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Northland Capital Partners View on the City Arian Silver, Fastjet, Mariana Resources, Motif Bio and others

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Motif Bio plc (LON:MTFB) – BUY*: Financial statements
Market Cap: £41m; Current Price: 64p; Target Price: 89p
Financial statements of subsidiary

  • Motif reported annual financial statements for its wholly-owned subsidiary, Motif BioSciences, Inc. covering the period ended 31 December 2014.
  • The statements cover the period prior to the completion of the Company's merger, acquisition, and admission to AIM - they were broadly represented in the group’s admission document.
  • Since the end of the period, the group completed an IPO on London’s AIM market, raising $4.3m, together with the acquisition of its flagship asset, iclaprim.
  • On 15 April 2015, the U.S. Food and Drug Administration (FDA) agreed to the group’s proposed Phase III clinical development programme for iclaprim.

NORTHLAND CAPITAL PARTNERS VIEW: Motif’s late clinical-stage antibiotic, iclaprim, is set to fill a major market void. Iclaprim’s safety and efficacy is well supported, having already been tested on over a thousand patients. If approved, the drug could achieve over $1bn/year in sales. 

Mariana Resources (LON:MARL) – SPECULATIVE BUY: Hot Maden update
Market Cap: £18m; Current Price: 2.53p
100.2m at 5.6g/t Au & 1.3% Cu and 107.7m at 4.2g/t Au & 0.9% Cu

  • Mariana Resources reports the assay results from the next two holes at its drill programme at the Hot Maden Project.
  • 100.2m at 5.6g/t Au & 1.3% Cu from 81.8m, and 47m at 0.82% Zn from 23m (west of Au-Cu shoot), 44m at 0.7% Zn from 195m (east of Au-Cu shoot) and 40m at 0.56% Zn from 264m (east of Au-Cu shoot) (HTD-10).
  • 107.7m at 4.2g/t Au & 0.9% Cu from 255.3m, 11m at 1.99% Zn from 147m and 18.5m at 1.17% Zn from 183.5m (east of Au-Cu shoot) (HTD-11).
  • Within the high grade results to date there appears to be a very high grade corridor (>10g/t Au) that appears to be correlated from north to south; 33.4m at 18.3g/t Au & 3.3% Cu (HTD-04), 13m at 88g/t Au & 2.5% Cu (HTD-05), 43m at 11.7g/t Au & 2.2% Cu (HTD-10) and 14.2m at 27g/t Au & 0.9% Cu (HTD-11).
  • 55m of sulphide mineralisation has been intersected in HTD-12 from 220m, based on visual inspection. 114m of sulphide mineralisation has been intersected in HTD-13 from 256m, based on visual inspection.
  • HTD-14 appears to have been drilled down a NW-trending, post mineralisation fault zone that contains fragments with pyrite-chalcopyrite mineralisation over 30m from 150m.

NORTHLAND CAPITAL PARTNERS VIEW: Mariana Resources continues to deliver exceptional results from its Hot Maden Project, located in Turkey. HTD-10 and HTD-11 have extended the known strike length of the high grade gold-copper (Au-Cu) shoot to the south, as we expected based on the visual inspection of the core (reported 26/05/15). At present the shoot has a defined strike of 225m but remains open to the south and down and up dip. These results also highlight that there is a higher grade (>10g/t Au) corridor within what is already high grade Au-Cu mineralisation. The visual inspection of the next two holes (HTD-12 and HTD-13) appears to indicate a down dip extension to the Au-Cu shoot, though we await assay confirmation. These assay results, support expectations that the high grade shoot’s geometry is sub vertical, north-south striking and plunging to the south. This update indicates that the shoot has been dextrally displaced by at least two northwest striking fault zones, though the amount of displacement is relatively minor. The zinc mineralisation continues to form a halo around the Au-Cu shoot as the joint venture partners test further to the south. Hot Maden has been an impressive discovery for Mariana and its joint venture partners and we look forward to further results.

Arian Silver Corporation (LON:AGQ) – CORP: San José drilling update
Market Cap: £10m; Current Price: 29p
5.09m at 249g/t Ag and 6.43m at 357g/t Ag

  • Arian Silver has reported the results of its 4,877m drill programme at the San José project.
  • Results include; 5.09m at 249g/t Ag from 136m and 6.43m at 357g/t Ag from 170.5m (GW-15-59), 6.11m at 157g/t Ag from 176.25m (GW-15-58) and 5.68m at 249g/t Ag from 255.9m (GW-15-64).
  • Updated mineral resource estimate planned over the coming results.

NORTHLAND CAPITAL PARTNERS VIEW: Positive drill results from Arian Silver Corporation that confirms the silver-lead-zinc mineralisation extends below the town of Guanajuatillo for over 1km. This area of mineralisation lies between the Soledad resource blocks to the east and the other resource blocks to the west. The results from this phase of drilling at Guanajutillo will be included in a resource update in the coming months adding further ounces to the Company’s resource base at its producing San José Mine.

3Legs Resources (LON:3LEG) – CORP: Placing and director change
Market Cap: £1.1m; Current Price: 0.255p
Proposed change of investing policy to focus on life sciences sector

  • Subscription to raise £500k at 0.27p/share and the appointment of James Mellon and Gregory Bailey as Non-executive directors and Richard Armstrong, current NED, as Non-executive Chairman, with immediate effect. Mellon and Bailey will have 14.97% each post the subscription.
  • Following the subscription and board appointments, the directors will propose a resolution at the next AGM to change the investing policy to focus on the life sciences sector.

iomart (LON:IOM) – Prelims
Market Cap: £247m; Current Price: 242p
Targeting the high end

  • Revenue +18% to £65.8m, adj. EBITDA +23% to £29.1m; adj. PBT +14% to £16.6m and EPS +16% to 12.6p – in line with consensus and April’s pre-close. Cashflow from operations +13% to £27.2m and proposed final dividend +43% to 2.5p, equivalent to a pay-out ratio of 19.8% of EPS.
  • Hosting revenue +23% (9% organic) to £55.0m and adj. EBITDA margin increased 140bps to 50.0%. Some churn amongst the customer base as customers experience funding difficulties, drop out of markets or become acquired.
  • Easyspace revenue fell £0.2m to £10.8m, as expected by management with EBITDA down £0.1m to £4.9m.
  • £15.8m spent on investing activities (FY14: £31.5m) including £2.4m on acquisitions (FY14: £19.0m), £1.3m on contingent consideration and £10.7m on assets (FY14: £11.7m). Net debt of £15.4m (FY14: £19.8m).
  • Yesterday announced the acquisition of System Up, a consultancy focused on Public Cloud. This will enable iomart to target the Hybrid Cloud market. Consideration of £9.0m in cash plus £0.5m as an interim settlement on working capital. A further contingent consideration of between £1.0m and £3.5m is expected to be paid next year.

NORTHLAND CAPITAL PARTNERS VIEW: FY results in line with expectations and April’s pre-close with reasonable organic growth in Hosting and a small decline in Easyspace. Further margin improvement is encouraging and good contributions from Redstation, Backup Technology and ServerSpace acquisitions. As Cloud adoption continues, deployment models become more complex and iomart will look to differentiate itself through its strategic advice, enhanced by the acquisition of System Up. This also creates a value add versus the commodity providers.

Fastjet (LON:FJET): MAY PASSENGER STATS
Market Cap: £75m; Current Price: 113p
Passengers numbers +52% YoY

  • Following up on recent full year results for FY14 passenger stats for May 2015 looks encouraging. Fastjet Tanzania passenger numbers in May were +52% YoY to 65,118, though the load factor of 70% looks below target load factor of c. 75% referenced in the recent final results. On a rolling twelve month basis, passenger statistics look even healthier +76% to 716,350.
  • As alluded to in the final results of 2 June 2015, the business is in the process of adding an additional A319 to the fleet and preparations are underway in this regard. Furthermore, discussions are also underway with suppliers of a fifth aircraft to be added to the fleet. 
  • The business recently secured a Zambia Air Service permit, and the first aircraft is expected to be deployed in the 3Q15. The current fleet is fully utilised so business requires extra capacity to meet demand. As referenced previously, the additional A319 will add 1000 more seats per day available to customers so a fifth aircraft in the fleet will boost seats available to customers significantly.    

NORTHLAND CAPITAL PARTNERS VIEW: There was a substantial improvement in revenue in FY14 as Fastjet Tanzania more than doubled its revenues. The stock trades on c. 2x FY14 Revenue which is not particularly undemanding however the additional aircraft should add significantly to current revenue particularly in FY16 which should see a full year of benefit. The foundations are being put in place to expand the fleet to up to 34 aircraft over time and the recent £50m equity raise supports such expansion plans.

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