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It was an oily week for London’s small caps ending with spotlight on San Leon

Published: 02:00 28 Aug 2016 EDT

oil well sunset by a lake

There is a bit of an oily feel to this week’s review of the small-caps with San Leon Energy Plc (LON:SLE) leading risers -gushing 71% higher on the day it effectively came back from the dead.

Suspended since January, the shares were re-admitted to trading after it concluded a £170mln fundraiser at a more than 50% premium to the last quoted price for AIM-listed group.

Backed by Martin Hughes’ Toscafund the cash call will allow San Leon to buy a 9.72% interest in a Nigerian oil field producing around 50,000 barrels of crude a day.

The dividend stream from that production is worth £77mln (US$102mln) even at todays depressed prices for the blacks stuff.

“This is a great looking deal in our view offering investors the opportunity to receive a healthy dividend yield from a mature production asset whilst also benefiting from revenue associated with oilfield services,” said Panmure Gordon analyst Jamie Campbell.

“This puts San Leon in a unique position in my view and I look forward to seeing what the potential cash flows and associated yield will look like.”

Sticking with oilers and it was a decent week for both Jersey Oil & Gas Plc (LON:JOG) and Sound Energy Ltd (LON:SOU).

The former, up 26% over the last five trading sessions, was given a boost by the news that Norwegian giant Statoil has backed into its North Sea licences, taking a 70% interest.

Statoil is making a US$2mln upfront payment, but has committed to spending US$25mln drilling a well to test the potential of the area with work beginning as early of next year.

For Sound, up 19% this week and 268% in the last six months, there were two pieces of news out this week.

It has strengthened its management ahead of a pivotal period for the company, which kicked off on Friday with the drilling of second gas well in Morocco that should unlock the block’s commercial potential.

At the same time the countdown is on for work to begin in Italy a gas well called Badile, which has a net present value of over £400mln.

Sticking with the winners a little longer,clean energy specialist ITM Power (LON:ITM) is starting to figure on the watch lists of investors having quietly advanced around 50% over the last six months.

Earlier this week it officially opened a re-fuelling station for hydrogen-powered cars, while on Friday it expanded its portfolio of customers after striking a deal with Arcola Energy, an importer of electrically driven Renault Kangoo vans.

Given its shares have run up almost 2,800% this year nobody was surprised to see Harvest Minerals Limited (LON:HMI) pause for breath, with a bout of profit-taking prompting a fall from 24p to just over 16p this week.

Better than expected results from a study of its Arapua fertiliser project plainly weren’t enough to prevent some investors taking a little of their money off the table.

Still with the miners, it has been a horrible week for Premier African Minerals (LON:PREM) which is struggling with operational issues at the RHA tungsten opration in Zimbabwe, where the grade has proved variable.

Finally, keep an eye open for Vale International Group, which is expected to IPO in the next couple of weeks.

Rather than moving to AIM, it is taking a standard listing on the LSE with a modest first raise.

Chaired by Patrick Tsang, a lawyer and business angel, who has worked in private equity, technology investment and property, Vale’s aim is to become a channel through which European businesses can attract Asian investment and vice versa.

Tsang brings with him a wealth of experience garnered from his work with Global Angels, an Asia-focused start-up incubator, and as the head of the private equity arm of ecommerce firm Quest Strategies.

Through Vale he is interested in acquiring companies in the emerging fin-tech space. He is currently assessing three-to-five serious opportunities, ranging from £5-£20mln in value.

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