Hybridan Small Cap Wrap: Amur doubles up, under the Bahamas sea, broadening the Range, Solo goes joint

This week: Amur doubles up, under the Bahamas sea, broadening the Range, Solo goes joint

With the announcement of a 0.5 per cent growth in GDP for the first 3 months of the year and a report that Germany could make concessions to facilitate a new aid package for Greece, the week saw a 1.2 per cent rise in the FTSE 100, while the AIM All share dipped during mid week and recovered to close at similar levels. The British Chamber of Commerce cut its GDP growth forecasts for the UK from 1.4 per cent to 1.3 per cent, and with little in the way of economic data expected for the week (except for BoE mortgage lending data), focus will shift to the US jobs report due on Friday, which forecasts for an increase in employment.

African Minerals (LON:AMI) (AMI 499p / £1,636.78m)                   

African minerals announced that it has signed a Memorandum of Understanding (MoU) with China Communications Construction Company Limited (CCCC) in respect of the optimisation and finalisation of a Final Engineering Study (FES) for all aspects of infrastructure for the Phase II and Phase III expansions of the AML Tonkolili Iron Ore project in Sierra Leone. Subject to all parties agreeing a formal appointment contract, on completion of the FES, CCCC will prepare a proposal to act as Engineering, Procurement, Construction and Management (EPCM) contractor to the Company. The MoU, which is intended to be binding between the parties, will be exclusive for a period of six months, during which time the engineering studies will be completed. AMI, CCCC and the Government of Sierra Leone also intend to establish a Joint Venture to design an expansion to the Bumbuna hydro-electric power generation facilities to satisfy the power needs of Phases II and III of the Tonkolili project.

Altona (LON:ANR) Energy (ANR 10.75p / £45.31m)  

Altona Energy, the AIM listed Australia-based energy company last week announced that it had entered into  a memorandum of understanding with Tongjiang to develop a strategic partnership in China to identify and evaluate coal and biomass gasification projects for the production of clean energy and transportation fuels. Tingjiang , a Hong Kong based private  investment group, has been a strategic shareholder in Altona since February 2008 and was instrumental in the introduction of China National Offshore Oil Corporation(CNOOC) to the company. CNOOC is Altona’s joint venture partner for the Arckaringa Project in Australia, the Company’s principal focus.  The chairman reported that the company looked forward to updating shareholders on the further progress being made on the bankable feasibility study at Arckaringa.

Amur Minerals (LON:AMC) (AMC 15.5p / £43.07m)*

AIM listed exploration and Development Company focused on Far East Russia last week announced that it has closed an early settlement for the equity swap agreement entered into with Lanstead Capital LLP in July 2010. This has allowed the Company to realise on an accelerated basis total proceeds of £2.07m, which is more than double the original placing proceeds of £0.89m. Fees related to the transaction have been included in the reported values. The acceleration of the settlements has resulted in a substantial increase in cash reserves whilst the Company continues its efforts to obtain its mining licence and to undertake the upcoming 2011 field season. A second equity swap agreement with Lanstead, announced on 22 March 2011, remains in place allowing Amur to continue to benefit from future share price appreciation over the subsequent 24 months.

Ascent Resources (LON:AST) (AST 3.35p / £34.35m)

In April 2011, Ascent Resources, an AIM listed oil and gas exploration and production Company re-commenced the Company’s operations of the PG-11A in the Karpatian reservoir. This is positioned to become the first re-development well in the Petiscovci Project in Slovenia, of which the Company has a 75 per cent interest. The first open hole test on the reservoir proved to be successful as there was presence of producible, good quality hydrocarbon gas after re-drilling to a dept of c. 3000m. Additionally, Ascent's Managing Director, Jeremy Eng observed that if confirmed by laboratory analysis, the minute concentrations of carbon dioxide in the gas (of less than 1 per cent) may mean that CO(2) processing equipment will be rendered unnecessary during the early stages of redevelopment. However, in spite of challenging drilling conditions in the form of high pressures and temperatures inside the well, further drilling to a total depth of 3500m is planned in order to map the full extent of the reservoir. Shareholders will be updated upon completion of the current phase of operations on the well

Bahamas Petroleum Company (LON:BPC) (BPC 16.5p / £203.03m)

Bahamas Petroleum, the oil and gas exploration company with offshore license permits in the Bahamas is conducting a seabed survey. This is an important part of the Company’s exploration programme as the survey can be applied towards hydrocarbon seep detection and the environmental assessment of the license area. Bahamas Petroleum has further signed a contract with Fugro N.V to conduct this high resolution seabed survey which takes approximately six weeks to complete, starting early June. 

Bloomsbury Publishing (LON:BMY) (BMY 129.5p / £95.87m)       

In their preliminary results, Bloomsbury Publishing has highlighted that the demand for digital delivery has increasingly called for a shift in the Company’s business model. They have taken steps to adapt their brands accordingly, with more notable projects, like the Winston Churchill Archives and the Public Online Library, seeing rapid digitization and expansion into new territories, respectively. 

The Company has changed its year end to 28^th February 2011, with total revenues to this date being £103.m (12 months ended 31 December 2010 was up 4 per cent to £90.7m, from £87.2m in 2009). A pre-tax profit of £4.2m was recorded (2009: £7.1m), a basic earnings per share of 3.02 pence (2009: 6.77 pence), and with net cash of £36.9m (2009: £35.0m), drivers of UK revenues were the success of the Adult list and full period’s trading of Bloomsbury Professional, with the increase of e-book sales influencing US revenues. However, with Kindle quickly establishing itself in the UK (and soon to be in Germany), demand for e-books is projected to surge in the latter two areas. E-book sales increased to £1.5m in 2010 (2009: £0.08m), with sales in January to March being £1.1m.

In order to realize increased synergies across the firm, the Company has not only centralized its UK operations in London, but is also unifying under the One Global Bloomsbury strategy. Along with the acquisition of Bristol Classical Press and Duckworth Academic expanding the group into classical philosophy in November 2010, the launch of Bloomsbury Australia in January 2011, and several notable appointments to the strong, entrepreneurial management team, this is a significant effort by Bloomsbury to adapt to the changing environment and to “better exploit [the] worldwide market as a global publisher in print and digital”.

First Derivatives (LON:FDP) (FDP 525p / £85.97m) 

Provider of software and consulting services to industry global investment banks and hedge funds announced results for the 12 months to 28 February 2011. Company revenues increased by 44.2 per cent to £36.7m (2010: £25.5m), whilst pre-tax profits increased by 15.1 per cent to £6.5m compared to (2010: £5.6m). Impressively, First Derivatives increased its headcount from 385 to 524 at the year end demonstrating its commitment to building its number of employees, with a significant proportion coming from the ever-growing pool of university graduates. Whilst consultancy services represent the bulk of the revenue generated, relative growth of software sales was much greater, having increased by 104 per cent to £12.5m (2 per cent growth for consultancy sales). The Company also acquired LakeFront Data Ventures Inc. in the summer of 2010, which has been fully integrated into the business and contributed to performance for the period, and having secured £4.3m from Invest NI for the creation of 359 new jobs over the next three years, First Derivatives could have an interesting period to look forward to.

GGG Resources (GGG 26.25p / £43.51m)   

The mineral resources exploration company announced that development of its Bullabulling Gold Project continues on track. The joint venture with Auzex Resources Ltd has commenced with the Phase Two drill programme. Approval of the programme of works for a planned 194,000 metres drilling programme has been received from the Western Australia government and three drill rigs are currently working on site. 27 new drill holes totalling 5,793 metres have been completed during April and May 2011, bringing the overall drilling total to 36,540 metres in 254 drill holes since commencement and 1,508 metres in eight holes for the Phase Two drilling programme. Results from the programme continue to confirm and expand the current resource model and include new high grade intersections. Approximately 22 per cent of reported mineralised sections are outside the current resource model. The QAQC (quality assurance/quality control report) has been approved by their resource consultant which means that the historic reverse circulation drill data can be used for resource and reserve estimation.

Green Compliance (LON:GCO) (GCO  0.92p / £16.83m)

Green Compliance, a leading provider of compliance-related business support services, last week announced that it expected to report a successful trading outcome for the year ended 31 March 2011 marginally ahead of management expectations. The Company has acquired 11 businesses in the year and with a major focus on integration of those acquired businesses now has a significant presence in its chosen markets in water hygiene, pest control and fire protection. It will be interesting to see how the Company integrates this number of acquisitions in such a short space of time.

In terms of the market more generally, the Company reported that demand in the three markets of water hygiene, pest control and fire protection is strong and this provided significant opportunity for organic and acquired growth.

Gw Pharmaceuticals (LON:GWP) (GWP 125p / £164.44m) 

GW Pharmaceuticals last week announced that the health authorities in Germany have granted regulatory approval for its Sativex spray for the treatment of patients suffering from Multiple Sclerosis (MS). The medicine is already available to MS patients in UK and Spain and is expected to be launched in Germany in July 2011.  Sativex is delivered by a spray and is shown to have a positive effect on spasticity (otherwise known as muscle stiffness) in MS. 

Herencia Resources (LON:HER) (HER 3.11p / £39.22m)

Herencia Resources, the mineral exploration and development company, reported high grade copper and silver results from surface sampling to the south-west of La Rosa, further enhancing the porphyry prospectivity of the project. Results from the sampling have confirmed high grades of up to 2.6 per cent copper and 202 g/t silver. The La Rosa prospect is within close proximity to both the Doris prospect, where copper and silver have been confirmed on surface and in diamond drill holes and the Patricia zinc-silver-lead-gold mineral resource.

Hydro (LON:HYD) International (HYD 125.5P / £18.02m)

AIM listed supplier of environmentally sustainable solutions and products for the control and treatment of storm water, wastewater and combined sewer overflows, provided a trading update in which it stated that the Company is trading in line with market expectations for the year to 31 December 2011 and is encouraged by general trading as the level of project proposals remains high. The US Wastewater business was awarded a $2.4m grit removal contract at the Point Loma Wastewater Treatment Plant in San Diego, California during the period, though the UK business continues to see delays with projects coming through under the new Asset Management Program AMP5. The Group's Storm water businesses are seeing recovery in their core markets, and in the UK demand (demonstrated by the strong level of enquiries) appears to be recovering, though conditions in the US remain challenging with subdued private sector construction activity. Whilst the Company seeks to grow its main UK and US businesses organically, it continues to consider acquisition opportunities to further its growth in other international markets.

Landkom (LON:LKI) International (LKI 5.38p / £23.38m)                      

AIM listed cultivator and distributor of crops provided an operational update covering the spring period, in which it announced that it had completed its spring 2011 planting campaign with 23,000 hectares of land being planted. This has pushed the total planted area to 52,000 hectares for the summer harvest, up 30 per cent year on year and some 80 per cent up on the 2009 period. Of this planting, approximately 10,400 ha was of maize, 5,100 ha of spring wheat, 2,500 ha of spring rapeseed, 2,000 ha of sunflower, 1,800 ha of soybean, 600 ha of spring barley, 300 ha of other cash crops and 400 ha of non-cash crops. This follows the winter period in which despite severe weather conditions Landkom lost only 2.14 per cent of the crops planted in autumn. The Group has now planted 70 per cent of its available land bank, and harvesting operations are likely to start in the southern region by the end of June 

Leni Gas (LON:LGO) and Oil (LGO 2.98p / £27.35m)

The Company, an oil and gas production, development and exploration company said that, as planned, Societe de Maintenance Petroliere (SMP) and Services Petroliers Schlumberger were mobilised to the Ayoluengo and Hontomin oilfields in Northern Spain in the week of April 26^th. From that, they report the following: SMP-2 rig and the Schlumberger wireline unit have been used in tandem with the Company owned Cardwell work-over rig to advance work on two wells simultaneously. To date, wells Ayo-4, Ayo-5 and Ayo-32 have been logged. Wells Ayo-4 and 5 have been perforated and both have been recompleted for production and have now returned to production. Ayo-32 is expected to be concluded within a week. Based on the electric logs run in the well, it is believed that additional production capacity will be achieved over the next few weeks in Ayo-5. The SMP-2 rig has now been moved to well Ayo-37 and operations are underway with 5 metres of new perforations and at least 28 metres of re-perforating planned. In addition, an electric down-hole submersible pump will be installed in Ayo-37 once logging and perforation operations have been completed. The Cardwell rig will shortly be moved to Hontomin-2 to prepare the well for perforating.

Mediwatch (LON:MDW) (MDW 2.5p / £3.52m)               

Mediwatch, the innovative urological diagnostic manufacturing company, last week announced a trading update for the six months to 30 April 2011. The Company reported that in a more challenging marketplace, turnover for the first six months was marginally ahead of the same period last year. However gross margins have come under pressure due to increases in components and manufacturing costs and increased industry competition. This has lead to a small reduction in gross profits.  Management is implementing a number of programmes aimed at reducing manufacturing costs, while the company has already been actively pursuing a strategy of reducing overhead expenses. The reduction in costs has enabled the Company to continue to be profitable in difficult markets and with the introduction of new products the board is optimistic for the second half of the 2011 financial year. 

Plant Health Care (LON:PHC) (PHC 53p / £28.11m)

Provider of naturally-derived products to the agriculture industry, released a trading update in which it noted that current trading is in line with the Board's and the market's expectations for the current financial year. Having sold the U.S retail and landscape business in January, the Group is showing, on a comparable basis, for the first 4 months of the year to April 30, an uplift in sales of over 20 per cent compared with the same period last year. There was a particularly strong contribution from Europe and Mexico and, partly as a result of the decision to cease the early order program to generate higher margin sales, an overall 4 per cent improvement in gross margin compared with 2010. The sale of the U.S retail and landscape business helped push the Company’s cash balance to $18.0m, compared to $13.0m at the year end. Plant Health is in talks with a number of companies in the US, Europe, Africa and Asia on a non-exclusive basis for agreements concerning both Harpin and Myconate as standalone products and in combination with herbicides, pesticides and fungicides on a wide variety of crops, including sugarcane, corn, cotton, soybeans and vegetables and fruits, and with several agreements already at an advanced stage it intends to provide the market with a status update in its half year report in mid August. 

Range Resources (LON:RRL) (RRL 15.75p / £252.77m)        

Range Resources, an international oil and gas exploration, development and production Company, provided an operational update in which it commented on progress made in Texas and Trindad. A simulation program in Texas showed dramatic increases in oil and gas flow rates from the Russell-Bevly #1 well, with stabilized flow rates of approximately 3.5 millions of cubic feet per day (mmcfd) and 350 barrels of oil per day (bopd) from this one zone alone. Other completed zones are projected to exceed the budgeted 4 mmcfd and 350 bopd for all production areas in the well. The Company awaits the arrival of frac equipment and crews to progress the Ross 3H horizontal well in East Clarksville field. With frac work is expected to begin in the next two weeks.     Following the acquisition of SOCA Petroleum in Trinidad, the Company is gearing up for an aggressive development program which should help grow oil production from the existing fields. The current production rate of 650-700 bopd is projected to rise to 4,000 and the program will also focus on the deeper and potentially bigger Herrara formation as well as untested areas not part of the current reserve base. Work should commence in the next 30-45 days, with the first phase including nine shallow wells at depths of 250-2000 ft, each well will potentially take one-two weeks to drill and complete, with initial flow rates projected to be in the range of 40-150 bopd per well. The Company’s technical team will further reprocess existing 3D seismic to upgrade the current 10 plus Herrara targets.

Solo Oil (LON:SOLO) (SOLO 1.74p / £40.45m)

Solo Oil has gained a 38.1 per cent direct working interest in the Ausable Field and surrounding properties in South Western Ontario. The Properties include the Ausable, Airport North and Airport South reefs with a total acreage of approximately 1800 acres. Currently, the Ausable Field is generating revenue largely from the Austable #1 and #4 wells. However, the latest April 2011 petrophysical analysis at the Ausable #5 well, drilled earlier in the year, was found to have contained 72 metres of net hydrocarbon bearing pay. Thus, the well could be promoted as an oil and natural gas liquids producer upon successful production testing of this well, expected any day. Due to the presence of oil and natural gas supply in the Ausable #5 well, Reef has started scheduling drilling of additional wells and is expanding Ausable production facilities, all of which is hoped to be completed by the end of 2011. Additionally, as the agreement also consists of rights to the 23,000 acre 3D seismic survey around the Ausable Field, current data highlights the existence of production sites that are untested yet have potential for development. Other development plans include expanding gas cycling and gas storage capacities. 

The Company has entered into a binding Heads of Agreement with Reef Resources, and will commit to co-invest with Reef in further development of the field and the surrounding properties. In order to earn this 38.1 per cent working interest, the terms will have Solo convert the existing loan of CDN$1.65m into a direct working interest, as well as an additional investment up to CDN$2.35m in the properties.

Transense Technologies (LON:TRT) (TRT 3.88p / £5.12m)*

Last week, Transense announced its results for the year ended 31 December 2010. The results stated that it has been a year of considerable, if slower than expected, development.  By December 2010, Transense was working on more active and customer-led projects than ever before in its history. The loss for the year was £1,454,000 (2009 - £1,472,000 loss). The road to full commercialisation of the Transense SAW (surface acoustic wave) IP patent portfolio continues. A growing pipeline of active new projects and encouraging acceleration of progress in drive-line torque provides grounds for optimism. However, it remains difficult to predict the timing of agreements and subsequent revenue recognition with any certainty. The Company remains confident in the quality of its technology, the strength of these relationships and value of its products to its customers. 

*A corporate client of Hybridan LLP