Thor Mining (LON:THR/ ASX:THR) – SPECULATIVE BUY*: Potential sale of Spring Hill and Dundas Gold Projects
Market Cap: £1.0m; Current Price: 0.024p
Signs option agreement with PC Gold for sale of Spring Hill and Dundas Gold Projects
- Thor Mining has signed an option agreement with an Australian Company, PC Gold, for the sale of TH Gold Pty, Thor’s wholly owned subsidiary that holds the Spring Hill and Dundas Gold Projects.
- PC Gold will pay Thor A$150,000 (within 21 days) as a deposit and will hold the option for 30 days. Should PC Gold exercise the option, it would pay Thor A$2m in cash for 60% of the project and 100% of management control, and a further payment of A$1.5min cash for the additional 40% of the project within 12 months.
- In addition Thor will receive A$14/oz Au of gold produced from Spring Hill that is sold for over US$1,500/oz Au. Should the gold price be less than US$1,500/oz Au Thor will receive A$6/oz Au.
- A portion of the proceeds of the sale will be applied to the A$1.2m loan secured against the Spring Hill Project.
NORTHLAND CAPITAL PARTNERS VIEW: An excellent deal for Thor Mining, shortly after it finalised the acquisition of the balance of the Spring Hill where it effectively acquired 191,000oz Au for around US$1/oz, Thor has signed an option agreement to sell the entire Spring Hill and Dundas projects in two stages for A$3.5m (US$2.5m), effectively selling 389,000oz Au for US$6.5/oz. Added to this, Thor has also managed to secure a flexible royalty over production from the projects that allows it to take a greater share of the revenue should the gold price improve. The cash consideration from this transaction less the amount payable on the secured loan would be roughly equal to Thor’s market cap. Thor Mining also owns two advanced tungsten projects.
Idox (LON:IDOX): Prelims
Market Cap: £161m; Current Price: 45p
FY in line, reports a stable outlook
- Revenue +3% to £62.6m and adj. EBITDA +11% to £18.2m with adj. EBITDA margin +201bps to 29.1%. Adj. PBT +14% to £14.5m (reported +29% to £9.8m) and adj. EPS +17% to 3.28p (consensus of 3.2p). Net debt of £23.1m (H1: £9.7m) reflecting the impact of the two H2 acquisitions (Reading Room and Cloud Amber). Proposed final DPS of 0.525p, making a total of 0.85p (+13%, consensus of 0.80p).
- 88% of revenues from either recurring contracts with customers or from repeat customers where the Group had derived revenues in the prior year.
- Public Sector accounted for 78% of group revenue, +14% to £49m, and adj. EBITDA increased 24% to £16.0m with a 300bps increase in margin reflecting cost efficiencies and mix. 14 new local authority customers in the year and 86 new system wins, close to double FY14. Grants business increased 16.7% with its largest grants claim to date and expansion in its managed service offering. Cloud Amber and Reading Room are being integrated and have traded in line since acquisition.
- Engineering Information Management revenue fell 21% to £13.6m and adj. EBITDA fell 37% to £2.2m with margin falling to 16% (FY14: 20%) reflecting weakness in the engineering markets. Costs reduced and management expects to maintain the business at this level with core base of maintenance and SaaS revenue.
- Management reports a stable outlook in all of its markets for the first time in three years and current trading is in line with expectations. Will continue on its buy and build strategy with a target of >10% annual growth to achieve £100m in revenue at sustainable margins. Anticipates organic growth of 3-5% with the two recent acquisitions adding c. 20% to pro forma revenue. Some margin contraction reflecting mix.
NORTHLAND CAPITAL PARTNERS VIEW: FY results in line with expectation with growth in the Public Sector offset by the contraction in the Engineering Information Management (EIM). The growth emphasis is firmly in the Public Sector where local authorities continue to spend to save and the market remains fragmented providing acquisition opportunities. Management has cut costs in EIM and there is a base of recurring revenue to rely on. Shares are trading on 11.8x FY16 consensus EPS, towards the lower end of the sector and c. 13x if the net debt is factored in.