Proactive Investor's  Instablog

In the junior mining space, finding candidates for investment is always a challenge. High grades, access to finances and resource estimates are the most common criteria. Another important criterion of course is ongoing development efforts.

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There was a plethora of interim management statements released this morning among the 350 largest companies listed on the LSE, but one of the most closely scrutinised was undoubtedly Taylor Wimpey (LSE: TW.) – one of Britain’s largest home builders.

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Westminster Group PLC (AIM: WSG) said it won a contract extension valued at US$2.72 million from the Government of Southern Sudan (GOSS) for additional security at Juba International Airport, Southern Sudan.

The company specialises in providing software and equipment to the security, defence, fire protection and safety markets worldwide.

The deal is an extension of the US$4.7 million contract Westminster was awarded in 2008 to secure Juba International and which has been an ongoing project during 2009.

Work will begin immediately, and Westminster will provide a further 6 kilometres of security fencing and perimeter detection systems together with under vehicle surveillance and number plate recognition equipment. The extension will also see the group install vehicle control barriers on entranceways, additional CCTV surveillance and solar powered street lighting around car parks.

GOSS will pay all goods, worth around circa US$2.5 million, prior to shipping and the balance on installation. Westminster recently received a payment of $US1.3 million from GOSS relating to works previously undertaken and a further US$200,000 payment is expected within the next two weeks.

In addition Westminster has secured a number of new contracts, valued close to US$1million, during October from various customers around the world and for a wide range of technologies including a security system for the National Bank of Ethiopia, a perimeter detection system for a client in Eastern Europe and a specialist fire prevention system for Corpus Christi College in Cambridge, UK. These contracts are expected to be commenced in late 2009 and completed in full during 2010.

The latest deals are in line with the group’s declared strategy of providing niche services and products around the world with a particular focus on emerging and third world countries. In 2008, 56 percent of its revenues were generated in Africa and 41 percent in UK and Europe, with the remainder made up of the Middle East and Asia & Pacific regions.

In September, Westminster won a US$660,000 surveillance equipment order from a Sub Saharan African government which was shortly afterwards beefed up by a further contract worth US$220,000 to provide the control & command facility for the systems.

At the end of September, it reported a 69 percent year-on-year rise in revenues for the first half to £2.4 million while its order book was up 23 percent as at the end of June 2009 at £5.3 million.

Chief executive Peter Fowler commented today: "The latest contract award for Juba follows a successful order intake for October and brings our order intake in the year so far to £7.34 million. We have an extremely healthy open quote bank and whilst the current economic climate may be causing some clients to take longer in the decision making process than anticipated, which may affect our short term outlook, we are confident of further important new contract wins in the near future."

Iron ore and coal developer and miner London Mining (AIM: LOND) has been admitted to the Alternative Investment Market (‘AIM’) of the London Stock Exchange (‘LSE’) today and will start trading today.

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A further indication that equity markets are returning to ‘normality’ is a growing level of M&A activity.  African focussed gold miner Randgold Resources (LSE, RRS) has not missed the boat acquiring Moto Goldmines, a move which has bolstered the group’s gold reserve base at a time when the price of gold looks set for further strength.

Moto’s main draw is its namesake project located in the Democratic Republic of Congo or DRC.  As per an optimised feasibility study carried out in March this year, the project boasts ‘probable’ mineral reserves of 5.5 million ounces of gold and 20 million ounces of resources.

This proved the trigger for a flurry of corporate interest and prompted Randgold’s near US$500 million part equity, part cash offer.  Encouragingly, the takeover sees Randgold partner once again up with Anglogold Ashanti, with whom it has previously combined at the Morila mine in Mali; the doubling of the intellectual capital in our view will drive the Moto project forward with greater success.

The project itself is considered one of the biggest and best that Africa has to offer. Just how big is best demonstrated by the fact that the planned mine life is currently estimated at 16 years.  And although located in the DRC (which is regarded as a high risk mining area), we believe the acquisition will prove a shrewd piece of business. 

Elsewhere, Randgold’s projects and developments are moving ahead at a rate of knots.

Third quarter production numbers are due out shortly however if this years second quarter performance is anything to go by, Randgold’s flagship Loulo mine (located in Mali) will post another quarter on quarter output jump. Randgold’s other producing mine, Morila (also in Mali) may have been successfully converted from a mining operation to stockpile treatment however it will contribute to earnings for some time yet.

Although Moto may be the big money signing receiving all the attention, Randgold has plenty of home grown projects waiting to break into the first team and become earnings accretive. 

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London’s Alternative Investment Market is littered with small cap technology firms that often have one or two neat ideas but have great difficulty in translating their innovations into solid revenue streams. The past few years have seen many tech firms – from fuel cell developers to thin-film solar businesses to software makers – come and go, usually achieving little for AIM investors during their time on the junior stock market.

But there are exceptions. Take Zytronic, for example. Shares in this firm, which , disappointed during its first three years on AIM – a period that proved a very tough time for technology shares in general. But since early 2003, Zytronic’s shares have increased more than five times.

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