Small Talk: Takeover would be the icing on the cake for Inter Link

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The Independent Online

It is just a month since takeover talks at Inter Link Foods collapsed, but private-equity firms continue to stalk Britain's second-biggest cake maker. It is though a number remain interested in taking the group private, as part of a management buyout or on their own initiative.

Inter Link admitted to a takeover approach in September. 3i and Hg Capital are believed to have shown an interest. One possibility considered was a buyout led by members of its management. But, any fresh move on the company is unlikely before the end of the year. Christmas is a key trading period for it.

The group, which supplies a range of supermarkets, moved into second place in the UK cake market last year by acquiring Yorkshire Cottage Bakeries in a £12m deal. Although it employs 1,900, mainly in the North and in Poland, it is valued at only £46m, putting it easily in the reach of most private-equity houses.

Inter Link's strong cash flows make it a classic target. Meanwhile, its shares look significantly undervalued. Trading at eight times forecast earnings for the group's current financial year, they stand at a significant discount to peers. It posted a profit before tax and exceptional items of £7.1m for the year to April 2006. This is expected to rise to £8.4m this year.If the shares are not re-rated soon, it won't be long before a bidder comes knocking again.

A miner miracle?

After false starts, things finally look to be falling into place at Cambridge Mineral Resources (CMR). The group may have been listed on AIM far longer than most peers, but so far it seems to have achieved little.

CMR hopes to draw a line under some of the disappointment today with a bullish update from its operations in Colombia. They are focused on the world-class Frontino gold belt in the north-west of the country. The statement will reveal the development of its Quintana gold mine is running ahead of schedule and having purchased key equipment, the company will soon start a drilling programme there. It hopes to be able to make a decision on whether to move Quintana into full-scale production within three months.

Readers can also expect to hear that CMR has completed an initial surface exploration programme at its El Cinco project and that gold bearing structures have been found there.

CMR will top it off with news it has purchased two high-grade gold mines, Mina La Linda and Mina del Sol.

Although CMR shares should enjoy a boost today, they have a lot of lost ground to make up. In the past two years, the stock has lost more than three quarters of its value. This is in a period when the wider mining sector has enjoyed the biggest boom for decades.

Vulcan aims for a good Finnish

Vulcan Resources, a base and precious metals explorer in Finland, will seek to secure a fast-track admission to the Alternative Investment Market today. It has appointed Hanson Westhouse LLP as its nominated adviser and stock broker, and hopes to see its shares trading on the junior market by the end of this month or early December.

The group, which is listed on the Australian Stock Exchange, is focused on developing its Kylylahti copper-cobalt project in eastern Finland. It hopes to have a feasibility study of the site completed by April, with development likely to start in the summer.

Early indications suggest that Kylylahti, which is located in a famous copper-mining region of the country, could prove to be a major resource, possibly generating up to £450m in revenues for Vulcan over 10 years. The company also has a sizeable nickel project, again in the eastern Finland, and a nickel-copper and platinum resource situated in the north of the country.