks are nearing an end depressed investor appetite for fixed income securities, which in turn resulted in further tightening of peripheral bond yield spreads. The stand out was the 10-year Spanish bond, amid a syndicated issuance from the Treasury. Going forward, Greek PM is scheduled to meet party leaders on a loan deal at 1300GMT, while other reports have suggested that the Troika is keen on meeting Greek parties individually. There is little in terms of macro-economic data releases today, however the US Treasury is due to sell USD 24bln in 10y notes.

US Headlines

The only data from the US today came in the form of mortgage applications, showing a week-on-week rise of 7.5%.

US MBA Mortgage Applications (Feb 3) W/W 7.5% vs. (Prev. -2.9%) (Sources)

Asian Headlines

China may implement new bank capital rules on July 1st, including allowing the institutions to lower risk weightings on individual business loans to 75% from 100%. (21st Century Business Herald)

A Fitch analyst has said to expect Chinese property construction to slow amid government tightening, and this will have an adverse effect on economic growth. As a result, Chinese banks are to face a decline in asset quality. The analyst further commented that he does not expect China to provide a significant sum of money to the Euro bailout fund, however the country may suffer a loss on investment if the Euro bailout fund is downgraded. (Sources)

EU and UK Headlines      

Greece yesterday missed another deadline to approve conditions for a second bailout following the postponement of a Greek party leaders meeting over last minute haggling with international lenders over emergency spending cuts. (FT-More) Greek PM Papademos will now be meeting the Greek party chiefs today at 1300GMT.

The ECB said it is willing to exchange Greek bonds with EFSF, but that they won’t take losses on the Greek bond exchange, according to sources, who also added that an ECB concession will contribute to the Greek debt reduction, and the concession depends on the overall debt agreement being set. Furthermore, national central banks’ investment portfolios will not contribute to the PSI deal.  (WSJ)

UK Shop Price Index figures released today show how retailers are holding down prices for customers despite a range of upward pressures. A further fall in inflation expected in the coming months should help improve consumer confidence, according to the BRC Director-General. 

UK BRC Shop Price Index (Jan) Y/Y 1.4% (Prev. 1.7%) (Sources)

Germany posted a below expected fall in their trade surplus for December of last year, with some analysts noting that this could point towards a slowdown in GDP growth for the country over the last month of the year. (Sources)

EQUITIES

European indices are trading in positive territory ahead of the North American open, following news that the ECB is willing to exchange bonds with the EFSF. This has stimulated risk appetite in the European markets, with participants moving towards the cheaper Financial stocks. As such, UniCredit (5%) and Commerzbank (8%) are trading strongly at this point in the European session.

European corporate earnings today been mixed. From the consumer goods sector, Reckitt Benckiser have outperformed expectations in their corporate earnings report before the European open, with a positive outlook for the rest of the year. Company shares have been trading strongly throughout the session, currently up 3.4%. (Sources)

International Power have suffered losses this morning following the group expecting growth in 2012 to be impacted by contracts rolling off in North America. Subsequently, company shares experiencing losses, currently trading down 3%. (Sources)

Top performing sectors in the BE500: Financials (+1.34%), Basic Materials (+0.85%), Oil & Gas (+0.36%)

Worst performing sectors in the BE500: Health Care (-0.31%), Consumer Services (0.00%), Technology (+0.05%)

**Note: For US equity news in detail, kindly refer to the RANsquawk Daily US Equity Opening News report.

FX

Swiss Unemployment Rate (Jan) M/M 3.4% vs. Exp. 3.5% (Prev. 3.3%)

Swiss Unemployment Rate SA (Jan) M/M 3.1% vs. Exp. 3.1% (Prev. 3.1%) (Sources)

GBP has experienced weaknesses during morning trade, with market talk of a right hand side fix in EUR/GBP, however this remains unconfirmed. 

USD/JPY has experienced volatility in the first half of the European session, pushing the currency pair downwards. Despite further promises of action from the Japanese Finance Minister Azumi, the JPY continues to strengthen, with no intervention seen from the Japanese government to weaken the JPY. (Sources)

COMMODITIES

Heading into the North American open, WTI crude futures are trading higher following the release of bullish crude oil inventories data last night. 

Oil & Gas News:

• Plains All American has said it will build a new 170-mile crude oil pipeline to ship Mississippian Lime crude oil production from Alva, Oklahoma, to Cushing. The Mississippian Lime pipeline is expected to ship 175,000BPD of light sweet crude and is to be completed in mid-2013, the company said in a statement. It did not provide a cost estimate for the pipeline. 

• The US Department of Energy is going to make a suite of changes to its rules to modernize the permitting process for liquefied natural gas exports, a top DoE official told state regulators Tuesday. 

• Saudi Arabia has given South Korea an assurance that it will “actively consider” providing additional crude supplies to the major gas imported if requested. 

• China has moved to buy Saudi Arabian and Russian oil in order to put further pressure on Iran over a price dispute between the two countries. 

Geopolitical News: 

• Iran’s Supreme Leader wants to ultimately shut Iran’s oil wells and turn the country into a non-oil economy, although the leader further commented that this vision may not be realized anytime soon. 

In financials, the broker prefers Close Brothers (LON:CBG) and Standard Chartered (LON:STAN). While the healthcare picks were Abcam (LON:ABC) and Smith & Nephew (LON:SN.).

Online gaming firms Playtech (LON:PTEC) and Sportingbet (LON:SBT) were the broker’s choice names in the leisure sector.

It highlighted environmental plastics firm Biome Technologies (LON:BIOM) and filtration experts Porvair (LON:PVR) as the preferred stocks in the materials sector.

Africa focussed Goldstone Resources (LON:GRL) and Stellar Diamonds (LON:STEL) are the top picks for the metals and mining sector, while in the oil and gas sector the broker prefers Petroceltic International (LON:PCI) and Chariot Oil & Gas (LON:CHAR).

Mobile technology firm Globo (LON:GBO) and gaming specialist Probability (LON:PBTY) were the picks in the software sector.

Close Brothers – Target Price 870p (current price 702p)

Analyst Simon Willis says Close Brothers has good earnings growth, which continues to be driven by a strong banking business. But, he says, further upside is likely to come following an overhaul of the group’s asset management unit.

Standard Chartered – Target Price £19.00 (current price £16.07)

Willis, meanwhile, believes that Standard Chartered is an excellent play on China-led growth. He says that even with China slowing, Standard Chartered is better placed than any European peer to achieve sustained double digit.

Abcam – Target Price: 393p (current price 336p)

AIM quoted antibody research group Abcam has ‘unrestricted potential’ according to Daniel Stewart’s healthcare analyst Vadim Alexandre.

“With constant revenue expansion supported by a growing catalogue of products, Abcam aims to become the leading provider of protein research tools,” the analyst said.

He says that Abcam shares have demonstrated a sustained track record of outperformance. This clearly demonstrates management’s ability to create shareholder value, he added. Alexandre reckons that, on the strength of Abcam’s market position, the group’s share price will continue to outperform the market well into the future.

Smith & Nephew – Target Price 766p (current price 637p)

Meanwhile Alexandre says replacement hip specialist Smith & Nephew is due a rebound. The analyst believes that ageing populations, increasing life expectancy and higher rates of obesity are all reasons that the business has favourable long term fundamentals that will drive ‘supernormal’ growth.

“We believe that the orthopaedics sector, given its strong underpinnings, may soon experience a rebound,” Alexandre said. “Smith & Nephew stands to benefit considerably from this possible recovery.”

Playtech - Target Price 462p (current price 314p)

Gaming software firm Playtech has a sound strategy for penetrating new regulated markets, according to analyst Michael Campbell.

The group’s joint venture strategy should generate substantial value for shareholders, as it swaps unregulated profits for regulated profits, he explained. Campbell reckons this will dramatically change the profile of the business.

Sportingbet - Target Price 80p (current price 43p)

Similarly Campbell thinks his other top leisure pick Sportingbet will also benefit from joint ventures in regulated markets in the future.  Specifically he says that positive news on tax changes in Spain and Greece could see a re-rating for the stock.

He says that the current valuation is undemanding and a very good entry point.

Biome Technology – Target Price 0.41p (current price 0.14p)

Analyst Edward Hugo says that environmental plastics firm Biome Technologies has hit the broker’s estimates consistently, and has grown revenue 40 per cent in 2011. He is now expecting similar growth in 2012.

Hugo sees both regulatory and corporate catalysts for Biome in the coming year.

Porvair – Target Price 159p (current price 112p)

Material filtration specialist Porvair secured multi-million dollar, multi-year, contracts last year, and Edward Hugo reckons the cash generative business will be able to increase dividend payouts as a result.

Goldstone Resources – Target Price 9p (current price 5.75p)

This junior gold explorer has incredibly prospective assets, according to mining analyst Austin McKelvie. He says the group is focussed on defining, upgrading and extending its existing 406,000 ounce gold resource at the Homase-Akrokerri deposit in Ghana.

Stellar Diamonds – Target Price 21p (current price 6.13p)

McKelvie reckons Stellar Diamonds is undervalued. According to the analyst’s sum-of-parts valuation the group’s Droijba, Tongo and Kono project’s are worth 21p a share to the company.

He expects Stellar to complete a new JORC resource estimate for the Droujba project in the current quarter. The analyst believes that a maiden 5 million tonne resource will deliver project value in addition to an independent Scoping Study.

McKelvie also highlights that an economic study is soon due for the Tongo project.

Chariot Oil & Gas – Target Price 371p (current price 125.25p)

Oil and gas analyst Kate Fisher reckons Chariot Oil & Gas is a high-risk, higher reward play.

“2012 is a big year for Chariot, which is set to spud two wells in two separate basins, presenting a clear catalyst for share price,” Fisher said.

The AIM quoted explorer is funded through this stage of exploration by its partners, BP and Petrobras. These partnerships lend a high profile endorsement of the asset prospectivity, the analyst added.

Petroceltic – Target Price 13.7p (current price 7.78p)

Meanwhile the analyst says Petroceltic has a diversified asset base in value accretive projects.

She highlights the group’s Development in Algeria, near term exploration in Italy and blue-sky potential in Kurdistan.

“Our 13.7p target price is borne out by development in Algeria and exploration onshore Italy,” Fisher said,

“Pure upside seen through entry to Kurdistan, one of the hottest emerging plays around.”

Globo – Target Price 100p (current price 24.5p)

Technology analyst Mike Jeremy is expecting a big year for mobile technology firm Globo, as its cloud-computing based Go! Enterprise Server (GO!ES) product is likely to dominate the group’s performance in 2012.

“We expect GO!ES to achieve acceptance and scale in FY’12 as the bring-your-own-device (BOYD)  smartphone trend in the workplace gathers momentum,” Jeremy said.

“RIM’s woes underline the problems facing monolithic solutions, in broad terms overtaken by the Cloud phenomenon of which GO!ES is a part.”

Probability – Target Price 132p (current price 76.5p)

Daniel Stewart recently upgraded its target price from 81p to 132p following a strong third quarter trading update.

Mike Jeremy explains that Probability is in a good position thanks to its on-mobile gaming and gambling products, 55 per cent of which are smartphone based, and its growth momentum via TV ad campaigns.

“Mobile gaming is increasingly conducted as an adjunct to TV viewing, part of the ‘second Screen’ entertainment format that encompasses social media and networking,” he said.

“Probability therefore sits at the centre of the interactive trend represented by the Connected TV format.”

Timeweave (LON:TMW) is best known as the owner of 50% of Amalgamated Racing, which broadcasts live pictures from 31 of the UK’s racetracks.

Its chief executive David Craven said the investment in DCD’s loan notes was consistent with its strategy of growth and delivering shareholder returns through investment.

“We have been following DCD Media for some time and took this opportunity to acquire the majority of the convertible loan instruments,” he added. 

Conversion of the loan notes is allowed up to a maximum of 29.99% of the DCD Media’s issued share capital.

Timeweave bought the notes for £2.09 million from a group of institutional investors at a 32% discount to their face value of £3.07 million. They pay interest at 8%, which rolls up to the maturity date.

The loan notes bought by Timeweave mature on 1 October with £2.093 million convertible into DCD shares at 18p while a further £975,000 convert at 1p.

Gartmore Smaller Companies, Standard Life UK Smaller Companies, Barnard Nominees, Universities Superannuation Scheme, Rockmore Investment Master Fund, Artemis Investment Management and Henderson Global Investors sold the notes to Timeweave.

DCD had £4.3m worth of convertible loans outstanding at the end of last September.

Shares in DCD Media rose 1.58p to 5p.

Morning View:

Economic News:

Europe – Yesterday Angela Merkel stated that the Eurozone had to suffer a long and painful process of structural reform that is required in order to restore growth. 

· Additionally Merkel stated that Greece would not be pushed out of the Eurozone.   

· Greek PM, Lucas Papademos is set to return to the table today with leaders of the coalition government as another day passed without a second bailout package secured. 

· Creditors and Greek officials are still negotiating over the exact terms of the deal. 

· Greece faces a 14.5bn euro bond payment on March 20 – motivation enough to get moving? 

· The current rescue plan suggests a loss of around 70% for bondholders with debt swap that will slice 100bn euros off more than 200bn of privately held debt. 

US – Yesterday the Fed Chairman spoke to the Senate Budget Committee in Washington.

· No surprises with his comments. 

· He indicated that he would stick by the plan to keep rates close to zero despite the improving jobs outlook in the economy. 

· Figures released yesterday show that consumer borrowing increased for the second month in a row in December beating expectations. 

· Credit increased by $19.3bn to $2.5tn in the final month of the year. 

China – Continued speculation that inflation is slowing, prompted stocks to rally the most in 3 weeks.

· Lower inflation prompts speculation that the Government will relax monetary tightening. 

· Yesterday forecasts emerge that suggest inflation could well fall to as low as 3.2% in February. 

· Forecasts ahead of a report due for release tomorrow are expected to show prices eased to 4% in January. 

· In July 2011 prices hit 6.5% 

· The country’s central bank has pledged to support first time home buyers as a crackdown on real estate speculation threatens to trigger a property slump. 

· Analysts have for some time now questioned the resilience of the country’s property market and whether the bubble would burst. It appears that the Government is to some extent successfully managing a retrenchment in the market without the bust widely expected. 

Japan – The country’s current account surplus slid to a 15 year low last year on the back of rising energy bills, as the knock on effects of the March Earthquake led to an increase in overseas energy requirements. 

· According to the finance Ministry, the excess shrank by 44% from a year earlier to 9.63 trillion yen. The lowest level since 1996 

· Forecasts suggest that the country will see a sustained decline of the current account surplus for the rest of 2012. 

· Figures released yesterday showed that the Finance Ministry conducted 1.02 trillion yen of unannounced intervention in November last year – to little effect – The currency still traded within 1.8% of its post war high, hampering the outlook for the export led economy. 

UK – According to Research Group, Fathom and Co, the Bank of England should redesign its quantative easing program to target the over valued housing market and address the source of Britain’s sluggish growth. 

· The program suggests establishing a bank to buy distressed mortgage debt similar to the US TARP program. 

· Has TARP really been a success in the US? Home sales have not really responded. Bottom line, home sales recover when risk aversion decreases and consumer confidence recovers. 

· Removing the debt overhand is a good idea but it will not by itself lead to growth. 

Brazil – New reports suggest that Brazilian policy makers are considering cutting the 2012 budget by less than $29bn. The amount is less than some local economists expect – prompting yields on long term interest rate futures to rise. 

· The government is trying to balance the need to contain spending while it increases public investment to spur growth. 

Thailand – The country’s central bank – The Bank of Thailand has stated that it sees risk to economic growth posed by the worsening global outlook, as greater than the threat of inflation. 

· On the back of these comments it is unsurprising that policy makers voted unanimously to reduce the policy rate by 0.25% 

Commodity News:

Precious:

Gold US$1,747/oz vs US$1,728/oz yesterday – Prices surged 1.5% yesterday and traded around US$1,750/oz this morning after Fed Chairman Bernanke said yesterday no change in the policy stance to hawkish is expected anytime soon despite upbeat employment data in the US.

· The Fed Chief said a drop in the official jobless rate to 8.3% underestimates the weakness of the labour market.

· Gold production in Democratic Republic of Congo may reach 1moz in the next 5 years form current nearly zero following the end of Africa’s biggest war.

· Banro Corp, a Toronto-headquartered gold producer, opened the Twangiza mine last year, the first new gold project in Congo since its independence from Belgium in 1960. The mine is expected to produce 120koz this year.

· AngloGold and Randgold Resources plan to commence production next year.

· Congo was the world’s 5th biggest gold producer in the 1960’s.

· Barrick Gold expects to launch gold, silver and copper production from the Pueblo Viejo mine in the Dominican Republic by July, CEO said.

· SPDR gold trust holdings remained at 1.277t (41.061moz) value US$70.758bn.

Platinum US$1,651/oz vs US$1,629/oz yesterday

· Anglo American Platinum, the world’s biggest producer, shut some operations at its Khomanani mine in South Africa after a female worker died after being violently assaulted, the company said yesterday.

· Impala Platinum announced that a strike at its Rustenburg operation in South Africa may continue for another week.

· Norilsk Nickel, the world’s largest producer of nickel and palladium, is considering buying Platinum operations in South Africa to raise PGM production during the next decade.

Palladium US$711/oz vs US$707/oz yesterday

Silver US$34.17/oz vs US$33.75/oz yesterday

Rhodium US$1,510/oz vs US$1,428/oz yesterday             

Base metals:

Copper US$ 8,625/t vs US$8,470/t yesterday – Copper were up today for the first time in 3 days on weaker dollar and expectations of a resolution in regards of the Greek bail-out plan.

· China’s copper consumption may halve this year as the economy growth slows and home appliances’ subsidies expired in Dec 31. Home appliances are the second biggest copper users of copper.

· Workers at the Quebrada Blanca copper mine operated by Teck Resources in Chile negotiated a better pay, avoiding a strike that was planned to start today.

Aluminium US$ 2,271/t vs US$2,220/t yesterday

· South Korea’s Public Procurement Service will be taking part in a tender to buy a total of 3,000t of primary aluminum, according to the agency’s website today.

· Manufacturers are switching to aluminum in production of electric cables and wires as copper prices grew by 4 times the price of aluminum, Rusal said.

· Copper is at least 65% more effective than aluminum in the following 3 properties: electrical and thermal conductivity and ductility. The copper to aluminum price ratio, thus, should stand at 1.65. As the ratio moves above 2-to-1 it becomes economically justified to switch from copper to aluminum according to Deutsche Bank.

· Alcoa may cut its production at the Point Henry aluminum smelter in the state of Victoria due to “a combination of factors, including metal prices, input costs and exchange rates”, the company said.

· The LME recorded first transactions in LME swaps yesterday. A total of 96 trades in aluminum were handled.

Nickel US$ 22,050/t vs US$21,543/t yesterday

Zinc US$ 2,143/t vs US$2,127/t yesterday

Lead US$ 2,222/t vs US$2,185/t yesterday

Tin US$ 25,550/t vs US$24,360/t yesterday – Tin prices increased to a 6-month high on a shortfall in production and dwindling inventories of the metal.

· Tin inventories monitored by the LME dropped to the lowest level since Mar 2009 last week.

· Indonesia’s production may reach only 9,000t in Q1 this year due to adverse weather conditions that disrupted mining operations according to PT Bangka Belitung Timah, a group of 6 smelters. Normal weather production rate is around 20,000t.

Energy:

Oil US$116.53/bbl vs US$115.93/bbl yesterday – Brent prices rose a second day off shrinking U.S. stockpiles, flagging increased demand. 

· The European benchmark for March delivery was over at a >$17 premium to West Texas Intermediate on the futures exchange (WTI). 

· China has raised petrol prices to a record high in response to international markets. 

· The National Development and Reform Commission will raise petrol and diesel prices by 300 yuan ($47.50) per metric ton from Wednesday midnight; a 3.3% increase, stated in a report by Dow Jones. 

· China is taking measures offering incentives for more fuel efficient cars in an effort to reduce emissions 

· China’s fuel pricing mechanism is set by following a moving average of Brent, Dubai and Cinta crude and if it changes by >4% over a 22 day period. 

· The government is researching new pricing mechanisms. 

Natural Gas US$2.479/mmbtu vs US$2.55/mmbtu yesterday – In November last year China raised electricity prices for businesses and implemented a system for raising prices for the heaviest residential users.

· The move was in response to fuel subsidies that were benefiting wealthy households and the business sector which has been causing social unfairness and stirring tensions.

· More news over concerns of the use of the Hydraulic Fracturing method commonly known as Fracking which is used to extract shale gas.

· A study carried out by veterinarians shows findings of dozens of farmers and pet owners whose animals are suddenly dying or suffering from neurological problems.

· The study was done over six states over the Marcellus Shale.

· Farmers are becoming more concerned that their animals will become delivery systems of contaminants to crops.

· Energy representatives have dismissed the findings saying “The paper is little more than a collection of testimonials and cannot be independently assessed or verified”.

· Energy companies are not obliged to disclose the composition of chemicals used in the Fracking process…yet! 

Uranium US$52.95/lbs vs US$52.95/lbs yesterday – Uranium spot prices stay at US$52/lb on UXc

Coal – Seaborne coal trade will expand 4% to 956mt in 2012 with India purchases gaining 12% with Chinese imports climbing 8% according to Clarkson Research Services.

Company news:

North River Resources* (LON:NRRP) - Update on Nuclear Fuels Agreement 

· The company has announced that it has completed the payment of subscription monies and as result received shares in Brandberg Energy. 

· The deal means that NRR Energy Minerals Ltd, the 100% owned subsidiary of North River now holds a 50% interest in Brandberg Energy, on the back of the payment of $800,000. 

· Brandberg Energy holds Exclusive Prospecting Licences (EPL) for nuclear fuel at 3327 and 3328. 

· The licences are located near the old tin mining town of Uis in northwest Namibia. 

· The company have identified two nuclear fuel targets over EPL 3327 and EPL 3328 following completion of a horizontal loop electromagnetic (HLEM) survey over 200 line km – 150 km  over 3327 and 50 km over 3328. 

· The HLEM traverse lines were surveyed over 2 km initially and then reduced to 1 km to identify buried palaeochannels through an electromagnetic response. 

· The most promising target areas identified using this methodology has been on EPL 3327. 

· A previously planned drilling campaign of 1,100m may now be extended to 1,500-2,000m once the Radiation management plan has been approved by the Radiation Protection Authority in Namibia. 

Conclusion – This is another step in the right direction for the company. We are encouraged by prospect of increasing the drilling program and look forward to this commencing and subsequent news flow. 

*Fairfax acts as joint broker to North River Resources

Polymetal (LON:POLY) – Acquisition of the remaining 50% interest in projects held in JV with AngloGold Ashanti

· The company paid US$20m in cash for a 50% share in various companies held by AngloGold under the AngloGold Ashanti – Polymetal Strategic Alliance agreement.

· Projects include the Veduga gold deposit in the Krasnoyarsk region of the Russian Federation.

Rio Tinto (LON:RIO) – Investment of US$3.4bn in expansion of Pilbara iron ore operations in Western Australia is approved

· The investment will include a US$2.2bn (Rio Tinto share 100%) expansion of the Nammuldi iron ore mine and a US$1.2bn (Rio Tinto share US$700m) programme to increase capacity at Cape Lambert port and rail.

· Production capacity at the Nammuldi iron ore mine is forecast to rise to 283mtpa in H2 2013 and the mine’s life increasing by 14 years.

· Rio Tinto estimates capital intensity of port and rail capacity expansion from 220mtpa to 353mtpa to be approximately in mid-US$150s per tone (Rio Tinto share in mid-US$130 per tonne).

Mining this week: 

EMED (EMED LN)* 12.25p, Mkt cap £86.9m – Agreement with a Chinese partner for a US$30m funding package

Xstrata (XTA LN) £12.3, Mkt cap £36.45bn – Preliminary annual results FY 2011

Glencore/Xstrata merger – Companies have agreed a 2.8 of Glencore shares for every Xstrata share merger that would create a commodities group with a total value of US$90bn.

Horizonte Minerals (LON:HZM) – Acquisition of Vila Oito and Floresta nickel laterite projects in Brazil

Amur Minerals (LON:AMC) – Placing of £5.48m in ordinary shares

Shanta Gold (LON:SHG)* - Shanta Gold shares rise on good news from drilling at the New Luika Gold Mine

Randgold Resources (RRS LN) – Q4 results show record profit and production

Baobab Resources (LON:BAO) – IFC agreed to support the 2012 exploration programme at Tete project, Mozambique, with a contribution of US$1.9m

Coal of Africa (LON:CZA) – BEE companies will acquire a 26% interest in the Chapudi Coal project and related exploration properties

Glencore/Xstrata merger – Glencore may offer a larger than expected premium for Xstrata shares in a US$88bn merger.

Heading into the North American open, WTI crude futures are trading higher following the release of bullish crude oil inventories data last night. 

Oil & Gas News:

• Plains All American said Tuesday it will build a new 170-mile crude oil pipeline to ship Mississippian Lime crude oil production from Alva, Oklahoma, to Cushing. The Mississippian Lime pipeline is expected to ship 175,000 b/d of light sweet crude and is to be completed in mid-2013, the company said in a statement. It did not provide a cost estimate for the pipeline. 

• The US Department of Energy is going to make a suite of changes to its rules to modernize the permitting process for liquefied natural gas exports, a top DOE official told state regulators Tuesday. 

• Saudi Arabia has given South Korea an assurance that it will “actively consider” providing additional crude supplies to the major gas imported if requested. 

• China has moved to buy Saudi Arabian and Russian oil in order to put further pressure on Iran over a price dispute between the two countries. 

Geopolitical News: 

• Iran’s Supreme Leader wants to ultimately shut Iran’s oil wells and turn the country into a non-oil economy, although the leader further commented that this vision may not be realized anytime soon. 

Corporate News: 

• Total has agreed to sell its Colombian subsidiary TEMPA BV to Sinochem for USD 1bln. 

Weather news:

Weather Derivatives forecast sees average temp. in the US for the next 6-10 days to be 2.1% below the average at this time of the year. The data is accurate as of 7th February, 2012. There are no tropical cyclones at this time.

The Airtours owner’s revenues rose by 3% to £1.86 billion in the three months to December as Northern Europe improved and with the first contribution from its recent UK joint venture with the Co-op.

Operating losses rose to £91 million from £37 million due to its problems in the UK and higher fuel costs. Pre-tax losses rose to £151.7 million from £99.3 million.

Cook said West & East Europe divisions reported significantly increased losses because of ongoing disruption in North Africa.

The company needed an emergency cash injection before Christmas and has set a target of raising around £200 million by offloading what it describes as non-core assets.

The cash will be used to reduce its debts, which are estimated by analysts to be in excess of £1 billion.

As part of the process, Cook said today it put its  77.1 per cent shareholding in Thomas Cook (India) Limited up for sale though it added it will only sell the business if a compelling offer is received.

In the three months to 31 December 2011, free cash outflow was £739.6m (2011: £639.1m) which reflectedlower bookings as a result of planned capacity reductions and increased winter losses.

The firm added that December typically represents the seasonal cash low point for the group and cash has come into the business since then.

Cook added that the winter season remains subdued with economic concerns weighing on consumers' minds.

Summer season bookings are ahead of capacity in the UK and Central Europe despite the difficult market backdrop, but are slower than expected in Northern Europe and West and East Europe.

Sam Weihagen, chief executive, said he expects 2011/12 to be a challenging year given the economic backdrop and difficult trading environment, particularly in winter.

“The trends which we have seen in the first quarter are expected to continue for the rest of the first half, but summer trading is more encouraging.”

Shares rose 5% to 13.61p.

A reasonably good week for the financial markets, with the FTSE up 150 points to 5,890 and the AIM All Share up 17 points to 781. Whilst the underlying European and global financial difficulties continue, a spate of positive announcements, such as US job number growth (a drop in unemployment to 8.3 per cent) and Eurozone service sector growth (with the PMI up by 1.6 points in January) certainly helped the markets, as have company announcements such as BP’s increased profits and Xstrata’s $90bn merger with Glencore. The week ahead sees the MPC February interest rate decision, producer price and industrial production & manufacturing output data.

ALK Acquisition and trading update, ALL Interim results, ABH New manufacturing contracts, AVN Interim Results, BSST Trading update, CNS Trading update, EKF Contract award, ESG Appointment of VP, FIP Collaboration and sales, GWP Regulatory approval in Austria, HLO Appoints CFO, IKA JDA with Energizer, ISG Contract award, MTEC Trading Update, MDW Final results, NTOG Hewitt & Bale Creek, OMG New contract, PRES Trading update, SSP Trading update, STEL Initial bulk sampling results from Kono, SUN FDA approval, SYM Mexico update, SNG audited 6 month results, TRP Operational update, TRT Order from Bridgestone, VAL Patent approval for NAV3, XEN Proposed Open Offer cancelled and ZCGP Client renewal.

Take-Over Activity Round-Up

Last week proved an interesting week for small cap takeover activity with the Friday seeing the announcement of a cash offer to acquire Network Group Holdings (LON:NGH) by its management team, backed by Lloyds Development Capital.  The price of 26 pence per Network share represented a premium of approximately 40 per cent to the pre-announcement share price.  The deal was announced in the morning with the support of irrevocable undertakings to accept the offer over shares representing 91 per cent of the Network share capital - enabling the offer to be declared wholly unconditional in the afternoon. 

Friday afternoon also saw an announcement by PLUS Markets Group (LON:PMK) that it had decided to conduct a formal sale process in order to identify appropriate potential partners for the Company or major strategic investors – thereby putting itself into play for the purposes of the Take-over Code.  The Company added that the board believes that it is in the best interests of the company to seek a partner which will help it achieve the scale and reach required to maximise value to stakeholders.

Earlier in the week, Myriad, a £135m market cap Swiss Exchange listed software company providing software solutions and services for the mobile phone and consumer electronics industries,  announced an all share offer to Synchronica (LON:SYNC) valuing each Synchronica share at 13 pence and the Company itself at approximately £20m.  The offer is at a premium of 70 per cent to the price on the date which Myriad first made a non-binding indicative proposal to the Board of Synchronica but the consideration shares in Myriad will only be listed on the Swiss Exchange. Myriad noted that Synchronica has an obligation to pay deferred acquisition consideration to Nokia of approximately US$20.2m payable in full before 31 December 2015 and questioned Synchronica’s ability to repay the Nokia debt. Synchronica advised shareholders to take no action in respect of the offer and await a further announcement. 

Finally, the battle for control of Victoria (LON:VCP) continues (see SCW 17 January 2011) with the existing Board advising its shareholders not to support the resolution requisitions of the rebel shareholders until they have received and read the circular from Victoria containing the notice of general meeting and at which the resolutions to change the Board will be voted upon. The Board confirmed that it will report on the progress of the formal sale process, announced on 13 January 2012, by the end of February 2012.

Alkane Energy (LON:ALK) 

Alkane Energy, the alternative energy company, last week announced that it had conditionally agreed to acquire Greenpark Energy Limited (CVE:GRN), a coal mine methane (CMM) and power response power generation business, for a total consideration of up to £5.725m. Greenpark management estimates that the CMM and power response business being acquired generated unaudited revenue of circa £3.4m and EBITDA of circs £1.9m for the year ended 31 December 2011. The acquisition has been financed by conditional funding arrangements to extend and add additional banking facilities, increasing total facilities to £9.5m, to be provided by Lloyds TSB Bank PLC (LON:LLOY)  (currently drawn prior to the acquisition at approximately £5.0m), the issue of a £2.0m convertible loan notes and the issue of £250,000 in Alkane ordinary shares. The Company also announced that it expected to report revenues of circa £9.5m (2010: £6.6 m) for the financial year ended 31 December 2011 with  full year electricity output of circa 140GWh (2010: 120GWh) with the average electricity sales price for 2011  expected to be approximately £51/MWh (2010: £44/MWh). 

Allocate Software (LON:ALL) 

Allocate Software, the leading provider of workforce and compliance optimisation solutions, announced interims for the six months to 30 November 2011. Whilst revenue for the Company showed marginal increase at £16m (2010: £15.9m), impairment and other charges during the period took Allocate to a loss before tax of £6.57m (2010: £1.18m profit). Despite this, the Company believes it could have a good full year to look forward to having secured a multi million pound long term agreement with the Australian Defence Force in December which is likely to add significantly to the full year revenues (through the extension of the deployment of Allocate’s DefenceSuite to all personnel in the Australian Army). 

Angel Biotech (LON:ABH)* 

Angel Biotechnology Holdings, the biopharmaceutical contract manufacturer, has agreed three further manufacturing agreements with OOO NPF Materia Medica Holding (MMH), a major Russian pharmaceutical company, with a combined value of £4.5m. Under the agreements Angel will initiate activities in its existing facilities with the aim to transfer the contracts to the joint venture company announced on 17 October 2011. It is expected these projects will run concurrently and take approximately 22 months to complete.

Avanti Communications (LON:AVN) 

The broadband satellite provider announced interim results for the six months to 31 December 2011. Revenues for the period increased significantly to £5.1m (2010: £1.2m), though the Company continued to post losses, which this period came in at £6.8m (2010: £6.3m), largely due to significant operational costs. HYLAS 1, Avanti’s broadband satellite, provided the Company with its first full 6 months of revenue, and the 2nd quarter will see HYLAS 2 launch which will extend Avanti's coverage to Africa and the Middle East, helping the Company to drive forwards and build capacity. At the end of 2011, Avanti had a backlog of orders worth £181m, with a pipeline going forwards in negotiation worth £530m; though for the year to 30th June 2012 there is clear visibility of £17m revenues. The Company is also looking further ahead, with HYLAS 3 planned to be launch in partnership with ESA in 2015. With growing demand, and a plan to serve the need with infrastructure and capacity growth, we look forward to seeing how the full year ahead unfolds. 

BlueStar SecuTech (LON:BSST) 

Blue Star SecuTech, a leading provider of digital video surveillance solutions in China, this week provided a trading update for the second half of its financial year ending 31 March 2012. The Board reported that whilst BlueStar's sales prospects for the first few months from 30 September 2011 were encouraging, the outlook for revenues following the Chinese New Year holiday is lower than previously expected. Furthermore, although the Company succeeded in winning a number of contracts towards the end of 2011, it anticipates that revenue will not be recognized from some of these contracts until after its financial year end. As a consequence, BlueStar's revenues for the full year are expected to be lower than last year's revenues and will have a material effect on the Company's net profits, which are now expected to be significantly lower than the Board's original forecasts. 

Corero Network Security (LON:CNS) 

Corero Network Security, the network security and business software provider, this week provided an update on trading for the year ended 31 December 2011. Consolidated revenue for the year ended 31 December 2011 is expected to be approximately £11.0m (2010: £3.0m) and consolidated operating profit before depreciation, amortisation, exceptional costs and financing expected to be above breakeven. Cash balances at 31 December 2011 were £4.3m. The Company also reported significant post acquisition progress in the Corero Network Security business as the business has been repositioned through investments in product development and a new international sales organisation.  

EKF Diagnostics (LON:EKF) 

The global manufacturer of point of care in-vitro diagnostic devices has won a contract to supply the State of New Mexico’s Women, Infants, and Children (WIC) clinics with its point-of-care haemoglobin testing instrument, the HemoPoint® H2, and related cuvettes. The initial order is for 220 instruments which will be supplied to over 100 WIC clinics throughout the US State and will be used to carry out tests for anaemia. According to the Centers for Disease Control and Prevention, anaemia is one of the most common blood conditions in the US, affecting about 3.5m people. An initial indication from the New Mexico WIC clinics suggests that they expect to perform more than 160,000 tests per year using the HemoPoint H2 instrument. 

eServ Global (LON:ESG)

The global telecoms software supplier, which specialises in mobile money and value added services (VAS), has appointed Paolo Montessori as Vice President, Mobile Money. Mr. Montessori is a well recognised figure in the global mobile VAS market and for the past three years has had a particular focus on delivering Mobile Money solutions. Prior to joining eServGlobal, Mr. Montessori was Vice President Sales for Comviva Technologies Ltd (formerly Bharti Telesoft Ltd) where he was closely involved in Mobile Money and Payments and led both commercial and solution design in this field.

Fusion IP (LON:FIP)* 

Fusion IP, the university IP commercialisation company, announced that its 48 per cent owned LED Company, Seren, has signed its first collaboration to bring its processes to market with a major, undisclosed, LED manufacturer. The agreement allows the partner to take a licence to manufacture products incorporating Seren’s processes and gives exclusive rights in India. The Company also announced that its 47 per cent owned company Mesuro took $1.25m worth of new sales for its RF equipment in the last quarter of 2011 to three undisclosed customers.

GW Pharmaceuticals (LON:GWP) 

GW Pharmaceuticals has received regulatory approval for Sativex® in Austria as a treatment for spasticity due to Multiple Sclerosis (MS). The launch of Sativex® in Austria is expected to take place during 2012 following completion of the national pricing and reimbursement process, and will be marketed by GW's partner, Almirall S.A. The company has also announced that, further to the November 2011 announcement of the filing of a new regulatory application to expand Sativex® to additional European countries, the dossier has been validated and is now under technical review by regulatory authorities in the following countries: Belgium, Finland, Iceland, Ireland, Luxembourg, the Netherlands, Norway, Poland, Portugal and Slovakia. It is expected that this new European Mutual Recognition Procedure (MRP) process should complete around mid 2012. Sativex® is currently available as a prescription medicine in the UK, Spain, Germany, Denmark, Canada and New Zealand. Launches are expected during 2012 in Italy, Sweden, Austria and the Czech Republic. Sativex® is also in Phase III clinical development as a treatment for cancer pain. 

Healthcare Locums (LON:HLO)

Healthcare Locums the staffing group for the health and social care sectors, said Thursday that it has appointed Sue Bygrave, who joins from Biome Technologies (LON: BIOM 0.14p/£8.24m), as Chief Finance Officer. She will formally take up her role as an Executive Director on the board on February 6th and will assume responsibility for all accounting activity across the group including operations in Australia. 

Ilika (LON:IKA)

Ilika the advanced cleantech materials discovery company announced that it has entered into a joint development agreement with Energizer Battery Manufacturing Inc., in the USA, a world leading primary battery manufacturer, for the development of advanced materials. An Energizer spokesperson said: "Ilika's high throughput techniques are well-matched to our material development requirements and we look forward to rapid innovation in this collaboration." 

Interior Services Group (LON:ISG) 

The international construction services group has signed a contract worth at least £100m with Santander to construct and fit out a new data centre in East Midlands. The project includes the construction of two identical and technically complex buildings, each with an individual gross floor area of over 161,000 sq. ft. 

Matchtech Group (LON:MTEC)

One of the UK's leading specialist recruitment agencies operating in the Engineering, Science, Technology and Professional Services sectors last week provided a Trading Update for the six months ending 31 January 2012 and the Board's current outlook for the year to 31 July 2012. The Group has continued to trade in line with the Board's expectations. There was a strong net fee income performance across the whole Group during the period, with a total of £17.0m, up 26 per cent against the same period last year. Whilst the trading environment currently remains steady, the Board remains mindful of the impact of uncertainty in the macro-economic environment on business confidence and the effect this may have on Permanent Fees, which were 33 per cent of the Group's net fee income in H1 2012. The Board now expects that the Group's full year performance will be within the range of expectations, albeit towards the lower end of that range, with profits for the financial year again significantly weighted towards H2. The Group will release its Interim Results for the six months ended 31 January 2011 on Wednesday 11 April 2012, at which point it will provide a further update on trading. 

Mediwatch (LON:MDW) 

The innovative urological diagnostic company announced its final results for the year ending 31 October 2011. Sales revenues came in at £10.6m (2010: £10.5m), increased EBITDA for the year was £713,000 (2010: £583,000) and increased profit before taxation for the year of £322,000 (2010: £233,000). Profits and cash flows have increased due to the re-organisation that commenced in Q1 2011, including the outsourcing of major parts of the manufacturing process. The PSAwatch is at an early stage of commercialisation with clinical trials in France to gain reimbursement approval, direct marketing starting in Germany, Hong Kong, Mexico and China, growing sales in the UK private sector and the potential for further co-operation and trials with two international pharmaceutical companies. Significant sales growth of circa 75 per cent was seen in developing markets (Far East and Russia), providing an excellent platform for further growth, balancing the detrimental effects of the Arab Spring. Mobilewatch is making great strides and has increased its turnover three fold in the last 3 months. The Company continued to strengthen its product range and partnership with EBNeuro S.p.A. for the exclusive distribution of its gastro and neuro-physiology products in the UK. Omer Karim, Mediwatch Chairman said: "...During 2012 we anticipate the conclusion of a number of important research and development projects that will strengthen and update our existing product lines in urodynamics and ultrasound while reducing unit costs..." 

Nostra Terra Oil & Gas (LON:NTOG)

Nostra Terra, the oil and gas producer with projects in the USA has commenced foreclosure proceedings against Richfield Oil & Gas Company, formerly Hewitt Petroleum, Inc. The Company issued a US$1.3m secured loan note which has been accruing interest at 10 per cent per annum from the date of issue and which matured on 31 December 2011. As announced on 6th January 2012, the Company granted Richfield an extension on the repayment date to 31st January 2012. To date, no funds have been received from Richfield and it has been notified that it is in default. Nostra Terra has begun the process of recovering against the collateral. The Loan Note is secured against producing leases located in Kansas and non-producing leases located in Utah. Nostra Terra is in the process of assuming temporary control to operate the producing leases in Kansas during the foreclosure process. Following 3D seismic interpretation at Bale Creek, locations of the initial wells have been adjusted. Site construction is now underway, and spudding is expected to follow. 

OMG (LON:OMG) 

The mobile motion capture (mobile mocap) technology group announced a substantial contract for it division Yotta DCL, which is a highway surveying company. The four year contract (with an option to renew for a further year) is expected to be worth £2.27m in total, with Yotta performing a Traffic Speed Condition Survey (TRACS) to determine the condition of the road surface- in total, approximately 140,000km of motorway and other major roads across England is to be surveyed using the Company’s new Tempest vehicles. OMG also announced that its Vicon division has signed an agreement to provide motion capture (mocap) technology to The Imaginarium, a London based studio, with eighty of its cutting edge T160 mocap cameras being supplied along with Vicon's new Blade software providing all the crucial elements needed for mocap. Whilst the Company faced a difficult last year (prelims for the year to 30th September 2011 in showed an 81 per cent drop in profits to £0.7m) these recent contract wins marks a good start to 2012 and we look forward to seeing how the Company progresses over the course of the year, with a particular highlight being a new camera the Company is working on. 

Pressure Technologies (LON:PRES) 

The designer and manufacturer of specialty engineering solutions for high pressure systems has announced a considerable strengthening in the order book of its largest division, Chesterfield Special Cylinders (CSC), thanks to increased activity in the deep water oil rig market. Hydratron is driving growth in the Engineered Products Division and order books have strengthened in both the UK and USA. This is underpinned by continued strength in the global wellhead and controls markets led by the USA, which is aiming to become energy self-sufficient by 2030. In the Alternative Energy division, Chesterfield BioGas has only won one biogas upgrader project out of the two expected, and it is unlikely that any further orders won this financial year can be delivered in the year. There are a number of potential vehicle refuelling and trailer projects that are likely to reduce any shortfall in activity. However, given the size of the Company’s total order book and the immediate pipeline, the management is confident of achieving market forecasts for the current financial year. 

Solid State (LON:SSP)

Solid State, the AIM listed supplier of battery power solutions, specialist electronic components and industrial/ruggedised computers to the electronics market, this week  announced that trading in the year ending 31 March 2012 has continued to be very satisfactory and the result for the year is now expected to be ahead of current market expectations.  While revenues have been broadly as expected, the sales mix has shifted in the second half in favour of higher margin product. 

Stellar Diamonds (LON:STEL) 

The diamond mining and exploration company focused on West Africa has provided initial bulk sampling diamond grade results from the Lion-5 kimberlite dyke at its Kono diamond licence in eastern Sierra Leone. 346 dry tonnes of kimberlite were sampled and yielded 244 carats for in-situ grade of 70 carats per hundred tonnes, which is consistent with the previous trial mining results from the Pol-K and Bardu kimberlites at Kono. The management believes these results indicate that the Lion-5 kimberlite has significant exploration potential and intends to continue the exploration and evaluation work to develop this potential.

Surgical Innovations Group (LON:SUN) 

The designer and manufacturer of creative solutions for minimally invasive surgery announced that it has received FDA approval for its Logic range of reusable instruments. These instruments are compatible with the Group's Logic Handles, which already have approval in the US, and are currently used with the Company’s Resposable LogiRange- FDA approval will therefore help the Company to further penetrate these markets and take advantage of this sizeable market. A new contract with the Premier healthcare alliance was also signed with the Company’s master dealer for the sale of the Group’s Resposable LogiRange, and Logic range of reusable instruments, running for three years from 1 April 2012 with an option to extend for 2 years upon the agreement of both parties. A strong update by the Company. 

Symphony Environmental Technologies (LON:SYM)

Symphony Environmental Technologies, the specialist in advanced plastics technologies reported that on 31 January that the Company presented its advanced plastic and other environmental solutions to business and political leaders at the residence of the British Ambassador in Mexico. Particularly pleasing was the strong interest in the "d2Detector", a portable device which shows whether the plastic product has been correctly made, and helps brand-owners to detect counterfeiting. In Mexico, Symphony, through its exclusive distributor Plasticos Degradables is actively involved in research and development with universities and institutions. A new laboratory with advanced equipment will be opened in March. 

Synairgen (LON:SNG)

The respiratory drug discovery and development company with a particular focus on viral defence of the lungs this week announced its audited results for the six months ended 31 December 2011 following the change of year-end to that date. The Phase II trial of inhaled interferon beta (IFN-beta) in asthma is on schedule: last subjects were dosed in December 2011, with results anticipated in March 2012. Positive results from the pre-clinical study completed in November 2011 showed that aerosolised IFN-beta reduced virus-induced pneumonia, suggesting that inhaled IFN-beta may have potential as a broad spectrum antiviral for use in patients admitted to hospital with suspected viral lung infections; and as a post-exposure prophylactic defence against a lethal virus threat to the lungs. Research and development expenditure for the period came in at £1.8m (year ended 30 June 2011: £2.9m), whilst the post-tax loss for the period was £2.0m (year ended 30 June 2011: £3.2m) and the company had cash at 31 December 2011 of £3.4m (30 June 2011: £4.9m). Business development activity for the out-licensing of the IFN-beta programme is being coordinated to coincide with the availability of key clinical trial data.

Tower Resources (LON:TRP)

Tower Resources who has exploration assets in offshore Namibia and Uganda, provided an update on operational progress in Uganda, where the Mvule-1 well is now expected to spud within 6-9 days, i.e. between the 8th and 11th of February.  Tower's wholly owned subsidiary, Neptune Petroleum (Uganda) Limited, has begun mobilisation of the OGEC K900 drilling rig to the Mvule-1 site. Preparation of the site is near completion and rigging up is about to begin. The well is anticipated to reach a total drilled depth of about 600 metres within two weeks of spud. A further update will be released once the well has spudded. The well is evaluating estimated recoverable resource potential of 80 m bbls. 

Transense Technologies (LON:TRT)* 

The sensor systems specialist for the transportation and industrial markets has received an order from Bridgestone Brazil for its next-generation iProbe commercial tyre inspection tool. This follows a successful field trial and positive feedback from Bridgestone's customers. The management believes this is a strong endorsement of its technology and anticipates further orders to follow as part of an on-going deployment programme by Bridgestone. Bridgestone Brazil, in partnership with Transense and its South American partner, Budini Inc., has developed a tyre inspection software solution built around the iProbe, for mobile devices running on the Apple iOS and Android platforms. Bridgestone Brazil will use the iProbe and software as a complete tyre monitoring and reporting system for its commercial tyre customers and independent service providers. 

ValiRx (LON:VAL)* 

The life science company announced that its cancer screening biomarker NAV3 has received patent approval by the European Patent Office. The Company is now in position to begin production and marketing of the biomarker. The biomarker is one of five patent family assets the Company’s subsidiary, ValiFinn Oy, purchased from Pharmatest Services Oy in January 2012. ValiRx retains all commercial rights to the five patent family assets and is currently in negotiation with clinical partners for potential production. 

Xenetic Biosciences (LON:XEN) 

Xenetic Biosciences, a bio-pharmaceutical company focussed on high-value differentiated biological and vaccines and novel cancer drugs, announces that the Open Offer as proposed in the Shareholder Circular dated 4 August 2011 will not be implemented. The Company’s share price of 9 pence per share on 31 January 2012 was below the Open Offer price of 11 pence per share and hence the Directors determined it was not in the best interest of the Company to implement the Open Offer.

Zeta Compliance Group (LON:ZCGP.PL)* 

Zeta Compliance Group announced that five of its clients renewed their long term contracts, which will provide revenues of £985,000 over the coming year. Four of these clients are clients in the retail sector and Zeta will be responsible for the monitoring of approximately 6,900 sites around the UK. The Company faced difficult market conditions in the last quarter of the financial year ending 31 January 2012 with preliminary annual results due in May.

*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.  

Mobile payment services firm Bango (LON:BGO) soared over 50 per cent in early deals as it confirmed a new business tie-up with Facebook.

Bango provides white-label payment services for ‘app’ stores that distribute software on mobile devices. It already works with several market leading clients including Blackberry App World, FOX Mobile and Gameloft.

Today, it revealed that it has signed an agreement to provide payment services to Facebook. 

The news sparked a great deal of excitement among investors. At 8:45 on AIM, Bango shares were up 38.5p, or 39 per cent, trading at 137p a share.

The precise terms of the deal remain confidential. “The board believes it is too early in the relationship to accurately forecast the level of business which it may generate,” the company said. 

The markets

Market opening: Tracking Asia’s optimism, the market looks set to open higher, despite the further extension of Greece’s bailout talks. FTSE futures were trading 16.5 points higher at 7.00am UK time.

New York: A larger-than-expected jump in consumer credit, US Federal Reserve Chairman Ben Bernanke’s reiteration of an easy monetary policy, and rumours of Greek leaders meeting to finalise a bailout package lifted markets. The S&P 500 index closed 0.2% higher yesterday.

Asia: Toyota’s upward revision of its fiscal year guidance helped the Nikkei to reach a new three-month high and end the day 1.1% higher. The Hang Seng was trading at +1.2% at 7.00 am UK time. 

Continental Europe: In a mixed trading session, poor corporate profits, indicating that the Euro region could be on the brink of a recession, and the lack of urgency shown by Greece’s political leaders to seal the bailout deal, weighed on markets. The German DAX fell 0.2%, but the French CAC 40 rose 0.2% yesterday. 

UK small caps: The FTSE AIM All-Share index closed 0.5% lower yesterday. 

Today's news

Greek leaders extend talks for yet another day, again 

Turning a deaf ear to the EU’s warnings that the bailout deal must be finalised by mid-February, Greece’s political leaders stretched the talks for another day, citing missing paperwork. Political leaders in Greece have been reluctant to accept the tough reforms set forth by the troika (European Commission, European Central Bank and the International Monetary Fund) that will bring Greece the much-needed €130bn in bailout funds. Meanwhile, Dutch Prime Minister Mark Rutte and German Chancellor Angela Merkel differed on Greece’s exit from the EU—the former asuggested the EU ‘can live without Greece’, while Merkel said she would try not to compel Greece to move out of the monetary union. 

Company News:

TUI travel (LON:TT.)

TUI travel reported a 4.7% increase in revenues to £2.8bn in Q1 2012 ended 31st December 2011. Organic revenues grew 4% y-o-y. Underlying operating losses widened 27% to £109m during the period. The company said summer bookings in the UK for 2012 were flat, outperforming the travel market, which saw a 14% decline, according to GFK Ascent. Nearly 42% of UK summer bookings for 2012 took place online, an increase of 6% from Q1 2011, with differentiated products constituting 64%, up 7% y-o-y. The management said the business was severely impacted by the political unrest in North Africa, the economic environment in Europe and high fuel costs. 

Our view: Issues plaguing the European travel industry’s source and destination markets persist. The economic environment in Europe (source market) is putting a strain on consumer discretionary spending, while the political turmoil in North Africa (destination market) is deterring travel. Rising fuel cost is increasing the pressure. We would steer clear of investing in the sector and maintain our hold rating.

BP (LON:BP.) 

BP released full-year results (year to 31st December 2011) yesterday. Replacement cost profits for the year were US$23.9bn, marking a return to profit following the US$4.9bn loss suffered in FY2010, when the Gulf of Mexico oil spill wiped out profits. Replacement cost profits for Q4 2011 were US$7.6bn, which includes pre-tax cash of US$4.0bn received from Anadarko in settlement of the Gulf of Mexico oil spill. Higher oil prices and higher refinery utilisation helped the company to record profits despite an annual drop of 10% in production to 3.45m barrels of oil equivalent per day. The company expects production in FY2012 to be ‘broadly flat’. Capital expenditure is projected to be about US$22bn, up from US$19.1bn in FY2011. The dividend increased 14% to US$0.08. 

Our view: The increase in the dividend signals the management's belief in the future operational performance of the company. The company has also set aside US$41bn to cover cost of the Gulf of Mexico oil spill, which we believe to be adequate. As with the other integrated majors, BP is benefiting from the current high oil price environment. With signs of the company returning to 'normal' operations, we retain our BUY rating on the stock.

GlaxoSmithKline (LON:GSK)

GlaxoSmithKline (GSK) yesterday released the preliminary results for Q4 2011 and FY2011 to December 2011. In FY2011, reported sales dropped 3% y-o-y to £27.4bn. However, on an underlying basis, which excludes the sales of pandemic related products, Avandia and Valtrex, sales increased 4%. Geographically, sales in emerging markets, Japan and Asia Pacific increased 15%, 28% and 28% respectively, compensating for stagnating sales in the US and a 4% decline in Europe. The company reported progress in the R&D pipeline, with data received on nine of 15 Phase III drugs and four drugs having enough data to file. The company declared a 70p per share full-year dividend and an additional 5p per share was returned to shareholders from the receipts of disposal of the North American OTC brands. 

Our view: The company received three new approvals in 2011, and expects to file for four new drugs in 2012. Also, the company's geographical diversification is helping it offset negative growth in the western markets. The company is in the midst of a three-year restructuring programme, and while the cost savings have started yielding results, we prefer to be cautious at this stage, and maintain our Hold recommendation.

Xstrata (LON:XTA) 

Glencore has finally published details of its proposed merger with Xstrata, paying 2.8 Glencore shares for every Xstrata share held, implying a 15.2% premium on the miner's share price on 1st February. However, at least two of Xstrata's largest shareholders have said they would vote against the deal, saying it undervalues their holdings. The new entity would comprise 65% Xstrata assets while assets from Glencore make up the remaining. Nonetheless, Xstrata shareholders will hold only 45% in the merged entity. Also, switching from a high-margin, high-growth mining business to a lower-quality trading business is bound to be unattractive for some. As Glencore is barred from voting, only 17% of Xstrata's shareholders need to vote against the deal to halt the merger plan. 

Xstrata also released preliminary results for FY2011 yesterday. Revenues increased 11% y-o-y to US$33.9bn and underlying operating profit increased 10% to US$8.4bn. Underlying attributable profit increased 12% y-o-y to US$5.8bn. The company declared an annual dividend of US$0.40, an increase of 60% y-o-y. 

Our view: With vocal opposition from some of the largest Xstrata shareholders, the acceptance of the deal seems ever more doubtful. Despite falling sharply yesterday, the share price is still almost 12% higher than at the end of January, when news of the probable merger started to leak. We re-iterate our advice to take profits and exit the stock now.

Bellway (LON:BWY)

Bellway, the homebuilder, yesterday issued a trading update for H1 2012 ended 31st January 2012. Sales of homes increased 5.3% to 2,455 units, as private sales increased 15%. An improved sales mix resulted in the average selling price rising to £183,000 from £168,428 in H1 2011. The operating margin is expected to be above 10%, well above the 6.9% in H1 2011. However, the company expects growth in operating margins to slow to a more sustainable pace in the future, while growth in the average selling price could also slow for the rest of FY2012. The order book stood at £423m, representing 83% of the target for 2012.

TalkTalk (LON:TT.

In an interim statement, TalkTalk revised full year earning per share guidance upwards by 6% to 17.0p to 17.5p, while EBITDA margins are estimated to improve to 18% to 19% (17% to 18% previously) as the company's cost saving programme yields results ahead of schedule. Average revenue per user (ARPU) increased to £25.3 in Q3 2011 from £24.9 in Q3 2011. However, the company lost 50,000 customers in the period, and in consequence, revenues declined 4.9% y-o-y to £422m.

Economic News:

UK BRC like-for-like (LFL) sales

The British Retail Consortium (BRC) reported a 0.3% y-o-y drop in like-for-like sales in January, a sharp contrast to the 2.2% y-o-y increase registered in December; this is the second worst January for retailers since record keeping began in 1995. In January 2011, sales increased 2.3% y-o-y as the snow disruption in December 2010 brought out shoppers in droves. Total sales grew 2.1% y-o-y in January 2012 after rising 4.2% in January 2011. 

Our view: The drop in retail sales is not surprising, as consumers cut back after the festive season. As the reality of rising unemployment, job insecurity, dropping real incomes and increasing energy bills kicks in, consumers are not expected to contribute significantly to a recovery in Q1 2012.

German industrial production

Industrial production in Germany fell 2.9% m-o-m in December, after remaining flat in November (originally reported as a drop of 0.6%), the German Economy Ministry said yesterday. This is the largest drop in output since a 7.1% contraction in January 2009. Industrial activity shrank as manufacturing production declined 2.7% m-o-m in December. Construction activity also plunged 6.4% m-o-m, wiping most of November's 3.3% m-o-m gain. December's weak business activity caused the output for Q4 2011 contract 1.9% q-o-q while annual output increased 0.9% y-o-y. 

Our view: The Economy Ministry was probably right to say that though the industrial production fell towards the end of 2011, other indicators, such as stabilising factory orders and improving business sentiment, point towards a recovery in the German manufacturing sector over 2012.

US IBD/TIPP economic optimism

The IBD/TIPP Economic Index improved 1.9 points to 49.4 in February indicating lesser consumer pessimism about the US economy. A reading above 50 indicates optimism, while that below 50 indicates pessimism. The personal financial sub-index, which measures Americans' perception of their personal finances over the next six months, was 57.4 an increased 1.7 points from January. The increase of 4.5 points to 40.5 in the federal economic policies index suggests improving consumer confidence in government policies; however the sub-index of economic outlook decreased to 50.2 in February from 50.8 in January.

Chief executive Alex Halliday says that thousands of visitors are visiting the company’s website (www.SocialGo.com) each day as they look to grow an online community.

“This growing interest is an excellent opportunity for the company,” he said.

“With the software having proven itself as a stable and flexible platform we are now concentrating our efforts on giving our customers a vibrant and active community that is up and running in minutes and continues to grow and develop over time. 

“We will shortly be introducing a revised customer journey which will feature a new setup process, new network structure and critically, dramatically improved Facebook integration which will help the sites launch, grow and sustain activity.

“The upcoming releases will add definition to how the SocialGo sites exist in parallel with Twitter, Facebook Groups and Facebook Pages.”

In this morning’s trading update the company explained that it continues to receive revenues from the its first product, which is no longer available to new customers, and the sales for the new product are growing month on month.

It said that January saw twice as many new subscriptions as December. Furthermore it said that recent improvements to the way customers sign-up and set-up their social websites has seen a significant increase in customer trials. SocialGo says this is very encouraging.

A joint venture with Muronia Ltd, which specialises in online retail services for the music, entertainment and sports industries, has also benefited the company.

Together they are targeting high value clients that are seeking to directly exploit their commercial rights to their fan bases through their own dedicated social networks.

They have already signed up British rock band Kasabian, which launched its SocialGo powered site (www.kasabianlive.com) in December.

SocialGo hopes to build on this initial success with targeting similar initiatives, this includes promising discussions with a major US media group.

The company also announced today that Lord William Astor has joined the board of directors.

It follows the payment of US$800,000 to Brandberg, which was set up by Extract Resources (ASX:EXT).   

The company holds exclusive prospecting licences 3327 and 3328, located near the old tin mining town of Uis in the northwest of Namibia.

A horizontal loop electromagnetic survey over the two licences has identified of two uranium target areas. 

Priority target Orawab is interpreted as a palaeochannel at least 14 kilometres long, between 100-1000 metres wide and up to 50 metres deep.

A secondary target, Ringo, appears to include a less prominent but still significant palaeochannel to the southwest of the Orawab target, which is up to 7 kilometres long, 50-500 metres wide and 30 metres deep. 

The Ringo target is considered a possible downstream extension of the Brandberg uranium occurrence identified in historical literature, North River said.

North River said today Brandberg plans a 1,100-metre drill programme, which may be increased to 1,500-2,000 metres following the receipt of new funds.  

It will commence once the radiation management plan is approved by the National Radiation Protection Authority in Namibia.  The RMP was submitted in mid-November. 

David Steinepreis and Luke Bryan of North River will be appointed to the Brandberg board alongside two Extract directors.

ASIA

JGBs prices remained slightly lower on hope that the current Greek situation will soon be resolved. At 0630GMT JGBs were trading down 24 ticks at 142.24. (RANsquawk) 

China may implement new bank capital rules on July 1st, including allowing the institutions to lower risk weightings on individual business loans to 75% from 100%. (21st Century Business Herald)

A Fitch analyst has said to expect Chinese property construction to slow amid government tightening, and this will have an adverse effect on economic growth. As a result, Chinese banks are to face a decline in asset quality. The analyst further commented that he does not expect China to provide a significant sum of money to the Euro bailout fund, however the country may suffer a loss on investment if the Euro bailout fund is downgraded. (Sources)

Japanese Eco Watchers Survey: Current (Jan) M/M 44.1 vs. Exp. 47.4 (Prev. 47.0)

Japanese Eco Watchers Survey: Outlook (Jan) M/M 47.1 vs. Exp. 45.5 (Prev. 44.4) (Sources)

US 

T-notes settled in negative territory for the session on Tuesday as speculation mounted that Greece was closer to reaching an agreement on their second bailout. Yesterday’s 3y note was a slightly disappointing affair, despite a solid yield, with the buy-side demand and foreign sponsorship both underwhelming the fixed income markets. At the pit close, t-notes settled at 131.05, down 16+ ticks. Finally the DJIA finished up 0.26% at 12878.20, the S&P 500 finished up 0.20% at 1347.05 and the Nasdaq 100 finished up 0.15% at 2532.06. T-notes were seen trading down 6 ticks at 130.31 heading into the European session on continued optimism that Greece are closer to a deal. Last price taken at 0630GMT. (RANsquawk) 

Yesterday’s USD 32bln 3y note auction drew a yield of 0.347% vs. exp. 0.346%, the b/c was 3.30 vs. avg. 3.44 (prev. 3.73), indirects were 27.7% vs. avg. 37.94% (prev. 38.44%) the allotted at high was 12.68% and the auction stopped through the WI at the bidding deadline by 0.3bps. (RTRS)

EU

Greece yesterday missed another deadline to approve conditions for a second bailout following the postponement of a Greek party leaders meeting over last minute haggling with international lenders over emergency spending cuts. (FT-More) Greek PM Papademos will now be meeting the Greek party chiefs today at midday. (Sources)

The ECB said it is willing to exchange Greek bonds with EFSF, but that they won’t take losses on the Greek bond exchange, according to sources, who also added that an ECB concession will contribute to the Greek debt reduction, and the concession depends on the overall debt agreement being set. Furthermore, national central banks’ investment portfolios will not contribute to the PSI deal.  (WSJ)

Greece’s public administration has “immense problems” and the country’s authorities are “barely able to carry out” reforms that have been approved, according to a Troika draft report. (Bild Zeitung)

German taxpayers may face at least EUR 25bln in losses on Greek sovereign bonds, according to calculations by the IfW economic think tank. (Die Welt)

Italian PM Monti has warned that European leaders must take concrete steps to fuel the Continent’s economic growth or risk threatening its long-term prospects. (WSJ)

French President Sarkozy’s plan to raise VAT while cutting payroll charges will create 100,000 jobs by reducing companies’ production costs, according to the French Budget Minister. (Les Echos)

FX

Swiss Unemployment Rate (Jan) M/M 3.4% vs. Exp. 3.5% (Prev. 3.3%)

Swiss Unemployment Rate SA (Jan) M/M 3.1% vs. Exp. 3.1% (Prev. 3.1%) (Sources)

COMMODITIES

WTI crude futures were trading up USD 0.83 at USD 99.24 heading into the European session, following a decrease in the US API crude stockpiles. Last price taken at 0630GMT. (RANsquawk)

US API Crude Oil Inventories (Feb 3) W/W -4533K vs. Prev. 2067K

US API Gasoline Inventories (Feb 3) W/W 4429K vs. Prev. -222K

US API Distillate Inventory (Feb 3) W/W 386K vs. Prev. 970K

US API Cushing Crude Inventory (Feb 3) W/W 385K vs. Prev. 1482K. (RTRS)

China has moved to buy Saudi Arabian and Russian oil in order to put further pressure on Iran over a price dispute between the two countries. (RTRS) 

Iran’s Supreme Leader wants to ultimately shut Iran’s oil wells and turn the country into a non-oil economy, although the leader further commented that this vision may not be realized anytime soon. (Sources)

Chariot’s survey targeted an area in the north east section of the licence that contains 11 leads with a combined prospective resource potential of 3.972 billion barrels of oil.

Data processing and interpretation is now underway with Chariot expecting to report the results in the second half of the year.

“This 3D seismic survey is the largest undertaken by Chariot to date and...has provided excellent quality data despite difficult weather conditions at times,” said chief executive of Chariot Oil & Gas Paul Welch.

“The Central Blocks are the least mature of our portfolio and we look forward to receiving the processed information, which will enable us to identify further targets to include in our long term drilling campaign.”

Moving to Europa Oil & Gas, the group saw its production in the UK has improve significantly, which has resulted in a 61 percent increase in revenues to £2.4 million in the six months to end January.

Output surged from 151 barrels of oil per day (bopd) a year ago to 187 bopd as the West Firsby WF-9 well came on stream and downtime was reduced, while oil prices have improved from US$82.7 per barrel last year to US$108.9 per barrel.

“Our UK production continues to generate more than enough cashflow to cover our operating costs and provides a solid foundation from which we can develop our other highly exciting assets,” said chief executive of EOG Hugh Mackay.

Sticking with oil and gas companies, SacOil (LON:SAC) has revised the terms of its partnership with Transnational Corporation of Nigeria and Energy Equity Resources (EER). Under the terms of the amended agreement, farm-in fees for SacOil and EER have been reduced from US$32.5 million to US$24.5 million.

Transcorp will remain the operator of the OPL 281 and will cover 60 percent of the capital expenditure to first production, while SacOil and EER were to cover 100 percent of capex under the initial agreement.

Sector peer Wentworth Resources (LON:WRL) has agreed to sell its 100 percent owned 18MW gas-fired power plant and associated assets to TANESCO for US$13.5 million in cash.

The company, which operates in the Rovuma Basin of East Africa, said the sale will allow it to streamline its Tanzania operations and focus exclusively on exploring for oil and gas and developing and producing its known natural gas resources.

“This transaction provides us with further non-dilutive capital as we look to focus on our core strategy of exploring for hydrocarbons and developing known natural gas resources,” said managing director of Wentworth Geoff Bury.

“We look forward to continuing to be a reliable, long-term gas supplier to the Mtwara Power Plant and to being a gas supply partner with TANESCO in other parts of Tanzania.”

In the mining sector, North River Resources (LON:NRRP) has completed the acquisition of a 50 percent interest in Brandberg Energy, which holds Exclusive Prospecting Licences (EPLs) 3327 and 3328 in Namibia, after paying US$800,000.

Brandberg Energy intends to complete a 1,100 metre drill programme planned by its owner Extract Energy. Drilling will begin once the Radiation Management Plan ('RMP') is approved by the National Radiation Protection Authority in Namibia.

Another small cap miner Continental Coal (LON:COOL) announced that it has signed a binding a subsidiary of Barclays (LON:BARC) for the previously announced US$65 million of debt funding.

The company also told investors that development activities at the Penumbra coal mine have accelerated significantly in 2012. Preparation of the twin declines through the installation of spilling bolts into the perimeter of the excavations was completed in late January and early February 2012.

Drilling of the first rounds for blasting the initial 2m of advance was completed on 4 February 2012, with the first blasts in the decline completed two days later.

Elsewhere in the markets, Sphere Medical Holdings (LON:SPHR) has published two studies that support the utility of real time propofol measurement in routine clinical use.

One of the studies, which was carried at the Queen Elizabeth Hospital Birmingham UK, showed that the use of Sphere Medical's Pelorus 1000 propofol measurement system has the potential to significantly improve the accuracy of patient dosage.

“The Queen Elizabeth Hospital study provides clear evidence that the Pelorus 1000 propofol measurement system could be used to improve the accuracy of propofol dosing using target controlled infusion,” said chief executive of Sphere Medical Stuart Hendry.

In IT, SocialGo (LON:SGO), which provides software as a service (SaaS) social media applications, said that since the launch of Version 2 of its proprietary software, the service has been trialled by thousands of visitors to its site that were seeking to create online communities.

The software has received positive comments from customers, particularly in relation to the stability and flexibility of the platform, said SocialGo.

Revenue from Version 2 has been growing month on month and SocialGo has recently introduced its regular 'Concierge' version of the product.

Sales of new subscriptions in January were double that of December and with the latest improvements to the on-boarding process, the group has seen a significant increase in customer trials, which it said was encouraging.

Filtering antennas for mobile and wireless devices manufacturer Sarantel (LON:SLG) also had news to report to investors today, announcing a its largest order to date from a leading military radio manufacturer for a range of different Sarantel antenna products.

This order is for GeoHelix GPS antennas which the manufacturer uses across a variety of products and is expected to be delivered over the next 12 months and will have a significant impact on Sarantel's revenues and cash flow in the current financial year.

“This is the largest order that we have secured so far and we expect it to have a material impact on our revenues,” said chief executive of Sarantel David Wither.

“It is a great endorsement of the importance of our technology to world leading customers.”

Finally, mobile messaging services provider Synchronica (LON:SYNC) has signed a letter of intent with the Toronto-based Intertainment Media, which develops rich media applications including the real time experiential language platform, Ortsbo.com.

The companies will integrate Synchronica’s messaging platform Mobile Gateway with the Ortsbo experiential language technology, enabling Mobile Gateway to provide users with real-time translation between more than 50 languages potentially across Synchronica's growing client base of over 100 mobile operators and device manufacturers.

Under the terms of the agreement, Intertainment will invest up to C$10 million in Synchronica at a minimum price of 16 pence per unit, consisting of one share in Synchronica and one ordinary share warrant exercisable at 40 Canadian cents per share.

UK BRC Shop Price Index (Jan) Y/Y 1.4% (Prev. 1.7%) (Sources)

The Bank of England should redesign its quantitative easing program to target the overvalued housing market and address the source of Britain’s sluggish growth. This plan would accelerate the deleveraging cycle in the UK, according to Fathom Consulting.  (Sources) 

The UK Treasury should set up a “bad bank” to buy, at a discount, distressed mortgage-backed assets that are weakening banks’ balance sheets, in a move similar to the US TARP system. The entity could then issue a bond backed by these assets, which could be bought by the BoE via a quantitative easing program. 

One in ten admit “things get tight within a week of receiving monthly salary”. (Daily Mail) 

The average British worker is worrying they are broke just 17 days after payday, according to a report from Halifax. 

ASIA

The Nikkei share average closed above the 9,000 mark for the first time in three months, boosted by a stronger-than-expected profit outlook from Toyota. (RTRS)

Top Performing Sectors in Nikkei 225: Telecommunications (+2.16%), Consumer Goods (+1.47%), Technology (+1.28%)

Worst Performing Sectors in Nikkei 225: Utilities (-0.55%), Health Care (-0.01%) Oil & Gas (+0.33%)

Sony – Co. downgraded to BBB+, outlook negative by S&P. (RTRS)

Alibaba Group – Co.’s customer unit Tianmao aims to double transactions in 2012 to CNY 200bln. (Ming Pao Daily)

US

US Equities finished in positive territory yesterday as hopes grew of a resolution in the talks regarding Greece's second bailout package. Utilities were one of the best performing sectors as the broader market remained firm, multiple takeover stories showed that M&A deals were still very much part of the picture, Sears (+6.17%) were one of the best performers on the back of this. Yum Brands (+2.63%) were also a strong performer after their quarterly earnings. Finally the DJIA finished up 0.26% at 12878.20, the S&P 500 finished up 0.20% at 1347.05 and the Nasdaq 100 finished up 0.15% at 2532.06. (RANsquawk)

Top performing sectors in S&P 500: Utilities (+0.75%) Oil & Gas (+0.54%) Technology (+0.35%)

Worst performing sectors in S&P 500: Basic Materials (-0.54%) Financials (-0.08%) Industrials (-0.01%)

Apple – Co. may introduce its iPhone 5 product in July, according to the Economic Daily, without citing sources. (Economic Daily)

Walt Disney – Co.’s Q1 EPS USD 0.80 vs. Exp. USD 0.71, Q1 revenue USD 10.779bln vs. Exp. USD 11.19bln, Q1 net USD 1.464bln, Q1 parks and resorts revenue up 10% to USD 3.2bln, Q1 studio entertainment revenue down 16% to USD 1.6bln, co. shares fell 2.32% in after-market trade. (RTRS)

Yahoo! – Co. Chairman Bostock and three other directors will step down as the struggling company ploughs ahead with internal overhaul. (RTRS)

3M – Co. has boosted its quarterly dividend 7.3% to USD 0.59 per share. (Sources)

UK

BHP Billiton – Co. reported H1 net USD 9.94bln vs. Exp. USD 10bln, H1 sales of USD 37.48bln, up 9.7%, an interim dividend of USD 0.55, H1 underlying EBITDA up 8% to USD 18.7bln. The co. said it has USD 27bln in growth prospects in execution, and was well placed to achieve 200 MTPA iron ore production rate. Co. CEO has commented that he sees continuing “high-grade” capital expenditure. Co. is close to striking an AUD 3.5bln deal with the government of Gabon over the Belinga iron ore project, which is said to contain 4bln MT of ore. (RTRS/Sources)

Shire – Co. said the US FDA has approved the prescription medication Vyvanse capsules as a maintenance treatment for adults with ADHD. (RTRS)

Rio Tinto – Co. has approved a further USD 3.4bln spending in the expansion of its Pilbara iron ore operations in Western Australia. (Sources)

International Power – Co. FY underlying EPS EUR 0.276, Prev. EUR 0.249. Co. adjusted current operating income EUR 3.055bln. Co. adds it is confident of delivering further growth in 2012. (RTRS)

Reckitt Benckiser – Co. Q4 adjusted EPS GBP 0.742 vs. Exp. GBP 0.693, Q4 revenue GBP 2.416bln vs. Exp. GBP 2.4bln, co. recommends 8% in final dividend. (Sources)

Companies going ex-dividend: Sage Group (GBP 0.0707)

OTHER UK

Misys – Co. announced that it had agreed to a number of key terms on a possible all-share merger with Temenos. The exchange ratio will be 4.1:1, leaving co. shareholders with 53.9% of the combined group and Temenos shareholders with 46.1% after accounting for options outstanding but excluding co. convertible bond. (RTRS)

FRANCE 

Sanofi – Co. Q4 Business EPS EUR 1.56 vs. Exp. EUR 1.56. Co. Q4 Sales EUR 8.51bln vs. Exp. EUR 8.51bln. Co. reports it will pay dividend of EUR 2.65 per share, up 6%. Co. says 2012 objectives are in line with plans presented in September and sees 2012 business EPS down 12-15% at constant currency. Co. Q4 Lantus sales rose 18% to EUR 1.05bln, Q4 Plavix sales rose 2.2% to EUR 529mln and Q4 Lovenox sales fell 13% to EUR 498mln. Co. announced the FDA approval of Sklice Lotion for the treatment of head lice. (RTRS)         

Vinci – Co.’s 2011 net EUR 1.9bln vs. Exp. EUR 1.91bln, reported a record order book of EUR 30.6bln, and is to pay a dividend of EUR 1.77 per share, up 6%. (RTRS)

Technip – Co. awarded a USD 2.1bln major flexible pipe frame pact by Petrobras. (Sources)

Veolia Environment – Co. has been downgraded to ‘Baa1’, outlook stable by Moody’. (RTRS)

OTHER FRENCH

Air France KLM – Co. aims to have 70% of its short and medium haul flights operating during today’s strike, and 60% of its long haul flights. (RTRS)

GERMANY

Bayer – Co. told by Indian state to pay farmers INR 4.5mln as the pest resistance of Co. cotton did not meet minimum standards. (Economic Times)

PAN EUROPEAN

BBVA – According to press reports, co. will make a strong bid for Unnim. (El Confidencial)

Nokia – Co. will cut about 1,100 to 1,200 jobs at its factory in Salo, Finland. (Helsingin Sanomat)

Dexia – Co. is to hold a meeting today with the CDC board with regards to the refinancing unit, Dexma, and expects a solution shortly. (RTRS)

Skanska – Q4 Operating profit SEK 1.33bln vs. Exp. SEK 1.09bln. Co. Q4 sales SEK 36.6bln vs. Exp. SEK 35bln. (Sources)

Intesa Saopaolo – Co.’s CEO Cucchiani said he considers the banks 10.2% Core Tier 1 capital ratio adequate for managing current market volatility. He also added he wants the co. to remain active in liability management, but stated that he was not interested in additional bond buybacks at the moment. (Sources) In other news, the co. has had its long-term debt rating cut to ‘A-‘ from ‘A’ by Fitch. (RTRS)

Caixabank/Bankia – Co.’s proposed a merger plan to the new government at the end of last year (El Mundo)

Banca Monti dei Paschi di Siena – Co.’s long-term debt rating downgraded to ‘BBB’ from ‘BBB+’ by Fitch. (RTRS)

Banco Popular – Co. needs EUR 2.6bln in additional property provisions, and also is to set aside EUR 850mln as an add-on capital buffer. (Sources) In other news, the co. has also had its long-term debt rating cut to ‘BBB’ from ‘BBB+’ by Fitch. (RTRS)

UBI Banca – Co. announces a buyback offer for Tier 1 securities with nominal value of EUR 450mln, in a move designed to strengthen capital. (Sources)

Bankia – Co.’s deposit rating cut to ‘Baa3’ from ‘Baa2’ by Moody’s, reflecting the sizeable debt maturities for the current year. Moody’s also commented that the magnitude of the cap shortfall Bankia would experience would be consistent with the low end of a ‘D’ category rating. (Sources)

SMI

Roche – Illumina’s board have unanimously rejected Co.’s USD 5.7bln bid to takeover Illumina. Co. have reported they are disappointed by the actions of the Illumina board and continue to believe the offer is fair. The FDA has granted Co.’s Pertuzumab priority review for previously untreated HER2-positive metastatic breast cancer. (RTRS)

Nestle – Co. is seen leading the race to acquire Pfizer’s Wyeth infant nutrition unit. (Sources)

Syngenta – Co. FY sales USD 13.3bln vs. Exp. USD 13.3bln, FY net USD 1.6bln vs. Exp. USD 1.62bln. Co. proposes 2011 dividend of CHF 8 vs. Exp. CHF 7.50. (Sources)

BROKER MOVES

BP CUT TO HOLD FROM BUY AT SOCGEN

RBS CUT TO NEUTRAL FROM BUY AT CITI ON VALUATION

CAIRN ENERGY CUT TO NEUTRAL FROM OVERWEIGHT AT JPMORGAN

PERNOD RICARD RAISED TO BUY FROM HOLD AT SOCGEN

ING CUT TO NEUTRAL VS BUY AT GOLDMAN

UBS CUT TO SELL FROM HOLD AT DEUTSCHE BANK

MORGAN STANLEY CUT TO HOLD FROM BUY AT COLLINS STEWART

This is an excellent article by Rich Miller, Asjylyn Loder and Jim Polson for Bloomberg. Here is the opening:

The U.S. is the closest it has been in almost 20 years to achieving energy self-sufficiency, a goal the nation has been pursuing since the 1973 Arab oil embargo triggered a recession and led to lines at gasoline stations.

Domestic oil output is the highest in eight years. The U.S. is producing so much natural gas that, where the government warned four years ago of a critical need to boost imports, it now may approve an export terminal. Methanex Corp., the world's biggest methanol maker, said it will dismantle a factory in Chile and reassemble it in Louisiana to take advantage of low natural gas prices. And higher mileage standards and federally mandated ethanol use, along with slow economic growth, have curbed demand.

The result: The U.S. has reversed a two-decade-long decline in energy independence, increasing the proportion of demand met from domestic sources over the last six years to an estimated 81 percent through the first 10 months of 2011, according to data compiled by Bloomberg from the U.S. Department of Energy. That would be the highest level since 1992.

"For 40 years, only politicians and the occasional author in Popular Mechanics magazine talked about achieving energy independence," said Adam Sieminski, who has been nominated by President Barack Obama to head the U.S. Energy Information Administration. "Now it doesn't seem such an outlandish idea."

The transformation, which could see the country become the world's top energy producer by 2020, has implications for the economy and national security -- boosting household incomes, jobs and government revenue; cutting the trade deficit; enhancing manufacturers' competitiveness; and allowing greater flexibility in dealing with unrest in the Middle East.

My view - Once George P Mitchell pioneered the fracking method for extracting shale gas at a very commercial rate in the late 1990s, the seemingly unobtainable 'holy grail' of energy independence for the USA became a practical possibility. When this game-changing technology was adapted for the successful extraction of shale oil, the previously unthinkable prospect of the USA as the world's largest producer of energy became a probably for the next decade.

This will require none of the expensive subsidies thrown at ethanol and various inefficient renewable technologies. The USA is blessed with the world's largest known reserves of shale oil and the second largest known reserves of shale gas. Moreover, American innovation created the means for extracting this vital resource - a technological breakthrough that other countries are now scrambling to achieve.

This item continues in the Subscriber's Area.

Note: Fullermoney has been posting reports, articles and comments on shale gas and oil developments for over seven years. By using the 'Search' facility in the menu shown upper-left, you can access 156 entries for shale.

The Weekly View: Raising Our 2012 S&P 500 Trading Range - My thanks to Rod Smyth, Bill Ryder and Ken Liu of RiverFront Investment Group for their superb market letter. It is posted in the Subscriber's Area but here is a brief sample:

Leadership in the financial markets has changed from last year, when higher yielding more defensive stocks performed. In 2012, stocks are being led higher by emerging markets, small caps, and large-cap technology - the MSCI Emerging Markets Index is up 16% year to date, the Russell 2000 is up 12% and the Nasdaq 100 is up 11%. At the same time, long-term Treasury bonds have fallen 1.7%. We believe some of the extraordinary monetary policy support by the world's central banks, led by the Federal Reserve and the ECB, is beginning to filter through to the real economy, judging by the job growth acceleration reported last week.

My view - Steroids in the form of quantitative easing have cushioned downside risk for the larger western economies. Commentators who prefer Austrian School economics tell us that we would have been better off by allowing the overleveraged global financial system to collapse in a traumatic debt default, so that it could then rise like the fabled phoenix once the ashes had settled.

This item continues in the Subscriber's Area.

Email of the day - On high frequency trading:

"How are you?

"I happened upon the following animated GIF on a HFT related forum. It purports to show the rise of the algorithmic machines since 2007. Things get rather frantic in the second half of 2011, which says quite a lot."

My comment - We are fine and thanks for the link above which will certainly be of interest to other people.

This is the first time-sequenced visual depicting the increasing influence of HFT that I have seen. I recommend watching it all the way through because a degree of mayhem occurs in 2011, as you will recall. If you click inside the GIF you will also find some discussion.

For more on this subject, use our search facility shown upper left, fourth item down and type high frequency in the Search box. It will produce 63 items.

Additional commentary by Eoin Treacy

Africa can remind the world of the capitalist way This article by Dambisa Moyo for the Financial Times may be of interest to subscribers. The full article is available in the Subscriber's Area but here is a section:

Capitalism is alive and well in Africa. Some observers will worry about the recent violence arising from the removal of fuel subsidies. The truth is that today's Nigeria is strong enough to avoid a protracted crisis. This is down to the growing power of the African consumer. A decade or two ago, the rash subsidies decision taken by President Goodluck Jonathan could have brought the country near to a full political meltdown. But in 2012, Nigerian consumers want to buy their groceries and get back to work; they have too much vested in the economy. It's a pattern mirrored across the continent.

Africa is quietly catching up after a period of isolation from the rest of the world between the late 1990s through to 2008. Policymaking has justifiably been criticised for its multi-decade approach of ring-fencing Africa. This created an us-versus-them culture, which hinged on one set of development policies trade, foreign direct investment, capital market access for certain countries like China, India, Brazil, but prescribed an aid-centric policy for other (mainly African) countries.

My view China's investments in and deals with a slew of African countries have been well reported over the last decade. India is increasingly attempting to acquire access to African resources as are a number of other Asian countries. This is helping to drive a boom in capital investment and infrastructure. The presence of African traders in countries such as China is less well reported.

On my trip to China's Zhejiang province last October, I was surprised to see just how many Africans were trawling through the wholesale markets. Most appeared to be aiming their purchases at low cost consumer goods. The type of items one might associate with a Dollar, Pound or Euro store. They would not be in China sourcing goods without the consumer demand to fuel such activity. This suggests that while corruption, politics and disease remain headwinds in Africa, economic development is progressing, albeit from a low base.

This section continues in the Subscriber's Area.

Neil Theory of Contrary Opinion Thanks to a subscriber for this highly educative summary by James L. Fraser of Humphrey Neill's views dating from the early 1960s. To the best of my knowledge this is the same James L. Fraser who helped found Fraser Asset Management; hosts of the annual Contrary Opinion Forum at which David is regularly invited to speak. I rate this report unmissable for the depth of information contained. I'm sure I will return to it on future occasions to absorb additional nuggets. It is posted in the Subscriber's Area but here are two sections:

Some skeptics might say that as we are in a new era for the first time in history possessing the means never to slave again that the Crowd will diminish until we have little to be contrary to. Modern man has confidence in his own power to shape and transform the physical world in accord with his own concepts. Keen thinking, sharpened by computers, should keep the public under control. And all the time, public education is improving. But a world of cybernetics is no solution.

There will always be crowd psychology to deal with, Instantaneous answers mean crown reactions occur faster also. Rapid communication with accelerated computations means opinions shift fast. If anything we will pounce on new fads with greater speed not less. It is our safety valve as witness the following.

And

We have a portrait of a mobile society, of America on the go, so busy moving and adjusting that there is no time left for serious thought. Interdependence is the rule with industrialization, technology, human crowding, and mass media causing many activities once considered private to be involved in national issues. The result of a national and worldwide abstract economy is homogenized uniformity.

My view Following the flash crash on May 6 th 2010 a question arose at The Chart Seminar, held a couple of weeks later, as to whether behavioural technical analysis was still credible following an event which was largely attributed to machines. The reality is that the flash crash proves computers panic in and panic out just like regular people. However, the size of this sector and volatility it creates makes them more destructive.

Cliffs Becomes Easy Target With Cheapest Mining Value This article by Charles Mead for Bloomberg may be of interest to subscribers and is relevant to my comments on iron-ore companies yesterday. It is posted without further comment.

Today's interesting charts The Chart Library's Note function, found to the right of the charcoal bar above every chart, allows you to annotate each chart. Your comments will then be visible next to the title of the instrument in your Favourites menu.

Brent Crude Oil extends the break above the psychological $115 area and a clear downward dynamic, held for more than a day or two, would be required to check potential for some additional upside.

This section continues in the Subscriber's Area.

Speaking engagements in the USA - I have accepted invitations to speak to a number of associations and groups while in the USA for The Chart Seminar. My schedule is still filling but here are the details so far:

San Diego MTA chapter in the first week of April. Time and venue yet to be arranged.

Los Angeles MTA chapter on April 11 th venue to be arranged but will be in the Long Beach area.

To Hoard or to Horde: risks and opportunities from participating with the crowd. Will be the topic of my talk to both these associations.

CFA Institute San Francisco April 12 th 3pm. Venue and the topic have yet to be finalised.

If you would like me to speak to your local chapter or organisation in California or New York please contact your respective chairperson and ask them to contact me.

The Chart Seminar 2012 - Following a sell-out tour to Singapore and Australia last year, The Chart Seminar will be held in San Francisco, New York and London this year. Please be aware that the early booking rate for non- subscribers at the US seminars expires on January 31st.

We are currently taking bookings for our San Francisco and New York dates in April as well as London seminars in May and November. Anyone interested in securing a place at any of our events should contact Sarah Barnes at sbarnes@fullermoney.com.

The date and venues for my seminars so far in 2012 are:

San Francisco - April 16th &17th 2012 Nikko Hotel

New York - April 23rd & 24th 2012 at The Manhattan Club (above Rosie O'Grady's) at 800 7th Avenue

London - May 25th & 25th 2012 at the Radisson Edwardian Hampshire

London - November 22nd & 23rd 2012 at the Radisson Edwardian Hampshire

The full rate is £950 + VAT. (Please note US delegates, as non EU residents are not liable for VAT). The early booking rate of £875 for non-subscribers expires on January 30th for the US seminars. Paid-up Fullermoney subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates. 

The order is from an unnamed US military radio manufacturer, which will use Sarantel’s GeoHelix GPS antennas across a range of its products.

One use of Sarantel’s GPS antennas is in compact radio systems that are embedded inside a soldier’s body armour.

Sarantel added that the order was part a multi-year supply contract expected to be delivered over the next 12 months.

It is currently considering a number of options for both short and medium term financing, including a commercial loan.

David Wither, chief executive. said: "This is the largest order that we have secured so far and we expect it to have a material impact on our revenues. It is a great endorsement of the importance of our technology to world leading customers."

Broker XCAP said the order was great news for the company and the broker expects eventually to raise its September 2012 sales and operating profit forecasts “materially”.

“Today's order takes Sarantel a long way towards profitability even without any contribution from camera GPS contracts,” it said, while the comments about financing suggest the company believes it can fund itself with bank debt based on the current order book. 

XCAP said if Sarantel does make a breakthrough into consumer products, it may need to riase money to cover the ramp-up, but in that situation the share price “would be far above current levels”.

Today’s order follows on from an award last November from US-based NAL Research Corporation for its second-generation Iridium antenna for a low-power, two-way satellite messaging and personal tracking device. That deal could generate revenues of US$1 million.

The plant is being sold for US$13.5 million cash. 

Mtwara is an 18 megawatt gas-to-power plant, which already sells its electricity to TANESCO. The plant is supplied with gas from Wentworth’s nearby Mnazi Bay gas field. 

Wentworth says the deal allows it to streamline its operations and focus on exploring for hydrocarbons and developing its natural gas resources.

"We believe the sale of the power plant is beneficial to both parties and we want to thank TANESCO and the government of Tanzania for their commitment and professionalism throughout the transaction process,” said managing director Geoff Bury.

“This transaction provides us with further non-dilutive capital as we look to focus on our core strategy of exploring for hydrocarbons and developing known natural gas resources. 

“We look forward to continuing to be a reliable, long-term gas supplier to the Mtwara power plant and to being a gas supply partner with TANESCO in other parts of Tanzania".  

Wentworth said that the Mtwara asset has a net book value of US$9.4 million. And in the first nine months of last year it generated revenues of US$5.2 million and a US$206,000 profit.

Today’s deal follows last week’s news that Wentworth had agreed to acquire an additional 16.38 per cent stake in the Mnazi Bay licence, taking its total interest to 41.78 per cent, in an asset swap with Cove Energy (LON:COV).

The firm described that deal as a ‘classic win-win’ situation. 

Wentworth and the operator Maurel et Prom will now take the project forward, alongside the Tanzania Petroleum Development Corporation. Maurel et Prom own 38.22 per cent stake in Mnazi Bay and the TPDC owns a 20 per cent stake.

Cove and Maurel et Prom were set to carry Wentworth’s costs for an exploration well and a 3D seismic acquisition programme. Going forward Wentworth will have to cover some of these costs itself. Wentworth will pay 30 per cent of the costs. After the agreed work is complete the costs will be split according to the partners' participating interests.

Wentworth says it will now have a greater strategic influence over Mnazi Bay's gas monetisation plan.

Turnover jumped by 61 per cent to £2.1 million in the half year to January 31 as volumes from its three producing fields rose by 23 per cent to 187 barrels per day.

Income was also boosted by a 39% rise in oil prices to US$108.9 per barrel.

The company currently has three producing assets all located in the East Midlandsand consisting of a 100% working interest in the West Firsby and Crosby Warren fields and a 65% working interest in the Whisby 4 well.

Higher output reflected the West Firsby WF-9 well coming on stream and reduced downtime after the blizzards had affected the the previous year.

Hugh Mackay, chief executive, added that daily production has been consistently higher than the previous year despite a recent workover programme for the West Firsby 7 well.

“Our UK production continues to generate more than enough cashflow to cover our operating costs and provides a solid foundation from which we can develop our other highly exciting assets.”

“Little or no value is being attached to our highly prospective portfolio of exploration and development assets that include the Berenx gas appraisal project and the Tarbes Val d'Adour re-development project, both of which are located in France.”

Management is committed to realising the inherent value of Europa’s portfolio, he added.

Doctors Nick Cowley and Thomas Clutton-Brock presented their results at the UK Society for Intravenous Anaesthesia (SIVA UK) annual scientific meeting. 

Chief Stuart Hendry said: "The Queen Elizabeth Hospital study provides clear evidence that the Pelorus 1000 propofol measurement system could be used to improve the accuracy of propofol dosing using target controlled infusion."

The Sphere device received a second endorsement in the online edition of the Journal of Clinical Monitoring and Computing.

It said: “The Pelorus 1000 propofol measurement system fulfils the requirements for measurement of propofol levels in whole blood samples with precision and accuracy suitable for elucidating propofol pharmacokinetics at clinically relevant concentrations." 

Propofol is widely used as a general anaesthestic and for sedation in the intensive care unit.

However its concentration in the blood stream cannot be measured in real-time.

Pelorus offers researchers the opportunity to monitor it instantaneously, rather than using retrospective sample analysis.

Sphere’s lead product is called Proxima, and is designed for use in intensive care units.

The blood monitor, which is the size of a match box, is designed to be fitted directly to the patient. 

It is hoped it will be cleared for this use in the States by the middle of 2012, and earlier in Europe with the award of a CE Mark. 

The company, spun out of Siemens, could be tapping into a very lucrative niche. 

The intensive care market alone is worth an estimated US$1.3 billion annually with a total of 12 million patients passing through the developed world’s ICUs each year.