Hybridan Small Cap Wrap: A company that wants to Bglobal, positive communications from Avanti and Sarantel sounds encouraging

African Aura Mining (LON:AAAM) (AAAM 167.75p/£144.02)

Established exploration and development company listed on the TSX as well as on AIM announced the filing of its 43 101 resource statement detailing 1.51 million ounces of gold at 3.78 g/t Au including 5,599,000t at 4.17 g/t (for 751,000 ounces) in the indicated category and 7,040,000t at 3.40 g/t (for 762,000 ounces) in the inferred category, with the deposit remaining open at depth and along strike. The entire indicated resource is within potential open pit depth from the surface and management is targeting a production profile of approximately 100,000 ounces per year for the open pit material – at a no doubt very attractive extraction cost per ounce.

African Eagle Resources (LON:AFE) (AFE 11.25p/£43.29m)

Following our recent positive comments on the Company, we were not surprised by the announcement that Anglo Pacific PLC has increased its holding to 17.275m shares (4.49 per cent of the issued share capital). Anglo Pacific is a very well respected and successful investor in mining companies and investors could do worse than follow their lead. 

Avanti Communications Group Plc (LON:AVN) (AVN 712p/£604.85m)

Following on from the announcement of contract wins last week, Avanti has signed a 3 year managed services contract with the Spanish service provider NASSAT - Network & Satellite Systems de España – which provides satellite communication services mainly to enterprise and media customers and also has specialist contracts with fire services and television stations. We expect there to be further news of additional customers in the not too distant future.

Beacon Hill Resources (LON:BHR) (BHR 14.25p/£67.04m)

The AIM listed resource company, announced that BHR Mining Limited, the Company's subsidiary, has acquired 100 per cent ownership and control in the Minas Moatize coal mine in Mozambique and remains fully funded ahead of the development of producing coal from the planned large open pit mine by Q1 2012. Given the unique geological location of the mine and the potential of the Tete province, Management is expecting promising results from the project.

BGlobal Plc (LON:BGBL) (BGBL 41p/£40.79m) 

Provider of smart metering solutions to the energy market announced its interim results for the 6 months to 30 September. The results were most impressive with revenue increasing 114 per cent to £12.46m (2009: £5.82m), though this was in part due to the acquisition of Utiligroup during the financial year- stripping this away, Bglobal saw a 79 per cent increase in revenue to £10.42m. Gross margins, too, were strong at 44.6 per cent (2009: 33.5 per cent), and adjusted operating profit (before acquisition costs and amortisation of acquired intangibles) came in at £1.1m, half of which is from the Bglobal Metering business and the other half of which comes from the Utiligroup business- encouraging signs of its integration into the main business.

Bglobal operates a model of ‘securitising’ its contracts with clients- these are packaged up and sold to Barclays/Macquarie, thereby de-risking the Company’s revenue stream.

Going forward, one of the main opportunities is in penetrating the international markets- the Far East and Asia in particular are showing much promise, though Bglobal has indicated that this is very much a long term strategy and would possibly seek to find a partner to collaborate with on the distribution side of any service provision in the region. A global strategy therefore for the smart meter company.

Datong Plc (LON:DTE) (DTE 64p/£8.85m)

Datong released its final results for the year to 30 September 2010 (a new year end) showing revenue up 80 per cent to £14.06m (2009: £7.82m) and adjusted earnings per share of 6.38p (2009: loss per share of 2.47p). Net cash was £2.58m (2009: £1.70m). The confident statement highlights signs of recovery in its core US market and the launching of well-received new products should give investors comfort and cheer at this time of the year. 

Electrum Resources (LON:ECR) (ECR 1.92p/£7.18m)

Electrum Resources has announced a placing of 100m new ordinary shares at 1.4 pence per share raising up to £1.4m before costs. The proceeds of the Placing are to be applied to the continued development of the Company’s projects, the evaluation of new opportunities and for working capital purposes. The Company also announced another change of name to ECR Minerals plc in light of a trademark issue that has arisen in the USA.

Equatorial Palm Oil (LON:PAL) (PAL 20.25p/£23.80m)

The Company is convening a general meeting to gain shareholder approval for the previously announced Joint Venture Agreement with BioPalm Energy Ltd. The Joint Venture Agreement provides for equity investment in Palm Developments, the Joint Venture Company, of US$7.5m from PAL (via its Guernsey subsidiary) and US$22.5m from BioPalm Energy (which holds approximately 28.5 per cent of the issued share capital of PAL). Furthermore, BioPalm Energy will arrange and guarantee an additional US$30.0m loan facility to the joint venture company.

PAL will be the operator of Palm Developments and use the resulting US$60m to accelerate its strategic development plan in respect of its c.169, 000 hectare land position at Palm Bay, Butaw and River Cess, with the aim to nearly double its previous planting targets each year from 2011 to 2014. The accelerated planting schedule will increase harvesting rates, requiring faster investment in the associated infrastructure and palm mills to process palm fruit into CPO, palm kernel oil and palm kernel cake. The accelerated planting rates should also bring forward revenues generated from expected sales of CPO and other palm products. We agree with Management that this should have an overall positive impact on shareholder value.

European Nickel (LON:ENK) (ENK 21p/£48.74m)

The Board of European Nickel has had enough of waiting for the re-issue of a forestry permit for the Çaldag project in Turkey and decided to put the whole thing on care and maintenance. The technical team will be flying to the Philippines after Christmas where they will be fast-tracking the definitive feasibility study at the company’s Acoje project on Luzon Island. A pre-feasibility study confirmed an economically viable nickel heap leach project. As time is money, we believe European Nickel’s priorities are right.

Fusion Ip (LON:FIP) (FIP 30.5p/£16.54m)

Seren Photonics, a company in Fusion IP’s intellectual property commercialisation portfolio has announced that it has raised £475,000. The funding will enable Seren to build its first pilot scale ultra high brightness LEDs that will be used as demonstration products to showcase the technology to larger high brightness LED manufacturers, some of whom the Company is already having discussions with. Seren’s technology has the potential to advance the development trends of LEDs by years in terms of efficiency. The technology allows for dramatically increased efficiency of light conversion, which implies that either much brighter lamps can be produced or that the power consumption of state-of-the art lamps can be further reduced. This may be of interest not only for the fast growing use of white LEDs for back lighting of laptop computers and TVs, but may also enable new market sectors such as domestic lightning where the reduced need for cooling will make it a realistic alternative to incandescent bulbs. Seren is not the only bright light in Fusion’s portfolio; a number of other companies are seeing very positive progression which will allow Fusion to record some significant value uplifts. In addition, Fusion’s share price is trading well below net asset value so investors may benefit from appreciation in both.

Hutchison China Meditech (LON:HCM) (HCM 501.5p/£259.45m)

Chi-Med, the pharmaceutical and healthcare company based primarily in China, has announced that it intended to increase its indirect ownership in Hutchison Whampoa Guangzhou Baiyunshan Chinese Medicine Company Limited. Chi-Med’s wholly-owned subsidiary, Hutchison Chinese Medicine Holding Limited has entered into agreements to increase its equity interest from 75 per cent to 80 per cent for a cash consideration of approximately US$2.7m. The directors at Chi-Med consider the transactions are fair and reasonable to all shareholders.

ITM Power (LON:ITM) (ITM 51p/£56.36m)

Amey (which is a leading public services providers and infrastructure manager employing around 11,000 people across 200 UK locations and operating a fleet of approximately 4500 vehicles) and the RAC (which has a fleet of some 1,700 vehicles) have signed agreements to participate in the Hydrogen On Site Trials (HOST) of ITM Power's transportable high pressure refuelling unit (HFuel). This is an important step for the Company in demonstrating the applicability and practicality of green hydrogen in everyday vehicles, whilst also displaying considerable interest in the Company’s technology.

Kea Petroleum (LON:KEA) (KEA 12.5p/£63.58m) 

New Zealand based oil and gas exploration company with six petroleum exploration permits in Taranaki and Northland Basins, has announced that it has signed a legally binding heads of agreement to establish an alliance with Methanex New Zealand Ltd to facilitate exploration in the Taranaki Basin in New Zealand. Both companies will provide 50 per cent of the funding requirements, and in return Kea will be entitled to all oil and gas condensate income. Methanex on the other hand will be entitled to a percentage of accounting profits and the opportunity to purchase any gas produced at a price using a predetermined formula similar to that used for the Beluga Gas Offtake Agreement. This is a very positive early step in the exploration process for Kea, and we look forward to further updates.

Motive Television (LON:MTV) (MTV 0.72p/£8.65m)

Digital television technology, software and services provider announced that since the first half results announcement, significant progress has been made integrating into the group the two acquisitions previously announced, Adecq Digital S.L. and NXV Limited. During the nine months to 30 September 2010 Adecq's total sales were €707,000, compared with €260,000 in the same period in 2009, an increase of 172 per cent. As previously announced Adecq has now signed a second major supply agreement, anticipated to be worth approximately US$1.1m in the first year revenues, with one of Europe's leading television satellite equipment providers. The Board is confident that this combination of disruptive technologies position Motive as a solution provider that can offer TV Anywhere, anytime to the industry.

Oilex Ltd (LON:OEX) (OEX 22.25p/£48.97m)

Oilex has announced the conditional placing of 30m new shares (approximately 12 per cent of the enlarged share capital of the Company) at a price of 20p pence each resulting in gross proceeds of £6.0m. The proceeds of the placing will be applied primarily to further drilling on the Cambay Production Sharing Contract Eocene reservoirs in Gujarat, India, and for working capital. This drilling will be in addition to the Company's first proof-of-concept horizontal well on the Cambay Eocene reservoirs planned for Q1 2011. 

Polo Resources Ltd (LON:POL) (POL 5.26p/£124.38m)

The Chairman of GCM, in which Polo owns 29.83 per cent, issued a statement at the time of its Annual General Meeting giving an update on its various interests – the most important of which is the Phulbari Coal Project. A telling extract, should investors wonder if the project will ever get off the ground was “...there is almost universal acceptance that coal has a unique role to play in meeting the country's energy requirements. Similarly, it is now accepted that open pit mining is the only feasible means of delivering the volumes of coal required in an economically, socially and environmentally acceptable way.” As the most advanced coal project in energy-starved Bangladesh, logic would indicate that it can only be a matter of time before its Government gives the go-ahead to mine the coal to produce the much needed electricity. The future looks bright for GCM and Polo. 

Red Rock Resources (LON:RRR) (RRR 15.25p/£103.02m)

The gold mining and exploration company with projects in Kenya and Colombia, and interests in steel feed and uranium, reported that it has found 2 drillable sulphide targets from a VTEM airborne electromagnetic survey over the Macalder mine in south Kenya. On this basis, the Company will now test these targets for Copper, other base metals, gold and silver mineralisation through a programme of up to 10 holes and 2 trenches. This has the potential to become a significant opportunity for the Company.

Regal Petroleum (LON:RPT) (RPT 26p/£82.78m)

The Company has announced that it has received a number of approaches in relation to a potential offer for the Company and confirms that it is in final-stage discussions in relation to a possible all-cash offer for the Company at a price of 24.0 pence per share.

Sarantel Group (LON:SLG) (SLG 1.38p/£4m) 

The leading manufacturer of revolutionary filtering antennas for mobile and wireless devices, has announced the terms of a proposed placing of 110,000,000 shares at 1.25 pence per share, to raise £1.375m gross. The cash will provide Sarantel with additional working capital to allow the Group to expand its sales and marketing efforts and invest further in research and development. The directors and senior employees participated in the placing, which is always a sign of confidence.

Sareum Hldgs Plc (LON:SAR) (SAR 0.265p/£3.38m)*

Specialist cancer drug discovery business announced on Monday that it is encouraged by the quality of data that its cancer research programmes have generated in 2010 and is encouraged by the number of discussions currently in progress regarding their commercialisation. Encouraging results have recently been generated in pre-clinical cancer models which are on-going. The Board looks forward to fully analysing this data and announcing the results in the first quarter of 2011. In addition, the Company announced it has raised £250,000, at 0.20p per share. Sareum intends to use the proceeds of the placing primarily to progress its cancer research programmes. Sareum is well positioned to fund and execute its ongoing business plan of further development and commercialization of its drug cancer programs.

Sqs Software Quality Systems Ag (LON:SQS) (SQS 209p/£56.98m)

Software Quality Systems , the German-based provider of software testing and quality management services, has announced three new Managed Services contracts and extended three existing ones, such that the order intake for the Managed Services division has exceeded €50m in the year to date. This is over a 10-fold increase from 2009 and illustrates that the Management is well on the way to reaching its goal of 50 per cent of group revenues being derived from this area. The new contracts are with a German logistics company, a European telecommunications company and Specsavers. We would expect the Company to continue to expand the Managed Services area and so keep your eyes peeled for further similar announcements. Certainly one to watch!

Sunkar Resources (LON:SKR) (SKR 33.25p/£53.15m)

Sunkar has announced an update on operations and development of its Chilisai Project highlighting a revised 2010 mining target of 1 million tonnes of ore earlier than planned. To date, 236,000 tonnes of P2O5 concentrate has been produced as a feedstock for the existing milling complex and the Company is currently commissioning the new milling and loading complex. Work on the Bankable Feasibility Study is progressing with preliminary results expected before the end of 2010. With the Company actively negotiating with farmers in Kazakhstan and Russian fertilizer plants on phosphate rock sales for 2011 and the submission of an application for the inclusion of Chilisai direct application rock in the Kazakh subsidised fertilizer list, Management are certainly not letting grass grow under their feet with regard to revenue generation.

Synchronica (SYNC 18p/£16.76m)

Following on the heals of the announcements at the end of September and November that a major Latin American operator group has mandated that device manufacturers certify their products with Synchronica's IM infrastructure, the Company has declared the third order from a top-10 mobile device manufacturer to certify and license its IMPS instant messaging for its mid and entry level devices. In addition, Synchronica expects to receive additional orders from other device manufacturers that wish to sell their devices to the operator, repeat orders as device manufacturers launch new models of their handsets and also expects to see an increase in the uptake of its Instant Messaging service by the carrier's subscribers, which ultimately translates into increased revenues for the Company.

Toledo Mining Corp (LON:TMC) (TMC 31.25p/£12.98m)/European Nickel (ENK 21p/£48.74m)/ Amur Minerals (AMC 8.5p/£21.28m)* 

We have commented in the past on Toledo Mining and European and it is interesting to note that Toledo has announced that it has received a bid approach – and this is after the signing of a MOU in July with Jinchuan Group Limited, the largest nickel producer in China, pursuant to which Jinchuan intend to subscribe for 29.9 per cent of Toledo shares at 42p per share. European Nickel has a 7.7 per cent interest in Toledo plus 23.7 per cent of the Berong project - Toledo’s main investment, in which TMC has a 56.1 per cent economic interest. The news should bode well for investors in both companies and should highlight the attractiveness of other nickel plays, such as Amur Minerals*– where it is worth noting that the deposit is nickel sulphide and not, as at Berong, which is nickel laterite and therefore difficult and more expensive to process. This news and Amur Minerals also announcing that it had received an update from Rosnedra relating to its application for a mining licence on its Kun-Manie nickel - copper exploration licence, has had a positive impact on Amur’s share price. Three of the four external agencies included in the licence approval process have approved the application and the Company anticipates that the fourth agency, the Ministry of Economic Development, will provide its affirmative input and approval in due course. 

Tower Resources (LON:TRP) (TRP 4.48p/£46.19m)

The oil and gas exploration company with interests in sub-Saharan Africa, provided an update on its current operations in each region. In the Namibia regions, Licence 0010 showed some promising results. In terms of the Uganda region, final interpretation studies over Licence EA5 may indicate significant oil generation and good reservoir in the area. Following the £660k placing on 2nd November 2010, the Company is looking for third party interest in funding the remainder of the Uganda commitment operation.

Zytronic (LON:ZYT) (ZYT 206p/£30.30m)

AIM listed specialist manufacturer of internationally award-winning touch sensor products, announced its preliminary results for the year ended 30 September 2010. The results were pleasing with revenue up by 16 per cent to £18.5m and orders for the year up by 30 per cent to £19.8m. The Company also performed well in its historically strong market – the ATM market, with ATM optical filter unit sales up by 36 per cent. Profit before tax increased by 27 per cent to £2.9m while gearing reduced to 11 per cent compared with 31 per cent in 2009. With sufficient working capital for future periods, the Management believes it’s time to reward its investors with a dividend of 7p per share.

Zytronic’s leading touch sensor products are based upon its unique projected capacitive technology (PCT), which is similar to the technologies used on iPhone but PCTprovides better durability and stability and works better on large screens (min 6” screen). Zytronic has completed a few Research & Development projects during the year and is looking to enhance its manufacturing facilities through the purchasing of new equipment and the refurbishing of its clean-room facility for increased manufacturing capacity and efficiency. With export accounting for 90 per cent of sales this year, the Company now has 39 countries covered and is looking forward to expanding its distribution channel into the Far East and at the same time to consolidating its existing sales network in Europe and the Americas.

*A corporate client of Hybridan LLP