Hybridan Small Cap Wrap: A positive diagnosis for 3D, Motive motivates and a pat on the back for Patsystems

This week: A positive diagnosis for 3D, Motive motivates and a pat on the back for Patsystems

3D Diagnostic Imaging (3DD 6.75p / £11.51m)

3D Diagnostics, which owns the protected rights to a technology platform with a number of significant potential commercial products, announced that it was the proud recipient of the ‘Best New life Sciences Company in Scotland’ award at Scottish Enterprise Life Sciences 2011. Having previously won a prestigious US dental industry accolade for the CarrieScan Pro (3D’s handheld device for the early detection and monitoring of tooth decay), the Company is receiving well deserved recognition for its achievements and progress made in the US and Canadian markets. This should help 3D push forwards even more. Diagnosis… positive.

Altona Resources (LON:ANR) (ANR 12.75p / £53.74m)

AIM listed Australian based energy company last week provided a positive update on progress at the Arckaringa Coal-to-Liquids Project in South Australia.  This is specifically for the Bankable Feasibility Study and the implementation of a work programme aimed at evaluating the conversion opportunities for the estimated 7.8bn tonne Arckaringa coal resource, of which 1.287bn tonnes are currently JORC complaint.  We write on Altona for the first time and await news on the completion of reports that will underpin the design of the field drilling programmes by April 2011, and of starting the field programmes in mid 2011.    

Amur Minerals (LON:AMC) (AMC 18p / £45.07m)*

AIM listed exploration and development company focused on Far East Russia last week announced the Company has received the last of its 2010 exploration programme results. A gridded soil geochemical sampling programme was completed over a 5.5 kilometre long area between the Maly Krumkon and Ikenskoe deposits, which includes the Gorni target located approximately midway between the two deposits. A near continuous, 3 kilometre nickel anomaly has been defined and links the Gorni target with the Maly Krumkon deposit. The intervening area and the approximately 800 metre long drilled Maly Krumkon deposit represent a structure approaching 4 kilometres in length. This anomalously mineralised area has been upgraded to a drill target. The drill target defined by the trenches and soil anomaly is three times longer than the drilled portion of the Maly Krumkon deposit. Amur has sufficient funding into early 2012 to fund the ongoing administrative costs and to undertake additional exploration in 2011 at Kun-Manie. Work continues with the Russian agencies to obtain the mining licence on the Kun-Manie project; expect some news on this over the next few months. With a Pre-Feasibility Survey that indicates an NPV of $84m, an increased resource potential, and funds that should result in significant exploration work, Amur is a highly attractive share.

Bahamas Petroleum (BPC 24.75p / £244.38m)

Bahamas has now completed the acquisition of 1120 km of long cable close grid 2D seismic survey undertaken to define drillable targets and resource potential in place in its southern licences.  The seismic analysis will be processed by Spectrum over the next couple of months.

Beowulf Mining (BEM 48.75p / £77.90m)

AIM traded mineral exploration company which owns several exploration projects in Sweden announced that its drilling programme on its wholly owned Kallak South iron ore deposit is making progress despite experiencing harsh winter weather conditions. Assay results for the initial 10 (out of the planned 32) drill holes, totalling 951 metres, are now expected to be received by the end of February 2011 and, despite the severe winter weather conditions, drilling of the remainder of the total 3,500 metre programme and final assay results for all of the selected drill cores are still anticipated to be received during Q2 2011. Beowulf also announces that it has assumed the role of operator at its Ballek, copper-gold joint venture project from Energy Ventures Limited, its joint venture partner. Beowulf is currently in the process of setting up a new Swedish subsidiary in order to facilitate the potential future application for a mining licence or exploitation concession. Beowulf also announced that it had appointed Fred Boman as a Production Consultant. Beowulf has risen 7 pence since we wrote on the Company a month ago, as the market begins to appreciate that both deposits at Kallak are estimated to contain more than 600m tonnes of high quality iron ore.

Central Rand Gold (CRND 1.55p / £24.80m)

On 3^rd February, the Company updated the market on the problem it faces with regards to the rising Acid Mine Drainage (AMD) problem. The South African Government consistently provided assurances of their commitment to a joint solution throughout 2010, with a decision expected in January 2011 but thus far no undertaking has been received. Recent heavy rains and flooding in the Gauteng province has exacerbated the AMD issue and accelerated the rise of the water table.

CRND, along with other affected mining companies, supports the first phase of the interim solution being proposed by the Government which involves the construction of a submersible pump station with the ability to pump 72 megalitres of AMD per day with the water to then be treated through the existing High Density Sludge plant at East Rand Proprietary Mines. The full cost of this project is estimated at US$26m with CRND’s proportionate funding contribution expected to be in the region of US$4m.

If there is no commitment to this joint project by the end of Q1 2011, CRND faces the very real prospect that it will be unable to access its reserves below 250 metres below surface by the end of this year.

Due to the uncertainty over the Government’s participation, the Company has adopted a prudent position with respect to its capital resources and operations.

The Company said in that announcement that further updates would be issued as they arose and on 7^th February they announced that the Company, together with Mintails SA (Pty) Limited and Mogale Gold (Pty) Limited (collectively referred to as MSA) have identified a commercially beneficial opportunity arising from participating in a venture in terms of which CRND shall contribute gold bearing ore for processing at MSA’s metallurgical gold processing plant. We suggest watching CRND closely. 

Cove Energy (LON:COV) (COV 102.5p / £503.27m)

Cove Energy, the upstream oil and gas company, together with the operator Anadarko Petroleum Corporation, announces a fourth major gas discovery at the Tubarao prospect in the Rovuma Basin Area 1 block, offshore Mozambique. The discovery well encountered more than 110 net feet (34 metres) of natural gas pay and no water in a high-quality Eocene-age reservoir that is separate and distinct from the hydrocarbons in Anadarko’s three previous discoveries in the Offshore Area 1 of the Rovuma Basin.

Anadarko’s drilling efficiencies have been enhanced to the extent that this well was drilled in half the time of the first exploration wells.

Anadarko is the operator of the Offshore Area 1 with a 36.5 per cent working interest, Cove has 8.5 per cent. John Craven, CEO of Cove said “The high quality gas reservoir at Tubarao, located 16 miles south-west of the previously announced Lagosta discovery, confirms a new play concept and de-risks similar prospects in the block”.

Encore Oil (EO. 151.5p / £443.43m)

EnCore has added 20 feet of net gas bearing pay within the Tay interval and 14 feet of net oil bearing pay within the Cromarty reservoir section to the hydrocarbon column in the Catcher area. Although this is less than the market had hoped for it nevertheless indicates that Catcher North is part of the Catcher and Catcher East accumulation as pressure data, porosity and estimated oil-water contact are comparable. The results from the Catcher North appraisal well will be incorporated into an updated model to estimate the likely oil in place figures for the whole Catcher structure.  The Galaxy II rig will be mobilised to the Burgman prospect in the near future.

Equatorial Palm Oil (LON:PAL) (PAL 28.75p / £34.84m)

We have written extensively on the progress being made on the joint venture agreement with BioPalm Energy Limited, which provides for an equity investment in Palm Developments, the Joint Venture Company, of which US$7.5m was due to come 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). Last week, the Board announced the full implementation of the JV and that monies amounting to US$22.5m have been received from BioPalm Energy Ltd which should help develop its c.169,000 hectare position at Palm Bay, Butaw and River Cess in Liberia. We remain optimistic about the Company’s ability to make the most of the opportunity and we look forward to operational updates in the near future.

Forte Energy (FTE 8.86p / £51.62m)

The uranium and rare earth metals company has commenced the process of re-assaying for rare earth elements at the Firawa project in Guinea and expects to obtain initial results towards the end of this quarter.  If the results are positive, Forte will be able to calculate a maiden JORC compliant mineral resource for rare earth minerals at Firawa in the first half of this year.

Frontier Mining (FML 8p / £148.87m)

The AIM listed gold and copper E&D Company focused in Kazakhstan, announced the appointment of Greg Vojack to the board as a non executive director. Mr Vojack brings with him a wide range of experience as well as extensive knowledge of working in Kazakhstan where he has resided for the past 16 years. He also has considerable experience in helping to bring corporate governance changes to many joint stock companies in Kazakhstan. Furthermore, Frontier Mining announced a successful operational update from 2010. Substantial progress was achieved on all the company’s projects with Benkala in particular having accomplished several key milestones during the year. Ensuring initial production occurs on schedule at Benkala in 2011 remains the company’s primary focus. With a completed equity raise of $6m, $4m in loan acquired and an increased copper production target on the Benkala Project, things are looking positive for Frontier.

Central China Goldfields (LON:GGG) (GGG 28p / £40.72m)

The gold developer focused on Australasia provided an operational update, the highlight of which is that 29 new drill holes have been mineralised, bringing the overall total to 88 and of which 87 show mineralisation consistent with the current JORC resource model. Most interestingly, 22 per cent of mineralisation in the existing program extends beyond the current JORC estimates- an upgrade of this is due in Q2 2011. Such news is likely to be well received by the market and demonstrates clear value being generated from the mineralisation programme. 

Herencia Resources (HER 4p / £50.44m)

The Northern Chilean miner is considering adding another project and has entered into a non-binding memorandum of understanding to acquire a 51 per cent controlling interest in an iron-oxide copper-gold system.  The project is likely to be an open pit in a very attractive setting geologically and logistically.  Three of seven drill holes completed by the current owner have intersected significant copper and gold mineralisation at shallow levels.  If Herencia decides to enter into the joint venture, the Company will have to commit to drilling a minimum of 6,000 metres and making staged payments totalling $750,000 over a 30 month period.

Leni Gas (LGO 3.05p / £28.04m)

The Board of Leni Gas & Oil, an international Oil and Gas Production, Development and Exploration Company, announced the appointment of Mr. Steve Horton as a Non-Executive Director. Mr. Horton has extensive experience in the energy sector with a record of delivery in drilling and production operations..

The shares closed at 2.834p on the day before the announcement and the price reacted positively following the news of the appointment. 

Max Petroleum (LON:MXP) (MXP 19.25p / £87.01m)

Oil and Gas explorer MXP announced last week that had agreed to raise $85min a share sale at 17p and restructure its debts to fund exploration at its licenses in Kazakhstan. The capital reorganization pushes out repayment dates for loans and convertible bonds by about two years, which will enable the Company to focus on its exploration, Chief Executive Michael Young said. The Company will add the cash to the existing cash from operations and its borrowing facilities to embark on a drilling programme that includes 8 exploration wells in the Caspian Basin, targeting up to 168 million barrels of oil and 2 exploration wells targeting c. 1 billion barrels of oil equivalent. It also plans to drill 10 appraisal and development wells at its Zhana Makat, Uytas and Borkyldakty licenses. It will start drilling the first of up to 4 deep exploration prospects in Kazakhstan in August 2011 and this operation will take about 6 months.

Motive Television (LON:MTV) (MTV 0.88p / £10.73m)

AIM listed digital television technology, software and services provider last week announced the appointment of Graham Loader as CFO, Group FD and Company Secretary and that Alistair King had stepped down as part time FD. Graham Loader has substantial international experience in multinational, multi site blue chip companies and joins from Western Union, Global Remittances where he was VP and CFO for the APAC Region. We continue to believe that the combination of disruptive technologies position Motive as a solution provider that can offer TV Anywhere, anytime to the industry. 

Ovoca Gold (OVG 30.75p / £27.20m)

Ovoca has given an inferred mineral resource estimate for its Stakhanovsky gold project in Magadan of 350,000 ounces of gold.  This is calculated from an inferred mineral resource of 9.1m tonnes at an average grade of 1.2 grams per tonne and a cut-off grade of 0.5 grams per tonne.  The resource estimate was prepared by SRK Consulting using both historic data and data gathered by Ovaca.  Drilling has covered only a quarter of the immediate area in which the geological mapping and grab sampling have returned encouraging results so further exploration potential is considered to be good.  For this year Ovaca intends to continue exploring the deposit using bulk sample analysis and hopes to be in a position to register a gold resource with the Russian state authorities.

Patsystems (LON:PTS) (PTS 24.25p / £45.27m)

The AIM listed company that delivers tailored solutions to enhance derivatives trading performance and trade processing, announced a result of mixed performance ending December 2010. They have seen some notable sales success such as the new customers for its exchange system offering, tempered against the deferred sales opportunities for their risk product and the marginal growth in the trading systems business. The group continues to demonstrate high cash generation and profit resilience, which they expect to continue into 2011. Overall Patsystems commences 2011 with an encouraging sales pipeline that will provide them an opportunity to expand their geographical presence and grow revenues for each of their product offerings- especially in their global ASP offering, Patsystems Xconnect.

Plethora Solutions Holdings (PLE 7.75p / £4.21m)*

UK-based speciality pharmaceutical company last week announced a trading update of unaudited information following the completion of the financial year ended 31 December 2010. In addition, the Company also announced the appointment of Richard Horsman, previously CEO of Cybit Holdings plc, as a non-executive director of the Company and the appointment of Billy Hargan, previously General Manager UK at Specialty European Pharma Limited, as VP Commercial Operations. The Urology Company launched eleven products during the year, including prescription pharmaceuticals and consumer healthcare products, which was ahead of expectations. For 2011, the primary goal for The Urology Company is to grow revenues to a material degree so that the business makes a significant financial contribution to the Company's results. During 2010 the Company received substantial payments from Shionogi for the reimbursement of costs incurred by Plethora in the development of PSD 502 and should receive milestone and royalty payments in due course. The results are expected to show total revenues of approximately £1.15m, broadly in line with market expectations and cash balances in excess of £750,000. We like the highly derisked model: speciality pharma products selling on the market coupled with blue sky upside from already partnered drug development programmes, at no further cost. Plethora is well funded and we believe will continue to provide good news flow in the short and medium term.  We see recent share price weakness as a great buying opportunity. 

Range Resources (LON:RRL) (RRL 10.5p / £131.40m)

Last week Range announced that preparations have begun on site in anticipation for the arrival of the team to perform the fracture stimulation on the Russell Bevly Well (Range 20 per cent interest) at the North Chapman Ranch Project in Texas. The fracture stimulation is expected to significantly increase hydrocarbon flow rates and recoveries from the well. It is anticipated that the team will arrive on site on or around 10 February 2011 and will then take around a week to complete the fracture stimulation operation. It is expected that the fracture stimulation will result in a significant increase in production. It is then planned that the team will return to potentially undertake a similar stimulation operation on the nearby Smith #1 Well in April. On the Company's East Texas Cotton Valley play, where Range recently increased its participating interest to 21.75 per cent, preparations are being made to mobilize a rig onto the drill site for the Ross 3H well. Range and its partners expect to spud the well this month. Last week we commented how Range had been included in the FTSE AIM All Share Index. We believe that Range’s profile continues to be on the ascent amongst institutional investors.  

Wasabi Energy (WAS 2.88p / £57.60m)

Further to the announcement of the contract win for FLSmidth last week, Wasabi Energy raised an amount of £3m at 2.7p per share for the purpose of providing the Company with additional financial resources to continue the rapid commercialization of the Kalina Cycle. Mr. John Byrne, Executive Chairman of Wasabi Energy, commented, "We are delighted that there has been such strong institutional support for the Company which endorses our own view of the significant opportunities available to Wasabi." Having recently gained a 100 per cent ownership position in Global Geothermal Limited, the Company is making good steps in ensuring that it is able to maximise benefits from amounts being ploughed into the technology, and the winning of the contract for FLSmidth demonstrates its commercial application. 

 

*A corporate client of Hybridan LLP