Fishing Republic plc (LON:FISH) – BUY*: Update
Market Cap: £14.8m; Current Price: 39p; Target Price: 47p (from 37p)
Investing for growth
Investing in store network and online expansion: Two additional stores, Mildenhall and Reading, which takes the total store network to 13 stores and increases the total footprint to c. 75,000 ft². Additional investment in stores and the online business of c. £1.3m at the back end of the current financial year put in place the foundations for the new fishing season in FY17 and beyond.
Introducing forecasts for FY17: In our forecasts for FY17 we look for overall revenue growth (stores & online) of c. +51% YoY to £8.6m. We expect online to grow by c. +70% YoY to £3.1m on the back of investment into the online business, and stores to grow by c. +42% YoY to £5.5m, which includes a full year of a total store network of 13 stores. We expect EBITDA to grow by c. +31% YoY to over £0.6m.
Valuation and price target: We stick with our EV/Revenue based valuation methodology to value the business, which points to 47p per fully diluted share (from 37p) based on FY17 revenue of £8.6m, which is further corroborated by a DCF valuation pointing to 50p per fully diluted share.
NORTHLAND CAPITAL PARTNERS VIEW: The new store openings, increases the store network to 13 stores by the end of 2016 and the business continues to increase its scale. Furthermore, the business will see the benefits of the investment of c. £1.3m into stores and the online business start to transpire in the new fishing season in 2017 and beyond, reflected in our revenue growth forecasts for FY17of +51% YoY. The balance sheet remains in strong shape post-investment with c. £2.5m of net cash at the end of FY16, which provides additional firepower to grow the business organically and via acquisition. We increase our price target to 47p (37p) based on FY17 forecasts and maintain our Buy rating on the stock.
Ascent Resources (LON:AST) – CORP: Placing and subscription
Market Cap: £8.5m; Current Price: 1.2p
Raises £4.5m to commence production
Northland Capital Partners has acted as Joint Broker in a £3.5m placing of 350,901,027 shares at 1p and subscription for £1,000,000 of loan notes at £1 each for Ascent Resources.
The Directors have plan to invest up to £50,000 in the 2016 Loan Notes and an additional announcement in this regard will be made in due course.
The funds will be used to recomplete the Pg-10 and Pg-11a wells, connect the two wells to the existing central treatment station (CPP), refurbish the CPP, provide working capital and repay the £871,510 loan to Henderson Loan Facility. Following the repayment of this loan Henderson has agreed to release its charge over the shares of Ascent Slovenia Limited.
Henderson has also agreed to defer the redemption date on the £8.2m 2013 and 2014 Loan Notes to 19/11/19, the same date as the 2016 loan notes.
NORTHLAND CAPITAL PARTNERS VIEW: These funds give Ascent Resources the financial resources required for the Company to commence untreated gas production in Q117. The untreated gas will be sold to INA, Croatia’s leading Oil and Gas Company, at day ahead Central European gas hub pricing less a discount to reflect the costs of treatment in Croatia. The capex for this route to initial production is remarkably low because the gas will be extracted by recompleting existing wells that will be connected to an existing pipeline and transported to an existing central treatment station (CPP) (owned by Ascents JV partner and used under a service agreement) that will be refurbished to remove the water and condensate from the gas, which will then be transport via another exiting pipeline, owned by INA, to INA’s gas processing facility at Molve, Croatia. This production is expected to generate cash flow and importantly give the Company the detailed knowledge of well performance and reservoir behaviour for the larger scale production that will involve selling treated gas into the Slovenian national or international grid.
Thor Mining (LON:THR) – CORP: Quarterly report July to September
Market Cap: £1.9m; Current Price: 0.025p
Drilling at both Molyhil and Pilot Mountain Project in 2017
Follow up drilling at the Molyhil Tungsten project, located in Australia, planned for 2017.
Permitting approved for a drill programme at the Garnet Prospect and eastern extension of Desert Scheelite prospect at the Pilot Mountain Project, located in Nevada. Drilling expected to start in 2017.
The Company has identified several projects that have the potential for the near-term development with attractive capital and opex cost structures, and is reviewing this in more detail.
Cash and cash equivalents of A$35,000.
NORTHLAND CAPITAL PARTNERS VIEW: Thor Mining is planning to follow up on the positive drill programme completed at Molyhil with another drill programme next year.
Arian Silver Corporation (LON:AGQ) – CORP: Corporate update
Market Cap: £1.3m; Current Price: 0.75p
Extension to TNM agreement and accessing a new project
Arian Silver Corporation and Tierra Nuevo Mining have agreed to extend the exclusivity period for the Notche Buena Gold-Silver Tailings Project, located in Mexico, for 60 days until 27/12/16, at no additional cost.
To date metallurgical tests have produced commercial gold grade concentrate but at the expense of recoveries, the additional test work being performed will determine if a commercial gold recovery rate can be achieved.
Arian is also in discussions regarding the acquisition of an advanced stage exploration project in the Southern USA. The project has been extensively drilled and has a non-compliant mineral resource estimate of in excess of 100moz Ag. Arian believes the historical data would allow the Company the opportunity to rapidly delineate a compliant mineral resource estimate with a view to near-term production.
NORTHLAND CAPITAL PARTNERS VIEW: Arian Silver Corporation is continuing its evaluation of the Notche Buena Gold-Silver Tailings Project, located in Mexico, and is expected to report the results of the current metallurgical tests before the 27/12/16. The Company is also continuing to evaluate a number of projects including an advanced silver exploration project in the Southern USA.