Savannah Resources (LON:SAV) – CORP: Oman update
Market Cap: £15m; Current Price: 4p
Mahab 4 and Maqail South Mining Licence Applications submitted.
Savannah Resources has submitted two mining licence applications to the Public Authority of Mining (PAM) in the Sultanate of Oman, as part of the licencing requirements for new mine developments in Oman.
The applications are for an open-cut mine at Maqail South and an underground deposit at Mahab 4.
Savannah Resources has completed the milestones necessary to have 51% shareholding in Al Thuraya Mining, the owner of Block 4.
Savannah has relinquished its interest in Block 6 due to relative progress and prospectivity of Blocks 4 and 5.
NORTHLAND CAPITAL PARTNERS VIEW: Savannah Resources continues to move its Omani Project forward at pace, with the Mining Licence Application now submitted. The company is seeking technical feedback from eight Government departments in order to finalise the financial evaluations of the mine developments.
Fishing Republic plc (LON:FISH) – BUY*: Interim Results
Market Cap: £12.7m; Current Price: 33.5p; Target Price: 37p
Interims show progress
Results: Interims to June shows healthy YoY growth, where group sales were +34% YoY to £2.5m and +16% YoY on a l-f-l basis. Store sales showed double digit growth,, +23% YoY on a l-f-l basis including the newly relocated Hull store, and including the new stores in Birmingham, Crewe and Swindon store sales were an impressive +70% YoY. Furthermore, store sales made up c. 70% of group sales in the 1H16. Own website sales increased significantly, +153% YoY, and now represents c. 30% of total online sales. However, total online sales were -9% YoY as online sales via third party websites (eBay & Amazon) were lower YoY, a reflection of shifting the focus on growing sales derived from own websites, where a greater margin can be captured for the business.
Gross margins improved by 600bps to 50% (44%) in the 1H16, reflecting the increase in own website sales as well as initiatives to enhance the profitability of third party online sales. As a result of this and increased store scale, gross profit was +54% YoY to £1.25m. We do however expect the gross margin to normalise toward c. 45% for FY16, during the 2H16. Adjusted pre-tax profit was +5% YoY to £157, 384 reflecting increased costs of being a publicly quoted business and additional resources for new stores. The balance sheet is in a strong position with £3.9m of cash at the end of June, after raising £3.75m in order to accelerate the growth of the business.
Outlook: Lower than expected sales during the latter part of the summer season combined with two further store openings in Cambridge and Reading before year end, additional investment into the online business and the store network, implies that costs will increase and forecasts for FY16 will be impacted as a result.
Forecasts: Though store sales are showing healthy YoY growth and broadly tracking our forecasts we are reducing our overall sales forecasts particularly online sales, which were -9% in the 1H16 and now expect overall online sales to be flat YoY. As a result we now expect the business to produce £5.7m (£6.5m previously) of sales for FY16. This combined with increased costs in the short term will impact on profits and we now expect pre-tax profit of £404k (£663k previously) for FY16. The new store openings will require inventory (stocking) so we increase our inventory levels for this year which lowers our previous cash forecast from c. £4.3m to c. £3.7m for FY16. Finally we will look to introduce new estimates for FY17 for the business in due course.
NORTHLAND CAPITAL PARTNERS VIEW: The newly planned store openings, increases the store network to thirteen stores by the end of 2016, which is almost double the footprint at time of listing in June 2015 (seven stores). Although there are costs associated with new store openings and investment into the online business in the short term, we expect the benefits of these openings and investment to transpire in the new fishing season in 2017 and beyond. Lower than expected online sales in the 1H16 and lower than expected sales in the latter part of the summer is disappointing news, which has prompted us to reduce our forecasts for FY16 and our target price to 37p (42p previously). However, we maintain our Buy rating on the stock and expect the business to benefit from both a larger store footprint and increased investment in the online business, particularly in own websites, in 2017 and beyond.
Keras Resources (LON:KRS) – CORP: Wycheproof update
Market Cap: £9.4m; Current Price: 0.7p
Milling of first batch of ore underway
Milling of the first 10,000t batch of gold ore from the Wycheproof deposit has commenced at the Lakewood Mill.
NORTHLAND CAPITAL PARTNERS VIEW: A short update from Keras Resources, to keep investors updated that the milling of the Wycheproof ore is underway. The ore is being processed under a toll milling agreement with Golden Mile Mining. Keras has a 50:50 profit share agreement with the owners of the Wycheproof deposits, Kalgoorlie Mining Associates.
Clontarf Energy (LON:CLON) – CORP: Placing
Market Cap: £2.7m; Current Price: 0.6p
Additional placing to raise £250,000
Clontarf Energy has raised an additional £250,000 through the placing of 47,619,048 shares due to higher demand at an increased price of 0.525p per shares.
The placing represents 8.18% of the Company.
Following admission the Company will have 581,844,829
NORTHLAND CAPITAL PARTNERS VIEW: In combination with the placing completed earlier in the week Clontarf Energy has now raised £650,000 that will be used to fund any costs associated with the ongoing negotiations regarding the Company’s Ghanaian assets and will also provide it with additional working capital.