Savannah Resources (LON:SAV) – CORP: Mutamba Project update
Market Cap: £26m; Current Price: 5.9p
RC drill programmes underway as auger drill programme nears completion
Savannah Resources has commenced drilling at the Ravene deposit, located in Mozambique.
An Auger drill programme is nearing completion at Ravene and a follow up RC drill programme is also underway. The RC programme is expected to consist of 88 holes totalling 3,500m and is due to be completed Jan-17.
Savannah has also commissioned a scoping study and environmental studies at Mutamba. The scoping study is expected to take 4 months to complete and the environmental study is expected to be completed in 3-4 months.
Data compilation and a detailed review of the Chilubane deposit is underway to further understand and evaluate the project. This is expected to take 6-8 weeks to complete.
NORTHLAND CAPITAL PARTNERS VIEW: The Ravene deposit forms part of the Mutamba Project, a joint venture between Savannah Resources and Rio Tinto. Savannah is fast tracking the infill drill programme at Ravene to complete an inferred mineral resource estimate so it can form part of the scoping study for the Mutamba Project that is due to be complete in around four months.
VELTYCO GROUP PLC (LON:VLTY) – BUY*: Trading
Market Cap: £23m; Current Price: 34.5p; Target Price: 36p
Trading ahead of market expectations
Positive trading update from Veltyco this morning where trading in the 4Q16 has been strong, particularly in the binaries marketing business. As a result, the Board expects results for the FY16E will be ahead of market expectations.
In our forecasts for FY16E we were looking for revenue of c. €5m, implying a stronger 2H performance of €2.8m relative to the 1H of €2.1m, and we were looking for strong YoY EBITDA growth of +87% to c.€1.4m, so it is encouraging to see the business trading ahead of these growth expectations.
NORTHLAND CAPITAL PARTNERS VIEW: Interim results to June 2016 demonstrated the high growth nature of the business where revenue was +78% YoY and this morning’s trading update confirms the message. Management plans to grow the business quickly by investing in marketing for organic growth and by growing via acquisition. The Shares have traded well over the last month and are on a PE of c. 20x our FY16 forecasts. We are looking for another year of high growth in our FY17E forecasts, where EBITDA is expected to more than double to c. €3.2m and EPS more than double to €4.2c which puts the stock on a PE of 9.6x FY17E. Despite the strong rally in the share price which is now trading close to our target price of 36p we stick with our BUY rating on the stock.