Savannah Resources (LON:SAV) – CORP: Mineral sands update
Market Cap: £5.5m; Current Price: 2.2p
Rio Tinto JV extension
- Rio Tinto and Savannah Resources have agreed to extend the long stop date for the conditions precedent of the joint venture until 31 March 2016 (or later date as may be agreed between the parties) from 19 October 2015. This will allow additional time for the approvals process.
NORTHLAND CAPITAL PARTNERS VIEW: It is positive to see that both Rio Tinto and Savannah Resources remain committed to moving the projects forward as a joint venture despite the approvals process taking longer than expected.
Premier African Minerals (LON:PREM) – SPECULATIVE BUY*: Funding
Market Cap: £5.6m; Current Price: 0.8p
From Friday: £810,000 loan notes from Darwin
- Premier African Minerals has signed a subscription agreement with Darwin Strategic limited for 36 unsecured zero coupon convertible loan notes issued at a price of £25,000 per loan note with Prem receiving £22,500 per loan note. Prem will receive aggregate net proceeds of £810,000.
- Darwin has the right to convert shares at a price of 1.363p or the current market price (90% of 5 day VWAP) if lower. The loan notes will be redeemed at £25,000 per loan note after 12 months from the date of the subscription agreement unless repaid (105%) or converted.
- Darwin will also receive warrants to subscribe for £225,000 of new shares at a price of 1p per share,
- The proceeds are to be used for additional working capital during the reopening of underground operations and the final stages of the ramp up during Q116.
NORTHLAND CAPITAL PARTNERS VIEW: The delay in the ramp up of the RHA Tungsten Project has meant a delay in cash flow generation for Premier African Minerals. RHA should have been contributing to loan repayments from July 2015 so additional funds were required. Importantly, because RHA remains responsible for the full repayment of the true cost of debt incurred by Prem to develop the mine that includes the effective cost of any equity placed from conversion of the loan notes, the dilution or repayment cost of the debt is passed on to RHA rather than Prem. Prem remains confident in the medium-term contribution from RHA.
Telit Communications (LON:TCM): Q3 Update
Market Cap: £388m; Current Price: 337p
Reduces FY guidance
- 9m revenue +15.1% to $236.1m with Q3 revenue +19.2% to $80m. Good performance from the automotive line and IoT services as well as Telit’s traditional industrial m2m business.
- Full guidance reduced to $330m to $340m (from $347m to $354m) and adj. EBITDA to $40m to $45m from ($42m to $47m). This reflects customers delaying new deployments in order to deploy LTE CAT-1 in their new products as well as some customer project slippage.
NORTHLAND CAPITAL PARTNERS VIEW: Revised guidance suggests a slowdown in growth in the final quarter with revenue growth of c. 11% at the mid-point and c. 14% for the FY. This translates in FY adj. EBITDA growth of c. 22% compared with the 28% achieved in the first half as the operational gearing takes its toll. The revised level of growth remains healthy, however, and the update suggests a blip rather than anything more structural and follows last week’s $30m smart meter contract.