Tuesday, 28 September 2010

Ariana Resources takes Red Rabbit gold project forward in ‘busy & exciting’ first half

Ariana Resources (LON:AAU) aims to complete the project feasibility for its Red Rabbit joint venture within a year.

In this morning’s results statement, managing director Dr Kerim Sener commented on a ‘busy and exciting’ first half.

“Our plans for the development of the Red Rabbit project continue to crystallise and activities within the newly incorporated JV company, Zenit Madencilik, are progressing solidly,” Sener said.

The integrated Red Rabbit project is combination of the Kiziltepe and the Tavsan gold projects in western Turkey.

“Recent resource drilling at Kiziltepe was concluded on a positive note with vein extensions now proven beneath cover. This adds to our confidence that the current resource base across the project will grow from the current base of 401,000 oz gold equivalent.”

During the busy six month period ended 30th June, Ariana completed positive independent economic and environmental scoping reports for the Kiziltepe, which "demonstrated the viability of the envisaged operations".

The company also completed its resource drilling programme on Kiziltepe, and raised £1 million though a placing.

Importantly Ariana successfully negotiated the terms of the Red Rabbit joint venture, and the basis for the newly created Zenit Madencilik (who will manage Red Rabbit).

Through a deal with Turkish construction firm, Proccea, the company is set to move the project forward.

Proccea will earn 50% of the Red Rabbit Project with a US$1.4 million commitment to the bankable feasibility and environmental studies, and a further US$6.6 million to start plant construction.

Looking ahead Ariana told investors that it remains fully committed and on-track to establish a gold-silver mine in Turkey.

Ariana is due to formally start the Bankable Feasibility Study and Environmental Impact Assessment.

Some aspects of the feasibility study are already underway, including the mineral resource statement and processing plant designs.

The completed feasibility study is expected by the third quarter of 2011.

Ferrexpo secures US$350m credit line for expansion projects

The only pure iron ore producer listed in London Ferrexpo (LON:FXPO) has successfully renewed its debt facilities, securing a larger than expected credit line after the initial loan was oversubscribed.

The initial plan was to secure a US$300 million facility, which was subsequently increased to US$350 million.

The Swiss-based Ukrainian miner now has the means to fund its expansion projects.

“Ferrexpo is pleased to have successfully renewed its debt facilities.

“The group remains strongly cash generative and this financing, in addition to our growing cash balance, provides the company with the financial flexibility to progress with key expansion projects,” said chief financial officer Chris Mawe. Deutsche Bank (NYSE:DB) acted as coordinator, mandated lead arranger and sole bookrunner for the loan.

Besides DB, funding was provided by 10 other prominent financial institutions including ABN AMRO (Euronext:ABN), Credit Suisse (NYSE:CS), Societe Generale (Euronext:GLE), JP Morgan (NYSE:JPM), UBS Investment Bank and BNP Paribas (Euronext:BNP), among others.

Evolution Securities analyst Charles Kernot highlighted that the new facility ‘sets the company up for a one third increase in output and reduces interest costs.’

“This enhances the visibility of the company attaining our 450p target price and reduces the need for the group to bring in a dilutive joint venture partner”, Kernot said.

In its interim results released in early August, Ferrexpo reported a 74% increase in revenue, a 340% increase in pre-tax profit, a 384% increase in basic EPS (earning per share) and a 456% increase in underlying EPS.

The strong performance in the first half prompted Edison Investment Research to upgrade its earnings estimate for the company and predict record full year results for Ferrexpo, surpassing even 2008.

The research house expects full year production to be at least 9.7% higher than in 2009.

Broker Evolution Securities responded to the results report by stating that Ferrexpo was undervalued, while projecting pre-tax profits to jump to £492 million this year from £82 million in 2009.

“The second half is set to be substantially better as the group benefits from two quarters of high prices rather than just one. The company is also increasing its capital expenditure in line with increased cash flow generation and this is set to yield additional production growth,” said Evolution mining analyst Charles Kernot.

Ferrexpo has performed very well on the London Stock Exchange this year. Since January, the share price increased by roughly 50% to the current 299 pence.

Shares in the group rose 2% on today’s news.

African Aura Mining reveals more positive drill results from New Liberty gold project

African Aura Mining’s (LON:AAAM, TSX-V:AUR) New Liberty project is shaping up to be a very significant advanced gold project, said chief executive Luis da Silva.

The company has reported more drilling results from the New Liberty gold project in western Liberia.

"We are very pleased to announce further robust drill results from the Latiff zone of the New Liberty gold project which already has a 1.4moz NI43-101 resource at a grade of 3.18 g/t and excellent metallurgy,” da Silva commented.

The best intersections include 4.32 grams per tonne gold (g/t) over 22 metres, 5.17 g/t over 8 metres, 4.33 g/t over 10m and 3.81 g/t over 6m.

This morning’s drilling update relates to the latest 1,180 metres of the 13,350 metres drilled as part of the 2010 programme to date.

African Aura said it will continue step-out drilling along strike, to the west. The step-out programme is expected to be completed during October, with all assay results returned this year.

“All the intersections are expected to fall within the open pit element of the forthcoming independent resource statement and pre-feasibility study expected to be delivered during Q4 2010”, da Silva added.

Evolution Securities analyst Charles Kernot said the good results increase expectations of a ‘solid’ resource upgrade later in the year.

“With the drilling that the group has previously announced we believe that these results will lead to both a significant increase in the resource estimate at the project and an upgrade in geological confidence”, Kernot said.

“Additional news-flow is expected on the two iron projects which should keep African Aura in the public eye.”

The analyst reiterated his ‘buy’ rating, and emphasised that his 210p price target has ‘scope for a significant upgrade when the new resource estimate is released’.

A Definitive Feasibility Study will begin immediately after the pre-feasibility study is complete, subject to results, with a scheduled completion in H1 2011.

African Aura is a diversified mine developer with gold and iron assets, as well as a 30% stake in AIM listed diamond producer Stellar Diamonds (LON:STEL).

Centrica buys Connaught’s gas and electricity services businesses for £11.2 mln

British Gas parent company Centrica PLC (LON:CNA) said the British Gas Business
division has acquired the assets of the gas and electricity services businesses of Connaught Compliance, the trading division of distressed social-housing contractor Connaught Group PLC (LON:CNT), for £11.2 million in cash.

The acquisition will bring British Gas Business an approximately 600 strong work force including approximately 400 gas and electricity engineers who specialise in the installation, service and maintenance of commercial gas boilers and electrical systems, and in excess of 20,000 customer contracts, mainly in the private sector.

The acquisition also includes Connaught’s training academy in South Wales.

British Gas Business has now made five acquisitions in the energy services and management sector in the last two years. The latest follows the previous acquisitions of BMSi, Semplice Energy, Energy and Building Management Solutions and Newnova Group.

The 600 Connaught employees joining British Gas Business will be additional to the 5,100 new jobs in insulation, smart metering and energy efficiency which British Gas has already announced over the past two years.

Morgan Sindall (LON:MGNS) bought contracts and assets from Connaught earlier this month in a deal worth £28m. The contracts and assets will be integrated into the company’s affordable housing division Lovell Partnerships, and 2,500 employees will transfer to Lovell as part of the agreement.

A week prior to the Morgan Sindall deal, Connaught’s shares were suspended and the company called in the administrators. It has been a rather swift fall from grace for the social housing specialist, after its business was severely crippled by budget cuts under the new government.

Xcite Energy secures up to £20 mln equity line with YA Global

The new capital facility will help Xcite progress the Bentley Field, without delay
Xcite Energy (LON:XEL,TSX-V: XEL) has secured up to £20 million in new capital, with a deal for an equity line facility.

The company has entered a Standby Equity Distribution Agreement (SEDA) with an investment fund managed by Yorkville Advisors, the YA Global Master SPV Ltd.
"This SEDA facility is a very useful part of our funding options,” Xcite Energy chief executive Richard Smith commented.

“We are very pleased to have the independent financial capacity that Yorkville can provide at this vital time in our corporate development."
Under the terms of the deal, Xcite can draw-down funds and issue new shares at its sole discretion. The new shares will be priced based on market conditions, and the facility is available over a three year period.

Xcite plans to use the SEDA funding to assist its future working capital requirements, and to avoid delays as it progresses towards the first stage production of the Bentley field in the North Sea.

In last month’s interim results statement, Richard Smith said that the next few months would be transformational.

Xcite told investors that it has secured an alterative rig to carry out the 9/3b-R well, and consequently, it has been able to expand the drilling programme to include a ‘slant’ well section.

"This has been another important period for the company and we have now put in place the key elements of the work programme for the 9/3b-R well,” Smith said.

“We look forward to a transformational few months as we seek to demonstrate the commercial value of the Bentley field."

Mariana Resources Boss Believes Argentina is Yet to Reveal its Full Potential

  Mariana's share price has had an excellent run since early 2009
In June Mariana Resources (LON:MARL) raised £6.75 million from investors.
The cash call reflected a remarkable change in the company’s fortunes.
The new shares were issued at 28p – a premium to the prevailing price, which underlined the growing interest in its gold project in Argentina.
It also provided a graphic illustration of how Mariana’s prospects have improved immeasurably thanks to a shrewd grass-roots discovery programme, overseen by managing director John Sutcliffe.
At the start of 2009 the stock was changing hands 2p.
Today the price is 37.5p – so even those people who invested at 28p are sitting on a healthy profit.
The catalyst for all of this has been Argentina, and specifically the Las Calandrias gold discovery in Patagonia.
It is located in the Deseado Masif, the up-and-coming area for gold and silver discoveries.
The Mariana project is divided in two – Calandria Sur and Calandria Norte. The licence is 100 per cent owned by Mariana.
Around a year ago Sutcliffe and his team drilled 1,350 metres of holes around Norte and came away with very little.
“We got a few metres with a few grams of gold,” Sutcliffe told Proactive Investors.
However he had better luck when he began a second round of drilling to 70 metres that struck bonanza grades of gold between 338 grams and 443 grams per tonne.
“It is pretty amazing. But both intersections are very narrow - in one case one metre and the other 80 centimetres,” Sutcliffe says.
The first programme, completed in October 2009, did find a very viable target at Sur, which the Mariana MD says is “stacking up to be bulk minable”.
The grades here range between 0.9 grams per tonne and 2.4 grams, but are spread over a much greater area.
However Sutcliffe reckons the drill programme is yet to uncover Sur’s full potential.
“Calandria Sur is a bowl with the gold like a soup at the bottom of the basin,” he explains.
“The gold is spread out over a large area. What we are looking for is where the gold came from, because it didn’t just appear in that rock. It didn’t form that way. It has got to have come from some sort of feeder zone.
“I think the feeder zone is something like Calandria Norte, which is a vein of a high-grade multi-ounce feeder zone.
“Perhaps what we haven’t found at Calandria Sur is what could actually be the future if the project.
“It is going to be hard to find (the feeder zone) and we may not find it in this round of drilling. If we don’t find it then this project is still going to have legs.”
While Mariana continues to look for the source of the gold at Sur, the drilling is also designed to help it compile a resource estimate, which it hopes to publish by the “first part of next year”.
However Mariana isn’t a one project play.
Drilling at Sierra Blanca, in Argentia, will begin by the end of the year with the potential for silver-gold discovery. Mariana owns 70 percent of Sierra Blanca, though it has an option to a buy the remaining 30 per cent from IAMGOLD.
“We have got on the surface some very exciting silver numbers,” says Sutcliffe.
One particular 11 metre intersection contained 386 grams of silver per tonne coupled with a not-to-be-sniffed at 3.4 grams of gold.
“The numbers are really interesting, but we’ve not been able to nail it in the drilling,” Sutcliffe explains.  "This is mainly the result of drilling problems – difficult ground and loss of water circulation.” 
In Chile the group has joint ventured all its iron oxide copper gold (IOCG) projects there with Cliffs Natural Resources. The earn-in agreement could see the American group take a 70 per cent stake in Mariana’s Northern Chile properties.
But it will only do so if it invests US$3 million developing them. Cliffs has committed to a minimum spend of US$500,000.
Analyst Joe Lunn, of the company’s broker FinnCap, reckons this is a very sensible approach.
“We view the decision ... as an excellent way of unlocking the potential value of this world class exploration ground while maintaining shareholder exposure in the event of a discovery,” he said.
And he points out that while there is the potential for a major copper discovery in Chile, he also notes that a “substantial amount of geophysics” needs to be carried out before drill targets can be determined.
Back in Argentina, and just two kilometres from Calandria Sur, is the El Nido prospect, which barely rates a mention in the Mariana literature and certainly isn’t included in the company’s current valuation.
FinnCap’s Lunn has taken a stab at valuing Las Calandrias and reckons it is worth 41p a share based on a resource of 600,000 ounces of gold. However his matrix gives an upside case of 91p.
“We think that the enlarged mineralised footprint at Calandria Sur, proved up by the recent drilling campaign, has the potential to contain up to 500,000 ounces of low grade, bulk tonnage mineralisation,” Lunn said in a note to clients shortly after the summer fundraiser.
“But our re-rating of the shares is primarily due to the bonanza gold grades encountered at Calandria Norte, located 700 metres away.
“Although only two ore grade holes have been drilled so far, we believe that Calandria Norte has the potential to become the standout discovery at Las Calandrias.

Monday, 27 September 2010

Edison says Oracle Coalfields recent supply deals could unlock value

Oracle Coalfields’ (PLUS:ORCP) recent deals have the potential to unlock the value from its Pakistan coal assets, according to Edison Investment Research.
Edison analyst Warren Johnstone highlighted the two deals signed at the turn of the year, December’s memorandum of understanding with the Karachi Electric Supply Company (KESC) and January’s MoU with Lucky Cement.

Oracle and KESC are working towards the signing of a joint development agreement to establish a mine-mouth power plant, which will be supplied from Oracle’s Block VI.

Additionally, the Lucky Cement deal is expected to provide the basis for a coal supply agreement. According to Johnstone the deal will allow Oracle to achieve early sales and cash flow while the pit is opened up and the power plant developed.

Oracle’s bankable feasibility study (BFS) is investigating plans to start a 3.5 million tonne per annum (Mtpa) mining operation, with initial production commencing in 2012. The company sees 2.5Mtpa being directed to a power plant and 1Mtpa being sold to the local cement industry.
Edison emphasised the size of the deposit, which has a 1.4bn tonne resource, and 371 million tonnes of reserves.

Johnstone attributes a 0.43p per tonne enterprise value, whist acknowledging "little allowance" for the potential upside which he believes is "inherent in the eventual exploitation of the deposit".

Furthermore, “investors will have access to a profit margin that we previously estimated between US$15/t and US$30/t with potential added upside in the event that Pakistan’s local coal buyers are prepared to pay a premium for locally produced coal,” Johnstone said.

Equatorial Palm Oil appoint Siva representative Varadharajan

Equatorial Palm Oil (LON:PAL) (EPO) has appointed Shankar Varadharajan, a representative of its strategic partner the Siva Group as non-executive director.

Siva, a major Indian conglomerate, is supporting the company’s expansion in Liberia.

Varadharajan is being appointed as Siva’s representative on the board, as agreed under the group’s initial £5m investment back in May. The relationship between EPO and Siva has grown further recently, with a menorandum of understanding to create a significant US$60m joint venture.
"We continue to build upon our already exciting relationship with The Siva Group, and this appointment will solidify our relationship with them,” EPO chairman Michael Frayne commented.
“The Siva Group has recognised the huge potential of our operations, and is keen to work closely with us to substantially de-risk our project financially and advance our land position.”
Last week, in the company’s upbeat interim results, Frayne emphasised that “Siva seeks to invest in growth opportunities and has identified the palm oil industry as having high expansion potential”.

The chairman believes that the joint venture puts EPO in a strong position. “Our potential JV with the Siva Group provides us with a strong funding position and a supportive partner with synergistic objectives to advance the scale of our plantations quickly and responsibly.”
EPO has a large 169,000 hectare land position, covering three distinct areas - Palm Bay, Butaw and River Cess County. The company intends to plant 50,000 hectares of oil palm over the next ten years, taking production to 250,000 tonnes per annum (tpa).

Desire Petroleum raises £22.8m for 3D seismic over Falklands oil acreage

Desire Petroleum (LON:DES) is preparing to carry out further investigation of its acreage in the Falklands, raising £22.8 million to fund a 3D seismic acquisition campaign. The company announced late Friday that is was placing 16.3 million new shares to raise £22.8 million.
The placing price of 140 pence represents a discount of 9.5% to Desire’s Friday’s closing price of 154.67 pence.
Following the Sea Lion oil discovery by Rockhopper Exploration (LON:RKH), Desire has concentrated on identifying prospects in the same play type as Sea Lion and has outlined a fan sandstone play fairway in the eastern flank.
Desire said that it was essential to acquire and process 3D coverage “as quickly as possible” to understand the potential of this play.
The company is currently looking for partners to undertake a joint seismic programme to mitigate the cost of the mobilisation/demobilisation of a seismic vessel to Falkland waters.
The programme is expected to begin in December 2010.
Now that Rockhopper has concluded the successful flow test on the Sea Lion discovery, the Ocean Guardian drilling rig will revert to Desire to drill a number of its prospects.
The Rachel prospect will be the first to be drilled.

Mariana Resources promises exciting 2010 after H1 gold-silver exploration boosts portfolio value

Mariana Resources (LON:MARL) promised more "exciting" news in the months ahead after its exploration efforts undertaken in the first half significantly increased the value of its property portfolio.
The bulk of the exploration success was delivered by the company’s Las Calandrias property in the Deseado Massif in Southern Argentina. The project has rapidly moved from being a grassroots project to follow-up drilling over two bonanza-grade gold and silver intersections at the Calandria Norte deposit.
This will be followed by resource drilling at Calandria Sur, which contains a significant disseminated gold deposit.
Preliminary metallurgical testing has already commenced with results due later this year.
The expenses will be covered with the £6.75 million raised in June. The funds have paved the way for the current 10,000 metre drill programme, the prime target  of which is extension to the vein-breccia  bonanza gold-silver  intersections at Calandria Norte.
In parallel with the follow-up drilling, intensive exploration of the entire 11 sq km (square kilometre) rhyolite dome field is underway.
A key objective of the current drilling is to achieve a maiden resource in Q1 2011.
Apart from Las Calandrias, Mariana is also advancing other projects in Argentina, including the Sierra Blanca joint venture with drilling of silver-gold targets planned for Q1 2011 and Los Amigos, where drill target definition work is progressing.
At La Borita, where Mariana has an option to acquire 100%, scout drilling of a concealed porphyry copper target is planned for Q4 2010.
In Chile, drilling at the Buenaventura IOCG project and evaluation of new properties by the Mariana-Cliffs Natural Resources is in progress.
The company acknowledged the “continuing support” of its shareholders and promised that the second half of the year will be just as interesting.
“This has been another outstanding six months for the company, and the Mariana team is to be congratulated on an excellent performance.
“The next six months promises to be equally exciting and regular updates will be provided to shareholders as results come to hand,” said chairman J.R. Horsburgh.
Broker finnCap issued a note on Mariana last week, praising the expansion potential of Las Calandrias.
The broker expects the initial batch of assays that will be released in October to be similar to those already reported.
Previous intersections at Calandria Sur have included 68 metres grading 2.4 g/t (grammes per tonne) gold and 24 g/t silver from 74 metres and 106 metres grading 1.6 g/t gold and 27 g/t silver from 3 metres.
FinnCap noted that following a “strong drilling run” started earlier this month the stock met its valuation of 41 pence, which it said was due to the market anticipating exploration success at the project.
As a result, finnCap placed the valuation of the company under review.

Noventa hires mining and engineering expert Leslie Heymann as director

Noventa (LON:NVTA) has appointed mining and engineering expert, Leslie Heymann as a new director of the company.

Heymann has acted as a consultant to Noventa for the past year. “With his experience as a professional engineer and a history of improving technical performance, we are confident that Leslie will bring valuable expertise and insight to the board," Noventa chairman Eric Kohn commented.

Noventa highlighted that Heymann's key areas of expertise include mining, plant operation, engineering construction and business development. He has also led the expansion of several mines and has introduced new equipment and methodologies.
The company also noted that Hemann has more than 30 years experience in the industry and he has provided consultancy services to the mining industry since 2001.

Under its new management team, Noventa has turned around the fortunes of its Marropino tantalum mine in Mozambique.

In August, Noventa revealed that Marropino’s redevelopment has made rapid progress since the mine re-started operations in April 2010, after spending just under a year on care-and-maintenance.  Tantalum recovery at Marropino has increased significantly over historic levels.

Furthermore, Marropino was boosted further with a new discovery in the surrounding area.

Should the new discovery prove to be viable for mining, Noventa said that Marropino’s “enhanced economics may reduce or eliminate further need for external financing”.

SmartFOCUS wins software contract from major tour operator

SmartFOCUS (LON:STF) announced a new contract from a major travel company. Its marketing and database software will be deployed by escorted tour operator Page & Moy Travel Group, which it said would “increase customer insight and targeting for enhanced marketing performance focused on delivering stronger campaigns”.
The group operates across three brands, Travelsphere, Page & Moy and Just You, offering holidays in 80 countries around the world.
The product provided by smartFOCUS will replace the group's existing SQL database and legacy SAS marketing applications.
The company added that apart from supplying the software, its support and expertise will help reduce costs and accelerate the ROI (return on investment) through improved database maintenance.
“We're seeing a huge demand in the market from companies just like the Page & Moy Travel Group  that are looking for software which enables internal departments to deliver and drive business forward, while eliminating the time and costs of external consultants or resources.
“This is what smartFOCUS delivers,” commented chief executive of Chris Underhill.
The financial terms of the deal were not disclosed.
This is the company’s second contract with a high profile customer this month. Exactly two weeks ago, smartFOCUS announced a contract for its software from retail phenomenon The White company, which has become one of the UK’s fastest growing clothing and bedding sellers.
SmartFOCUS is a business software developer that supplies ‘intelligent marketing’ systems that aim to deliver relevant, personalised and timely communications to a brand’s customers through different channels, e.g. print, e-mail, mobile phones and the Web.
The firm’s clients include well-known brands such as Easyjet, Harrods, Hilton, Manchester United, Rabobank, Société Générale and Sony. In total it has more than 700 clients around the world.
In full year 2009, smartFOCUS made a pre-tax profit of £490,000 on revenues that had improved 14.7% year on year to £11.9 million.

Leni Gas & Oil soars after initial success at Hontomin-2 in Spain

Leni Gas & Oil (LON:LGO) told investors that oil flowed to the surface during drilling of the Hontomin-2 well in Northern Spain. The well encountered oil at a depth of 1,350m.
Shares in the group rose nearly 30 percent in opening deals.
"This is an extremely important development for the company ... oil flowing to surface is an encouraging sign for this well," chairman David Lenigas commented.

The company has now drilled the top reservoir formation, which will be fully monitored over the next few days, before drilling resumes to open the bottom reservoir formation.

All production from Hontomin-2 will be transported to the company’s central production facilities at the Ayoluengo operations.

The Hontomin structure has an estimated 2.40mmbo (million barrels of oil) in mean probable OIIP (Oil Initially In Place) resources. The Hontonmin-2 well, and the associated testing program, are designed to appraise long-term production potential.

Last month, analysts at Edison Investment Research highlighted that the Hontomin-2 extended well test marks the start of an extensive development plan to evaluate the untapped oil and gas resources at Ayoluengo and in the surrounding concessions. The analyst beleives that LGO has the potential to transform itself into a mid-tier E&P player. Edison said it considers LGO to be a ‘development and rehabilitation’ specialist and that it has a ‘large resource base’ given its junior status.
According to Edison, LGO has 'significant prospects', with its ‘best estimate’ of prospective recoverable resources at 120 million barrels of oil equivalent (mmboe) - with 56 million barrels of oil (mmbbls) and 383 billion cubic feet (bcf) for gas.
The Spanish operations are considered to be LGO’s core assets. In Spain work centres on the renovation of the historic Ayoluengo oilfield, which comprise of  12 oil and gas production and exploration prospects - at all lifecycle stages.
"Spain is one of the company's most important assets and there is a great deal of new work being done between here and the end of the year,” Lenigas added.

The chairman emphasised that LGO intends to enhance its overall production on various fields, as a result of its extensive reworking of its project database.
The Ayoluengo oilfield has a mean oil initially in place volume of 106 million barrels, and 19% of that has been recovered since 1964.
LGO believe they can achieve 30% to 40% recovery using re-completions, new primary depletion, and gas and liquid assisted mobilisation and re-pressurisation programs.
The recent re-processing of Chevron’s historic 3D seismic work revealed two ‘very significant opportunities’ below the known shallow reservoirs and targets.
The uppermost target, around 2,000-2,300m below surface, is believed to be an oil reservoir with a nominal gross reservoir sequence of 80m, a footprint of 10 square kilometres, and good porosity in the range 10-17%.
Additionally it is believed that an ‘unconventional’ shale gas reservoir exists below this, with a potential for 3.8 trillion cubic feet of gas initially in place.

Monday, 20 September 2010

Silence Therapeutics reveals progress after a hectic six months

Biotechnology group Silence Therapeutics (LON:SLN) today gave a comprehensive run-down on its progress since merging with rival Intradigm at the start of the year.

However there was no update on the “potential offer” for the group received earlier this month from an as yet unnamed suitor.

The lack of tangible news on bid talks prompted a 1p, or 8.5 per cent fall in the share price to 10.5p.
The stock was 7.8p on September 6 when official confirmation of the approach was received and Silence peaked at 13.25p.

The interim results, which revealed Silence posted an after tax of £7.05 million, represent the first comprehensive update since the Intradigm deal.

Key among the milestones was the £15 million fundraising, which was carried out at 23p a share.

By the end of June the firm had £6.84 million of cash and equivalents remaining after burning through £8.65 million in the period.

This included a repayment of £1.94m of Intradigm's short term loans and a “significant reduction of our other liabilities”.

Silence gets the name because its expertise is 'gene silencing', also known as siRNA technology.

This is a way of controlling or shutting down some of the 40,000 genes in the human body. It copies the body's own method of fighting a virus.

In theory the process could be used to tackle cancers and other diseases that traditional chemistry and biotechnology have failed to eradicate.

However there are just a couple of hurdles that need to be overcome with this cutting edge science.

First, the ‘siRNAs’ have a nasty habit of creating flu like side effects and second, they require a delivery technology to get them to the parts of the body where they are needed.

On both counts Silence is well ahead of the competition so far as the intellectual property, the delivery and the side effects profile are concerned.

During the six months under review the group has made significant progress in developing its pipeline of potential blockbuster products.

It has been issued with a novel RNAi patent issued covering the high-value PKN-3 cancer target in the US.  Silence's lead drug candidate, Atu027, specifically targets PKN-3.

At the same time its small interfering RNA delivery collaboration with Dainippon Sumitomo has expanded to additional disease targets selected by the Japanese Pharma giant.

Silence also landed a one-year extension of ongoing siRNA delivery collaboration with AstraZeneca to examine new and enhanced delivery approaches for RNAi therapeutics.

However, the most exciting collaborative development happened after the period end as it emerged the  group could earn as much as $65 million from a collaboration deal with Swiss giant Novartis (NYSE:NVS).

The focus of the study will be QPI-1002, an experimental kidney drug discovered by Silence, but licensed to American firm Quark.

The treatment is now being taken into phase II clinical trials.

The $65 million is Silence’s slice of a potential $680 million windfall of potential milestone payments and royalties negotiated by Quark.

Quark will receive $10 million up front. However it is not known how much of this sum will trickle down to Silence.

An injection of funds would go a long way to filling a potential funding shortfall predicted in the second quarter of next year.

Separately, Silence said its strategic plan has now been implemented following the Intradigm merger.

All research activities now take place at the company's Berlin facility, while other functions, including business development, legal and certain drug development activities, have been relocated to its new Redwood City, California operation.

Chief executive Phil Haworth said: "2010 has been a pivotal year for Silence Therapeutics.  Our new, more comprehensive structure has facilitated multiple advances in the three areas that we believe will be most critical in the coming years - partnerships, intellectual property and clinical progress. 

“We are delighted by our progress in the first half of 2010 and look forward to continued success during the second half of 2010."

Europa Oil & Gas reports major upgrade for West Firsby oil reserves

Shares in Europa Oil & Gas surged more than 30 per cent in early trade as the explorer unveiled a major upgrade to the reserves in place at the West Firsby Field in Lincolnshire.
Detailed re-mapping by Merlin Energy Resources and iProdTech has resulted in the P50 remaining reserves figure jumping by 250 per cent to 1.4 million barrels.

This assumes just a 7 per cent recovery factor on a total oil in place (STOIIP) of 20.6 million barrels.

However, Zone 2A has produced 25 per cent of its STOIIP whilst Zone 1 only 4 per cent, despite having similar reservoir characteristics.

The average East Midlands oilfield recovery factor in these reservoirs is between 15 and 25 per cent.

Managing director Paul Barrett said: “This review, commissioned in March this year, is the first comprehensive subsurface review of the West Firsby Field for some time and supports the management's view that the field holds significant unrecovered oil volumes.

“The planned WF9 well therefore has two clear objectives: to significantly increase field production and access these additional Zone 1 reserves.”

The West Firsby Oilfield is a producing oilfield located north of Lincoln in the East Midlands Petroleum Province.

The oil production is transported to the ConocoPhillips Immingham Refinery and sold at a small discount to Brent.

At 8.45am, the shares were up 3.7p at 16.7p.

Astaire Securities analyst David Johnson said: “(This is) positive newsflow for the diversified Europa that spans the E&P value chain, including production, appraisal and exploration in the UK, France and Romania.

“The Voitinel gas discovery in Romania remains the critical value driver for the company but West Firsby provides a small boost.”

Lipoxen drug pipeline progressing nicely

Bio-pharmaceuticals group Lipoxen (LON:LPX) said that development of ErepoXen, its long acting erythropoietin for the treatment of anaemia, is progressing well.

The drug candidate is currently undergoing phase IIa clinical trials in India overseen by the Serum Institute, its local partner and the company’s second largest shareholder.

Dosing of the remaining patients in the study and the delivery of the final trial report are expected by the end ofErepoXen is one of two key developments in the Lipoxen portfolio. The other is SuliXen, a long-acting insulin, which is being developed by Russian partner FDA Pharma.

The company said the programme remains on track to enter phase II clinical trials in the final quarter of this year.

Separately, discussions continue with the Barbara Davis Centre for Childhood for Diabetes over the pair’s pre-clinical collaboration on SuliXen. 

“While the current programme has shown that our product is only as effective as other therapies for the prevention or reversal of diabetes, it has demonstrated positive therapeutic outcomes for treatment of the disease,” the company said.

“This continuation of the programme has budgetary considerations and we are therefore continuing our dialogue with the BDC on the costs of conducting further challenge efficacy studies in diabetic animals.  We expect to report further on this programme before end-2010.”

The update was given alongside the company’s interim results, which showed the group’s pre-tax loss widened by £100,000 to £1.5 million in the six months to June 30.

However the financials were something of a side-show to what was a comprehensive research and development update from Lipoxen.

The firm seems particularly buoyed by the results of its work on a potential flu vaccine, which should move into the next stage of pre-clinical development in early 2011.

“The challenge study end-stage of this project is nearing completion to such degree and with such level of positive expectation that the company has now initiated a process for full scale clinical development aimed at ensuring the near seamless continuation of the development of Lipoxen's influenza vaccine product candidate,” the company said.

“The final report on the current programme (being part-funded by the UK's Technology Strategy Board) is expected to be released early in the fourth quarter this year. 

“The company has developed a number of viable vaccine candidates and hopes to move to the next pre-clinical development stage early in 2011 subject always to the availability of internal capital and/or the securing of external collaborator funding arrangements which we hope to make in the next three to six months.”

Last week Lipoxen strengthened its ties with Baxter International (NYSE:BAX) in a US$4 million deal that gives the drugs giant a seat on the board.

Under the renegotiated terms of its agreement, Lipoxen will receive a US$2 million licence fee.

The AIM-listed group is also issuing warrant rights to subscribe to US$2 million of new equity between July next year and June 2015.

But instead of receiving the US$75 million of milestone payments and royalties negotiated in 2005, Lipoxen will get US$71 million. Baxter also gets to appoint a non-executive director to the Lipoxen board.

The agreement covers the PSA Factor-VIII molecule, which treats haemophilia and uses the Lipoxen-developed PolyXen protein drug delivery technology.

The Baxter injection of funds comes at just the right time for Lipoxen, which had £946,213 of “cash and equivalents” at the period end.
In April the group raised £1.2 million, and it later emerged that the senior management were the “cornerstone investors” in the placing.

This underlines the confidence of chief executive Scott Maguire and his finance director Colin Hill in the company’s prospects.

This confidence is also reflected in a two-part stock option scheme the pair signed up to in June that will see awards at 20p, 40p and 100p a share. The current share price is 7.38p a share.

“We have subscribed to the last two equity placings, “Maguire told Proactive Investors recently. “We bought in the open market.

And there’s a stock option programme that goes to 20p, 40p and a pound. So we are committed.”

Lipoxen was founded by professor Gregory Gregoriadis and spun out from the School of Pharmacy at the University of London in 1997.  It listed on AIM nine years later.

The company targets three specific areas – biological, vaccines and oncology drugs. It has three novel platforms to do this – PolyXen, ImuXen and VesicAll.

However the key focus of the company is the first two platforms.

The PolyXen platform is a versatile protein drug delivery technology. It is essentially based on a polymer of sialic acid which is naturally found in the body.

Thursday, 16 September 2010

How ZOO Digital is Making its Hollywood Dream a Reality

ZOO Digital’s (LON: ZOO) client roster includes a number of the powerful Hollywood studios.
And while it is headquartered in Sheffield, the majority of the workforce is based in Los Angeles.
However, you won’t see the company’s name written in neon, or its distinctive logo tagged onto the closing credits of the latest big money movie.
But if boss Stuart Green has his way, ZOO’s software will be as indispensible to the business of merchandising films as CGI and digital animation are to the process of creating a blockbuster.
Its suite of products automates and simplifies highly labour intensive ancillary parts of the film-making process. They help the back-room produce marketing material, posters and DVD sleeves and video based products for both packaged media and electronic sell through.
Its latest masterstroke is a program that adapts films to the Apple iTunes format.
And the news last week that an as yet unnamed major studio has adopted the technology has propelled the share price more than 20 per cent higher to 58.5p in just three trading sessions.
Mostly ZOO’s products are about simplifying many of the more mundane processes as well as saving studios money.
Where it comes up with a new innovation ZOO works closely with a partner to ensure that the resulting product, when developed, will meet the customer’s requirements.
This has the effect of de-risking development and minimises speculative investment.
“ZOO Digital’s prudent modus operandi remains the development of new products but with announcement of the product contemporaneously with first customer adoption,” said Andrew Darley, an analyst at FinnCap.
Last week the company used its annual meeting to showcase its translation management tool.
It is a truly remarkable piece of software that has the potential to eradicate many hundreds of man hours from the laborious process of preparing promotional and marketing material for a major film.
It allows posters to be redesigned for the local market and simultaneously translated into any major language.
The internet based product also allows the designers to make changes and project managers to track revisions automatically, where currently this is done using spread sheet and emails.
“Our solutions redefine the way customers work,” chief executive Green says.
“We are transforming the workflows and using automation through our tools.
“This displaces human-based labour with automated software that does the same function without any compromise to quality at a fraction of the time and cost.”
ZOO hasn’t gone down the traditional route of charging a one-off fee for its products.
It takes the Software as a Service model and typically bills clients based on the "work they put through the system", Green explains.
“This way we can build recurring and scalable revenue streams that increase the more our customers use the system,” he adds.
In June it signed a collaboration deal with the American firm Multi Packaging Solutions (MPS), a premium packaging company focused on the multi-media, pharmaceuticals and cosmetics industries. The aim of the tie-up is to sell ZOO products to MPS customers.
The US group subscribed for 2.15 million shares at 40p each as part of the agreement. ZOO could also issue up to 2.15 million warrants exercisable above 50p. The terms of this particular part of the JV are interesting – and indicative of the aspirations for the co-operation.
MPS will only receive the full award if it can generate in excess of US$10 million of incremental ZOO sales in any one of the three years of the agreement. If new ZOO sales are below US$5 million no warrants will be issued.

“We began speaking to MPS a little while ago and recognised there may some great synergies between us,” said Green.
“They have aspirations of expanding their business globally.
“In so doing they are looking to establish relationships that enable them to work with their customers across multiple languages.
“We have solutions that help adapt their products very effectively to different languages.
“So there seems to be great match here in terms of taking our propositions to those organisations through MPS relationships.”
The company’s commercial director Gordon Doran is guardedly optimistic about the tie-up.
“It is early days,” he cautions. “But they seem to have a real genuine interest in this.”
“We’ve had an encouraging start and there’s been a really good dialogue with their customers.
“MPS has been really proactive in getting us in front of their customers.”
Understandably, the analysts following ZOO haven’t yet taken into account the potential revenues from the MPS deal as the partnership is in its infancy.
FinnCap is predicting ZOO’s sales of US$16.2 million in total in 2011, up by US$1.1 million from a year earlier and giving a maiden pre-tax profit of US$900,000.
Putting a 75p price target on the shares (current price 58.5p), FinnCap analyst Darley tells us: “We are cautious not to model potential until a run rate develops.
“However, this product development beyond the already strong DVD and Blu-ray niche expertise presents the opportunity for capturing more revenue from existing customers and strengthening the product set for potential customers.
“Alongside the use of products outside of media content, through the strategic but nascent relationship with MPS, unmodelled upside is considerable.”

Solomon Gold tops LSE risers on Fauro gold project assay results

in Solomon Gold (LON:SOLG) soared and at one point nearly doubled after the company announced the assay results from initial surface sampling on its 100% owned Fauro Island project in the Solomon Islands. The stock was still trading up 62% at midday.
The company said that Fauro Island has the potential to host a world class gold deposit with geological similarities to the 40 Moz (million ounce) Lihir Island gold
mine, which was indicated by the first 58 of the total 215 samples taken at Fauro.
The “exciting” results indicated the potential for a large gold deposit similar in style to Lihir Island in Papua New Guinea, also highlighting the molybdenum mineralisation discovery at Ballyorlo.

The best results included 173 g/t (grammes per tonne) gold from the Meriguna prospect and 139 g/t gold from Hornbill.
Other significant results ranged from 11.4 g/t gold to 69.4 g/t gold and up to 0.2% copper in the Meriguna, Hornbill and Kiovakase prospects.
The samples have also shown that the Ballyorlo prospect yields up to 0.43% molybdenum and defined the Hornbill prospect over a 300 by 400 metre zone.
“Coincident magnetic anomalies and copper, gold and molybdenum values in porphyry style rocks with disseminated sulphide mineralisation strongly supports the presence of high tonnage porphyry copper, gold and molybdenum targets on Fauro,” said chief executive Nicholas Mather.
Further 157 results are expected shortly.
Solomon Gold plans to commence the third exploration programme later this month, while drilling at Fauro is planned for late 2010.
The company will revisit prospects from the August campaign as well as two eastern Fauro prospects, Piru and Masa Masa Islands, marking its first campaign in these areas.
in Solomon Gold (LON:SOLG) soared and at one point nearly doubled after the company announced the assay results from initial surface sampling on its 100% owned Fauro Island project in the Solomon Islands. The stock was still trading up 62% at midday.
The company said that Fauro Island has the potential to host a world class gold deposit with geological similarities to the 40 Moz (million ounce) Lihir Island gold
mine, which was indicated by the first 58 of the total 215 samples taken at Fauro.
The “exciting” results indicated the potential for a large gold deposit similar in style to Lihir Island in Papua New Guinea, also highlighting the molybdenum mineralisation discovery at Ballyorlo.

The best results included 173 g/t (grammes per tonne) gold from the Meriguna prospect and 139 g/t gold from Hornbill.
Other significant results ranged from 11.4 g/t gold to 69.4 g/t gold and up to 0.2% copper in the Meriguna, Hornbill and Kiovakase prospects.
The samples have also shown that the Ballyorlo prospect yields up to 0.43% molybdenum and defined the Hornbill prospect over a 300 by 400 metre zone.
“Coincident magnetic anomalies and copper, gold and molybdenum values in porphyry style rocks with disseminated sulphide mineralisation strongly supports the presence of high tonnage porphyry copper, gold and molybdenum targets on Fauro,” said chief executive Nicholas Mather.
Further 157 results are expected shortly.
Solomon Gold plans to commence the third exploration programme later this month, while drilling at Fauro is planned for late 2010.
The company will revisit prospects from the August campaign as well as two eastern Fauro prospects, Piru and Masa Masa Islands, marking its first campaign in these areas.


Monday, 13 September 2010

Singer Capital says Advanced Computer Software forecasts underpinned by strong trading

Singer Capital Markets issued an upbeat note on Advanced Computer Software Group PLC (LON:ASW), following the on healthcare and commercial sector-focused IT group’s trading update ahead of interim results.
Singer said the update shows a management team delivering against expectations despite general concerns on public sector spending.
ACS expects to report first half revenues to be in line with market expectations and adjusted EBITDA to be ahead of expectations.
Revenues for the half year ended August 31 2010 are expected to rise to £47.3 million from £11 million a year earlier and the EBITDA figure is expected to be no less than £12 million, up from £3 million in the previous year.
Singer noted that the UK government’s October Spending Review is on the horizon, but “we believe this start to the year provides a strong underpinning to the full year forecasts and reinforces our view that the management is fully capable of exploiting the opportunities it is facing. At 10X feb’11 P/E, we see current levels as attractive.”