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Northland Capital Partners View on the City Advanced Power Components, Magnolia Petroleum and TXO Plc

Published: 08:06 21 Jan 2015 GMT

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APC Technology (LON:APC) – CORP: New subsidiary

Market Cap: £21.4m; Current Price: 25.5p

  • Creation of Minimise Generation subsidiary and Board appointment
  • Created a new subsidiary, Minimise Generation Limited, that will serve as the group’s on-site renewable generation offering, alongside Minimise Energy, Minimise Water, Minimise Solutions and Minimise Finance. Minimise Generation will offer photovoltaic thermal (PV-T) panel technology in combination with other renewable technologies, including heat pumps, to help customers to achieve cost savings through the conversion of light and heat to energy for use on-site.
  • Andrew Shortis has been appointed to the board as Managing Director of Minimise Holdings Limited. Shortis brings considerable experience of working closely with private and public sector bodies to encourage the take up of projects to reduce energy consumption and simplify procurement. He also has a track record of developing, financing and delivering large energy efficiency contracts for European and US multinational organisations involving a variety of technologies, on and off balance sheet.
  • Management reports good progress in all areas of the business including the relationship with Royal Mail Group that commissioned the group in late 2014 to identify energy reduction opportunities across its estate.
  • FY results due on 22nd January. No change to forecasts.

NORTHLAND CAPITAL PARTNERS VIEW: Creation of Minimise Generation further extends APC’s product and service offering in the sustainability space. This breadth of offering, encompassing consultancy, monitoring, products and financing, is a key differentiator as APC becomes a one-stop shop for companies looking to reduce total energy and water consumption rather than a simple point product provider. The appointment of Andrew Shortis as Managing Director strengthens the Minimise division. 

 

Magnolia Petroleum (LON:MAGP) – CORP: Board change

Market Cap: £6.3m; Current Price: 0.7p

NORTHLAND CAPITAL PARTNERS VIEW: The company recently outlined that operating breakeven is c. $30/bbl leaving headroom to withstand current oil price weakness.  Magnolia has always run a low central overhead and, in common with most in the sector, continues to work hard to minimise its cost structure.

 

TXO Plc (LON:TXO) – CORP: Financing Update 

Market Cap: £1.24m; Current Price: 0.14p

  • £1m loan facility capped at £0.5m/general financing update 
  • TXO has now drawn down £500k of its £1m zero coupon loan facility. Lenders have opted to advance £500k direct to GBG and therefore not to advance the remaining £500k of this facility to TXO, though the parties are said to be discussing a further £500k facility.
  • This facility is payable on or before the 31st of October 2016 and convertible at the lenders’ discretion at the lower of 0.1p or a 20% discount to share price. The charge over GBG shares has halved to 127 GBG shares.  
  • A total of 7.5m new TXO shares (equivalent to c. £10.9k in momentary terms at current mid-price), has been issued to GBG as an introducer’s fee for the above facility. GBG now owns 15.13% of TXO. This is a related party transaction.
  • Enlarged share capital on admission of new shares will be 889.3m. TXO is proposing to carry out a related party placing to raise £100k, with details to follow.
  • Following these and other financing changes, TXO now has outstanding convertible loan note (CLN) commitments totalling £1.27m, comprised of: £55k CLNs due 31st January 2015; an aggregate of £509k CLNs due October 2015; £210k of Bergen CLNs due February 2016 and £500k CLNs due 31 October 2016.

 

W Resources (WRES:LON:) – BUY*: Placing

Market Cap: £7.4m; Current Price: 0.3p; Target Price: 1.1p

  • From Yesterday: Raises £1.4m from Hansource Investments Limited
  • W Resources has completed a £1.4m placing with investors including Hansource Investments Limited, a strategic UK investment group funded from Greater China.
  • The Company will issue 466,666,664 shares at a price of 0.3p per share
  • Both Michael Masterman (Chairman) and Byron Pirola (Non-Executive Director) took part in the placing investing a total of £202,000.
  • Following the transaction the Company will have 2,886,437,497 shares in issue.
  • Forecasts updated, price target lowered to 1.1p per share (from 1.5p) to reflect the dilution from the placing and other minor updates. BUY rating maintained.

NORTHLAND CAPITAL PARTNERS VIEW: W Resources plans to use the £1.4m raised from the placing for the development of the stage two production at the Company’s La Parrilla tungsten project and further work at the Company’s Régua tungsten project, as well as working capital. Hansource’s owners have significant experience in the mining industry and could prove to be a strategic investor for the Company. Following the placing Michael Masterman (Chairman) holds c. 27% of the issued share capital of the Company and Byron Pirola (Non-Executive Director) holds c. 6%. Hansource Investments Limited will hold c. 11.6%.

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