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Northland Capital Partners View on the City: Serabi Gold, Red Leopard Holdings, Ubisense and NetDimensions

Last updated: 10:06 07 Apr 2014 BST, First published: 09:06 07 Apr 2014 BST

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TMT: Ubisense (LON:UBI)

CONTRACT WIN

  • $1.2m software contract from a large communications network operator for an online/offline web based tool for its map based asset data. Software should improve operational awareness across the network.

NORTHLAND UK VIEW: Relatively small contract win but demonstrates further success in the telecoms space as the company targets a number of verticals. More significantly, Ubisense significantly strengthened its balance sheet last week with the £4.2m placing at 220p/share, a 4.3% discount to the prevailing price. As previously argued, although the company has been demonstrating good progress at the top line with customer bookings and the growth in the order book, it continues to invest heavily in its operations and is also considering further acquisitions that left the balance sheet looking weak. 

 

MINING: SERABI GOLD (LON:SRB)

Q114 OPERATIONS UPDATE: PRODUCTION OF 2,300OZ AU DURING THE RAMP-UP

  • Plant successfully commissioned and ramp-up of production.
  • Production of 2,300oz of gold during the ramp-up.
  • Remediation of the Carbon in Pulp (CIP) leaching circuit commenced, expected to be commissioned in July 2014.
  • Second ball mill purchased and it is expected to be installed by the end of the second quarter.
  • Surface stockpile of ore totalled c. 20,300t at a grade of 8.5g/t Au.

NORTHLAND UK VIEW: Q114 for Serabi progressed well with the successful commissioning and ramp up of production at the Palito Mine, Brazil. Serabi focused on processing lower grade ores during the ramp up at Palito to minimise the potential losses while the plant is optimised, importantly, the Mine reached its target throughput rate of 10.5t per hour. Serabi is now treating higher grade ore and we expect to see a much stronger Q214 in terms of gold production, with production for the quarter expected to be around 6,000oz Au. By the end of Q214, we are expecting the CIP plant to come online that will improve gold recoveries as at present gold recovery is limited to flotation and gravity concentration. Once the CIP plant is online the tailings generated during Q114 from flotation and gravity processing will be reprocessed through the CIP plant.

 

TMT: NETDIMENSIONS (LON:NETD)

PRELIMS: INVESTMENT PROGRAMME SUBSTANTIALLY COMPLETE

  • Revenue +17% to $16.2m with 36% growth in SaaS to $6.1m. Deferred revenue +25% to $7.6m. Revenue included $1.3m from NetDimensions Healthcare that was formed in March on the back of the eHealthcareIT acquisition. eHealthcareIT was previously NetDimensions’ North American reseller. Net $0.6m revenue. 67 new clients added. 
  • Heavy investment in operations as part of the three business plan. Investment totalled $4.9m in FY13 with headcount up 28% (37) to 167 with 29 sales quota carrying heads. This resulted in a $4.4m negative swing in adj. PBT to a loss of $4.0m. Net cash +13% to $7.7m following May’s $6m fund raising. Dividend increases 25% to 0.6p. Facility (undrawn) with SVB of up to $5m.

NORTHLAND UK VIEW: Heavy investment in 2013 as NetDimensions has sought to become a major global player in the Talent Management software market. This, plus the shift to more of a SaaS model, had a significant impact on the P&L with reported operating loss increasing $4.7m to $5.0m and selling costs up $4.8m. With the placing and facility in place, the company has reasonable headroom assuming increased revenues come through although further losses are expected in 2014.   

 

MINING: RED LEOPARD HOLDINGS (LON:RLH)

TRADING UPDATE ISSUE OF EQUITY: TUNNEL APPROVAL STILL PENDING

  • Awaiting approval from US Bureau of Land Management to reopen the Idora Tunnel.
  • Red Leopard has obtained a substantial amount of historic data from around the Idora Mine claims. 
  • Red Leopard also looking at projects in Chile and facilitated the sale of two properties for which it received $25,000 in cash and 300,000 shares in Cougar Minerals Corp (TSX-V)
  • Simon Michaels steps down as a non-executive director.
  • 7,291,666 shares have been issued in lieu of directors fees (£43,750).
  • 7,575,000 shares issued in a private placement to raise $75,000.

NORTHLAND UK VIEW: Red Leopard is continuing to work with the US Bureau of Land Management in regard to its plans to reopen the Idora Tunnel for exploration purposes at its projects in the vicinity of Shoshone County, Idaho. Once these plans have been approved, the Company will look to commence exploration immediately. The Company has also been examining projects in Chile and generated some cash by the facilitating the sale of two projects.

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