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Northland Capital Partners View on the City Ariana Resources, Eckoh and Churchill Mining

Northland Capital Partners View on the City Ariana Resources, Eckoh and Churchill Mining

Churchill Mining (LON:CHL) – SPECULATIVE BUY*: FY15 results
Market Cap: £23m; Current Price: 17p
From yesterday: LBT widens

  • LBT of US$2.8m in FY15 compared with US$2.5m in FY14.
  • Nest cash of US$1.2m in FY15 compared with net debt of US$0.2m in FY14.

NORTHLAND CAPITAL PARTNERS VIEW: Churchill Mining has continued to progress its claim against the Republic of Indonesia regarding the East Kutai Coal Project. Following the hearing on document authenticity, both parties had to file "Post-Hearing Briefs" answering certain questions. Churchill filed the first of two Post-Hearing Briefs on 20/10/2015 and expects to file the second-round Post-Hearing Briefs on 20/11/2015 in which it will reply to the points made in the State's first-round Post-Hearing Brief. Once its second-round Post-Hearing Brief is filed, Churchill is expected to issue a summary of the points made in each of the two briefs filed by the Company.

Eckoh (LON:ECK): Interims and acquisition
Market Cap: £103.6m; Current Price: 46.4p
Interims and acquisition

  • Revenue +10% to £8.6m with recurring revenue representing 78% of total (H1 FY15: 76%), gross margin increased 1000bps to 82% and gross profit increased 26% to £7.1m. Adj. EBIT +44% to £1.5m and adj. EBITDA +30% to £2.0m. Cash fell £0.7m to £3.7m reflecting movement in working capital – net debt of £1.3m.
  • US division gaining momentum with four contracts signed since June (total now ten), eight in the UK and 13 renewals – 100% of those that expired in the period. Also getting interest from other international markets resulting in sales in South Africa, Morocco and Canada.
  • Outlook – market demand remains strong and management is reports H2 trading in line with expectations.
  • Acquisition of Product Support Services (PSS), a provider of management of contact centre and customer experience technology, for $7.6m ($5.6m net; $5.6m in cash plus 3m shares) to increase its presence in the US as well as the UK and Australia to support sales and marketing. It also brings products and services. It is expected to be immediately earnings’ enhancing. Will look at other acquisitions. PSS acquisition funded through a new five year £5m facility replacing the existing £2.4m loan.
  • PSS had FY14 revenue of $17.4m and a PBT $1.2m though c. $4.0m would be classified as agency fees.

NORTHLAND CAPITAL PARTNERS VIEW: Demand for Eckoh’s products and services remains buoyant with the ongoing flurry of high profile data breaches and the theft of customer details. Companies need to protect their customer data and the threat of fines is now also looming. The acquisition of PSS looks a logical bolt on and enables Eckoh to move faster in the US and into Australia for the first time. The sales cycles encountered by West Corporation, Eckoh’s main US partner, for larger deployments have been longer than originally anticipated and Eckoh has had success in smaller direct sales. The current rating requires near flawless execution of its growth strategy at 36.9x FY16 and 29.8x FY17 EPS pre upgrades around PSS.

Ariana Resources (LON:AAU): Kizilcukur update
Market Cap: £6.8m; Current Price: 0.85p
Mining permit received

  • Ariana Resources has received the mining permit for the Kizilcukur Gold-Silver Project that is located 22km northeast of the Kiziltepe Mine, where construction is underway.
  • Kizilcukur is not currently included in the Red Rabbit joint venture with Proccea and is 100%-owned by Ariana.
  • The mining licence is valid until 24/09/2022, though it can be extended. Land access and forestry permits are already in place for exploration.
  • Drilling at the project has been completed and sampling is ongoing.

NORTHLAND CAPITAL PARTNERS VIEW: A positive development for Ariana Resources as the Kizilcukur Project could potentially become a satellite pit for the Kiziltepe Mine extending its life and improving the economics of the Red Rabbit Project. This is positive for Ariana for another reason in that if the project is brought into the joint venture Ariana will receive three times the exploration cost spent on the project. Kizilcukur currently has a Inferred JORC compliant mineral resource estimate of 12,500oz Au at a grade of 2.39g/t Au and 250,000oz Ag at a grade of 48.5g/t Ag making it relatively small compared to the two principle pits at Arzu South and Arzu North but potentially similar in scale to the two subsidiary Banu and Derya Vein pits at the project. The recently completed 1,598m drill programme could add additional upside to the current resource increasing its significance to the Red Rabbit Project.

1. Northland Capital Partners Limited (“Northland”) acts as Nominated Advisor and/or Broker to the company.

2. Northland) and/or its affiliates companies do beneficially own 1% or more of any class of the issuer’s equity securities, as of the end of the month immediately preceding the date of issuance of the research report or the end of the second most recent month if the issue date is less than 10 calendar days after the end of the most recent month. 

3. The authoring analyst or any associate of the authoring analyst does maintain a long or short position in any of the issuer’s securities directly or through derivatives, including options or futures positions.

4. Northland, its affiliated companies, partners, officers, directors or any authoring analyst of Northland has provided services to the issuer for remuneration during the preceding 12 months other than investment advisory or trading services.

5. Northland or any of its affiliated companies has performed investment banking services for the issuer during the 12 months preceding the date of issuance of the report.  

6. A partner, director, officer, employee or agent of Northland or any of its affiliated companies is an officer, director, employee or advisor of the issuer.  Disclosures are applicable for all companies

7. The authoring analyst, or any associate of the authoring analyst, has viewed the material operations of the issuer. 

8. The authoring analyst, or any associate of the authoring analyst, received reimbursement for travel expenses.

9. Northland makes a market in the securities of this company.




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The past is not necessarily a guide to future performance. The value of shares and the income arising from them can fall as well as rise and investors may get back less than they originally invested. The information contained in this document has been obtained from sources which Northland Capital Partners Limited believes to be re¬li¬able. The Com¬pany does not warrant that such information is accurate or complete. All estimates and prospective figures quoted in this report are forecasts and not guaranteed. Opinions included in this report reflect the Company’s judgement at the date of publication and are subject to change without notice. If the investment(s) mentioned in this report are denominated in a currency different from the currency of the country in which the recipient is a resident, the recipient should be aware that fluctuations in exchange rates may have an adverse effect on the value of the investment(s). The listing requirements for securities listed on AIM or PLUS markets are less demanding, also trading in them may be less liquid than main markets.

Northland Capital Partners Limited and/or its officers, as¬sociated entities or clients may have a position, or other material interest, in any securities men¬tioned in this report. Northland Capital Partners Limited does not provide recommendations on securities of firms with which it has a corporate relationship. More information about our management of Conflicts of Interest, Investment Research Methodology & Definition of Recommendations can be found at 

Northland Capital Partners Limited is authorised and regulated by the Financial Conduct Authority and a Member of the London Stock Exchange.

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