Hybridan's Small Cap Wrap

The Hybridan team once again casts its net into the small cap pool to deliver updates from Anglesey Mining, Cyan Holding Torotrak and many more in the latest round-up...

This article is an edited extract from a non-independent research note issued by Hybridan.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Anglesey Mining (AYM) (27.75p/£43.89m)

Iron ore miner Anglesey announced that Labrador Iron Mines (LIM), in which it has a 33 per cent interest, has entered into an agreement to sell all of its 2012 iron production. The agreement has been signed with the Iron Ore Company of Canada and follows an agreement with the company in 2011 which saw 412,000 (wet) tonnes of iron ore shipped to China and sold on the Chinese spot market.

Additionally, LIM announced that it has entered into a ‘Impact Benefits Agreement’ with the local peoples, the Innu Takuaikan Uashat Mak Mani-Utenam of Sept-Iles, Quebec (ITUM), with regard to Labrador's Schefferville Area direct shipping iron ore mining projects.

Specifically, this is a life-of-mine agreement in which LIM has received consent for its iron ore projects whilst Uashaunnuat receives equitable participation in the projects through employment, training, contract opportunities and environmental protection measures.

Animalcare Group (ANCR) (159p/£32.61m)

The supplier of pharmaceutical and other products and services to the veterinary industry has reported a 10% year-on-year decline in its revenues in the six months to December 2011.

The decline reflects temporary supply disruptions in its Buprecare analgesics business and reduced demand for companion animal identification microchips and relative services. Despite the 18% drop in operating profits, cash generation was sufficiently strong to encourage the board to increase its interim dividend by 50% to 1.5p.

While reduced consumer demand will continue to impact second half trading, the management is confident that its growing portfolio of licensed veterinary medicines will continue to take market share.

Atlantic Coal (ATC) (0.38p/£14.51m) 

Atlantic Coal, an open cast coal production and processing company confirmed this week that it has entered into an option agreement to acquire anthracite mining assets in Pennsylvania. The exercise price of $35m would constitute a reverse takeover for the company and would be subject to shareholder approval.

Earlier in the year, the company provided a production update in which it announced that during 2011 it mined 208,730 tons of run-of-mine, considerably less that its 300,000 ton target- the recent update demonstrates considerable resolve in seeking to grow that number substantially.

Baobab Resources (BAO) (13.25p/£25.19m)

The iron ore, base and precious metals explorer in Mozambique has provided an update on its activities at the Massamba Group iron / vanadium / titanium project where resource inventories currently total 324m tonnes (JORC Inferred).

The consultant, Coffey Mining, is on schedule to complete the Tenge resource estimate by March 2012 which has the potential to add substantially to the current resource estimate. The completed Tenge resource drilling programme has defined broad packages of mineralisation. Analytical results from eight reverse circulation (RC) drill holes have been returned with a further fifteen drill holes currently undergoing analysis.

These results to date correlate particularly well with the Ruoni North resource block and are entirely in line with the Company's expectations.  IFC (International Finance Corporation) hold a 15% participatory interest in the project with Baobab owning the remaining 85%. The Company announced on 6 February that the IFC has supported the 2012 pre-feasibility study (PFS) through a pro-rata contribution of approximately $1.9 million.

Cyan Holdings (CYAN) (0.44p/£7.23m)

Cyan Holdings, the integrated system design company delivering wireless solutions for lighting control and utility metering has formed a strategic partnership with Larsen & Toubro to collaborate in the development, supply and delivery of Advanced Metering solutions. The alliance with L&T is in line with Cyan's strategy of building strategic partnerships with key established players in India.

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

PLUS-quoted consolidators and acquirers of music and video rights announced that it has acquired the rights under a long license to the Fearless TV Music show of video content.

Originally broadcast on TV in the USA the content includes all 60 shows with over 420 performances performed by over 150 artists. The deal was concluded together with the acquisition of other audio rights featuring over 350 modern jazz titles. The deal was concluded for a consideration of $15,000 plus an ongoing royalty on future sales.

Regency Mines (RGM) (2.32p/£14.88m)        

Regency Mines, the mining exploration and mineral investment company with interests in nickel and other minerals in Western Australia, Queensland, and Papua New Guinea announced continued positive assay results from recent drilling at the Mambare Nickel Laterite Project in Papua New Guinea.

Highlights of the assay results were good thicknesses and grades from all three areas.  These results were derived from 247 samples from thirteen drill holes, with nine of these drill holes including assayed intervals with Nickel grades above 1%, and ten with assayed intervals over 0.70% Nickel.

Of the 247 samples tested, 140 were above 0.7% Nickel, including 66 above 1% Nickel. The weighted average grade for all samples is 0.80% Nickel.

Symphony Environmental Technologies (SYM) (8.38p/£10.71m)

Symphony Environmental Technologies, the specialist in advanced plastics technologies including controlled life and anti-microbial products, and waste-to-value systems announced that it has been audited by the UAE authorities and that its products meet the approved specification and can be imported or made in the UAE.

This is a huge opportunity for Symphony to supply an indicative market of over 500,000 tons of Polymers. By Decree 77/5 of the United Arab Emirates the import and manufacture of plastic bags and other plastic products not conforming to the approved specification was prohibited as from 1st January 2013.

The Government has now brought forward this prohibition to 1st January 2012. The Official Notice covers not just plastic bags, but all packaging and disposable articles made from plastic polymers derived from fossil-fuels.

These include but are not limited to, flexible shopping bags and semi-rigid plastic packaging for food, magazines, consumer-durables, garbage bags, bin-liners for household use, shrink wrap, pallet wrap, cling film etc and other articles normally used over short periods and other articles normally used over short periods and subsequently discarded.

Torotrak (TRK) (34.12p/£55.95m)

The company has made good progress towards its key objectives, and financial performance in the second half of the year is in line with expectations with higher levels of licensing income being experienced.

Torotrak is experiencing a particularly busy period of discussions with potential business partners across its target areas. It hopes to be in a position to report on some of those more fully in May when announcing its final results for the year to 31 March 2012.

Trifast (TRI) (41p/£43.82m)           

As reported in November 2011, the group's strong performance in both sales and profitability in the first half of this current financial year provided a solid foundation and opportunity to further progress across all stated objectives.

The group has continued to benefit from both its 'self-help' objectives and its automotive customers' manufacturing schedule requirements gaining momentum.

Looking at the underlying TR business (pre-acquisition), due to a mix of customer de-stocking in Europe and the US on the back of on-going Eurozone concerns and, customer schedule changes in Asia following the Thai floods that occurred in September 2011, trading in the Q3 period softened, resulting in similar levels to the comparable Q3 2010/11 period. However, margins throughout the period have held up well and largely maintained at the half-year level.

Though the company noted that since the beginning of 2012 to the date of this announcement, the business has seen resurgence to more encouraging volumes and sales.

On 14 December 2011, the group completed its £15 million Malaysian acquisition of Power Steel and Electro-Plating Works (PSEP), a manufacturer of higher value and technically sophisticated cold forged components used within the automotive, motorcycle and compressor industries which is considered to be one of the most advanced fastener manufacturers in the Asia region.

Its customer base is complementary to TR's customer base and substantially broadens the group's overall reach.

*A corporate client of Hybridan LLP

The Hybridan Small Cap Wrap is a weekly review of some of the most interesting small cap stories of the past week. Our review will usually be of those companies whose market capitalisations are less than £50 million although we may occasionally cover larger companies. Our review is not intended to constitute research and is not to be taken as investment advice.

A non-independent research note:

(a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research; and

(b) is not subject to any prohibition on dealing ahead of the dissemination of investment research (although Hybridan does impose restrictions on personal account dealing in the run up to publishing research as set out in their Conflicts of Interest Policy).

The individuals who prepared this document may be involved in providing other financial services to the company or companies referenced in this document or to other companies who might be said to be competitors of the company or companies referenced in this document. As a result, both Hybridan LLP and the individual partners and/or employees who prepared this document may have responsibilities that conflict with the interests of the persons who receive this document.

It was not originally intended to be distributed to Retail Customers, and is included here for information and discussion purposes only. It does not form a recommendation to invest or otherwise. It is intended as a weekly review of some of the most interesting small cap stories of the past week. The content will usually review companies whose market capitalisations are less than £50 million although we may occasionally cover larger companies.

Our review is not intended to constitute research and is not to be taken as investment advice.