Small-Cap Stock Picks

Philippines-focused gold and copper play Bezant Resources is talking to possible partners about developing its potentially attractive Mankyan project.

Steered by executive chairman Gerry Nealon, London-based Bezant has 40 per cent of Mankyan and an inexpensive option on the other 60 per cent, currently held locally. Among favoured candidates as partner in the £60 million project is First Pacific, a Hong Kong conglomerate keen on Philippine mining assets whose rumoured interest in the neighbouring Lepanto gold mine recently sent shares in Manila-quoted Lepanto Consolidated Mining soaring on the Philippine Stock Exchange.

Independent consultants have confirmed indicated resources at Mankyan of 1.1 million tonnes of copper and 3.7 million oz of gold, plus an inferred 200,000 tonnes of copper and 600,000 oz of gold, at grades of 0.49 per cent for copper and 0.52 grammes of gold per tonne of ore. The company stresses how mining-friendly the Philippine authorities now are and cite nearby profitable mining operations as indicating likely comfortable profitability for Mankyan at these grades.

As well as First Pacific, headed by telecoms magnate Manny Pangilinan, other groups interested in Lepanto include China’s Zijin mining giant. Analysts suggest that one possible outcome could be a combination of the Lepanto and Mankyan operations, though this is all hypothetical as yet.

Bezant does not look askance at net asset value estimates of between 60p and £1 a share, against today’s 20.25p. For the strong-nerved, ready to take on the project, sector and country risk, the shares, once 143p when floated in 1995 as a completely different type of company, Voss Net, could eventually repay a flutter.

More resource cheer for Kalahari

Kalahari Minerals, originally backed here in 2007 at 26.25p, says potential uranium resources at Rossing South in Namibia have leapt 82 per cent to 267 million lbs of U3O8.

AIM star Kalahari holds 40 per cent of Aussie-quoted Extract Resources, which owns Namibia’s Husab uranium project, including the Rossing South deposit. A project update from Extract says a maiden resource estimate of 122 million lbs of U3O8 at 543 parts per million for Zone 2 of Rossing South brings the combined indicated and inferred resource estimate for the deposit to 267 million lbs of U3O8 at 487 parts per million.

Although the more certain ‘indicated’ part of the total is a much lower 24 million lbs of U3O8 at 527 parts per million, Kalahari chairman Mark Hohnnen hails ‘these incredible results’ as ensuring Rossing South ‘is now one of the largest uranium deposits in the world’. The company says it now ranks in the top ten global deposits.

Kalahari shares, recommended again here in April at 112p, are now higher at 139.25p, valuing the company at £275 million. Partial profit-taking might be prudent, but there is likely be more action before Rossing South is finished. Beleaguered mining giant Rio Tinto, whose long-standing Rossing uranium mine is next door, holds some 15 per cent of Kalahari and the two companies have crossed swords verbally of late.

AIM-quoted Polo Resources, chaired by formidable uranium entrepreneur Stephen Dattels, holds more than nine per cent of Extract, though its shares at 3.68p are well down from a year’s high of 8.63p.

Investor Oakley retains its promise

Investment company Oakley Capital Investments, the vehicle that invests alongside and owns 68 per cent of entrepreneur Peter Dubens’s private Oakley Capital Private Equity fund, grew net assets by 16 per cent in the first half to June.

Net asset value (NAV) per share swelled 16 per cent from the end of December to 125p, representing a 31 per cent increase since launch in July 2007. The principal cause for the improvement is the enhanced valuation of Oakley’s largest investment, website hosting and domain name manager Host Europe.

A valuation of the private equity fund, ‘by an independent third party’, has substantially lifted the ‘fair value’ of Host Europe, due to its leading position in a strongly growing market. The fund’s other investments, in diversified media business Headland and derivatives and equities broker Monument, are adjudged to not have accumulated any extra value and are still valued at their cost price.

Since the half-year end, Host’s managed hosting services arm, Vialtus, has been sold to newly AIM-listed Daisy Group, netting Host £13 million cash (to go towards paying off £17 million of debt) and £29 million of Daisy’s shares. Oakley's stake in Host is, it says, ‘strategically well placed for exit’, since Host represents an attractive prospect for consolidators in a fragmented industry, being the second-largest hosting provider in the UK and third-largest in Germany.

Dubens, who along with a group of fellow dot-com millionaires also recently founded a venture capital fund to back other internet entrepreneurs, is in buoyant mood, saying that ‘potential deal flow in the period has remained strong and we are pursuing a number of possible investment opportunities for the fund’.

Tipped as a speculation here in February at 62p, Oakley shares have since skipped up 22 per cent to 75.5p where, trading below net assets, they remain a promising punt.

Futura strikes evaluation pact

Drug developer Futura Medical says a ‘major pharmaceutical company’ is to consider commercialising its TPR100 pain relief cream.

The Guildford-based company, whose lead product is the CSD 500 erection-maintaining condom, says the unnamed big group has agreed to pay an initial £50,000 to carry out two studies to enable it to evaluate TPR100, whose initials stand for ‘topical pain relief’, designed as an over-the-counter product for fast-working alleviation. If the evaluation goes well, Futura’s potential partner will then decide whether to enter into an agreement to commercialise TPR100, which is described as a ‘non-steroidal anti-inflammatory drug’.

AIM-quoted Futura says clinical tests have shown that TPR100 permeates patients’ skins 30 to 40 times more thoroughly than current market-leading products. Chief executive James Barder says this evaluation agreement reflects ‘solid progress’ made developing TPR100, arguing that it follows a period of ‘detailed due diligence’ by the other party.

Futura, which lost £2 million last year, ended 2008 with £780,000 cash and raised another £1 million in March at 20p. The shares, tipped here at 27.5p last November, have swung between 45.5p and 12p over the past year. At the current 24.25p, valuing the company at a shade over £15 million, they could move higher if the evaluation leads to a deal.