Metal Tiger (LON:MTR): Logrosán Gold and Tungsten JV update
Market Cap: £2.9m; Current Price: 1p
From Yesterday: Tungsten defined over a strike of 450m
- The phase 1 drill programme at Target 2 has been completed confirming the presence of tungsten mineralisation over a strike of 450m
- Anomalous tin intersections were returned from two holes in the southwest area of Target 2.
- Results include; 2m at 0.47% WO3 from 15.63m and 2.2m at 0.25% WO3 from 25.63m (LM045), 6m at 0.25% WO3 from 1.52m and 10m at 0.12% SnO2 from 1.69m (LM053).
- Assay results from ten holes drilled at Target 2 remain pending.
- Drilling on Target 1 is expected to recommence in September.
NORTHLAND CAPITAL PARTNERS VIEW: Positive initial results from the second phase of drilling at Target 2 by Metal Tiger and its joint venture partner Exploration Network. Drilling will now stop during the summer months and will recommence in August 2015 with further work at Target 1. Target 1 is located on the recently awarded Zorita licence and is considered to be a larger and more prospective target by the Company. Metals Tiger currently owns 20% of Logrosán Minerals and is expected to send an additional €300,000 to earn a further 30% interest.
Playtech (LON:PTEC): Acquisition
Market Cap: £2,758m; Current Price: 855p
PTEC continues to diversify
- PTEC continues to diversify itself away from being solely a supplier of technology and marketing services to gaming operators where the model is based on revenue share to a business which interacts direct with the consumer (B2C) in the retail Forex market.
- The Acquisition of Ava Trade Ltd for a $105m bolsters PTEC’s exposure to FX trading on the back of the recent acquisition of TradeFX. Ava Trade operates in more than 160 countries and gives traders access to trading c. 250 underlying instruments. Ava Trade produced $26m of revenue, +34% YoY growth, in the first five months of FY15 and TradeFX produced $42m of revenue, +71% YoY growth over the same period. This puts the combined FX businesses (Ava Trade & TradeFX) on run rate revenue of c. $165m for FY15, and at an EBITDA margin of between 35% - 40%, the FX business could add an additional $65m of EBITDA to PTEC’s profit line or on our estimates £380m - £420m (c. 15%) to PTEC’s market capitalisation.
- PTEC’s core underlying gaming software business is also performing strongly where average daily run rate revenue for the 2Q15 is >25% YoY. This is in line with the trading update provided at the end of April where average daily revenue in the first 25 days of the 2Q15 was more than +25% YoY.
NORTHLAND CAPITAL PARTNERS VIEW: The acquisitions gives PTEC exposure to a fast growing new vertical where profit margins and cash conversion and cash generation are particularly high when scale is achieved. This also diversifies PTEC away from being reliant purely on generating returns for shareholders from online and land based gambling. However, regulation could also prove to be a key risk for the business in the retail Forex market which could weigh on margins and cash generation. Nevertheless, the strategy is one we like and makes sense as it further diversifies and de-risks the business. The stock trades in c. 18x FY15 consensus earnings which is not particularly demanding for a technology business and the additional profits from the FX businesses would imply a lower entry multiple in our view. The FX business would also provide management with the ability to grow the dividend in our view.