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This week: Chamberlin changes, Escher excels, Personal provides and Bullabulling bone crushes

Last updated: 12:13 16 Oct 2013 BST, First published: 11:13 16 Oct 2013 BST

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Predictably, stock markets have bounced back as a truce in the US Senate is in sight and a temporary stop-gap fiscal package is expected to reopen the government and authorise an increase in America’s debt ceiling before this Thursday’s deadline. The FTSE 100 is up 219 points to 6,540 since Thursday last week whereas the All Share AIM Index is up 19 points to 791 over the same period. In the UK, major macro indicators have been broadly in line with expectations with CPI inflation reporting at +2.7% vs consensus of +2.6%, while RPI was reported at +3.2% in line with consensus. This indicates potential momentum in the UK’s economic recovery. Sector wise, all of indices are reflecting positively with the exception of personal goods, electricals and mobile telecoms. The rest of this week sees the publication of Fed’s Beige Book and Initial Jobless Claims in the US.    

AEG trading update,BGL increases mine production forecast,CMH trading update,ESCH banking facility,FIP preliminary results,GAL gold jewellery arrangement,GRPH upgrade facility,HCM milestone payment and Chinese Eli Lilly agreement,INS global sales appointment,NMG 2013 work programme update,PGH wins contract,RRL merger update,SRT trading update and acquisition,TMZ CE Mark,UK pilot,distribution agreement,TRX technology transfer,TSTL full year results, UBI preferred supplier to global OEM 

 Active Energy Group (LON:AEG)

Active Energy announced that in the three months ended 30 September 2013 it shipped 50,000 Metric Tonnes (MT) of wood chip compared to 57,000 MT shipped in the six months ended 30 June 2013 of which 38,000 MT was subject to profit share arrangements with Nikofeso Holdings Limited.  The acquisition of the whole of the issued share capital of Nikofeso was completed on 27 June 2013. Prior to completion of the acquisition, the Company's fiscal entitlement was governed by a financing agreement between AEG and Nikofeso whereby AEG received a profit share per MT shipped. For this reason, the revenues reported in the Company's recently published Interim Financial Statements are not comparable to those attributable to the Company now acting as a trading principal. The Q3-2013 shipments have generated gross revenues of US$5.3m for the account of the now enlarged Group. The Shareholder Circular published by the Company prior to the Acquisition stated that the Board believes that, by end 2015, there is an opportunity of shipping up to 350,000 MT per annum of woodchip on the Black Sea Trade with a similar quanta of cargoes of power plant feedstock shipped to European clients. 

Bullabulling Gold (LON:BGL

Bullabulling Gold has reported that the on-going optimisation of the Bullabulling Gold Project has confirmed the potential for a further improvement in the economic performance through the relocation of public infrastructure at the northern end of the project area. A series of four open pits have been proposed for development at Bullabulling. The northern most pits, Bonecrusher and Dicksons, are separated by an exclusion zone accommodating overhead power transmission lines and an underground telecommunications cable. Dicksons is separated from the Phoenix pit to the south by an easement for the Great Eastern Highway and the Goldfields Water Supply pipeline. Revised mine designs based on the recently updated resource estimate show that the relocation of the power line and telecommunications cable would enable the Bonecrusher and Dicksons pits to be expanded to capture an additional 5.4m tonnes grading 0.87g/t for 150,000 ounces of contained gold. This would take total forecast mine production over a projected mine life of approximately 13 years to 94.7m tonnes at 0.84g/t for 2,562,000 ounces of contained gold.

Chamberlin (LON:CMH

Chamberlin, the specialist foundry and engineering group, has announced that following the appointment of the new executive management team last month, a review of Chamberlin's financial forecasts for the year to March 2014 has been undertaken especially in light of the difficult current trading conditions announced previously. Accordingly, the Company has provided a revised guidance on the expected outcome for the year, with management anticipating that the Company will now report a loss before tax for the year to March 2014. Trading since the beginning of the new financial year has been tough, especially for the medium and heavy castings foundries at Leicester and Scunthorpe. Both foundries have continued to see a slowdown and these sites are expected to generate an operating loss for the current financial year. The foundry at Walsall is performing in line with management forecasts, with turbocharger activity at expected levels. In addition, the engineering businesses are also trading at or above management forecasts. 

Escher Group (LON:ESCH

Escher Group, the provider of outsourced, point of sale software to the postal industry, has agreed a revised banking facility with Bank of Ireland Corporate Banking comprising a US$9m five year term loan facility and a revolving 12-month facility for US$3m. The term loan extends the maturity of the facilities by more than three years to October 2018 and also reduces the annual capital repayment from over $3.3m p.a. to $1m p.a. 

Fusion IP (LON:FIP)

Fusion IP, the university commercialisation Company that turns world-class research into business, announced its preliminary results for the 12 months ended 31 July 2013. Five new portfolio companies started in the year; Proflu, Extraject, PH Therapeutics, Wound Genetics and Rhedyn. The Company has invested £2.6m in the portfolio companies (2012: £2.9m); and a further £9.5m has been invested in the portfolio companies by third party investors (2012: £10.0m).   During the period £20m was raised in a placing with new and existing investors, and two new partnership agreements were signed with The University of Nottingham and Swansea University. Also an investment Memorandum of Understanding was extended with Finance Wales.  The Board reported a 26 per cent increase in the carrying value of the investments to £25.0m (2012: £19.8m). Cash and deposit balances totaling £21.3m (2012: £5.9m) were reported. 

Galantas Gold Corporation (LON:GAL)

Galantas Gold announced that Heads of Terms have been agreed for the production, marketing and sale of a tightly specified range of jewellery products, using Galantas Irish gold. The arrangement, with TJH Ltd of Dublin, is subject to preparation of a detailed contract and sees Galantas Irish gold, produced from the Company's Omagh mine, being sold to TJH at a material premium to and above a minimum London Metal Bullion price, with an additional royalty on sales payable on a quarterly basis. TJH is an established jewellery marketer and manufacturer, having developed other brands, including Irish oriented brands, previously. 

Graphene NanoChem (LON:GRPH)

Graphene NanoChem announced that it has commenced the upgrade process of its Senawang Chemicals Facility, scheduled to be completed by 31 December 2013 with recommissioning planned by 31 January 2014. The completion of the Senawang Upgrade Project will increase the production capacity of the Senawang Chemicals Facility to 120,000 tonne per annum; enhance the feedstock processing capability in a more cost efficient manner;  improve production efficiency and optimise plant uptime; and allow the plant to produce a broader range of high value performance chemicals. The process is being managed by independent multinational project consultants, in conjunction with the Group's technology team, to ensure the timely coordination of upgrade activities and to mitigate any risk of delays on project implementation. In addition, the temporary shutdown has also been planned to coincide with the periodic annual maintenance of the Senawang Chemicals Facility to further minimise the production suspension period.

Hutchison China MediTech Limited (LON:HCM

Chi-Med announced that Hutchison MediPharma Limited (HMP), its majority owned R&D Company, is set to receive a milestone payment of US$6m from Janssen Pharmaceuticals, Inc., pursuant to the global strategic alliance to develop novel small-molecule therapeutics against a target in the area of inflammation/immunology entered into by the companies in June 2010.The US$6m milestone was triggered by a compound, the Candidate, discovered by HMP in collaboration with Janssen meeting certain development candidate criteria pursuant to the Agreement.  Upon achievement of specific clinical development and approval milestones, HMP may potentially receive up to an additional US$90.5m and is entitled to royalties on worldwide sales upon commercialisation of a product by Janssen. Hutchison MediPharma Limited also separately announced that it has entered into a licensing, co-development, and commercialisation agreement in China with Eli Lilly and Company for Fruquintinib (HMPL-013), a targeted oncology therapy for the potential treatment of various types of solid tumours.  Fruquintinib, a selective inhibitor of the Vascular Endothelial Growth Factor (VEGF) receptor tyrosine kinases, was discovered by HMP and is currently in Phase II testing in China. Under the terms of the agreement, the costs of future development of Fruquintinib in China, to be carried out by HMP, will be shared between HMP and Lilly. HMP will potentially receive a series of payments of up to US$86.5m, including upfront payments and development and regulatory approval milestones. Should Fruquintinib be successfully commercialised in China, HMP would receive tiered royalties starting in the mid-teens percentage of net sales. 

Instem (LON:INS)

A provider of IT applications to the global early development healthcare market announced that it has appointed Edward Lorenti as its new Vice President of Global Sales. Mr Lorenti has over 24 years’ sales and business development experience within organisations providing enterprise software products and solutions in the life sciences industry. His extensive sales and sales management experience has been demonstrated with both mature and emerging products introduced organically and through acquisitions. Based in the US, Mr Lorenti has responsibility for global sales, bringing together the current teams of sales professionals for each business unit and the strong existing account relationships.

Noricum Gold (LON:NMG

Noricum Gold, the Austria-focused gold exploration and development Company, has provided an update on its 2013 work programme at the Company’s 100 per cent owned Rotgülden Gold and Precious Metals Project, which is currently focused on the previously producing mine, one of the four targets identified. Highlights include high grades of up to 24.95 g/t Au returned from on-going channel sampling programme to re-test historic work and assist in preparation of resource model. Drilling is continuing on deeper holes (c. 150m) from point C, the farthest accessible point in the existing underground workings. Results from drill holes RZ01A, RZ03 and further partial results from RZ01 are expected in the coming week.

 Personal Group Holdings (LON:PGH)

Personal Group announced that it will be providing 2 Sisters Food Group's 24,000 employees with a voluntary benefits programme, and an Employee Assistance Programme (EAP) from November 2013. The programme will be available to employees both on and offline, via a bespoke web portal and through a hard copy benefits book. David Walker, Commercial Director of Personal Group, commented: "We are thrilled that we have secured 2 Sisters, this is a benchmark client which Personal Group is proud to serve. The programme will be rolled out in Personal Group's unique face-to-face format utilising our successful iPad application, which fundamentally aids engagement and in depth understanding of the employee benefits programme." 

Range Resources (LON:RRL)

The board of Range Resources noted the announcement, dated 14 October 2013, from International Petroleum Limited (NSX: IOP) whereby International Petroleum announced it had entered into two binding conditional term sheets for the sale of its assets in Kazakhstan and Russia for US$60m. As previously announced (24 April 2013), Range had proposed a merger with International Petroleum, subject to various conditions being met, which when announced was likely to be conducted as an off-market takeover offer by Range to International Petroleum shareholders. In conjunction with the proposed merger Range has advanced US$8m in secured loan financing to International Petroleum. Whilst the sale process for the Russian Assets was supported by the Range board, the final terms of the proposed transaction and the sale of the Kazakhstan Assets have only now been defined. As a result of clarity on the sale of these assets, the likely proceeds from this sale and the associated shift in focus of International Petroleum to its African assets, Range will now identify and consider a range of corporate alternatives to the original merger proposal, which may or may not include a merger of the two companies - albeit on terms to be renegotiated. 

Software Radio Technology (LON:SRT)

For the six months ended 30 September 2013, Software Radio expect to report a financial performance in line with its internal budgets with revenues of £3.2m and a loss before tax of £0.4m. At the period end, they had cash balances of £2.2m and no debt. The Company stated in the final results in June, that it expected the current year to be weighted towards the second half due to the timing of particular mandates and projects, some of which will make a significant contribution during the second half. Revenues for the first half were primarily generated from the core non-mandated leisure and commercial markets which showed continuing growth, increasing approximately 40 per cent over the corresponding period last year. Looking forward to the second half, the Company expects to see a significant increase in revenues primarily driven by demand arising from existing mandates already underway, the possible implementation of some significant new mandates and the implementation of a number of the many project opportunities on which they have been working with their customers. In addition, the core business is expected to continue to grow in line with the general commercial and leisure markets and make a healthy contribution. 

Tissue Regenix Group (LON:TRX)

Tissue Regenix announced that Community Tissue Services (CTS), the Group's processing partner in the United States, has successfully undertaken its first production of DermaPure(TM), Tissue Regenix's dCELL(R) human dermis application. Since the signing of the processing agreement in June of this year, Tissue Regenix has been working with CTS, one of the US' largest tissue banks, towards the successful transfer of its patented dCELL(R) technology for use in the US market. This technology transfer now allows CTS to produce DermaPure(TM) from decellularised human biological scaffolds for patients suffering from acute and chronic wounds. Tissue Regenix remains on course for commercial launch of DermaPure(TM) in the US during the first half of 2014. Currently in the US, 6.5m patients are afflicted by chronic wounds. The partnership with CTS is allowing Tissue Regenix to target the existing $1.4bn market for wound healing devices and equipment. Tissue Regenix's DermaPure(TM) works by taking human donor skin and removing the DNA and cells, using the patented dCELL(R) process to leave a natural biological scaffold that can be placed in the wound to aid natural healing by attracting the patient's own cells to the wound area. 

Toumaz Limited (LON:TMZ)

Toumaz Limited, a pioneer in low-power wireless semiconductor and software technologies, announced that SensiumVitals®, its ultra-low power system for wireless monitoring of patient vital signs, has received CE marking under the EU Medical Devices Directive. The CE Mark allows the system to be sold throughout the European Union, and follows the product’s US FDA 510k clearance, received in July 2011. The Group has also secured the first UK pilot deployment of SensiumVitals® with Spire Healthcare, a leading UK provider of private healthcare. The pilot will start in a Spire Healthcare hospital in early 2014. Spire has 38 hospitals across the country and has earned a reputation as a leader in patient care. A similar pilot, conducted earlier this year in the med-surgical unit at St John’s Health Center, Santa Monica, California, provided clear evidence of both the clinical and economic benefits of the system. Separately, Toumaz has also announced a new distribution agreement with NantHealth for SensiumVitals® in North America, including its first commercial order and confirmation of its first pilot deployment. This agreement reflects the growth in capabilities of the two companies – in particular, NantHealth’s 2012 acquisition of iSirona, a leader in patient monitoring device connectivity. iSirona will be the exclusive distributor of SensiumVitals® in North America – providing a clearly defined and motivated channel to the region. Established in 2008, iSirona is a leading provider of solutions which integrate medical devices into hospital electronic medical records systems. To date, iSirona has introduced its products into 250 hospitals, a number which is increasing rapidly.  Toumaz has also received its first sizable commercial order for SensiumVitals®. The system will be deployed at Hurley Medical Center in Flint, Michigan; where for the first time, a wireless patient vital signs tracking system will be used in Accident & Emergency – thereby assisting physicians with the management of patients after triage.

Tristel (LON:TSTL

Tristel, the manufacturer of infection prevention and contamination control products, has announced results for the year ended 30 June 2013 ahead of market expectations. Turnover reached £10.6m (2012: £10.9m), with strong H2 seeing revenues up 40 per cent to £6.2m. The gross margin was stable at 66 per cent. Dividend per share for the full year is 0.4p (2012: 0.62p). The momentum built in H2 continued into the Q1 of the current financial year, and the management is cautiously optimistic that this will continue.

Ubisense Group (LON:UBI)

A provider of real time location intelligence solutions announced its selection as preferred supplier to a global automotive OEM for its factories in North America. Initial orders valued at more than $0.5m have been placed for implementations in the first two plants while the full project contract is estimated to have a multi-million dollar value over the length of its three year roll out programme. The scope of supply includes the recently launched Smart Factory System installed across multiple facilities. Applications ranging from tool and assembly line control to process tracking and yard management are to be deployed in a project roll-out across multiple production lines including vehicle assembly as well as engine build. 

*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. 

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