Hybridan Small Cap Wrap: Music to the ears from One Media, Belgravium captures a good year of performance and Horizonte aquires horizontically

3D Diagnostics Imaging (3DD 6.5p / £11.08m)

3D Diagnostics, which owns the protected rights to a technology platform with a number of significant potential commercial products, announced results for the 6 months to 31 December 2010. Whilst the Company generated £566,000 of revenue over the period (2009: nil), losses before tax came in at £980,000 (2009: loss of £478,000), much of which is possibly due to costs associated with the move to AIM completed by 3D in November 2010. At the same time the Company raised £2.7m which should serve it well in expanding the business- having signed distribution agreements with Patterson Dental last year, early sales of the CarieScan Pro device into the US and Canada have been promising and we look forward to further updates on trading in those territories.

African Eagle (LON:AFE) (AFE 11.88p / £48.59m) 

African Eagle Resources, an exploration and development company, announced last week that the Whittle Optimisation report for the Dutwa nickel project in Tanzania has shown that mining costs will be low, with a strip ration of 0.5 to 1 and concluded that, on current evidence, the Dutwa Project is likely to be economically viable, irrespective of whether agitated tank leach or heap leach is eventually chosen as the process route. The optimisation will be revised when the resource model has been upgraded from inferred to indicated or measured category under the JORC code, as better geotechnical data becomes available and as confidence improves in the capital and operating cost estimations. Because the Dutwa deposits are at the surface, mining will be relatively straightforward and the waste to ore strip ratio very low, between 0.45 and 0.53 to 1.

Belgravium (BVM 5p / £5.05m) 

Belgravium, the designer and supplier of mobile data capture systems, announced its preliminary results for the year ended 31 December 2010. The Group manufactures and installs complete systems incorporating both hardware and software for real time data capture in the logistics, petrochemical and mobile retailing markets. The chairman reported another year of increased profit before tax on steady sales - as well as a substantial reduction in the net debt position from £1.4m to £260,000.

The tone looking forward was one of cautious optimism as the company reported entering the New Year with a better order book than for the past three years and having made real progress against its key strategic objectives. The chairman concluded that provided the increased financial confidence amongst customers, accentuated by three years of restraint in capital expenditure, remains, the company expects to return to growth in 2011.

Education Development (LON:EDD) (EDD 197.25p / £111.17m)

EDI, which provides regulated assessments for accredited education and training programmes, announced an agreement with Pearson Plc for a cash offer of 200p per share by Pearson for the entire share capital of EDI. The offer represents a 61 per cent premium to the 124p closing price on 4^th March, and places a value on the Company of £112.7m. The acquisition is intended to complement Pearson’s existing work-based learning business and will create a group that can provide a range of vocational and academic services to the UK and international markets, rivalling competitors such as City & Guilds and Edexcel. This demonstrates the continued level of activity in the market, and we look forward to seeing how the acquisition will be integrated by Pearson.

Eleco (LON:ELCO) (ELCO 22.5p / £13.65m) 

Eleco, the construction software and building systems group, announced its interim results for the six months ended 31 December 2010 and with it a change of strategy for the group. The board plans to concentrate on expansion of its Software and service operations while reducing the current emphasis on the Building Products division and the currently loss making Precast Concrete division.  Software has delivered strong growth in the period, is profitable and now represents 23 per cent of the group’s turnover. This strategy will also significantly reduce the financing requirements of the group’s Building products and Precast Concrete interests while facilitating the planned expansion of the group’s Software interests, both in the UK and internationally. 

European Nickel (LON:ENK) (ENK 16.5p / £43.23m) 

Higher commodity prices have enabled European Nickel to strike a deal with DMCI Mining Corporation to recommence Direct Shipping Ore operations at the Acoje project in the Philippines after a long break.  European Nickel will receive a royalty fee on each shipment made based on the LME nickel price and grade of ore sold whilst DMCI takes on all financial risk, operations and marketing associated with the mining and sale of the nickel laterite ore.

This arrangement will provide European Nickel with much needed and low risk cash flow as it is working on the Acoje bankable feasibility study and the operation of the heap leach trial facility.

Frontier Mining (LON:FML) (FML 6.12p / £113.98m) 

Frontier Mining announced that it has assembled a project team to complete a Bankable Feasibility Study (BFS) of its Benkala copper project in Kazakhstan.

As most of the engineering and procurement has been sourced or completed, it is expected that the Bankable Feasibility Study will be finalised within the next 60-70 days. Positive results from the BFS will bode well for Frontier’s prospects.

Goldplat (LON:GDP) (GDP 10.12p / £16.92m) 

Goldplat, the gold producer, on Monday announced a rise in H1 profit and said it believes 2011 will be a period of growth for the Company. Pre-tax profit for the 6 months ended 31^st December was £1.36m (2009 £1.15m). Operating profit increased 17.13 per cent to £1.44m (2009 £1.22m). EPS 0.90 pence (2009 0.60 pence). During the period the Company raised £5.5 million to develop Nyieme and Banka Gold Project. The Company now has over £6.4m in the bank. GDP defined a maiden resource at Nyieme gold exploration project in Burkina Faso of 685,000 tonnes at 2.61 g/t Au for 57,000 oz Au. It signed an MOA to acquire Banka Gold Project, located in the premier gold district ion Ghana where historic data highlights gold prospectivity. The Company was also granted permission in February 2011 to commence operations at Kilimpaesa Gold mine in Kenya. It is also investigating establishing gold recovery bases in Tanzania, Burkina Faso and Mali to collect by-products to process at South African and Ghanaian gold recovery plants.

Horizonte Minerals (LON:HZM) (HZM 24.38p / £68.14m) 

The AIM quoted E&D Company focused in Brazil, announced positive results for the year ended 31 December 2010.

In the 2009 annual report, the Company stated that they were actively seeking opportunities to consolidate their position within the emerging Carajás nickel belt in northern Brazil that hosted their existing Lontra nickel project. In July 2010 they completed a transformational deal with Teck, whereby they acquired the advanced Araguaia nickel asset adjacent to their Lontra project which has created the potential for a 100m tonne resource with grades comparable to other leading nickel plays.  In completing this transaction, the value of the Company increased significantly both on an asset and corporate level. Early in 2011, they also further consolidated their position in the potentially world class nickel district by signing an option to acquire the adjacent Vila Oito and Floresta nickel laterite projects from Lara Exploration.

Horizonte’s investment case is evident; the board now believe the newly enlarged Horizonte is now a leading nickel and gold focused E&D Company in Brazil, with a world class nickel laterite project and an exciting portfolio of gold exploration assets.

Instem Life Sciences (INS 222p / £26.01m) 

Instem Life Sciences, a leading provider of IT applications to the global early development healthcare market, last week announced the acquisition of BioWisdom Limited. BioWisdom is a leading provider of software solutions for extracting intelligence from R&D related healthcare data for an initial enterprise value of £900,000 and was acquired for a maximum total enterprise value of £1.5m, subject to certain performance criteria. The acquisition is expected to be earnings enhancing in the first full financial year of ownership. 

Kalahari Minerals (LON:KAH) (KAH 285p / £699.46m) 

Kalahari announced it was holding discussions with Extract Resources, in which Kalahari holds an approximate 43 per cent interest, to explore various different options that might simplify the Extract/Kalahari shareholding structure to facilitate a combination of Extract’s Husab Uranium Project with the neighbouring Rössing Uranium Mine owned by Rio Tinto.

The Company further confirms that it is in talks with CGNPC Uranium Resources who are offering £756m for the Company. There is also speculation that Rio Tinto may put in an offer seeing as they own 14 per cent of Kalahari. Discussions are continuing and a further announcement will be made soon. Kalahari is in a strong position with its holdings in Extract, it has come as a surprise that a takeover is being presented. Worth keeping an eye on this.

Oilex (LON:OEX) Ltd (OEX 28.5p / £71.9m) 

The oil and gas exploration and production company based in Perth Australia provided an update for the WA-388P permit in offshore Western Australia. Whilst drilling was initially expected to commence in mid February significant cyclone activity had delayed the programme, but the operator of the permit (Apache Northwest) has now proposed a start date of April 2011. This is a sizable prospect, with early indications suggesting a potential size ranging from 0.3 to 2.8 trillion cubic feet of gas resource. News of a revised drill date was well received by the markets with the share price up 16.6 per cent on the day. 

 One Media Publishing Group (OMPP 3p / £1.30m)*

 PLUS listed consolidators and acquirers of music and video rights yesterday announced its preliminary results for the year ended 31 October 2010. Highlights included increased turnover by 53 per cent to £1,217,901, pre-tax profits were up 279 per cent to £249,732 and in the period One Media acquire seven new music catalogues and extended its digital distribution deal with The Orchard. One Media also bought back 52 per cent of the Company's shares and gained EIS and VCT eligibility, as well as appointing a new non-executive director. One Media states that it will continue to experience strong growth in its core business of digital sales. Its intention is to continue its successful policy of acquiring further digital rights within the main stream of easy listening and/or nostalgia music which has been its main source of revenue. OMP separately announced that the Board has approved a new share option plan for directors and employees under which options may be granted over shares representing up to a maximum of 10 per cent of the Group's fully diluted share capital. The share option plan is designed to further align the interest of employees with those of shareholders. OMP also announced that it has granted warrants over 500,000 ordinary shares in the Group to Roman Poplawski, a Non Executive Director of the Company.  A great set of results from an active small cap that knows how to do deals in its space and that we believe will continue to build its portfolio. 

Plexus (LON:POS) Holdings (POS 54.75p / £43.90m)

Oil services company Plexus has signed an agreement with Statoil Petroleum to provide the POS-GRIP High Pressure/High Temperature wellhead technology for gas exploration activities in the Norwegian Continental Shelf. After the recent BP disaster in the Gulf of Mexico there is an increased awareness and demand in the industry for safer and improved operating practices, and Plexus’ innovative wellhead engineering technology is seen as a solution.  The contract is worth approximately £700,000 and follows a similar deal with Apache Energy Australia.

Polo Resources (LON:POL) (POL 5.36p / £127.91m)

Polo Resources Limited, the mining and exploration investment company with interests in coal and iron ore, last week announced that it has signed a Letter of Intent (LOI) with Earth Coal Resources Limited to procure coking coal projects in Indonesia. Under the terms of the LOI, Polo will advance up to $3m in the form of a convertible loan to a newly incorporated Indonesian company, Polo IndoCoal, to fund due diligence and related project development costs in Indonesia, led by Polo’s partner in Indonesia, Earth Coal. The loan can be drawn down in several tranches and shall bear no interest.

Red Rock (LON:RRR) Resources (RRR 10.5p / £72.24m)

Red Rock Resources, a gold mining and exploration company with projects in Kenya and Colombia, plus interests in steel feed, uranium and rare earths, has entered into an option to earn-in to and explore iron ore deposits in North-West Greenland. RRR signed an agreement on 2^nd March 2011 whereby it will pay $60,000 to North Atlantic Mining Associates Limited (NAMA) for a two month option to enter into an earn-in agreement with NAMA over exploration concessions held by its subsidiary NAMA Greenland Ltd (NGL) at Thule, Greenland. During this two month period RRR will carry out further due diligence, including a site visit, while NAMA will carry out preparatory work for the exploration programme. RRR may exercise the option by making a payment of $250,000 (or issuing an equivalent value of Red Rock ordinary shares), upon which it will enter the earn-in and be obligated to fund the 2011 exploration programme. The programme is expected to include airborne geophysics, drilling and the definition of a JORC or equivalent resource. Upon fulfilment of the programme, RRR will be entitled to a 25 per cent interest in NGL. Under the earn-in, RRR may elect to earn a further 35 per cent interest in NGL by making a further payment of $250,000 (or issuing an equivalent value of Red Rock ordinary shares) and funding the 2012 exploration programme, also to include definition of a JORC or equivalent resource. The aggregate cost of the 2011 and 2012 exploration programmes is $5m, exclusive of taxes. The concessions held by NAMA Greenland are unexplored but are considered by the Company to have possible gold potential.

Reneuron (LON:RENE) Group (RENE 5.81p / £36.01m)

Last week, ReNeuron provided an update on progress with the PISCES clinical trial of its ReN001 stem cell therapy for disabled stroke patients. The PISCES study (Pilot Investigation of Stem Cells in Stroke) is the world’s first fully regulated clinical trial of a neural stem cell therapy for disabled stroke patients. Stroke is the third largest cause of death and the single largest cause of adult disability in the developed world. The Company is pleased to report that the first two patients treated in the clinical trial are both well. The final patient in the first dose cohort has consented to treatment and, assuming a successful pre-treatment evaluation period, is expected to be dosed in May. On this basis, the Data Safety Monitoring Board would be expected to review data from the first dose cohort in August and, all being well, give approval for the trial to move on to a higher dose cohort at that time. The Company therefore expects that this higher dose cohort of three further patients would have been treated by the end of this year assuming no significant recruitment delays. The remaining dose cohorts in the PISCES trial are expected to be treated in 2012, at which point the Company intends to have discussed and agreed its subsequent clinical development strategy for ReN001 with the relevant regulatory authorities both in the UK and beyond. ReNeuron also separately announced that it will be participating at a number of key UK stem cell and life science conferences over the course of March. Angel Biotech (LON:ABH) (ABH 0.54p / £14.19m)*The Company is producing the stem cells used in the trial at its Edinburgh facility. Angel has been ReNeuron’s manufacturing partner for over three years and enjoys a strengthening relationship.

Sareum (LON:SAR) Holdings (SAR 2.08p / £30.10m)*

AIM listed specialist cancer drug discovery business last week announced positive results from pre-clinical in-vivo efficacy studies from their joint research collaboration with Cancer Research Technology Limited (CRT) and The Institute of Cancer Research (The ICR). A recent colon cancer pre-clinical model study carried out by The ICR demonstrates that the combination of a collaboration Chk1 inhibitor, dosed via the oral route, in combination with a chemotherapeutic, gemcitabine, demonstrates a greater than two-fold reduction in cancer growth rate compared to treatment with the same dose of gemcitabine without the Chk1 inhibitor. Further pre-clinical in-vivo studies for the programme show that the collaboration Chk1 inhibitor, dosed alone, can reduce cancer growth in models of AML (acute myeloid leukaemia) and neuroblastoma (a childhood cancer).  Certain cancers, such as these, are believed to be dependent on Chk1 for survival. The joint research collaboration with the ICR and CTR targets Chk1 (Checkpoint Kinase 1). Chk1 is important in controlling a cancer cell’s response to DNA damage, which may be a consequence of the cancer itself, or intentionally caused by chemotherapy or radiotherapy. Sareum has had a great year data and share price performance wise thus far, its share price has risen ten-fold, and is well positioned to fund and execute its ongoing business plan of further development and commercialization of its drug cancer programs.

Sefton (LON:SER) Resources (SER 2.25p / £4.56m)

Sefton Resources has been attracting media attention as it begins steam flood operations at its Tapia Field in California. Alongside Tapia Canyon (heavy gravity oil) and Eureka Canyon (medium gravity oil) in the East Ventura Basin of California, both 100 per cent owned, Sefton’s other main interest is in East Kansas covering 45,000 acres of the Forest City Basin where coal bed methane, as well as conventional oil and gas deposits are targets. Latest news is that Sefton has commenced a continuous steam injection pilot of the Hartie #10 well which is part of an ongoing steam study being conducted by well-respected heavy oil expert Dr Farouq Ali. Steam is used to heat up the oil to reduce the viscosity thereby improving the recovery rate and boosting production. Sefton has already demonstrated that steaming works well in this area and have achieved very low lifting rates; and Dr Ali will be monitoring the affect of steaming the Hartie #10 well on each of the surrounding six producing wells. This data will be fed into the steam flood simulation model developed by Dr Farouq which will allow Sefton to ascertain the best methods and injection patterns for the steam flood across the whole field. As yet the buoyant oil price seems to have done little for the share price of this stock despite some compelling fundamentals. Sefton has proved reserves in California totalling 3.8m barrels of oil. Steaming is planned to increase the recovery factor which will thereby increase the proved reserves ahead of any future drilling. Last week the Company has just announced a twelve month extension of its reserved-based revolving credit facility of $10m with a declining balance borrowing base of $6.8m which provides funds for exploration, development as well as the acquisition of oil and gas properties. All in all, there looks to be value here for investors as this stock is currently capitalised at just a shade over £4m.

Sunkar Resources (LON:SKR) (SKR 32.5p / £51.95m)

Sunkar Resources announced that the Government of the Republic of Kazakhstan has ratified the changes to the Company’s Subsoil Use Contract (SUC) and work programme commitments to develop the Chilisai phosphate deposit. The major changes are a reduction in the Company’s obligations on ore extraction, and a revision to the commitment to meet associated cumulative development expenditure of $115m by 2020. The changes to the SUC have been ratified to align the development of the mine within the Company’s planned timeframe for the development of the Chilisai phosphate fertilizer project. More importantly, the new 2011 and 2012 mining commitments are in line with the existing production capability. Sunkar seems to be gaining much support from the Kazakhstan authorities.

*A corporate client of Hybridan LLP