Arian Silver Corporation (LON:AGQ) – CORP: Company update
Market Cap: £2.4m; Current Price: 7.1p
Non-binding term sheet with Quintana
- Arian Silver Corporation has signed a letter of intent and a non-binding term sheet Quintana AGQ Holding Co. LLC to give Quintana exclusivity until 31/10/15 to amend an investment agreement between the two parties and restructure the existing loan note.
- The Company expects the loan note to be amended to add an additional US$10m from Quintana and that the conversion price will be equal to the closing Market Price on the TSX-V on the 22/10/15 provided it is not greater than CAD$0.165m per share.
- The proceeds from any additional finance will be used for mine development, processing plant capex, general operating expense and working capital.
NORTHLAND CAPITAL PARTNERS VIEW: It is positive that Arian Silver Corporation has a potential source of additional funding that may, if secured, allow the Company to recover and re-commence the commissioning of the plant and development of the mine at the San José Silver Project, located in Mexico. However, as a result of the one month exclusivity period Arian is relying on Quintana for the finance, which could put Arian in a difficult position should Quintana not opt to amend its investment agreement. As Quintana is already a major investor in Arian providing significant funding to date, Arian’s management must be confident that Quintana will continue to finance the Company in the current low silver price environment. The conversion price being not greater than CAD$16.5m would mean that dilution would be high if the notes were to be converted but with the finance in place to put the mine back into production and a recovery in the silver price, Arian could be in a position to pay off the loan reducing the potential for dilution.
Clontarf Energy (LON:CLON) – CORP: Interims
Market Cap: £1.7m; Current Price: 0.375p
Interims: Progress in Peru
- Loss before tax reduced to $86k (H1 FY14: $159k) and cash of $323k (H1 FY14: net debt of $584k), following the £500k placing in H2 FY14.
- Peru: During H1, Union Oil & Gas, a large private South American agribusiness/energy group, took over the rights and obligations on Block 183. Management believes this is a particularly prospective block with adjacent consumer gas markets and discoveries nearby. Union was a target partner for Clontarf in 2011 but Union lacked local knowledge and the block passed to a local group. This group has struggled to secure funding and the block has passed to Union that is now operating elsewhere in Peru and is working on Block 183. Clontarf has a 3% revenue royalty up to $5m each for any two discoveries that are brought into production.
- Ghana: The Ghanaian National Petroleum Commission is actively considering the current re-application by Pan Andean Resources (60% Clontarf, 30% Petrel and 10% local interests) over c. 1,500km2 of the shallow to medium depth part of the prospective Tano Basin. This follows the dispute on the reassignment over what management believed to be its acreage and how best to implement the terms of a court approved settlement relating to a signed 2010 Petroleum Agreement that had not been approved by the Ghanaian cabinet or parliament.
NORTHLAND CAPITAL PARTNERS VIEW: Union’s takeover of the control of Block 183 was the highlight of the first half as Union is a substantial business with a number of natural resources and infrastructure investments. The situation in Ghana remains frustrating and the low oil price continues to be a drag on junior exploration shares. That said, management has cut back on operating costs and has reasonable levels of cash.
Premier African Minerals (LON:PREM) – SPECULATIVE BUY*: Issue of equity
Market Cap: £12m; Current Price: 1.7p
Direct subscription for £283,500
- Premier African Minerals has received a direct subscription for £283,500 from a single subscriber. The Company will issue 21,000,000 shares at a price of 1.35p per share
- Following the issue of shares the outstanding share capital of the Company will be 702,908,376 shares.
NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals has secured £285,000 to further optimise the RHA Tungsten Project, located in Zimbabwe and for general working capital. The ramp up of production at RHA was delayed when design deficiencies in the plant meant it could not accept the designed tonnage with up to 40% of the feed rejected as oversize. The completion of the optimisation process is essential for Prem to ensure it reduces its opex and increases its production levels, improving its margins in the low ammoniumparatungstate price (APT) environment.
Rockwell Diamonds (TSE:RDI) – CORP: Q116 sales and production results
Market Cap: CAD$10m; Current Price: 1.9c
From yesterday: H116 continues to reflect transition from old to new
- The ramp up of production at the Remhoogte/Holsloot Project during H115 was ahead of expectations (28/05/2015) though diamond values are below expectations. A fatality at the Remhoogte plant on 03/09/15 lead to a shutdown of operations and an investigation by the Department of Mineral Resources. Two of the three plants are now back in operation following safety review but volumes in Q316 will be below expectations.
- The Saxendrift Mine continued to have a strong quarter with improvements in volumes, grade, diamond recoveries, average diamond values and revenue compared to Q116, though the majority of these metrics for H116 are below those of H115.
- Saxendrift now expected to continue production until the Wouterspan Mine comes into production.
- Equity financing suspended on 24/08/15 due to weak equity markets. As a result, cash flows will be used to service the debt repayment. To date US$3.8m of the US$16.5m acquisition debt has been repaid. A shareholder meeting will be held 23/09/15 for shareholder to vote on the issue of 31.8m three year warrants to settle the bridging loan.
- Forecasts, rating and price target remain under review.
NORTHLAND CAPITAL PARTNERS VIEW: H116 was largely positive for Rockwell Diamonds on the operational front with the ramp up at the Remhoogte/Holsloot Complex Mine (RHCM) progressing well, though weaker diamond prices were encountered. The Saxendrift Mine improved compared to the previous quarter but was somewhere off its performance for the prior year, which is to be expected with the mine rapidly approaching the end of its life. Post period end, however, there was a fatality at RHCM that will delay the ramp up of production at the Mine with one out of three plants still not operational. Rockwell has also opted not to proceed with the equity financing and will instead repay the acquisition finance from cash flow and plans to issue warrants to repay the bridging loans. This has both positive and negative effects for the Company. On the positive side it means there will not be near-term dilution for shareholders. On the negative side it means the development and exploration projects will not be advanced as quickly as the company had hoped.
Amino Technologies (LON:AMO) – BUY*: Contract win
Market Cap: £111m; Current Price: 158p; Target Price: 210p
Further progress in end-to-end cloud platforms
- Amino’s Booxmedia subsidiary has signed a contract with Belgian broadcaster RTL to provide, install and maintain a full end-to-end cloud video on demand (VOD) platform.
- The new service, “a l’infini”, will include transactional and subscription services, live stream and catch-up libraries, will be available across a range of devices (iOS, Android, Samsung Smart TVs and web browsers) and will be launched at the end of September.
- No change to forecasts, BUY rating and 210p price target.
NORTHLAND CAPITAL PARTNERS VIEW: Further progress in Amino’s expansion into end-to-end cloud VOD platforms following the contract win with DELTA at the start of the month. The acquisition of Booxmedia in May provided Amino with a proven cloud-based platform that enables the delivery of ‘TV everywhere’ to a full range of IP connected devices. It also expanded Amino’s addressable market to include mobile operators, OTT providers, media companies and broadcasters. The consumption of content is becoming increasingly fragmented and, coupled with the more recent acquisition of US competitor Entone, Amino is well positioned to capitalise on the opportunity. We maintain our BUY rating and 210p price target.
Keywords Studios (LON:KWS) – Interims
Market Cap: £87.3m; Current Price: 181p
H1 in line; outlook positive
- Revenue +74% to €23.9m with contributions from acquisitions - +23% on a pro forma basis. Adj. PBT +65% to €2.2m and adj. EPS +63% to 4.29c. Net cash of €6.1m (H1 FY14: €9.6m; FY14: €11.0m) after €1.7m of acquisition consideration and costs. Interim DPS +11% to 0.40p.
- Continued gain in market share. Recent titles include Skylanders Supercharger, Batman: Arkham Knight, Mortal Combat X, Project CARS and Mad Max and new clients include Oculus VR, Amazon, Gearbox, Fincon and NetMarble.
- FY expected to be in line with expectation reflecting a return to peak trading suring the summer months (following the distortion in the past two years caused by new console launches), the impact of the acquisitions of Kite Team and Liquid Development and strong demand for Art services. Will continue to look at acquisitions.
NORTHLAND CAPITAL PARTNERS VIEW: Keywords’ buy and build strategy means that financial statements can be a little opaque but the momentum in the business remains strong. The acquisitions have increased the breadth and depth of Keywords’ offering and enables it to provide publishers with a comprehensive offering. This represents a clear competitive advantage in a highly fragmented market. The different dynamics of the different service offerings also helps to smooth some lumpiness. That said, the business remains H2 weighted but we are through the peak summer trading months. Shares are trading on 19.2x FY15 and 14.9x FY16.
Savannah Resources (LON:SAV): Oman update
Market Cap: £4.9m; Current Price: 1.95p
High grade copper identified below open pit from historic drilling
- Savannah Resources has identified high grade copper mineralisation under the old Aarja pit, located in Block 4.
- High grade results that have been identified to date include; 18.58m at 4.7% Cu from 143m (hole 10-23) and 24m at 3% Cu from 143.5m (hole 10-82) at the Aarja Main Zone; 33.8m at 3.35% Cu from 153.1m (hole AEX-39) and 10m at 4.17% Cu and 2.43% Zn from 100.5m (hole AEX-31) at the Dog’s Bone Zone; 9.8m at 3.86% Cu from 224m (hole AEX-36) from the Aarja South Zone.
- The open pit and underground development allow access to the copper mineralisation.
- A trench completed by Savannah over a gossan suggests the potential to expand the main Aarja pit towards the south with: 14.5m at 8.03g/t Au and 0.9% Cu.
- Savannah plans to commence a drill programme to confirm the historic results prior to the calculation of a JORC compliant mineral resource estimate in Q415.
NORTHLAND CAPITAL PARTNERS VIEW: The identification of high grade copper below the old Aarja Prospect is a positive development for Savannah Resources. Savannah compiled historic results from 64 out of 84 holes in the area that were drilled between 1975 and 1994. The Company now plans to complete a confirmation drill programme in Q415. Should this produce consistent results to the historic drilling it will allow the Company to rapidly define a JORC compliant mineral resource estimate for the Prospect at a relatively low cost. Interestingly a trench completed by Savannah over the gossan to south of the pit demonstrated the presence of high grade gold mineralisation adding a further target worthy of follow up work.