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Alan Green a research specialist presents a compelling investment case for ECR Minerals #ECR & Eddie Stobart #ESL, two very different companies on StockBox Research Talks.
Rutherford Health (RUTH) has secured a diagnostics agreement with Somerset NHS Foundation Trust that is worth £19.1m over ten years, although it is initially for five years. Rutherford will supply imaging services from a facility in Taunton, which will be developed in partnership with Equitix. The service should start in the second half of 2021.
Good Energy (GOOD) says that it remains profitable, although smaller business energy demand was lower in the second quarter. Gross margins have been hit because excess energy had to be resold. Operational efficiencies have offset some of this effect. Cash collection has been strong. Four-fifths of customers have been transferred to the Kraken customer services system. This will help to reduce costs.
Shepherd Neame (SHEP) has negotiated additional bank facilities. Total debt facilities are £132.5m. The brewery has been generating income from increased sales to supermarkets and for export. The majority of the company’s pubs should reopen by the end of July.
Cannabis-focused investment company Greencare Capital (GRE) has raised £1.37m at 50p a share. That is double the original flotation price. Management is hopeful that it will make an initial investment in its favoured acquisition target in the near future.
NQ Minerals (NQMI) says that plant production levels at the Hellyer gold mine increased by 44% to more than 1.3 mtpa. NQ has completed the acquisition of the Beaconsfield gold mine in Tasmania.
British Honey Company (BHC) says sanitiser sales have enabled the company to achieve sales of 240% of budget in the past three months. BHC has swapped 4.5% of its shares for a 10% stake in List Distillery LLC. BHC has an option to buy the rest of the company for £4.5m plus up to £500,000 in contingent consideration.
Capital for Colleagues (CFCP) had an NAV of £7.55m (48.9p a share) at the end of February 2020.
Tectonic Gold (TTAU) has changed its corporate adviser from Peterhouse to VSA. Tectonic has published full year figures to June 2019 and interims to December 2019. NAV was £2.49m at the end of 2019.
Wishbone Gold (WSBN) generated sales of $3.64m of sales in the first quarter of 2020, compared with $3.85m in the same period last year. In 2019, revenues were $10.7m.
Human Brands is selling some of its brands, including Shinju Whisky, to Rogue Baron in return for shares and Gunsynd (GUN) will have its £379,000 convertible loan note novated to Rogue Baron, which has been granted EIS advanced reassurance. Rogue Baron plans to float on a UK market and this could trigger the issue of further shares to Gunsynd.
First Sentinel (FSEN) has supplied a £300,000 loan facility to Vox Markets. This is convertible into shares. So far, £250,000 has been advanced. Loan facilities totalling £500,000 have been provided to Ridercam Systems. A £130,000 investment has been made for a 7.4% stake in investment company Malaika. The company’s Australian subsidiary has provided a loan facility to energy producer Direct Energy Holdings.
Ecovista (EVTP) was withdrawn from the AQSE on 1 July. The day after it published interim figures to February 2020. There was £42,000 in cash and this should cover general running expenses. Management says that being quoted cost £60,000 a year. NAV is £735,000.
Formerly known as Welney, Quetzal Capital (WENP) has been readmitted to the market following a share consolidation of 100 existing shares into one new share and placing raising £22,000.
Cambridge Cognition (COG) continues to win new contracts and the first half order intake was £4.9m. The digital health business has increased its contracted order book to £7.5m. The company is on course to make a much lower loss in 2020.
Construction disputes and expert witness services provider Driver (DRV) improved its profit in the first half thanks to a good performance from its Asia Pacific businesses. However, the Middle East is still a problem and a strategic review is underway. Net cash was £3.3m at the end of March 2020 and it has increased since then. There is no dividend. The second half will be tougher, though.
Forex provider Equals (EQLS) continues its strong growth record in 2019. Trading levels were hit by the COVID-19 lockdown in April and May, but June’s revenues per day recovered to a similar level to June 2019. The administration of Wirecard has had limited effect on business.
AFC Energy (AFC) is raising £31.6m at 16p a share. This will be used to invest in manufacturing for the H-Power fuel cell systems and employing additional staff for the deployment of the technology in the electric vehicle and construction markets. There will also be cash put into the development of the AlkaMem anion exchange membrane and the HydroX-Cell solid-state membrane fuel cell system.
Telecoms equipment supplier Filtronic (FTC) says it grew revenues from continuing operations in the year to May 2020 and it made a small underlying profit. Delays to deliveries mean that it is difficult to assess the outcome for the current financial year.
Redx Pharma (REDX) is raising $29m through a convertible loan note issue to Redmile and Sofinnova Partners and £812,000 via a share issue to Sofinnova.
Robinson (RBN) is paying an interim dividend of 3.5p a share. The packaging supplier did not pay a final dividend and the interim will be payable on 30 July to make up for that. First half trading was in line with expectations. Full year pre-tax profit is expected to be flat at £2.3m.
Trading in Lookers (LOOK) shares has been suspended because it has not published 2019 results. They should be published in August. An investigation by Grant Thornton suggests that there will be a £4m non-cash write-off relating to fraud with a further £15m non-cash write-off for incorrect or inconsistent accounting, mainly relating to stock.
Chapel Down Group (CDGP) increased sales last year, but the loss was also higher. Sales of wine and beer grew and revenues from continuing activities improved from £12.86m to £14.8m, while the loss more than doubled from £850,000 to £2.09m. the Chapel Down Gin Works in Kings Cross has been closed. There was still £2.47m in the bank at the end of 2019, even after the loss and £12m of investment in fixed assets and land. There are 428 acres of planted vineyard. Wine stocks have also increased following a good harvest. The Ashford brewery has been completed and full brewing capacity will be available before the end of the year. Martin Glenn is succeeding John Dunsmore as chairman.
Rutherford Health (RUTH) has entered into a £55m development framework agreement with Equitix, an investor in infrastructure assets. This will finance up to five diagnostic facilities in the UK. Each will be owned by a special purpose vehicle funded by Equitix and operated by Rutherford. An initial agreement has been made with a NHS Trust. Rutherford also announced a collaboration with Panthera Biopartners, which will be able to use Rutherford’s clinics for trials of potential cancer treatments.
Racing recommenced at Newbury Racecourse (NYR) on 11 June. Three race meetings have been held and five more are planned by the end of August. No public are being admitted. Revenues are coming from media rights. The Rocking Horse nursery reopened earlier this month.
Good Energy (GOOD) is increasing its investment in Next Green Car, which owns Zap-Map, to 50.1% through the exercise of a convertible loan.
BWA (BWAP) has spent £120,000 of the initial commitment of £250,000 for two rutile licence areas in Cameroon. Drilling programmes are being designed. COVID-19 has hampered progress with the company’s Canadian interests.
Coinsilium Group Ltd (COIN) says that investee company Factom Inc has filed for Cahpter 11 bankruptcy protection because of its failure to raise more cash. It could exit Chapter 11 protection within three months if things go to plan.The investment was valued at £237,000.
IamFire (FIRE) is reviewing strategies having raised £500,000 at 2.5p a share. Each share comes with two warrants with an exercise price of 10p a share. The investment focus is natural resources, mining and disruptive technology.
SAPO (SAPO) is still seeking a broadband investment and net assets were £1.1m at the end of 2019. At 3.2p a share, SAPO is valued at £6m.
Gunsynd (GUN) has invested £137,750 in Rincon Resources, which gives it a stake of 28.4%. Rincon has the rights to three prospective gold and base metals projects in Western Australia. Gunsynd has sold its stake in United Oil and Gas (UOG).
All Star Minerals (ASMO) has raised a further £200,000 at 0.02p a share, taking the total raised in share issues to £280,000. Convertible loan notes worth £55,000 have been converted into 275 million shares with 34 million shares at 0.01p each to pay liabilities. This means that more than 1.3 billion shares have been issued, which has nearly doubled the shares in issue.
Recent trading at floorcoverings supplier Victoria (VCP) has exceeded expectations. Manufacturing has restarted in all the company’s plants. All the main countries are doing relatively well considering the disruption due to COVID-19 and in the most recent three weeks revenues were 85% of pre-COVID-19 budget. The UK carpets business is only just getting going again. Net debt is £370m, which is predominantly bonds that last until July 2024. Cash generation can reduce debt, although management is likely to look for potential acquisitions.
Wynnstay Group (WYN) reported a decline in interim revenues but that was due to lower commodity prices. The interim dividend has been maintained at 4.6p a share. The agriculture division maintained its operating profit, but there was an improved profit from the merchanting division. Pre-tax profit edged up from £4.3m to £4.5m. Shore Capital has reinstated forecasts. It expects a pre-tax profit of £6.7m, down from £7.9m. This id a deliberately cautious figure.
MSQ Partners has launched a 0.5p a share bid for Be Heard Group (HRD) and that values the digital media company at £6.2m. The acquirer was the subject of a buyout last year. The combined business will have the backing of Lloyds Development Capital and the greater scale will help to win larger clients.
United Oil and Gas (UOG) says that average production from the Abu Sennan concession in the first two weeks of June was 13,900 boepd, of which its working interest is 3,060 boepd. That is 69% higher than the average daily figure in April. The 2P reserves at Abu Sennan have been increased by 12.55 to 13.5MMboe
Transense Technologies (TRT) has transferred its iTrack tyre monitoring business to a Bridgestone subsidiary for $1m and it will receive quarterly royalty revenues for the next ten years. That royalty would be £150,000/ quarter currently, but growth should be faster under Bridgestone. Two Transense directors are moving with iTrack. This leaves Transense with its SAWsense (wireless tyre sensor technology) and Translogik (tyre test equipment) businesses. Transense could move into profit in 2021-22.
A positive trading statement from allergy vaccines developer Allergy Therapeutics (AGY) led finnCap to increase its 2020 pre-tax profit forecast even though revenue growth is slower than expected. A 2019-20 profit of £2.9m is expected, partly due to the timing of research spending. Allergy is expected to move back into loss in 2020-21.
Beximco Pharmaceuticals (BXP) increased its revenues and pre-tax profit in the nine months to March 2020, with particularly strong growth in the third quarter. There is some disruption to international distribution and supply and full year revenue growth will be lower than originally expected.
Dekel Agri-Vision (DKL) reported flat full year revenues of €20.9m for 2019. The loss was barely changed at €3.29m. There has been a decline in the palm oil price in recent months, which will hamper performance this year. The cashew project is making good progress.
Strong first half trading at BATM Advanced Communication (BVC) has led to broker upgrades for 2020. The biomedical division has done particularly well, but the networks and cyber division has also done better than expected. Stifel is raising its revenues forecast from $138m to $155m, while the EBITDA estimate has been increased by one-third to $13m. Shore Capital expects to increase forecast revenues by 17% to around $154m with a significant improvement in EBITDA expected.
Construction services provider nmcn (NMCN) made a positive start in the first quarter of this year. Revenues were 4% ahead at £97.9m and pre-tax profit 6% higher at £1.8m. This period was hardly affected by the lockdown. Since the end of March, work has been at three-quarters of normal levels. There was £11.8m in cash at the end of March 2020. The interims will be reported on 6 August and there should be guidance for the full year outcome.
Tex Holdings (TXH) expects to make further cost savings and consolidate more of its activities. The plastics division is operating at 70% of expected levels, while the engineering division has suffered delays but not lost business.
Standard list shell Boston International (BIH) had £302,000 in cash at the end of 2019. It is still assessing the proposed acquisition of invoice factoring company Alexanders Discount Ltd
Rainbow Rare Earths (RBW) has raised £1.25m at 3p a share. The cash will accelerate trial mining at the Gakara rare earth project in Burundi.
The 2019 figures of Ross Group (RGP) include pharmaceutical grade Chitin producer Archipelago Aquaculture Group (AAG) for the first time. There were restructuring and impairment costs relating to the acquisition. Pilot production is being implemented and there are joint venture discussions with the company that has developed the Ionic Liquid extraction process licenced by AAG. There was a £3.6m loss in 2019.
SMALL CAP AWARDS 2020
Company of the year: Volex
Technology company of the year: Avacta
Impact company of the year: ITM Power
IPO of the year: Diaceutics
Transaction of the year: Kape acquisition of Private Internet Access
Executive director of the year: David Cicurel (Judges Scientific)
Innovative financing of the year: Yu Group
Journalist of the year: Joanne Hart (Mail on Sunday)
Analyst of the year: Lorne Daniel (finnCap)
VCT manager of the year: Amati
UK smaller companies fund manager of the year: JPM UK Smaller Companies
Lifetime achievement award: Giles Hargreave
Kibo Energy PLC, the multi-asset, Africa focused, energy company, is pleased to provide a corporate and operational update and to announce that it has signed a binding term sheet with an investment consortium consisting of several high net worth entities and individuals, including two of the Company’s largest shareholders, for up to £1,000,000.
· £1 million term sheet signed to continue development of diverse energy project portfolio comprising 1255 MW generation capacity approaching commercialisation
· Primary focus on Benga in Mozambique, where it hopes to deliver 350 MW to 400 MW
o On track to finalise a PPA with Baobab at the end of September 2020
o Continued productive engagement with EDM with a Power Purchase Agreement “PPA” planned to be finalised before the end of 2020
· Progress in the UK where it is advancing various funding and commercial opportunities and anticipates bringing Bordesley into production before the end of 2020
· Headway in Tanzania, where it is awaiting further guidance from authorities regarding a new tender for coal fired power projects
· Board and management have agreed a 40% pay cut for next three months
Louis Coetzee, CEO of Kibo said: “ Following the recent EGM, some of the of the major shareholders in Kibo entered into discussions with the Company regarding the projects that Kibo have within its portfolio and the costs associated with the further development of these. These discussions delivered strong support for the Kibo project portfolio and development strategy, culminating in the funding term sheet set out below.
With the knowledge that we have the support of the majority of our shareholders, and the strong belief we have in the exciting potential that our diverse portfolio of energy assets offers, we are pleased to announce this £1m term sheet. This compelling endorsement from a consortium of highly experienced investors / existing long-term shareholders, will enable the continued development of our projects, which are all approaching commercialisation. In particular, our project in Mozambique is making vast strides forward, where we realistically expect the delivery of two PPAs before the end of 2020 for up to 400 MW; at the start of this year our expectation was for one PPA for 150 MW. There is a lot of work still to be done, but our team is focused on delivering on it and we look forward to providing further updates in due course.”
Funding Term Sheet
Kibo has signed a binding term sheet with an investment consortium consisting of several high net worth entities / individuals (the “Investors”), for up to £1,000,000 (the “Facility”):
Secured Convertible Security (the “Convertible Security”)
12 months from the date of closing, with an option to roll over for another 6 months subject to agreeing terms at the time.
The Drawdowns will be over four tranches, consisting of two £300,000 and two £200,000 tranches each, provided that the period in-between drawdowns will be at least 45 days, apart for the fourth drawdown, unless mutually agreed otherwise. The Company will provide 7 days’ notice if and when it requires to drawdown. The Company has the option but not the obligation to drawdown on part or all of the facility provided. First draw-down immediately and remaining three as stated above and against different operational milestones agreed between the parties.
The Company will pay a Facilitation Fee equal to 7% of the Total Facility to the Investors by issuing new shares in the Company at the 5-day moving average as on the date of signing of the loan agreement. Said payment will be subject to and only fall due when the Company has been able to create sufficient authority to issue new ordinary shares at the Company’s next EGM / AGM.
The Company will pay a Drawdown Fee equal to 15% of the Drawdown amount to the Investors by issuing new shares in the Company on the 30-day moving average as on the date of each drawdown. Said payments will be subject to and only fall due when the Company has been able to create sufficient authority to issue new ordinary shares at the Company’s next EGM / AGM.
The Convertible Security will rank senior, and will be secured by a 25% interest in the Company’s subsidiary Sloane Investments Ltd that owns 100% of the Bordersley peaking power project and a 60% interest in Mast Energy Developments LTD.
If the share price closes above 1p for 5 consecutive days, the Company will have the right to repay the amount still outstanding on any amount drawn down, at any time with no penalty (“Repayment Option”). Should the Company exercise its Repayment Right, the Investor will have the option to convert up to 25% of said amount still outstanding, at the Conversion Price.
The Investor has the option to convert part or all of the facility provided to the Company, into new ordinary shares of the Company (“Conversion Shares”), on the Investor giving notice of conversion to the Company. The conversion price will be based on a discount to the moving average at the time of the conversion notice or at floor price of 0.15pence whichever is higher at the time (“Conversion Price”).
The two largest participants in the Facility, who also at present represent two of the largest shareholders in Kibo, have agreed not to convert any of their positions in the Facility during the first six months of the agreed term for the Facility
The Consortium has also agreed that no warrants as provided for below, will be issued until the end of the agreed term for the Facility
Upon full repayment or full conversion of the convertible loan facility, the Investor will receive 400 warrants for every £1.00 of the facility drawn down and repaid or converted, with each warrant entitling the holder to acquire one new ordinary share upon exercise of the warrant . The warrants will be exercisable for 36 months from their date of issue at an exercise price of 0.25p each.
Additional Austerity Measures
Board and management have agreed to a 40% pay cut for next three months where after the Company’s financial situation will be reassessed to determine whether measures should be retained, eased, or removed. The pay cut will be introduced in addition to already existing austerity measures to mitigate the severe adverse economic impact of COVID-19.
During the second half of 2020, the Company will continue to advance its diverse energy project portfolio comprising 1255 MW generation capacity approaching commercialisation; these address the acute power deficits in Sub-Saharan Africa and the UK and will incorporate sustainable power options.
In Mozambique the primary focus is on securing two PPA’s in aggregate of c. 350MW to 400MW from the following projects:
· Benga Power Plant Project (‘Benga’) in Mozambique, in which it has a 65% interest and is backed by both the Government and the local energy company Termoeléctrica de Benga S.A. To this end, a supply agreement is being targeted, which would deliver a total of c.150 MW to EDM, in line with the Company’s commitment to create reliable, sustainable, and affordable electricity in Mozambique.
· As per the announcement dated 18 May 2020, the Company is also advancing its agreement with Baobab Resources Ltd (‘Baobab’) to supply c.200 MW energy to its Tete Steel and Vanadium Project (‘TSV Project’). Located approximately 36km away from Benga, the TSV Project is recognised as a key development project in Mozambique. In this regard the Company is on schedule to finalize a PPA with Baobab.
Kibo and Baobab are making excellent progress as they look to establish the optimal way forward and are on track to finalise a PPA at the end of September 2020. With a joint project team established to fast-track this, several additional synergies have already been identified that may enhance the financial and technical feasibility of the Baobab project with a material positive knock-on effect for Benga as well.
Furthermore, the Company continues to have active and productive engagement with Electricidade de Moçambique (‘EDM’), the national power utility in Mozambique, regarding a PPA. Following the renewal of the EDM MOU recently, the next major milestone is the completion of the independent grid integration and impact study, which is expected to be finalized within the next month. The delivery of this study will enable the next phase in the ongoing process towards finalization of a PPA with EDM. Furthermore, EIA work is progressing in parallel as well as further optimisation of the feasibility study.
In the UK, as per the announcement dated 26 May 2020, its subsidiaries, Bordesley Power Ltd (‘Bordesley’) and Mast Energy Developments Ltd (‘MED’), continue to make good progress. AB Impianti S.R.L (‘AB’), which is managing the end-to-end Engineering, Procurement, and Construction (‘EPC’) scope of works (‘SoW’) for Bordesley, has confirmed that operations are ongoing, although COVID-19 continues to impact on the ability to resume full scale operations. Accordingly, the Company remains confident that Bordesley can still be in production before the end of 2020.
Additionally, the Company is actively progressing various funding and commercial opportunities to enhance MED’s capacity and ability to significantly expand its project portfolio in conjunction with an accelerated development plan for an expanded portfolio. Further details in this regard will be announced to the market in due course.
Finally, in Tanzania, the fully developed Mbeya Coal to Power Project (‘MCPP’) comprising a 39Mt mineable reserve and a 300-600 MW power plant is also making headway. While the Company continues to explore private and power pool off-take agreements it has also actively taken all the necessary proactive steps to ensure that it can participate in any tender process for further coal fired power projects by the national utility. In this regard the Company is ready to submit tender documentation on demand.
The Company furthermore intends to arrange a new EGM to ask for approval to create more headroom. Formal notice to go out shortly.
For further information please visit www.kibo.energy or contact:
Kibo Energy PLC
Chief Executive Officer
+27 (0) 83 4408365
Corporate and Designated
Adviser on JSE
+44 (0) 20 7392 1494
ETX Capital Limited
Bhavesh Patel / Stephen Allen
+44 20 3440 6800
RFC Ambrian Limited
NOMAD on AIM
Charlotte Page /
+44 (0) 20 7236 1177
St Brides Partners Ltd
Investor and Media Relations Adviser
Kibo Energy PLC is a multi-asset, Africa focused, energy company positioned to address the acute power deficit, which is one of the primary impediments to economic development in Sub-Saharan Africa. To this end, it is the Company’s objective to become a leading independent power producer in the region.
Kibo is simultaneously developing three similar coal-fuelled power projects: the Mbeya Coal to Power Project (‘MCPP’) in Tanzania; the Mabesekwa Coal Independent Power Project (‘MCIPP’) in Botswana; and the Benga Independent Power Project (‘BIPP’) in Mozambique. By developing these projects in parallel, the Company intends to leverage considerable economies of scale and timing in respect of strategic partnerships, procurement, equipment, human capital, execution capability / capacity and project finance.
Additionally, the Company has a 60% interest in MAST Energy Developments Limited (‘MED’), a private UK registered company targeting the development and operation of flexible power plants to service the UK Reserve Power generation market.