Paragon Diamonds (LON:PRG) – BUY*: £0.5m debt financing and update
Market Cap: £14.5m; Current Price: 5.22p; Target Price: 12.9p
£0.5m of unsecured debt from a specialist provider of short term capital
- Paragon Diamonds has raised £500,000 of unsecured debt from a specialist provider of short term capital for working capital while it finalises the acquisition of the Mothae Diamond Project. The funds may also be used for a potential for a share buyback programme.
- The loan matures on 30/09/15 and has a fixed monthly interest rate of 1.25%. It has a 3% arrangement fee and 3,571,428 detachable warrants with an issue price of 7p valid for five years.
- The Mothae acquisition is awaiting approval of the Lesotho Ministry of Mines and Paragon’s Chairman Philip Falzon Sant Manduca, is scheduled to meet the Lesotho Minister of Mines (22/06/15) to request the immediate approval of the Mothae acquisition so it can commence production promptly.
- The debt funding from International Triangle General Trading (ITGT) remains subject to contract.
- Production expected to commence later in the year.
- Forecasts updated. No change to rating or price target.
Northland Capital partners view: This small bridge finance gives Paragon Diamonds some additional working capital to finalise the Mothae acquisition and ITGT funding package that is contingent on the acquisition. With Paragon’s Chairman due to meet with the Minister of Mines for Lesotho next week, the Company is confident that it will secure the necessary permissions near-term allowing it acquire the Mothae Project.
Sunrise Resources (LON:SRES) – CORP: Exploration update
Market Cap: £1.7m; Current Price 0.25p
Portfolio continues to positively advance with some natural attrition
- At the Bay State Silver Project, located in Nevada, the revised drill plan has now been completed.
- At the Garfield Gold-Copper-Silver Project, also located in Nevada, results of soil sampling programme defined values of up to 258ppb gold, 0.33% Cu and 10g/t silver. The anomaly is discrete and occurs over 50m. A programme of trenching is now planned to expose further mineralisation for sampling.
- At the Baker’s Gold Project located in Western Australia, the new prospecting licence has been included in the Native Title Agreement. Results from soil samples show up to 132ppb gold defining new drill targets at the Dicky Lee Prospect. A number of non-prospective licences have been relinquished.
- At the Cue Diamond Project also located in Western Australia, the model and interpretation of airborne magnetic data has defined numerous anomalies that will be evaluated on the ground.
- At the Corona Gold Project, the soil sampling programme did not enhance the anomalies and the licences in this area have been reduced to a core holding around the historical Corona gold workings.
Northland Capital partners view: Sunrise continues to make positive progress with its portfolio of exploration projects. As is always the case for explorers, there were some licences at several of its projects that didn’t return results that justify further work. Importantly, the Company has rapidly dropped these licences to remove any further expenses on them and is focusing its cash on projects where there is potential for success. We expect Sunrise to focus in the near term on following up its rediscovery of bonanza silver grades at the Bay State Silver Project.
Botswana Diamonds (LON:BOD) – CORP: Exploration update
Market Cap: £2.6m; Current Price: 1.1p
Latest field work results from PLs206-210/2014
- Strong anomaly identified on PL210/2014. Drill programme to test anomaly planned for Q3/Q415.
- Further work planned on PL206 and PL207 to establish the source of the kimberlite indicator minerals.
- Two magnetic anomalies on PL135 and PL136 in the Gope Region of Botswana identified. A programme of soil sampling and transient electromagnetic surveying to further define targets for drilling.
Northland Capital partners view: A positive update from Botswana Diamonds with a clear target on prospecting licence 210 generated for the phase two drill programme to be conducted in H215 by the Company and its joint venture partner, Alrosa. Earlier stage exploration work is continuing at the joint venture partners other projects.
Playtech (LON:PTEC): Update
Market Cap: £2,372m; Current Price: 808p
Placing and trading
- Placing of c. 29m shares to raise c. £250m, representing c. 9.9% of issued capital. PTEC recently acquired TradeFX, an online direct to consumer FX broker for an initial of €208m and earn-out based on future performance of up to €250m. TradeFX in turn has an option to acquire another midsize direct to consumer broker. PTEC has also made an offer to acquire Plus500 to the value of £460m (€625m), subject to shareholder approval, and expected to complete in September 2015. These acquisitions will immediately give PTEC scale and exposure to a fast growing new vertical and diversify the business away from traditional online gambling such as casino and poker. Finally, management is also in the process of securing debt facilities in order to maximise the capital structure of the business.
- Trading in the 2Q15 looks similar to what was reported at the time of the 1Q15 trading update in April, where revenue in PTEC’s core business was up more than 25% YoY. TradeFX is showing signs of strong growth where the core CFD direct to consumer business is +72% YoY to the end of May 2015.
Northland Capital partners view: The equity fund raise and new debt facilities should result in a more efficient capital structure for the business. Entry into the financial sector diversifies the business and exposes it to a fast growing new sector. The PE rating for PTEC is toward the top of the peer range at c. 17x FY15 consensus earnings however the business has significant firepower with which to continue to grow into new markets and new product verticals such as the financial sector.