Shares in mid cap oil firm Cairn Energy (CNE) slicked up 1.7% to 286.7p on a successful appraisal well on the Norwegian Skarfell field and news of a discovery by its former Indian subsidiary Cairn India. The Indian find is likely to fuel the argument for merging Cairn Energy with Cairn India. The latter is now 58.5% owned by metals miner Vedanta Resources (VED), up 3.7% at £10.99, with Cairn retaining a 10% interest. Reports suggest Vedanta may outline plans for a merger between the oil firms at tomorrow's full-year results (10 Apr).
Cairn India's assets encompass the massive discoveries in Rajasthan, northern India made by its ex-parent in 2004. These are now in production and extremely cash generative. According to broker Jefferies, Cairn – which has been marked down over the last two years for its unsuccessful attempts to find oil offshore Greenland – only trades at a modest premium to the per share value of net cash and its stake in Cairn India. Combined these total 264p.
Natural resources were also in vogue elsewhere in the market, led by lower-than-expected inflation figures from China and decent results from aluminium giant Alcoa (AA:NYSE). These events have triggered a rally in mining stocks, underpinned by a string of news announcements from resource players including iron ore producer Ferrexpo (FXPO) which jumped 13.5% to 176p on its first quarter report. The market liked news that Ferrexpo increased the amount of higher-grade production during the first three months of 2013.
Finnish nickel producer Talvivaara (TALV) saw a relief rally after saying it had stemmed a leak at its gypsum pond. The troubled miner jumped 11.3% to 14.75p, albeit a fractional gain in the context of large falls since 2011 when it peaked at 609p.
A first quarter trading update failed to move shares in recruitment agency Robert Walters (RWA), flat at 221p. Stockbroker Investec implied that the business is treading water with similar trading patterns to the last three months of 2012.
Professional service exchange Blur (BLUR:AIM) issued a deluge of data that shows rapid expansion. The number of business pitches held in the first three months of 2013 nearly amounted to half of those held across the entire 2012. There's also more repeat business. But this is a classic example of a business chasing top-line growth at the expense of short-term profits (read @SharesMag interview with chief executive Philip Letts here). While 2012 revenues jumped 216% to $2.8 million, Blur produced a $1.9 million pre-tax loss. This news helped to pull the shares down 8.5% to 150.5p. Investors are also clearly worried about cash burn, with a $2.16 million cash outflow last year meaning its $4.4 million in the bank needs careful watching.
A bullish trading update filled the engines of Driver (DRV:AIM), taking the contractual dispute specialist up 13% to 91.5p. The small cap reckons the company will exceed management expectations for the current financial year.
Online games developer Zattikka (ZATT:AIM) reassured investors by saying that revenue booking in first quarter was up between 8% and 15% on the prior quarter and in-line with management expectations. This helped edge the shares 1.3% higher to 43.55p, although that's less than half its 100p IPO price of a year ago. Stating that the £9.5 million cap has had an encouraging start to 2013 is pleasing, but Zattikka remains in its infancy, as spelled out by @SharesMag last August.
Leeds-based oil services tiddler Getech (GTC:AIM) was up 7.9% at 69p after the group posted a 290% increase in pre-tax profits to £1.4 million for the six months to 31 January 2013. The group, which provides geophysical data which helps companies understand oil reservoirs, is supported by long-term sponsors which it says offer a 'greater degree of certainty on its forward-looking financial performance'.
Engineering play Tricorn (TCN:AIM) gained 9.4% to 24.9p after confirming it would recommend an improved dividend alongside its full-year results on 4 June 2013. The pre-close update said trading had been bolstered by overseas expansion which should help the Worcestershire firm achieve its aim of becoming a global tube solutions provider.
Drug discovery and development concern ImmuPharma (IMM: AIM) improved 3.3% to 39.5p despite pre-tax losses widening to £4.2 million. Management are discussing further licensing deals for chronic autoimmune disease treatment Lupuzor and could use its £8.9 million cash and funds from a contract research organisation to retain the drug’s rights and take it through Phase III trials.