ImmuPharma PLC (LON:IMM) – BUY*: Placing
Market Cap: £45m; Current Price: 37p; Target Price: 171p
From Friday: vendor and new share placing
On Friday ImmuPharma announced that it placed 7,100,000 existing ordinary shares held by Lanstead Capital with new and existing institutional investors and raised a total of £1m (before expenses) by way of an issue of 2,857,143 new ordinary shares, also to new and existing investors.
Both placings were executed at 35p.
The placings resulted from strong institutional demand and to accommodate EIS and VCT investment. Mr Robert Zimmer, the Company's President and Chief Science Officer, subscribed for 1,057,143 new placing shares to increase his holding in the Company to 20.3% (previously 19.3%) following admission of the new shares.
Lanstead now holds 10,521,555 ordinary shares representing 8.4% in the company's issued share capital after admission. The Company's Sharing Agreement with Lanstead (Sharing Agreement), which was announced on 5 February 2016, remains in place.
Following the completion of the vendor placing, in recognition of the Company's positive share price performance since the start of the Sharing Agreement, Lanstead has agreed to accelerate the next six monthly settlements to ImmuPharma under the Sharing Agreement which will result in ImmuPharma immediately receiving approximately £1.5 million.
The remaining settlements under the Sharing Agreement will recommence in May 2017.
Proceeds from the placing and accelerated settlements will provide the Company with additional working capital, which will be applied to the Phase III clinical trial of flagship product Lupuzor™--a potential treatment for Lupus.
NORTHLAND CAPITAL PARTNERS VIEW: The successful placing of c. £3.5m of stock demonstrates the growing investor interest in ImmuPharma’s late-stage clinical drug development programme. We estimate that the group’s shares remain grossly undervalued and we reiterate our 171p Target Price, BUY.
Savannah Resources (LON:SAV) – CORP: EIA underway
Market Cap: £18.5m; Current Price: 4p
Commencing preparation for EIA
Savannah Resources has commenced preparation for the Environmental Impact Assessment (EIA) for the Mahab 4 and Maqail South deposits, located in Oman.
Geo Resources Consultancy appointed to complete the EIA.
EIA expected to take around six months to complete.
NORTHLAND CAPITAL PARTNERS VIEW: Savannah Resources is continuing to move its Omani Copper Project forward at pace with the focus remaining on being in production by late 2017. The EIA will be submitted to Ministry of Environment and Climate Affairs as part of the licencing requirement for a new mine development in Oman.
VELTYCO GROUP PLC (LON:VLTY) – BUY*: Initiation
Market Cap: £15m; Current Price: 22.5p; Target Price: 36p
Building scale, generating returns, creating value
Veltyco Group plc (‘Veltyco’) operates in a significantly large online market which generates c. €30bn (£26bn) of annual gross revenues and there are significant opportunities to grow the business both organically, through investing in marketing to drive revenue, and through acquisitions which will scale the business faster.
Interim results to June 2016 and the recent Zoomtrader deal shows good progress in a short period of time for Veltyco. Increasing the scale of revenue and leveraging the current cost base increases margins significantly over our forecast period. The EBITDA margin step change from c. 28% to c. 40% combined with high levels of cash conversion (in excess of 90%) will increase returns significantly for shareholders. We estimate free cash flow yield grows to >19% in FY18. Furthermore, Veltyco has a management team with significant online gaming industry experience to execute on the growth plan.
In our forecasts we look for revenue to increase at a CAGR of 60%, EBITDA at a CAGR of 79% and EPS at a CAGR of 86%, over our forecast period to FY18E. The high levels of expected growth, puts the business on 5.1x FY17E EBITDA falling to 3.9x FY18E EBITDA. Our price target is based on the midpoint of our DCF and relative valuations which points to 36p or 60% upside to the current price. We initiate with a BUY rating.
NORTHLAND CAPITAL PARTNERS VIEW: Veltyco acquired Sheltyco Enterprises, which is active in marketing and promoting online casino & sports betting, lottery and binary options trading products and services online. The group refers customers to online brands under exclusive marketing agreements, for which it in turn receives a share of net revenues generated by the operators of the brands. Management plan to grow the business quickly through investing in marketing and through acquisitions. We initiate with a BUY rating and 36p price target.
Premier African Minerals (LON:PREM) – CORP: Zulu Lithium Project update
Market Cap: £8m; Current Price: 0.4p
From Friday: High tantalum grades, lithium assays pending
Significant tantalum grades have been returned in all holes from Premier African Minerals 2,500m drill programme at the Zulu Lithium Project.
Lithium assay results have yet to be returned from the laboratory.
Results include; 4.9m at 178pmm Ta2O5 (ZDD-14), 4.4m at 133pmm Ta2O5 (ZDD-003) and 5.21m at 216pmm Ta2O5 (ZDD-16).
NORTHLAND CAPITAL PARTNERS VIEW: While we are still awaiting the main event from Premier African Minerals drill programme at the Zulu Lithium Project, in-terms of the lithium assays, these tantalum grades appear positive when compared to Pilgangoora Lithium-Tantalum deposit, considered a bell-weather by the company.
Sunrise Resources (LON:SRES) – CORP*: Bay State Silver Project update
Market Cap: £2.4m; Current Price: 0.2p
Phase 2 drill programme complete but more work required
Sunrise Resources has received the assay results from the second phase drill programme and a underground sampling programme at the Bay State Silver Project, located in Nevada.
Three holes were completed in the Phase 2 programme.
Hole 16SRRC004, targeting the Chihuahua Vein, deviating away from the vein and was drilled to a greater depth than originally planned in an attempt to compensate for the deviation by reaching the vein at a greater depth. The hole is believed to have skinned the edge of the vein system at 333m below the surface with 0.76m at 52g/t Ag.
Hole 16SRRC005, targeting the Chihuahua Vein, was re-planned following the deviation of the first hole but no significant assay results were returned and the vein was not interested. It is believed that the vein has been displaced by faulting in this located.
Hole 16SRRC005, targeting the Lincoln Vein, did not return any significant assay results and further mapping and sampling of the vein is required.
Shallow underground samples returned 0.33m ay 85g/t Ag, 0.76m at 399g/t Ag and 0.91m at 480g/t Ag.
NORTHLAND CAPITAL PARTNERS VIEW: While the drill results from the Phase 2 drill programme at the Bay State Silver Project, are not what Sunrise Resources would have wanted with the first hole deviating away from the vein and the second and third holes unable to located the targeted veins, the phase 2 programme was relatively small and significant potential remains. With such as small programme it is fair to say that the full potential of the Project has yet to be fully evaluated and more work is justified at the project.