Small Talk: Oil explorer's investors excited over good news in the pipeline

By Michael Jivkov
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The Independent Online

This year looks set to be a year of action at Cambrian Oil & Gas. Shares in the Kyrgyzstan- focused explorer have been actively traded over the past week and gossips reckon a positive update is on the way (possibly as early as this week) from its Beshkent-Togap field. The site consists of a series of wells which are known to contain oil. Cambrian is merely updating the Soviet-era equipment and extracting the crude more efficiently. Back in November, the group promised that the field would start generating revenues in early 2006.

In the coming months there may also be news about Cambrian's investment in Elko Energy, a private Canadian company. Elko has an exploration licence in the Danish North Sea and is said to be considering an AIM float. Such a move would greatly enhance the value of Cambrian's stake.

Uranium may enrich Lonrho

Similarly, readers would do well to keen an eye on Lonrho Africa. Word has it that the group, once controlled by the late tycoon Tiny Rowland, is working on a major uranium deal in Africa. The price of the commodity has soared recently, making sites once viewed as uneconomic to develop once again commercially viable. The mining specialist David Lenigas was recently appointed chief executive of Lonrho after he and a number of institutional investors - believed to include RAB Capital - took a 20 per cent shareholding in the company.

Mr Lenigas stepped down as joint managing director of Asia Energy to take the role. The AIM listed Bangladesh coal group has been a great success and is now valued at over £200m. Meanwhile, Lonrho has a market value of £30m and a £23m cash pile. Although it has no assets other than its cash, the group does boast significant tax losses which it can use in the future to cut its tax bill.

In the days of Tiny Rowland, Lonrho Africa was a sprawling pan-African conglomerate where businesses as diverse as mining, luxury hotels, car dealerships and pig farms were housed. But over the past seven years it has been slowly wound down and its various businesses sold off. Among the last assets to be disposed of were the Norfolk Hotel in Nairobi and the Mount Kenya Safari Club in Nanyuki last summer.

Are AIM shares too cheap?

Growth Company Investor, a publisher focused on growth stocks, put out its third annual survey of the Alternative Investment Market last week. The research highlighted various facts about London's junior market and one of the most surprising was just how cheap some AIM stocks really are. For example, the ethanol producer Renova Energy and the recruitment group Multi both trade at less than three times forecast earnings.

Despite the fact that only a small proportion of AIM companies pay dividends (roughly a tenth), Growth Company's research has also unearthed some pretty impressive yields. It seems that more than 20 companies offer a dividend yield greater than the current base interest rate of 4.5 per cent. Among the most impressive is the 9.2 per cent offered by shares of the property developer City Lofts and Arbuthnot Banking's 6.9 per cent.

The purpose of the AIM market is to help finance growing companies and last year certainly threw up some great performers on this front. In terms of earnings growth, WH Ireland, the Manchester-based stock broker, was the best performer in 2005. Thanks to a buoyant new issues market (the bulk of which were AIM floats) WH Ireland achieved a staggering 2,875 per cent rise in earnings between 2004 and 2005. Close behind came ATH Resources and United Carpets.

Tiff brewing at Tadpole

Finally, there is revolt in the air at Tadpole Technology.

Private investors in the software company have formed an action group to oppose the sale of its streaming division. A statement from Tadpole last week complained that the business continued to incur losses and outlined plans for a disposal of a majority stake to a New York based private equity house. But the action group is unhappy with the proposal and claims the board is selling off the jewel in the company's crown against shareholder wishes.

Small Talk is told that the rebels have so far gained the support of nearly 10 per cent of voting shares.

Synchronica may still get its numbers right

Could a renaissance be on the way at Synchronica, formerly DAT Group? Given that the mobile phone software maker has lost 90 per cent of its value over the past 12 months, the shares are unlikely to fall any further. At present, Synchronica has a market value of £12m. Of this, £6m is accounted for by its cash pile, leaving the remainder of the business valued at £6m.

This makes the company look cheap. Especially as there is unlikely to be any further bad news. At the end of last month Synchronica assured investors that the business is trading in line with expectations. Meanwhile, City talk has it that positive news is in the way. The company is said to be close to securing a major contract in the US and a bullish piece of research on the group is said to be on the way from Evolution Securities.

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