AIM's Essential Top Ten News Stories for Monday, July 11th 2016

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Good morning and welcome to this first edition of “AIM’s Essential Top Ten”, a brief and early roundup of the main news announcements on London’s junior market.

Armadale Capital (LSE:ACP)

Share price: 2.125p. Market cap: £3 million.

Acquisition: Completed acquisition of a graphite project in Tanzania. Drilling campaign anticipated to commence in Q3 2016. Furthering the strategy to build a portfolio of resource projects “with near term revenue generation potential”. Consideration is 57.5 million shares, £450,000 of Loan Notes.

GN view: The vendors of the project will subsequently own 28.9% of Armadale. Loan Notes can also be converted at 2p for another 22.5 million shares. Not sure if existing shareholders will accept such a level of dilution.

Caledonia Mining (LSE:CMCL)

Share price: 82p. Market cap: £43 million.

Q2 2016 production update: 12,509 ounces of gold produced, 20% increase on Q2 2015. Targeted gold production for the remainder of 2016 is c 50,000 ounces, unchanged. Quarterly production to increase progressively by Q4.

GN view: I like cash-rich, dividend-paying companies, but not many miners fit into this category. Caledonia is unusually strong.

Collagen Sol (LSE:COS)

Share price: 41.5p. Market cap: £7.3 million.

Final Results: Revenue up to £3.2 million from £1.04 million, ahead of guidance. Net cash £2.5 million.

GN view: The statutory loss of nearly £1 million suggests that this remains quite high-risk. Chairman comments that “a higher level of momentum” is required are well-put.

CPL Resources (LSE:CPS)

Share price: 425p. Market cap: £130 million.

Trading Update: Revenues, gross profit and operating profit have continued to grow. Brexit presents both challenges and opportunities. Profit before tax for year ended June 2016 in line with market expectations.

GN view: Recruiters have been sold down recently but there is no evidence that this company is experiencing any headwinds. Will have benefited disproportionately from recent high activity levels in home market.

Frenkel Topping (LSE:FEN)

Share price: 44.5p. Market cap: £33 million.

Half-year Report: Recurring revenue unchanged at £2.9 million. Operating profit £0.3 million (down from £0.6 million), excluding share-based payment. Assets under management £687 million (down from £640 million).

GN view: Interesting move into discretionary investment management. Before upfront costs associated with setting up new operations, operating profit did not fall by such a large percentage.

Goldplat (LSE:GDP)

Share price: 5.625p. Market cap: £11 million.

Trading Update: A 74% owned subsidiary is in dispute over an amount due to it from Rand Refinery. Unpaid invoices of some £628k are outstanding. Rand Refinery, for operational reasons, will also not accept by-product materials for treatment in their smelter.

GN view: According to the statement, “the company is not yet in a position to advise whether annual results for the year to June 2016 will be in line with market expectations.” Seems like an extraordinary amount of uncertainty at play here, even for the sector.

Ithaca Energy (LSE:IAE)

Share price: 66.875p. Market cap: £275 million.

Q2 2016 operations update: Floating production facility now being finalised. Management “delighted” with quality and completeness of the vessel. Ready to leave the yard after two weeks of work. First hydrocarbons three months after sail-away. Excluding Stella field, full year production guidance unchanged.

GN view: $606 million debt outstanding is the biggest issue here. Some progress, having reduced from $630 million at the end o the first quarter.

Northern Bear (LSE:NTBR)

Share price: 41.5p. Market cap: £7.3 million.

Preliminary Results: Profit before tax unchanged at £1.9 million. Cash generated from operations £3.7 million (up from £2.4 million). Bank debt down to £2.5 million.

GN view: Cyclical building sector, reliance on public sector and worries over bank debt likely account for low rating here. Worth investigating for value.

Pinewood Group (LSE:PWS)

Share price: 542.5p. Market cap: £311 million.

Audited Results: Strategic review in progress. Revenues £83 million, up 111%. Operating profit £13.6 million, up from £5.8 million. Net debt little changed at £72.8 million.

GN view: Good visibility reported for balance of 2016, reducing the risk somewhat for a difficult industry. Looks like an impressive outfit to me. Valuation leaves little room for error.

Swallowfield (LSE:SWL)

Share price: 177.5p. Market cap: £30 million.

Trading Update: Full year profitability towards the upper end of expectations. Overall revenues up 10% to £54.4 million. Net debt reduced to £4.3 million.

GN view: I like the strategy of working towards owning their own brands. Existing relationships are highly valuable in their own right.

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