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Quoted Micro 12 October 2015


Stellar Resources (STG) is the latest AIM company seeking an additional quotation on ISDX, following AfriAg (AFRI), which joined on 9 October.  Donald Strang is a director of both companies and he is also a director of three other AIM companies – Polemos, Doriemus and Solo Oil. Stellar plans to join ISDX on 23 October. Stellar recently appointed Optiva as its broker. The company’s interests include exploration for gold in the part of Wales that includes the old Clogau mine and 10% of Horse Hill Developments, which owns the majority of the eponymous oil discovery in Surrey. There was £1.37m in the bank at the end of June 2015.

Investment company Lombard Capital (LCAP) has completely changed its board with Russell Darvill and Charlotte Argyle stepping down and Mark Jackson, Graham Jones and Nigel Fitzpatrick appointed to replace them. In the summer, Quetzal Securities withdrew the requisition for a general meeting because Lombard agreed to make board changes. Jackson and Jones were nominated by Quetzal and are both Hull-based – they are an accountant and chartered surveyor respectively. Fitzpatrick is a former director of AIM-quoted oil services provider Global Marine Energy, which was taken over in 2008. A change in investment strategy is possible. At 4.5p (4p/5p) a share, Lombard is valued at £87,000 and it had an NAV of £278,000 – equivalent to 14.5p a share – at the end of March 2015. Lombard’s NAV includes £235,000 worth of investments including 6.7% of ISDX-quoted BWA (BWAP), its investee company, payment cards marketer Prego International, whose shares are traded by JP Jenkins, and online recruiter Elevate Platform. BWA had net assets of £539,000 at the end of April 2014, although the company said that its stake in Prego was worth £513,000 above its book value. At 0.45p (0.3p/0.6p) a share, BWA is valued at £505,000. So this suggests that Lombard could be trading at a significant discount to its NAV, albeit based on illiquid investments.

All Star Minerals (ASMO) has raised £30,000 at 0.1p a share, having already raised £96,000 earlier in the year. All Star had £11,225 in the bank at the end of 2014, following a £269,000 cash outflow during last year.  Since the end of last year, All Star has sold some of its mining interests to ISDX-quoted NQ Minerals and the shares it was issued in NQ were worth £800,000 when the buyer joined the ISDX Growth Market. All Star is assessing metals projects around the world. At 0.15p (0.1p/0.2p) a share, All Star is valued at £1.16m.



The closure of steel making facility SSI Redcar and the Eggborough and Liverpool bulk terminals is bad news for coal supplier and materials logistics company Hargreaves Services (HSP). Redcar’s closure is likely to lead to one-off costs of £1.5m and the loss of annual operating profit of £4m, while the terminal closures will lead to a loss of business that will knock a further £1.5m a year off operating profit and cost £700,000 in redundancy costs. This has led to a cut of nearly one-third in this year’s forecast profit and earnings are expected to be around 30p a share. There are opportunities to develop surplus property assets.

A third quarter production statement from iodine supplier Iofina (IOF) reported that crystalline iodine production was 89% ahead of the same time last year at 144 tonnes. This means that Iofina should be on course to produce 552 tonnes in 2015. In the first half of 2015, Iofina cut costs and this enabled it to reduce its loss on lower revenues due to the fall in the iodine price. Net cash declined by $2.2m to $4.8m because of the build up of inventory in the period. Iofina is a low cost producer and even below $30/kg the company should be able to generate cash from its plants – whether it is enough to cover central overheads is another matter.

Lubricants and paper making chemicals supplier GTS Chemicals (GTS) is a Chinese company that is not disappointing the market. The latest interim figures have led house broker SP Angel to upgrade its full year forecast. In the first half of 2015, revenues grew by 39% to RMB415m, while net profit was one-third higher at RMB53m. Both parts of the business grew strongly but the newer lubricants business grew fastest. SP Angel has edged up its 2015 earnings per share forecast to 11.7p  – one-third higher than the 2014 figure. The dividend is expected to increase from 1.8p a share to 1.9p a share. The 2016 earnings per share forecast was raised by 3% to 13.2p. Cash flow is a concern for Chinese companies but SP Angel expects GTS to generate cash at a level similar to forecast profit in 2015. Capital investment in the company’s new facility means that there is expected to be a small net debt figure at the end of 2015.

Further drilling news from Mariana Resources (MARL) has extended the resource area for the Hot Maden gold project in Turkey. Mariana still owns 30% of the project following its joint venture partner Lydia’s expenditure on exploration. The previously reported resource was 3 million ounces of gold at a grade of 11.2g/t. RFC Ambrian believes that Mariana’s other exploration interests could be worth between nil and £5m which places a valuation of between £10m and £15m on the 30% stake in Hot Maden. RFC Ambrian estimates that this is equivalent to up to $27/ounce for the initial resource.

Horizonte Minerals (HZM) has completed the placing raising £1.55m at 1p a share – a discount of more than one-third to the market price at the time – that will help to finance the development of Glencore’s Araguaia nickel project and its integration with Horizonte’s existing nickel project in northern Brazil. This enlarged project will be more than double the size of Horizonte’s own project and create one of the biggest saprolite nickel projects in the world. The initial consideration was $2m in Horizonte shares and the total cost is $8m. There will be $1m payable following a feasibility study for the enlarged project and the other $5m when commercial production commences.



Property and civil engineering services provider Waterman (WTM) nearly doubled its profit in the year to June 2015 thanks to a strong UK market. Revenues grew from £68.8m to £80m, while pre-tax profit jumped from £1.4m to £2.7m. The dividend is doubled – for the second year running – to 2p a share. The order book has improved to £130m. Operating margin is 3.3% but Waterman hopes to get this figure up to 6% by 2019. A 2015-16 profit of £3.3m is forecast, which puts the shares, at 85.75p, on 12 times prospective earnings. The forecast yield is more than 3%. Ruffer has trimmed its stake in Waterman to 17%.

Andrew Hore

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