Hybridan Small Cap Wrap: Animalcare purrs along, Lo-Q moves forward, magnesium hydroxide is a Sirius by-product and Encore soon to repeat

3D Diagnostic Imaging (LON:3DD) (3DD 6.5p / £11.08m)

This week 3D Diagnostic Imaging, a recent transfer from PLUS to AIM, announced that it had signed an exclusive European distribution deal for its CarieScan hand held device for the early detection and monitoring of tooth decay. The deal is with Orange Dental, a well established and respected European distributor of dental diagnostic and imaging devices, who will distribute the CarieScan product within Germany, Austria and Switzerland.  Germany reflects the largest potential European market for the device. The Company also confirmed   that it has now shipped its first products into the Canadian market following the signing of its exclusive distribution deal for the Canadian market in August 2010. We look forward to further updates from the Company as these arrangements convert into revenues.

Animalcare (LON:ANCR) Group (ANCR 162.5p / £32.96m)

Animalcare Group, supplier of pharmaceutical and other premium products and services to the veterinary industry, announced results for the 6 months to 31 December 2010. With revenues up by 12 per cent to £5.99m, and a 47 per cent increase in profit before tax to £1.38m, the Company appears to be yielding good results- increasing sales of high margin animal veterinary products underlines these figures, and demonstrates the strength in leadership by Stephen Wildridge, who took position as CEO in April 2010. Going forwards the Company is seeking to repay all borrowings by the end of Q1 2011, and is exploring a strong pipeline of opportunities which it intends to fund through operating cash flows.

Baobab Resources (LON:BAO) (BAO 22.25p / £37.07m)

Australia-based, UK listed Baobab Resources Ltd is on track to develop Mozambique’s first iron ore deposit, a move which could spur the creation of a steelmaking industry in the country’s central province of Tete, the Company’s Head of Exploration Iain Plews has said: “It is possible that there are ways to get to steel production here in Tete. Thermal power, hydro power and coking coal are in sufficient quantities”. He said the Company could be sitting on a resource base of around 1 billion tons of iron ore once all the exploration has been completed. BAO is prospecting for iron ore in the Tete Basin where several international mining companies are already developing mega coking coal projects for export. A steel industry is still years away and BAO is still in the process of proving that the size of its iron ore discovery is large enough to make it a commercially-viable venture. The Company has already proven that 47.7 million tons of magnetite iron ore exists on a small fraction of its Tete exploration area and it expects that by the middle of this year, it will be able to prove it has at least another 300 million tons of proven resources and possibly as much as 400 million tons to 700 million tons in proven resources. After that the Company will move the project into a feasibility study phase where it plans to outline the best options to develop the project. The presence of cheap hydro-electricity close by and two railway lines means BAO could contemplate processing or beneficiating the iron ore on site and, as mentioned, even build a steel plant. According to Ben James, Baobab’s MD, the iron ore deposit would be commercially viable with an iron ore price of US$70 per metric ton. This compares with The Steel Index recently showing a price of US$191.9 per ton for iron ore fines delivered into China.

BGlobal (LON:BGBL) (BGBL 35.25p / £35.14m)

AIM listed smart metering company announced an agreement with Opus Energy Limited for the supply, installation and servicing of smart meters to Opus’s UK customer base. The agreement also involves the supply of data collection and analytical services to Opus, which in 2010 was awarded Independent Energy Supplier of the Year. A clear demonstration of the expansion path Bglobal continues to follow.

Cml Microsystems (LON:CML) (CML 196p / £29.30m)

CML, which manufactures semiconductors for storage and communications devices, put out an interim management statement for the period 1 October 2010 to 14 February 2011, which stated that sales revenues are ahead in all key markets and geographies, whilst gross margins and costs remain steady. A co-operation with Toshiba Electronics Europe has produced a storage product which will be sample tested by selected customers during this quarter. This is a positive indicator for the full year results, extending the impressive results for the first 6 months (which we wrote about in November last year), where revenue was up by 56 per cent to £11.21m.

Craneware (LON:CRW) (CRW 573.5p / £148.91m)

Craneware, the provider of software to US hospitals to improve financial performance, announced the acquisition of a US software company called Claim Trust Inc. for a maximum consideration of $19.5m (initial amount of $9m cash and $6m shares). Claim Trust offers revenue cycle technology solutions to hospitals in the US and reported revenues of $8.5m (EBITDA $0.9m), of which 70 per cent was based on recurring subscriptions. The technology will supplement the existing comprehensive suite that Craneware offers.

Keith Neilson, CEO of Craneware said: “…With the fiscal and regulatory pressures on US hospitals continuing to increase, the addition of Claim Trust's powerful set of revenue cycle software tools means we can provide our customers with further means of improving the collection of the revenue to which they are entitled.”

Encore Oil (LON:EO.) (EO. 121p / £354.16m)                      

EnCore’s partner and operator of the Cladhan discovery, Sterling Resources, has announced that drilling will shortly be resumed with at least one well and a sidetrack.  Following last year’s successful drilling, this accelerated appraisal drilling programme is expected to commence as soon as the Transocean Prospect semi-sub rig is in place.

Hutchison China Meditech (LON:HCM) (HCM 520p / £269.06m)

Chi-Med announced that Mr Johnny Cheng Chig Fung has been appointed as an Executive Director. He has worked in Chi-Med as Chief Financial Officer for over two years.  He is a director of Hutchison MediPharma (Hong Kong) Limited and Sen Medicine Company Limited and was a director of Hutchison Healthcare Limited during 2009.

Immupharma (LON:IMM) (IMM 80.5p / £65.63m)

The specialist discovery and development pharmaceutical company announced encouraging results from its ongoing phase I/IIa clinical trial in cancer patients. Around half of the cancer patients that had undergone treatment with ImmuPharma’s drug candidate IPP-204106 are in a stable condition without any other drug treatment.

ImmuPharma has already begun development of the next generation of IPP-204106, the “micro Nucants”. This improved formulation, comprising of small particles of the drug candidate, has shown more impressive efficacy in cancer models. The clinical trial is taking place in two hospitals; one in Paris and one in Dijon, and is expected to complete in the coming months. ImmuPharma hopes to start a Phase IIb programme later this year in patients with glioblastoma (brain tumour), hormone-resistant prostate cancer and pancreatic cancer.

Having now two drug candidates with positive results in clinical trials is a milestone for ImmuPharma. The latest positive results of the clinical trials will put the Company in a good position for further major corporate deals such as the one currently in progress with partner  Cephalon on Lupuzor that is now in a large late-stage clinical trial in the United States.

Cephalon on Lupuzor that is now in a large late-stage clinical trial in the United States.

Kalahari Minerals (LON:KAH) (KAH 252p / £618.47m)

This is the first time we have covered Kalahari, the AIM listed Resource Company with uranium, gold, copper and other base metal interests in Namibia. One of its two major interests is ASX, TSX and NSX listed Extract Resources, a Namibian focused uranium exploration and development company, in which Kalahari has a circa 42 per cent interest. The Board of Kalahari also confirmed that it is holding discussions with Extract to explore options that might simplify the Extract/Kalahari shareholding structure. Extract’s primary asset is its 100 per cent-owned Husab Uranium Project and it has advised that it is currently holding discussions with Rio Tinto around a potential combination of the Husab Uranium Project with the neighbouring Rössing Uranium Mine.  Extract estimates that the Husab Uranium project contains one of the fifth largest uranium only deposits in the world. This is worth keeping an eye on as there could be significant potential synergies from a joint development of the two projects. 

LO-Q (LON:LOQ) (LOQ 155.5p / £25.30m)

AIM listed provider of virtual queuing systems for theme parks announced preliminary results for the year to 31 October 2010. These were most encouraging, with a 15.9 per cent increase in revenues to £20.3m, and profit before tax pushing up by 18.4 per cent to £2.32m. Though the results were strong, the Company decided not to pay a dividend for the period, citing potential investment in additive projects as the main reason for holding back.

Lo-q’s QBot handheld device offers a portable system to theme park visitors, which for a fee allows users be prioritised in the queuing system for selected rides at theme parks. Revenue is generated predominantly from a share of the sales of theme park rides sold using the Qbot system, though with a strong suite of patents in place around its IP (which is broadly ranging) Lo-Q is continuing to explore new opportunities- a new water park product called Q-Credits is currently in the works, which enables all guests to avoid standing up in line, and is due for trials in summer 2011.

Max Petroleum (LON:MXP) (MXP 17.75p / £83.02m)

MXP, an oil and gas exploration and development company focused on Kazakhstan, has announced that it has completed drilling the ALTW-1 exploration well on the West Altykol prospect on Block E. The well reached a total depth of 1,947 metres without encountering producible hydrocarbons and will be plugged and abandoned. The Sun ZJ-30 drilling rig will now be moved to drill the ZMA-ET1 appraisal well, testing Triassic reservoirs in the Zhana Makat Field on Block E.

Motive Television (LON:MTV) (MTV 0.87p / £11.66m)

AIM listed digital television technology, software and services provider last week announced that its 100 per cent-owned subsidiary Motive Television Services Ltd has signed a Memorandum of Understanding with CME Media Services Ltd., a wholly-owned subsidiary of Central European Media Enterprises Ltd. The MOU outlines the next phase in CME's evaluation of Motive's "TV Anytime, Anywhere" technologies following an initial Pilot Test Program with the CME group in Prague, Czech Republic. 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.

One Media Publishing Group (OMPP 2.75p / £1.20m)*

PLUS quoted consolidators and acquirers of music and video rights today announced that it has signed two new music catalogue deals. In two separate deals for an advance payment of USD$5000 and an onward royalty to the artists, One Media has acquired the rights to certain performances by British singing diva Anita Harris and soul funk singer Root Jackson of the band F.B.I. All the tracks will be made available through One Media's digital partner, The Orchard and will be available to download from approximately 200 music downloading websites, including iTunes, Amazon, Tesco, Spotify, Verizon and eMusic. Michael Infante, Chief Executive of One Media, said: "Two distinctly different catalogues here but never the less both catalogues add breadth to our depth of 60’s and 70’s music and give us a greater offering to our expanding list of repertoire." OMP certainly has developed the knack of signing new digital content.

Ovoca Gold (LON:OVG) (OVG 32.5p / £28.73m)

Ovaca has identified another gold/silver target, Zet, on its Rassoshinskaya license in the Magadan.  The trench programme has identified 20 veins varying in length from 100 to 1,900 metres, which are between one and four metres wide with grades up to 20 grams per ton gold.  Ovaca now plans to drill on Zet to test if the veins extend to depth. Ovoca also announced the appointment of Kenneth Kuchling, as a Non-Executive Director. Mr. Kuchling provides mining consulting services with multiple clients globally.

Plant Health Care (LON:PHC) (PHC 61p / £32.37m)

Plant Health Care has been quick off the mark to announce its results for the year ended 31 December 2010. The Company emphasised the strategic progress that had been made with important new agreements - with Syngenta Crop Protection, Legacy Seeds and Germains Seed Technology - to advance the Company’s progress towards commercialisation and revenues. Financial results were however disappointing  due to the lower than expected sales to the Monsanto Company which had a substantial amount of inventory carried forward from 2009. Cash resources remain strong with current balances of approximately $18 m including approximately $5 m realised by the sale of non-core businesses. We believe plant health technology is an attractive niche as the pressure to improve agricultural productivity to meet increased demand grows and so we continue to follow the Company and its peer group with interest.     

Range Resources (LON:RRL) (RRL 16.25p / £205.24m)

The International oil and gas exploration, development and production company announced along with its Georgian partners, Strait Oil and Gas Ltd and Red Emperor Resources NL that a drilling rig has been secured for the upcoming Georgian drilling program.

The Company entered into an agreement with Edeco Petroleum Services to provide the drilling rig, with operations currently underway on preparing and servicing the rig and associated inventory in readiness for mobilisation, currently scheduled to commence March 2011.

The Company undertook a comprehensive approach in securing the rig, engaging highly experienced drilling project manager First Drill Limited to assist in identifying the most appropriate rig for the proposed Georgian drilling program and to help supervise the program.

This is a significant milestone for the Company, as it paves the way for Range’s first exploration well in Georgia.

Red Rock Resources (LON:RRR) (RRR 11p / £75.68m)

Last mentioned in the Small Cap Wrap of 15/12/10, RRR, a gold mining and exploration company with projects in Kenya and Colombia plus interests in steel feed, uranium and rare earths, announces that it has finalised drilling programmes to test, validate and extend the current resource targets and to investigate potential further targets. A drill programme to test copper-gold VMS targets will also take place shortly. RRR also announces that the mine at El Limon is operating two shifts and the crushers and conveyors are operating satisfactorily. The ball mill has been running 24 hours a day as have the jig, pumps and other elements of the plant. The material processed has produced 6 g/t and 450 tons of this material is still in the silo waiting processing. The material mined is grading 12-15 g/t and improving but the Company has chosen to process lower grade material first. The Machuca mine is now in operation and initial production is at around 20 tpd with grades of 6 g/t.

Rockhopper (LON:RKH) Exploration (RKH 249p / £642.52m)

The North Falkland Basin oil and gas exploration company, announced that the 14/10-4 appraisal well was spudded on 19 February. 14/10-4 is the first appraisal well to be drilled on the Sea Lion feature situated on License PL032, which is 100 per cent owned and operated by Rockhopper. 14/10-4 is designed to investigate reservoir and hydrocarbon columns downdip of the Sea Lion 14/10-2 discovery well. The planned Target Depth of circa 3,000 metres will investigate the possibility of deeper sands than those encountered in the Sea Lion discovery well. If the drilling is successful, the Company can look forward to a productive 2011.

Sarantel Group (LON:SLG) (SLG 1.71p / £6.86m)

Sarantel issued a trading update last week containing mixed news.  Sales so far this financial year have been slower than expected due to unexpected internal technical development issues experienced by two major customers and this disappointment has been reflected in the share price. However the Company reported a substantial improvement in customer orders and expects monthly sales for the remainder of the financial year to end September 2011 to be broadly in line with budgeted levels even without orders from these two customers. At these levels we continue to believe in the significant upward potential of the share price on positive news from the Company.

Serabi Mining (LON:SRB) (SRB 40p / £17.96m)*

AIM-traded gold exploration company last week announced that it has received confirmation from the Instituto Brasileiro do Meio Ambiente e  dos  Recursos  Naturais  Renovaveis  (IBAMA)  that  the original penalty of Brazilian  Reais 3,597,300 (equivalent to  US$2.2m) assessed  by IBAMA in June 2010 has been cancelled. IBAMA has assessed a revised penalty of Brazilian Reais 1,500, equivalent to US$903 in respect of the alleged administrative breaches. The Company has accepted and paid this fine. It is great to see this behind the Company now. Serabi has now filed a preliminary prospectus with certain of the securities regulators in Canada as part of its listing process there.  The ordinary shares will continue to be listed and traded in the UK on AIM. Drilling activity is on-going at Palito and the Company expects to announce results from each of the nine target drilling areas for each discrete area as soon as it has received and interpreted all results from that area.  The Company's target is to establish a resource of 1.5m ounces (gold equivalent). Investors should be able to continue to look forward to an interesting series of news flow over the foreseeable future.

Sirius Minerals (LON:SXX) (SXX 14.25p / £125.13m)

Sirius Minerals, the globally diversified potash development group has stated it is analysing the available process routes and the potential value of associated by-products and is “pleased to update” the market on potential by-product opportunities at its York Potash project. One of the key process routes for polyhalite involves the use of anhydrous ammonia to chemically precipitate potassium sulphate. The key by-product produced in that process is Magnesium Hydroxide Mg(OH)2. The market for Mg(OH)2 is increasingly being seen as a viable, in some cases superior, more environmentally sensitive replacement for Caustic Soda (NaOH) within several significant industries. Based on the chemical composition of polyhalite and the process chemistry, up to 0.33 tonnes of Mg(OH)2 could be produced for each tonne of Sulphate of Potash. Initial market investigations suggest that Mg(OH)2 is currently selling for approximately US$500 per tonne. For the York Potash project, this pricing could potentially contribute a significant by-product credit to reduce the operating costs of the project. Significant work will be required to confirm the full extent of the potential that Mg(OH)2 represents and this will be carried out as part of the Project development studies.

Chris Fraser, MD of Sirius commented: “we already believe we have one of the world’s largest deposits of polyhalite. Now, although it is early days, this exciting development could have a significant positive impact on the potential of the York Potash Project. It also further emphasizes Sirius’ focus to sustainability and looking to better, cleaner ways of doing things.”

Solomon Gold (LON:SOLG) (SOLG 29.25p / £82.42m)

The gold and copper explorer active in the Solomon Islands and Australia announced the completion of the first diamond drill hole on the Meriguna Prospect, with encouraging mineralisation and initial assay results from the first 83m of the hole.

Commenting on the recent activity on the Fauro Project, Nicholas Mather, Chief Executive of Solomon Gold plc said: "Solomon Gold is pleased to report the completion of the first diamond drill hole, FDDH001 on the Meriguna Prospect, part of the Fauro Island Project in Solomon Islands to a depth of 625m. Solomon Gold is encouraged by the mineralisation and alteration patterns diagnostic of porphyry systems”. These encouraging results can only bode well for Solomon Gold.

Stellar Diamonds (LON:STEL) (STEL 9.25p / £12.88m)

The AIM listed diamond E&D Company focused on West Africa, announced its strategic decision to accelerate the development of its hard rock kimberlite projects and provided an update on its alluvial diamond operations. In light of the strong rebound in diamond prices as evidenced by the record diamond prices achieved from the recent sale of diamonds from the Company’s Bomboko project (record average price of $201/ct), the Board concluded that substantial value may be created by focusing on fast tracking the development of its hard rock kimberlite portfolio. These projects include the Droujba kimberlite pipe in Guinea and the Tongo kimberlite dyke in Sierra Leone. If proven economic, these projects have the potential to generate substantial revenues over long mine lives and in turn have the potential to transform the company into a significant diamond production company in Africa.

Tertiary Minerals (LON:TYM) (TYM 14.62p / £17.33m)

Following the mention in the Small Cap Wrap of 02/02/11 when the Company reported progress on its Storuman fluorspar project in Sweden, TYM now reports positive drilling results for the remaining 32 drill holes from the resource definition drilling programme.

The results show further thick intervals of mineralization at shallow depth suitable for open pit mining, for example Hole 10TS19 shows 15.3 per cent grading fluorspar and Hole 10TS09 shows 11.6 per cent grading. Further, higher grade intervals that may be suitable for mechanized underground mining show gradings up to 21.9 per cent fluorspar. The drilling has confirmed the extension of fluorspar mineralization in both south-east and north-west directions where it is still open along a strike length of 3.7 km. The publication of the maiden 1JORC Mineral Resource Estimate is on track for the end of March 2011.

Touch Group (LON:TOU) (TOU 1.5p / £2.43m)*

AIM listed Touch Group last week announced that it raised £725,000 at 1.5 pence per share to enhance and extend its digital assets which should speed the development of the Company's Medical Education and Communications Division and expand its Pharma and Energy Divisions. Current shareholders, Schroder’s, Herald and the chairman, Mr Isaacs and family, and other directors all supported the placing. Vincent Isaacs, Executive Chairman of Touch, stated: “From the basis of a now stable infrastructure, the main assets we have built are an intellectual sales force and technical teams, coupled with a wholly owned world-class library of journals, medical and energy papers, both online and in print. None of these assets are reflected on our balance sheet.” We believe that Touch can look forward with renewed confidence.