Hoodless Brennan Daily Small Cap News Flash

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Scisys (SSY, 44.5p, £12.67m) Has been awarded the contract from the RNLI for the electronic architecture on its new class of lifeboats. Initial value is estimated to be £1m. We maintain our BUY recommendation with a price target of 50p.

ILX Group (ILX, 29p, £5.62m) The computer based training company has announced new contracts worth a total of £0.5m, with £0.25m training the graduate intake of a major European bank which will bill in August and September, £0.1m training analysts at a global investment bank and has been selected as the trainer of choice of 2 of the UK’s private equity programmes. It is also training recruits in New York – underlining its overseas presence. Forecasts for March 2010 are for £1.13m pre-tax profits with 4.08p EPS and 1.5p DPS, putting the group on a 7.1x prospective PER and 5.1% yield. A prospective PER of 8x would give a target price around 33p and a 4.5% yield, BUY.

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Highams Systems (HSS, 1.375p, £0.95m) Final results from the business, technology and professional service provider to the insurance and financial service sectors saw revenues fall to £10.53m (£13.61m) and a pre-tax loss of £0.37m (loss £0.85m), which is an improved position from the implied run rate of the interim loss of £0.26m. The cost cutting measures have now led to Q1 of the new financial year showing a modest EBITDA profit. Clearly the management have done a good job and the news that they have achieved a turnaround bodes well, a slightly risky SPECULATIVE BUY – as it is trading on a very low EV/Sales.

Tangent Communications (TNG, 4.75p, £8.08m) AGM trading statemEnt has confirmed trading for the first 4 months is ahead of expectations. The group has stated it intends to expand in its chosen sectors of the market by utilising its net cash which now stands above £2m. We repeat our BUY recommendation of 02/06/09 when the price was 4.375p with a price target of 8p.

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Intandem Films (IFM, 0.875p, £0.73m) Has warned that it has so far achieved funding for only 1 of its films and that it is in talks regarding the funding of its immediate needs. We last commented on 27/03/09 at the current price when we warned investors to await Intandem’s own films – but with the danger of an emergency cash raise and the associated dilution SELL.

Dillistone (DSG, 135p, £7.64m) Has signed 2 contracts for its FILEFINDER 9 - with GSI Executive Search for the implementation on-going support in offices in Singapore, Malaysia, Hong Kong, Thailand & China and with Tribal Group Executive Search & Selection. We remain cautious that the group has warned on H1 trading yet cost cutting should help the group achieve the market expectations of £1.06m pre-tax profits and 13.2p EPS – putting the group on 10x prospective PER. Moved from a sell to a HOLD.

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Neovia Financial (NEO, 51p, £61.16m) Has entered the international money transfer market that takes advantage of its existing developments to date, indeed the original NETeller card was taken advantage by UK citizens who would add funds to the NETeller wallet and give the ATM card to their builders in Spain. With the market forecast to be some $300bn this year (Source: World Bank) we believe this is a major boost to the Neovia outlook. We last commented on 20/07/09 at 51.75p and we reiterate the BUY recommendation with a 62p price target.

Tyratech (TYR, 40p, £8.67m) Has announced a distribution deal with Natural Forces for its insecticide and pesticide products where it will co-brand products for the US mushroom production and processing.

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Protonex (PTX, 32.5p, £10.29m) Has partnered with Ultracell Corporation, a producer of portable fuel cell products, for the development, marketing, demonstration, commercialisation, and sale of advanced fuel cell power solutions and fuels for the US Army. The group will combine the cells from UltraCell with the Protonex Power Manager and the water/methanol fuel systems. We remain impressed by the developments and maintain our SPECULATIVE BUY recommendation.

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BP declines, Lloyds, RBS and HSBC flat as FTSE 100 is in the red at midday

After all, the FTSE 100 managed to stay on positive territory yesterday despite a late retreat into the red, matching the record winning streak of 11 days. It is now poised to post a record setting 12 session winning streak and clear the 4,600 point hurdle, a significant milestone for technical traders.

It was once again hard to figure out the direction in which the FTSE 100 was headed.

The market was on the rise this morning, yet it was 8 points down by midday dragged down by significant declines in the mining sector, which was in for a correction after a few straight days, signalling it could be overbought overbought. Xstrata’s fall was the steepest in the group after reporting a 60% year on year ferrochrome production decline in H1 2009.

Yesterday’s top riser publisher Pearson was flat in the morning.

Software developer Sage Group emerged as the top riser after announcing both the results for the first nine months ending 30 June and the expected results for the full year ending September 30 are in line with the management’s expectations.

Packaging group Rexam (LSE: REX) continued to slump with a 3.7% loss. Building supplies group Wolseley (LSE: WOS), which recently announced it was looking to sell some of its international businesses, dropped 3.2%.

The negative impact delivered by the mining sector was tough to overcome.

Commodities

Commodity prices mostly accounted for marginal increases today and mining fell and oil & gas was mixed.

Gold was fluctuating early in the day and was at USD 955/ounce by afternoon. Silver was steady around USD 14/ounce. After making considerable progress yesterday, platinum underwent a slight correction declining USD 2.00 to USD 1214/ounce.

Base metals also saw their value increase. Copper was floating around USD 2.54/pound, zinc also didn’t show much movement and stayed at USD 0.76/pound, while nickel went up to USD 7.66/pound. Brent Crude closed at USD 70.5/barrel.

Platinum miners mostly fell in view of today’s correction in platinum prices. Lonmin (LSE: LMI) was down 1% at 1289p. Aquarius Platinum (LSE: AQP) eliminated yesterday’s gains with a loss of 5% to retreat to 237p per share. Johnson Matthey (LSE: JMAT) slightly added to yesterday’s gains improving by less than 1%.

Gold and silver producers were on decline. Randgold Resources (LSE: RRS) lost 3% after reporting Q2 results. Peter Hambro Mining (LSE: POG) was down 2.7% and Yamana Gold (LSE: YAU) was flat.

Silver producer Fresnillo (LSE: FRES) was flat, while Hochschild Mining (LSE: HOC) lost 2%.

Junior Gold companies suffered early losses. Oxus Gold (AIM: OXS) was flat following a strong performance yesterday. Kryso Resources (AIM: KYS) and Pan African Resources (AIM: PAF) and Patagonia Gold (AIM: PGD) were flat, while Medusa Mining (AIM & ASX: MML) slipped 5.1%. Cluff Gold (AIM & TSX: CLF) lost 3.7%. Norseman Gold (LSE: NGL) added 4%.

Coal miner BHP Billiton (LSE: BLT) was flat in the morning. Anglo American (LSE: AAL) declined slightly. Rio Tinto (LSE: RIO) was down 2%.

Copper miners were in for a significant correction and dropped considerably, dragging the market down. Vedanta (LSE: VED) lost 1.2%, Kazakhmys (LSE: KAZ) was down 2.5% and Antofagasta (LSE: ANTO) lost 3%. First Quantum Minerals (LSE & TSX: FQM) was unmoved.

Eurasian Natural Resources (LSE: ENRC) was down 2.5%.

BP (LSE: BP.) released mixed Q2 results and fell 1.5%, while Shell (LSE: RDSB) moved up insignificantly.

Juniors were also mixed. Cairn Energy (LSE: CNE) moved up slightly, Dragon Oil (LSE: DGO) lost just less than 1%, and Dana Petroleum (LSE: DNX) lost 2%. After having an independent estimate of recoverable C3 resources at its West Med field in Russia approved by the authorities, Victoria Oil & Gas (LSE: VOG) jumped 12%. Empyrean Energy (AIM: EME) fell 2%. Enegi Oil (AIM: ENEG) retreated considerably, slipping 11%. Max Petroleum (AIM: MXP) was up 23%. Green Dragon Gas (LSE: GDG) slipped less than 1%.

Insurance, banks, private equity rise

Banks showed some volatility early in the day, but weren’t far off from the opening levels by midday.

Lloyds Group (LSE: LLOY) made good gains after naming Win Bischoff new chairman, but was in the red by the afternoon with a loss of 1%. UK’s other partly nationalized bank RBS (LSE: RBS) held steady. HSBC (LSE: HSBA) showed little movement, while Barclays (LSE: BARC) was down 1% to fall further after a disappointing performance yesterday. Just like on Monday, Standard Chartered (LSE: STAN) was flat.

Insurance groups were once again mixed. Legal & General (LSE: LGEN) posted small losses, while Prudential (LSE: PRU) gained a little over 1%. Aviva (LSE: AV.) was down insignificantly and Old Mutual (LSE: OML) lost 3%.

Private equity group 3i (LSE: III) added 1.8%.

Large Cap News

FTSE 100 business management software company, The Sage Group (LSE: SGE), confirmed that trading for the first nine months of its financial year remained in line with expectations.

For the most recent quarter to 30 June 2009, Sage did note that market conditions “remained challenging” but mostly unchanged. Subscription revenues continue to show “solid growth” and the group’s cost base has been trimmed to reflect the slowdown in the software and software related services markets.

Xstrata PLC (LSE: XTA) reported a 11 percent rise in coal output in the first half to end-June 2009, to 43.8 million tonnes from 39.6 million a year earlier, while total mined copper production rose 1 percent to 447,509 tonnes.

Australian thermal coal production increased by 11 percent, mainly from the highly productive Newlands Northern Underground mine in Queensland and due to New South Wales mines switching semi-soft coal production to thermal production. The increase more than compensated for lower production from South Africa due to the planned closure of Impunzi Underground and industrial action.

In the midst of acquisition talks and with a share offering around the corner, Randgold Resources (LSE: RRS) reported on its Q2 results and production updates from its key projects, boasting a 45% quarter on quarter hike in profits.

Randgold’s profits jumped to USD 18.9 billion in Q2, driven primarily by the 10% increase in attributable gold production to 121,685 ounces and the 3% rise in gold prices. Yet the profits attributable to shareholders actually declined to USD 14,946 million from USD 17,911 million for the equivalent period of 2008.

South African bank, Investec plc (LSE: INVP, JSE: INP) spiked lower this morning after the company announced that it would be undertaking a book building process to raise fresh capital to tidy up its balance sheet, only to recover quickly on strong demand for the new shares.

Small Cap News

Biocompatibles International PLC (LSE: BII) said Eisai Co Ltd (TSE: 4523.JP) has exercised its option to license Biocompatibles' DC Bead and PRECISION Bead products in Japan, and the company will receive an initial fee of £3 million, followed by further substantial payments based on Eisai's achievement of targets.

The option agreement was previously announced in May 2008.

Mineral exploration junior, Horizonte Minerals (AIM: HZM) received encouraging news from its Tangara joint venture (‘JV’) with Troy Resources (TSX & ASX: TRY).

The Tangara JV covers the Tangara Project, a gold project located in the Carajas Mineral Province in Brazil. Horizonte first entered into the JV with Troy Resources in December 2007. The agreement allows Troy Resources to acquire 100% of the project from Horizonte Minerals by meeting a number of milestones, including a US$800,000 staged cash payment, a royalty of US$30 per ounce on the first 500,000 ounces produced, a 2% Net Smelter Return on production in excess of 1 million ounces of gold and finally a payment of US$2 million if Troy Resources exercises its option to advance the project to production. Troy Resources is also committed to a US$2 million exploration budget.

Leading independent Italian gas developer, Po Valley Energy (ASX: PVE) has completed drilling of the Sillaro#2 production well, to its target depth of 2,364 metres.

Logs of Sillaro #2 well have been run and analysis has confirmed the main pay zones in the Sillaro#1 production well, are across a gross interval of 140 metres from 2,180m to 2,320m. The two wells are laterally 500m apart at target depth.

African uranium developer West Australian Metals (ASX: WME) has undertaken downhole probing at Marenica Uranium Project in Namibia, Southern Africa.

In tandem with with the recently commenced 5,000 metre in-fill Reverse Circulation drilling program, the work is designed to upgrade a significant portion of the current resource at Marenica from Inferred to Indicated.

TyraTech Inc (AIM: TYR) said it executed a private label agreement with Natural Forces LLC of Davidson, North Carolina, under which Natural Forces will market and sell co-branded TyraTech Nature’s Technology insecticide and repellant products into the US mushroom production and processing markets.

Explorer Victoria Oil & Gas (AIM: VOG) put in solid gains on the AIM market after releasing an update on its West Medvezhye (West Med) gas and condensate project in Russia.

VOG said the independent estimate of West Med’s resources carried out by local geological institute SibNats has been approved by the Russian Ministry of Natural Resources (MNR), putting the resources of 3 structures within West Med at 170 million barrels of oil equivalent. More than 30 other structures have been identified and received MNR’s approval.

It was a mixed signal from mixed-signal semiconductor specialist, Wolfson Microelectronics (LSE: WLF) this morning. On the positive side, second quarter revenues growth rose 31% on Q1 2009, to US$33.2 million. However, this was still way below the comparable period in 2008, when revenues hit $53.9 million. Perhaps more worrying for investors, Gross Margins slipped 1.2% to 50.5% from 51.7% in Q2 2008.

Cash balances did grow to over US$100 million, and Wolfson Electronics has no debt.

UK based provider of subsea solutions to the oil and gas industry Hallin Marine Subsea International plc (AIM: HMS) said it was able to secure a deal for its Sanko Angel vessel to provide support and services for a major oil and gas operator.

The Sanko Angel will provide offshore construction support to the operator’s oil and gas platforms and subsea infrastructure. Among other things, the 76 metre vessel will also be providing accommodation support to the client’s offshore crew, while Hallin’s own divers, engineers and technicians will undertake various tasks including saturation diving and Remote Operate Vehicle (ROV) services from the vessel.

Recruitment software specialist, Dillistone Group plc (AIM: DSG) climbed this morning after the company announced a contract win with GSI Executive Search, a subsidiary of The GMP Group of Singapore. The contract is for Dillistone’s “Filefinder9” plus ongoing support. Filefinder is an executive recruitment software product, which provides tailored workflow and round the clock support for its users.

Metal trader Wogen PLC (AIM: WGN) is recommending that shareholders accept the 41 pence a share in cash management buy-out proposal, the acquisition vehicle Sanctuary Partners Ltd announced. The management team contemplating had initially tabled a 36p offer on June 11, but raised it to 41p a fortnight later.

Games Workshop Group PLC (LSE: GAW), owner of the Warhammer tabletop miniature wargame franchise, has increased revenue in the year to end-May 2009 to £125.7 million from £110.3 million previously while pretax profit rose to £7.5 million from £1.1 million.

The company has reduced its net borrowings to £1.6 million from the previous year-end-figure of £10.1 million.

British Virgin Islands based CIC Energy Corp (TSX: ELC) announced it signed a development agreement with International Power PLC (LSE: IPR) with respect to the Mmamabula Energy Project (MEP) in Botswana.

This latest deal follows the September 2008 agreement in which the parties pledged to develop one or more power stations utilizing coal from the Mmamabula coal field.

Shares in computer based business training specialist ILX Group PLC (AIM: ILX) were lifted by the announcement it won considerable new business in the current financial year, including several major contracts from its competitors.

The stock was trading up 12 percent by midday.

Stockbrokerage Charles Stanley Group PLC (LSE: CAY) said the business has performed solidly since the beginning of the new financial year on April 1 2009 in markets that continue to be challenging, and income has been resilient across all three divisions Private Clients, Financial Services and Charles Stanley Securities.

Revenue for the three months to June 30 was 2.4 percent higher than in the previous first quarter at £26 million.

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Training group ILX lifted by ‘considereable’ new business wins

Shares in computer based business training specialist ILX Group PLC (AIM: ILX) were lifted by the announcement it won considerable new business in the current financial year, including several major contracts from its competitors.

The stock was trading up 12 percent by midday.

The new contracts total in excess of £500,000. The largest contract, which has been won from a competitor, is to train the graduate intake of a major European investment bank. Revenues from this client in 2009 are expected to be £250,000, the bulk of which will be billed during August and September.

Its unit CTG has also secured a contract, estimated to be worth £100,000, with a large global investment bank for its analyst training programme, which will run through the summer.

In addition, CTG is now the trainer of choice to two of the UK's leading private equity firms. In 2009, CTG will deliver the inaugural graduate programme for one, whilst the other has again chosen CTG to run its intern and analyst training courses.

CTG also now delivers public courses for two accounting professional bodies.

In a strategically important development, CTG will train the US recruits for the New York office of one of its key UK based investment banking clients, ILX added.

Chief executive Ken Scott commented: "The market remains very difficult, but the company is in good shape and continues to win market share."

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Investec raises £85.8 million to pay down debt

South African bank, Investec plc (LSE: INVP, JSE: INP) spiked lower this morning after the company announced that it would be undertaking a book building process to raise fresh capital to tidy up its balance sheet, only to recover quickly on strong demand for the new shares.

The FTSE 250 constituent fell as low as 388 pence before bouncing back to 420 pence, and settled back to 409 pence after it announced that the placing had been completed. Merrill Lynch placed 22 million shares at 390 pence per share, raising £85.8 million before expenses. The new shares represent 4.92% of the existing ordinary shares in issue.

Investec said it would use the proceeds to buy back debt at a discount to par.

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CIC Energy in development deal with International Power for the Mmamabula project in Botswana

British Virgin Islands based CIC Energy Corp (TSX: ELC) announced it signed a development agreement with International Power PLC (LSE: IPR) with respect to the Mmamabula Energy Project (MEP) in Botswana.

This latest deal follows the September 2008 agreement in which the parties pledged to develop one or more power stations utilizing coal from the Mmamabula coal field. It sets out the framewok under which International Power will take a 35 percent stake in the MEP and be responsible for the operations and maintenance of the power station component of the project.

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Charles Stanley says first quarter performance ‘solid’ in challenging market

Stockbrokerage Charles Stanley Group PLC (LSE: CAY) said the business has performed solidly since the beginning of the new financial year on April 1 2009 in markets that continue to be challenging, and income has been resilient across all three divisions Private Clients, Financial Services and Charles Stanley Securities.

Revenue for the three months to June 30 was 2.4 percent higher than in the previous first quarter at £26 million.

Total client funds under investment management or administration rose during the quarter by 10 percent to £9.9 billion from £9.0 billion at March 31.

“It is difficult to predict how much longer the current conditions will prevail. However, with a strong balance sheet Charles Stanley is well placed to take advantage of further acquisition opportunities,” the broker added.

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Games Workshop reports good full-year results

Games Workshop Group PLC (LSE: GAW), owner of the Warhammer tabletop miniature wargame franchise, has increased revenue in the year to end-May 2009 to £125.7 million from £110.3 million previously while pretax profit rose to £7.5 million from £1.1 million.

The company has reduced its net borrowings to £1.6 million from the previous year-end-figure of £10.1 million.

The results were positively impacted by favourable exchange rate movements in the period and the reduction of staffing levels.

Chief executive Mark Wells said: “In summary, we are pleased to have delivered a good set of results this year, significantly reducing our net debt. We believe that we have laid the foundations for steady growth and that the prospects for Games Workshop remain good.”

In the UK, North America and Asia Pacific the management teams remained focused on building the customer base and delivered sales growth.

Not enough progress was made in Continental Europe, particularly in Spain and Italy so in the second half Games Workshop made management changes to both of these businesses. The task of rebuilding their customer base has begun and the group expects these new teams to deliver growth within the next couple of years.

www.proactiveinvestors.co.uk

Wogen agrees MBO at 41p/share in cash

Metal trader Wogen PLC (AIM: WGN) is recommending that shareholders accept the 41 pence a share in cash management buy-out proposal, the acquisition vehicle Sanctuary Partners Ltd announced.
The management team contemplating had initially tabled a 36p offer on June 11, but raised it to 41p a fortnight later.

The deal represents a premium of 9 percent to Wogen's closing price of 37.5 pence yesterday and a premium of 71 percent to the closing price on June 11 2009, the last business day prior to the commencement of the offer period. The offer values the current share capital of Wogen at about £18.4 million.

The approach was made by the executive directors of the company and co-founder Colin Williams in respect of the issued share capital of the company not currently owned by the management team, certain other employees and connected persons. The team is being led by Damian Brousse and it controls approximately 61 percent of Wogen’s capital.

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Dillistone Group secures contract from The GMP Group of Singapore

Recruitment software specialist, Dillistone Group plc (AIM: DSG) climbed this morning after the company announced a contract win with GSI Executive Search, a subsidiary of The GMP Group of Singapore.
GSI Executive Search, as the name suggest, is an executive search business with offices in Singapore, Malaysia, Hong Kong, Thailand and China.

The contract is for Dillistone’s “Filefinder9” plus ongoing support.

Filefinder is an executive recruitment software product, which provides tailored workflow and round the clock support for its users.

www.proactiveinvestors.co.uk

BMO Global strategist sees gold rally continuing into 2011 by Dorothy Kosich, Mineweb.net

After performing well in recent months, BMO Capital Markets Bart Melek says "gold is likely to remain range-bound near $950/oz into 2010."

BMO Research has also upgraded its industrial commodity price outlook "due to stronger-than-expected Chinese economy and commodity imports, convincing signs that the U.S. outlook has improved, re-stocking and expectations for a weak U.S. dollar."

The massive U.S. debt and concerns about the strength of the U.S. dollar "bode well for gold long term," Melek advised.

"Notwithstanding any possible short-term correction, gold's impressive seven-year run is expected to continue well in 2011," BM Research predicted.

"Gold typically leads inflation by 12-18 months, so investors would be well advised to look toward improvement in monetary aggregates as leading indicators of inflation and higher gold prices. BMO Research expects higher trend inflation over the longer term."

Melek also suggested that central banks "could be a very positive force for gold," as central banks around the world will likely put more gold in their reserves. Even more important, China has been acquiring gold in its official reserve.

"Despite the large purchases of gold by China since 2003 and the fact that it is now the fifth-biggest holder of metal in the world, at 1.5%, the Middle Kingdom has very little of the precious metal relative to its total foreign exchange holdings when compared to other key nations," Melek said. "It needs much more gold to match other nations."

BMO also forecasts an increasingly bright outlook for other commodities.

"Investors are now increasingly convinced that the global economy has already hit bottom and is on the way up," Melek said. "Better demand prospects along with the lack of capex commitments brought on by the credit crisis and ensuing recession should drive commodity prices higher next year and beyond."

Despite improved conditions, Melek advises, "the commodity rally will likely partially unwind in the near term."

"However, despite improved sentiment and the expectations of better economic conditions, overall activity is still quite poor outside of China and markets are worried about the recovery in the U.S., albeit these concerns have waned in recent days," he added. "As such, the commodity rally may partially unwind in the near term. Any possible correction is likely to be relatively modest and fairly short-lived."

Among the commodity price change increases BMO has revised for this year are copper, up 8.4% to $2.09 per pound; lead, up 14.5% 69-cents per pound; and uranium, up 5% to $52 per pound. Changes to short-term forecasts for the third quarter-2009 include an 18.4% increase in the copper price to $2.25/lb; and a 25% increase in the lead price to 75-cents per pound.

Meanwhile, the third-quarter platinum price forecast was increased 20% to$1,200/oz. For the long-term, BMO has increased its platinum price forecast by 9.5% to $1,148/oz.

Melek predicts copper, zinc, nickel, iron ore and oil prices will be lifted "as demand improves and supply growth continues to be modest."

Nevertheless, Melek noted that many metals prices remain well below production costs. However, he added, "This implies a sizable rebound once demand starts turning materially, as it is not possible to have a price environment where a significant portion of operators have a cost structure above the selling price over the longer term."

Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

www.proactiveinvestors.com

Mongolian Government allows Centerra Gold's Boroo gold operations to resume by Dorothy Kosich, Mineweb.net

Despite the fact the Boroo Mine is not permitted to resume its heap leach gold process, Centerra Gold CEO Steve Lang said Monday Boroo can still mine, mill and process gold.

A decree by the chairman of the Minerals Resources of Mongolia has annulled an earlier suspension order imposed on Boroo by the Mongolian Government on June 12^th.

However, the lifting of the suspension will not affect the Boroo heap leach facility, which is subject to an additional permitting process and remains shut-down. Nevertheless, Lang told Mineweb Monday Boroo can still process gold.

The company is working with Mongolian regulators to obtain final permits that will allow Centerra to resume the heap leach operation.

Boroo has not produced gold since May when workers went on strike demanding higher wages.

In a recent column, retired Mongolian politician, historian and political writer Baabar suggests the Boroo strike was motivated by more than wages. "They get paid four to five times higher than the national average of about US$250 of this poor country," Baabar said. "But they claim compensation on the grounds that Mongolians are working in sweatshop conditions for little pay and Mongolian wealth belongs to Mongolia, not to Canada." Centerra is based in Toronto.

The striking workers are seeking US$10 million in compensation, Baabar claims, while Centerra is prepared to pay US$1.6 million. Meanwhile, Baabar notes Centerra Gold is the second highest taxpayer in the country, after the Mongolian-Russian joint venture Erdemet, one of the largest mining and processing facilities in Asia.

However, Baabar also suggested both Moscow and Beijing are interested in evicting western investments and geopolitical interests from Mongolia, or at least freeze the use of Mongolian natural resources so that nobody can use them if Russia or China cannot benefit from them. He asserts that China and Russia have created a fifth echelon of decision-making within the Mongolian Government, as the country has allowed corruption to grow and develop.

"More than 2,000 foreign incorporated companies have operations in the territory of Mongolia from which 50% is incorporated by Chinese," Baabar said.

"There are 72 countries in the world that export mineral resources," he notes. "Mongolia, along with Zimbabwe and Venezuela, is perceived by investors to pose the highest levels of investment risks anywhere in the world."

‘Western investors have already gotten tired from Mongolia," Baabar asserted, adding that most major western mining companies have left the country or are preparing to leave.

"It is obvious that no good corporate citizen will replace these companies," he concluded.

Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

www.proactiveinvestors.com

Canadian Ministers release Arctic resources development strategy by Dorothy Kosich, Mineweb.net

Canadian Cabinet Ministers have released Canada's strategy to exercise the country's sovereignty over the Canadian Arctic as well as promote economic development of energy and minerals in the far North.

Canada's Minister of Indian Affairs and Northern Development Chuck Strahl and the Minister of Foreign Affairs Lawrence Cannon Sunday released Canada's Northern Strategy, a document and website outlining the Canadian Government's ongoing work and future plans for Canada's North. They were joined by Minister of State for Science Gary Goodyear for the policy announcement.

"We have a clear vision for the North as a healthy, prosperous region within a strong and sovereign Canada and we are acting to ensure this vision is realized," Strahl said at a news conference in Gatineau, Quebec.

"In addition to advancing our Northern interests at home, our Government's Northern Strategy builds on our international partnerships," Cannon said." Through our robust Arctic foreign policy, we are delivering on the international dimension of the Northern Strategy, affirming our leadership as an Arctic power and our stewardship and ownership in the region."

Canada, Russia, Denmark, Norway and the United States are all competing for their share of oil and gas and mineral reserves. The U.S. Geological Survey estimates that 30% of the world's undiscovered gas and 13% of the world's undiscovered oil reserves may be found in an area north of the Arctic Circle.

In the Canadian Northern Strategy, Canadian officials note, "Mining activities and major projects ...are the cornerstones of sustained economic activity in the North and the key to building prosperous Aboriginal and Northern Communities."

"Diamond mining in the North is now a [Cdn] $2 billion per year industry, which is about half of the economy of the Northwest Territories."

"The large-scale projects already underway barely scratch the surface of the North's immense store of mineral, petroleum, hydro and ocean resources," the document said. "However, the full extent of the natural resources potential in the Arctic is still unknown."

"The Government of Canada announced a significant new geo-mapping effort-Geo-Mapping for Energy and Minerals-that will combine the latest technology and geoscientific analysis methods to build our understanding of the geology of Canada's North, including in the Canadian Arctic Archipelago," the strategy stated. "The results of this work will highlight areas of mineral and petroleum potential, lead to more effective private sector exploration investment and create employment opportunities in the North."

The Cdn$100 million geo-mapping project in the North is aimed at informing and guiding the private sector in its mineral and petroleum exploration.

Strahl also advised the government would improve regulatory processes across the North and help "build investor confidence in the North and increase economic opportunities for northerners and all Canadians."

The strategy also calls for establishing conservation areas and national parks in the North, and allocates $15 million over three years to create and expand protected areas in the Northwest Territories.

The document also identifies mine properties and deposits in the Northwest Territories and Nunavut, which include copper, silver, gold, diamond, rare earths and uranium properties.

Mineweb is a web-based international mining publication focusing on mining financial and corporate news and comment.

www.proactiveinvestors.com

Zargon Energy Trust to acquire Churchill Energy

Zargon Energy Trust (TSX: ZAR) said it has entered into an agreement to acquire Churchill Energy Inc (TSX-V: CEI) in a cash and share deal valuing Churchill at approximately C$15.0 million, including the assumption of approximately C$5.8 million of net debt.

For each share held Churchill shareholders will receive either 0.01363 trust units of Zargon for a deemed value of C$0.22, $0.22 in cash or a combination thereof, with the cash payment capped at C$4.6 million. The price represents a premium of approximately 90 percent over the five day weighted average trading price of the Churchill common shares ending on July 27 2009.

Churchill is currently producing approximately 400 barrels of oil equivalent per day of which approximately 61 percent is from the operated Grand Forks, Brazeau and Jarrow/Killam properties in Alberta.

It also controls proved and probable reserves of 0.85 million of barrels of oil equivalent which are comprised of 0.57 million barrels of oil and natural gas liquids and 1.71 billion cubic feet of natural gas.

Churchill has working interests varying from 56 to 100 percent in three medium and heavy oil Mannville and Sawtooth pools in the Grand Forks area of Southern Alberta where significant incremental waterflood and tertiary recovery potential has been identified. It also has a 95 percent working interest in the light oil Brazeau River Nisku I pool of West Central Alberta where significant incremental waterflood recovery potential has been identified.

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Hydrogenics receives orders for two fuel cell power modules

Canadian hydrogen power systems manufacturer Hydrogenics Corporation (TSX: HYG)(NASDAQ: HYGS) announced it has secured two delivery contracts for two fuel cell power module solutions.
The HyPM Rack systems will be delivered to customers in France and Greenland.

One HyPM Rack system will be installed at the headquarters of French human resources consulting firm Abalone Group to generate energy and supplement photovoltaic and wind power. The other system will go to Nukissiofiit, Greenland’s national energy company. This is part of the H2KT project, aimed at analyzing the potential of utilizing hydrogen for energy storage and management in Greenland.

Hydrogenics is trying to take full advantage of the opportunity to highlight the importance of hydrogen in energy storage and management.

"These are exciting developments that demonstrate the growing importance of hydrogen for energy storage and management. We continue to believe that renewable energy solutions offer a large opportunity for Hydrogenics and are pursuing this market aggressively," said CEO and President Daryl Wilson.

Hydrogenics did not specify the financial details of the placed orders.

The company closed with a 7.7% gain yesterday.

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CIC Energy in development deal with International Power for the Mmamabula project in Botswana

British Virgin Islands based CIC Energy Corp (TSX: ELC) announced it signed a development agreement with International Power PLC (LSE: IPR) with respect to the Mmamabula Energy Project (MEP) in Botswana.

This latest deal follows the September 2008 agreement in which the parties pledged to develop one or more power stations utilizing coal from the Mmamabula coal field. It sets out the framewok under which International Power will take a 35 percent stake in the MEP and be responsible for the operations and maintenance of the power station component of the project.

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Braemore expects BHP Billiton to finish review of Leinster nickel tailings project in third quarter

Braemore Resources PLC (AIM: BRR) said BHP Billiton PLC’s (ASX: BHP; LSE: BLT) technical and financial review on the company’s scoping studies for the Leinster nickel tailings project is expected to be completed during the third quarter of 2009.

BHP, on whose property some 380 kilometres north of Kalgoorlie, Western Australia, the project is to be located, had requested some additional data in the year to date.

Braemore CEO Leon Coetzer commented, “The Leinster project is moving steadily forward. We continue to be cautiously optimistic of the project's merits, and have maintained our area of focus amid the recently announced corporate activity.”

Successful completion of a feasibility study will be followed by development and operation of commercial plants to process sulphide nickel and to produce an intermediate concentrate estimated to contain 61and 65 percent nickel.

Subject to certain conditions, BHP Billiton has the right to buy the concentrates and to acquire a 50 percent interest in the project when it is up and running.

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China markets up for a fifth day led by steel and cleantechs

China markets rose for a fifth day led by steel makers and cleantech stocks. The Hang Seng Index was up 1.8 percent. The Shanghai Composite Index added 0.1 percent. Taiwan's Taiex Index rose 1.6 percent, closing at an 11 month high.

According to the China Petroleum and Chemical Industry Association (CPCIA), consumption of crude oil dropped by 2.9 percent year-on-year in the first half of 2009, much slower than the 6.5 percent drop in the first quarter.

China's machinery industry output expanded 7.28 percent year-on-year in the first half of 2009, the China Machinery Industry Federation (CMIF) said yesterday. Electronic instrument and machinery stocks rose 2.84 percent and 2.03 percent respectively on the news.

Beijing Yanjing Brewery (SZ:000729) rose 1.5 percent after reporting profit increase of 25 percent in the first half this year, boosted by sales.

Airlines performed well, with China Southern Airlines (HK:1055) surging 12 percent, and China Eastern (HK:0670), which recently announced its planned takeover of Shanghai Airlines, rising 9.95 percent.

Steel shares rise high, seven stocks hit trading cap

Steels shares gained 7.41 percent on average, with Boashan - China's largest steel producer, rising 8.7 percent and seven companies surged to the 10 percent cap, including: Angang 8.2 in Hong Kong (SH:000898, HK:0347), Inner Mongolia BaoTou Steel Union Co. (SH:600010), Jinan Iron and Steel Company Ltd. (SH:600022), Nanjing Iron & Steel (SH:600282), Anyang Iron & Steel Inc. (SH:600569), Liuzhou Iron & Steel Co. (SH:601003) and SGIS Songshan Co. (SZ:000717)

Baoshan Steel, China's biggest steelmaker, rose 8.7 percent to 9.40 yuan, the biggest gain since Feb. 16. Angang Steel Co., the No. 2, jumped 10 percent to 17.11 yuan. Wuhan Iron & Steel Co., the third biggest, advanced 5.9 percent to 11.22 yuan. Benchmark Chinese steel prices reached the highest since Feb. 5 today, data from Beijing Antaike Information Development Co. showed. Steel prices have gained 25 percent since April 1.

Wind-power, smart-grids and cleantech rise on Premier's words

Chinese Premier, Wen Jiabao, told the press that China should intensify efforts to study smart-grid technology for wind power and to boost the use of the renewable energy.

Xinjiang Goldwind Sci & Tech Co. (SZ:002202) the nation's biggest maker of wind turbines surged 10 percent in Shanghai, and as did Shanghai Electric Group (SH:601727, HK:2727) - a company that could benefit from investment in China's grid.

Other grid related companies that rose included: Dongfang Electric Corporation Limited (SH:600875, HK:1072) which rose 6.7 percent on Shanghai and 8.3 percent Hong Kong, and Northeast Electric Development Co. Ltd. (HK:0042) rose 6.7 percent.

Other cleantech stocks that rose today included Singyes Solar (HK:0750), a maker of PV curtain walls, which rose 15.3 percent. GreaterChina Technology Group (HK:8032), which is planning to sell energy efficient air conditioning across mainland China, also rose 2.15 percent.

Petrol price cut by government

China will cut petrol prices tomorrow by RMB220 yuan (US$32) per metric ton reflecting a drop in global crude costs. China only recently raised the price of petrol by 11 percent on June 30.

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Will Pepsi buy out Britvic? by Alec Hajinoff

Despite the current economic situation in the country, the sales of well known soft drinks brands seem to hold up somewhat well. This benefits Chelmsford-based Britvic PLC (listed in London under BVIC, capitalised at £681m). The figures in the company’s interim half yearly results ending 12th April ’09 look encouraging – revenue, earnings and dividends are all up on the last reporting period. What is of medium-term interest to most investors, though, is to consider how far Britvic can still go in this fairly low-margin, mature business. Will it be bought out by Pepsi as some investors hope, or will it go on to build a large European business with a portfolio of well-known brands as other, more ambitious investors predict?

The company is currently the second largest soft drinks manufacturer and distributor in the UK (Coca Cola Enterprises holds the top spot). Britvic has a large and diversified customer base supplying drinks to over 200,000 outlets nationwide including Tesco, Sainsbury, Asda and WM Morrison. With the acquisition in 2007 of C&C Group in the Republic of Ireland for £170m, Britvic now has a sizeable and potentially strong business there. Other international operations are fairly immaterial (£9m revenue in half year to12th April ’09).

The company’s main revenue drivers are such seemingly recession-resilient brands as Pepsi, 7UP, Gatorade, Tango, Robinsons, Fruit Shoot and J2O. Britvic’s most significant commercial partner by a large margin is Pepsi Co; this partnership has so far worked out well and Britvic has several long-term committed bottling and distribution agreements with Pepsi Co in the UK and Ireland for such brands as Pepsi, Gatorade and 7UP (UK agreement is due for renewal in 2023 and Ireland agreement runs until 2015).

Britvic in its most recent history has been a highly geared company with almost no equity and all capital requirements being met by debt. The company currently has £443m worth of debt capital (£11.6m of this being current, in unsecured bank loans); pre-tax cost of this debt is 6.10%. The interest cover ratio is 3.4.

Current Assets have generated £483.2m worth of revenue in six months ending 12th April 09, an uplift of 6.3% over previous reporting period. And although the gross margin has slipped 2 percentage points compared to last reporting period we still end up with EPS of 6.7p, an increase of 11.7% over EPS in previous reporting period. This was achieved by well controlled selling and admin costs and reduced finance costs. The net income margin Britvic generated was 5.7% of revenue (adjusted annual basis), well below the industry average of 11%. This type of income margin allows us a Return on Capital of 12.5% (before exceptionals); compare this to the company’s cost of capital of 6.10% and you have a fairly profitable business. Had the net income margin been the industry average we would be looking at ROC of 24% - this would make for a lot more excitement.

Britvic’s total assets stand at £836m (£786.4m last reporting period), mainly due to increase in currency swaps. With total liabilities being £836.5m we have a negative number for total assets. Current Ratio also points to balance sheet weakness; it equals 0.84, as current assets do not cover current commitments. Cash is at a pretty lowly £3m (£15.2m in last reporting period).

Another point of interest on the Balance Sheet is the company’s £42.3m pension reserve deficit, an increase over the last reporting period of £28.1m. The company has now committed to paying down £10m annually, on 31st December of ’09 and ’10 to eliminate this gap.

Net cash-flow from operating activities for 6 months to 12th April 09 came in at £14.1m, down by 21.7% on last reporting period. The cash flow was greatly affected by a £12m restructuring charge invested in the Irish business. The increase in Capital Expenditures is attributable to the same cause.

The declared dividend in the reporting period was set at £19m or 8.7 pence a share, yielding just over 4% on an annual adjusted basis.

So, given all of the above, does the market price Britvic fairly? It seems so; given the company’s pay out ratio of 87% the dividend discount model gives us an intrinsic value for Britvic’s stock in the range of 350-360 pence a share. Evidently, there is a small upside to the current stock price of 322 pence a share.

The firm value could potentially increase if management achieves sizeable improvement in net profit margins and increases its growth. So far the revenue has been increasing at a pedestrian 5.5% a year over the last five years, while income has been dropping by 8.7% a year with a resulting steady decrease in dividends.

The key to sustainable value creating in Britvic’s business is brand innovation and successful brand marketing (last year’s advertising budget stood at 7% of revenue, likely to be maintained going forward). The company is innovating, in the last six months Britvic launched two new products: “Drench” - adult juice drink on the go and “Robinsons Be Natural” - brand extension. Other launches will concentrate on new pack architecture, such as “Tango with Added Tango”. “Lipton Ice Tea” has also recently been added as extension of Britvic’s relationship with Pepsi Co (Pepsi now owns around 5% of Britvic).

Elsewhere Britvic are at work improving efficiencies, restructuring their Irish business to the tune of £12.8m last year and reducing head count there by 145 (Cork factory has now been shut and investments in Dublin factory will enable it to produce the popular Robinsons drinks locally). Potential synergies with Britvic UK should add up to around EUR27m by 2011.

Will Pepsi buy out Britvic? It may do, the company is highly dependant on good working relationship with Pepsi Co, which places Pepsi in good negotiating position, assuming the economics of the deal could be worked out. Can Britvic develop a larger European business? Danone and Nestle will without a doubt be in the way, but Britvic has the necessary market expertise to venture, although their distribution capabilities in Europe a less certain.

What seems clear is that the status quo presents no meaningful upside so come the general economic recovery, where next for the company?

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Rolls-Royce invests heavily in five new facilities and two research programmes by Andre Lamberti

Turbines and aircraft engines maker Rolls-Royce PLC (LSE: RR) has announced plans to invest in five new factories , four in the UK and one in Singapore, as well as in two advanced research programmes in the UK, enabling it to respond to anticipated growth in its aerospace and civil nuclear markets.

Rolls-Royce will invest over £300 million in the four UK facilities. It will also contribute approximately £95 million to the research programmes, with the UK government footing £85 million of the cost.

In the UK, Rolls-Royce will invest in a new casting facility for single crystal (SX) turbine blades to develop new, high-productivity manufacturing processes before incorporating them into production. The factory will manufacture turbine blade castings for the company's most modern, high-thrust engines.

It will also establish a manufacturing facility to make discs, critical rotating parts used in fans, compressors and turbines. The factory is to deliver a step-change improvement in the manufacture of fan and turbine discs for commercial and military aero engines.

Rolls-Royce will extend its wide chord fan blade (WCFB) facility in Barnoldswick, where it currently manufactures large WCFBs for commercial aircraft, to manufacture advanced military blades, to meet future demand from its involvement in the engine programme of the Lightning Joint Strike Fighter (JSF) aircraft.

The company is providing hollow blisked fans for the LiftSystem on the VSTOL (Vertical/Short Take-Off and Landing) version of the aircraft and for the F136 conventional engine.

Additional capability for the manufacture of civil wide chord fan blades will be located in a new factory in Singapore announced separately today, which will complement the existing WCFB facility at Barnoldswick.

The fourth UK facility the group will invest in is a new factory to manufacture, assemble and test components for new civil nuclear power stations, including pressure vessels, heat exchangers and other large and complex reactor parts. The facility will have strong links with the Nuclear Advanced Manufacturing Research Centre, announced by the UK government on July 15 2009, in which Rolls-Royce will be the leading industrial partner.

Rolls-Royce and its partners are investing in a Rolls-Royce-led research programme valued at around £90 million that is central to the development of low carbon aircraft engine technologies. The UK government will provide £45 million through its Technology Strategy Board (TSB) to support the research. The TSB is currently considering a research programme called SILOET (Strategic Investment in Low Carbon Engine Technology), which is expected to deliver a substantial improvement in CO2 emissions and hence engine fuel economy.

The second research project is called SAMULET (Strategic Affordable Manufacturing in the UK through Leading Environmental Technologies), a Rolls-Royce-led collaborative programme to accelerate the development of manufacturing and product technologies.

It will focus on productivity and environmental improvements, including efficient advanced manufacturing processes and lower engine fuel consumption. The programme will be closely linked with the advanced manufacturing research centres. It will be valued at up to £90 million over four years and is receiving support of £28.5 million from the TSB and £11.5 million from the Engineering and Physical Sciences Research Council, with further support under discussion with regional bodies.

It announced separately that in Singapore, the company will build a new WCFB factory, located at the group’s Seletar Campus alongside the previously announced `Facility of the Future', which will test and assemble Trent aero engines.

Total investment in the Seletar Campus, including investment in the WCFB factory, will exceed around £300 million. It will create approximately 500 new jobs when fully operational, bringing the number of people employed by the group in Singapore to around 2,000. Construction of the Facility of the Future and all other elements of the campus, including a regional training centre, will begin in the first quarter of 2010.

The new factory will be the first outside the UK to manufacture Rolls-Royce hollow titanium WCFBs.

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Hallin Marine lands US$6.5 vessel deal

UK based provider of subsea solutions to the oil and gas industry Hallin Marine Subsea International plc (AIM: HMS) said it was able to secure a deal for its Sanko Angel vessel to provide support and services for a major oil and gas operator.

The Sanko Angel will provide offshore construction support to the operator’s oil and gas platforms and subsea infrastructure. Among other things, the 76 metre vessel will also be providing accommodation support to the client’s offshore crew, while Hallin’s own divers, engineers and technicians will undertake various tasks including saturation diving and Remote Operate Vehicle (ROV) services from the vessel.

"We are pleased to be able to announce this contract award with a major oil & gas operator and look forward to providing a professional solution for the offshore operations,” said Managing Director of Hallin Marine’s Eastern Division Jon Attenburrow.

The contract, worth USD 6.5 million plus additional service options, calls for an immediate start and will run well into Q4 2009.

Hallin Marine recently lost almost a quarter of its value following a year on year decline in margins for H1 2009.

The company was up 5% on today’s news, surging to 105p per share.

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