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Here is another of our occasional collections of stocks under 50 cents, ranging from a gold miner that’s eating into its costs, to a financial services provider expanding globally, to a company marrying medical device technology with artificial intelligence, a world-leading semiconductor technology innovator and a “smart” car-parking technology leader.
Silver Lake is a misnomer: the company is a goldminer, at its Mount Monger operation near Kalgoorlie. That is the focus, now that Silver Lake has sold its Murchison region assets – the Tuckabianna gold processing facility and the underlying mine tenure – to Westgold Resources, in a cash-and-shares deal worth $10 million.
At Mount Monger, Silver Lake operates the Daisy Complex, Maxwells and Cock-eyed Bob underground mines, the Imperial/Majestic and Santa Area open pit mines, and the Randalls processing facility. The flagship asset is the Daisy Complex, which has produced 583,000 since Silver Lake bought it in 2007.
At present, the Mount Monger operation hosts a resource of 28.2 million tonnes at a grade of 3.6 grams per tome (g/t) of gold, for 3.23 million ounces of contained gold, and a reserve of 3.7 million tonnes at 3.2 g/t gold for 390,000 ounces of contained gold. (Silver Lake also has 10.5 million ounces of silver, and 133,650 tonnes of copper.) Silver Lake is spending $14 million on a drilling program to extend this resource, particularly at the Daisy Complex, which has a history of repeat high-grade lodes being found.
Silver Lake has given sales guidance for FY17 of 135,000–145,000 ounces of gold. Last year its all-in sustaining cost (AISC) of production was A$1,281 an ounce: currently gold sells for A$1,611.95 an ounce, giving Silver Lake solid margins. It will be interesting to see the extent to which Silver Lake lowers this cost in its FY17 results: costs would have started to fall significantly in the September 2016 quarter, as higher grades from the completed Santa open pit and the first ore from the Majestic development were processed. Silver Lake is targeting AISC of less than $1,000, which would make it highly sustainable at current prices.
Analysts expect Silver Lake to lift its earnings per share (EPS) by more than 300% in FY17, to 3.6 cents, and comfortably double it again in FY18, to 7.7 cents. But Silver Lake is not expected to pay a dividend over this period.
Australian-listed global car parking technology company Smart Parking is a world leader in parking technology and solutions. Smart Parking markets a range of technologies to improve on-street city parking, with its in-ground vehicle detection sensors providing information to assist in the management of parking spaces, and enabling drivers to locate vacant spaces in real-time.
The company says it has more than 55,000 vehicle detection sensors installed in 16 countries, and holds the largest market share of the global intelligent parking sensor and integrated smart parking services market.
The management services division – which currently generates 90% of the revenue – operates exclusively in the United Kingdom. It specialises in managing car parks on behalf of retail customers, land owners and managing agent. The business operates more than 120,000 car parking spaces in the UK.
The technology division designs, develops and installs on-street and off-street parking technology and software, enabling clients to manage parking efficiently and cost effectively. The technology division will be the source of much of Smart Parking’s future growth: at present, the major installations are in the UK, Australia and New Zealand.
The crucial part of the service offering is to take the hassle out of car parking by using SPZ’s proprietary technology such as automatic number plate recognition (ANPR), which links to the Pay & Display automated payment system; the SmartEye radio frequency identification device (RFID)-equipped infrared vehicle detection sensors, which allow any parking bay to be managed in real time; SmartGuide, a ceiling-mounted indicator that indicates with a different colour whether a parking bay is available, occupied or disabled-only; and SmartApp, an easy-to-use app for both iPhone and Android devices that enables drivers to easily locate vacant parking spaces in real time. The company’s technology suite is wholly integrated.
Smart Parking backs this offering with real-time information, analysis and trend data that helps the clients monitor and plan their parking services better, and the company also provides trained parking attendants and marshals.
Last year, Smart Parking lost a big contract with UK supermarket chain Asda, which dented its prospects for a while. FY16 saw revenue lift 34% to $31.8 million, EBITDA surge into the black in a $5.2 million turnaround, to $1.4 million, and a net loss of $1.5 million. But the company said it was back to pre-Asda loss profitability by end of the first quarter of FY17. For the half-year ended 31 December 2016 the net profit was $363,000, compared to a loss 12 months earlier of for the half-year of $1.2 million.
On Thomson Reuters’ collation, analysts expect SPZ to report EPS of 0.4 cents in FY17, rising to 1.6 cents in FY18, but no dividends are yet projected. At 27 cents, that prices SPZ at 16.9 times prospective FY18 earnings. The analysts’ consensus price target for SPZ is 40 cents.
Australian semiconductor technology company BluGlass has developed what it says is a breakthrough process (and equipment) for making high-efficiency electronic devices, such as light-emitting diodes (LEDs), solar cells, power electronics. Called remote plasma chemical vapour deposition (RPCVD), the technology is a low-temperature deposition technology that allows the production of these high efficiency applications. The technology was developed at Macquarie University: BluGlass bought the technology from the university, which remains a major shareholder of the company.
RPCVD can grow semiconductor materials such as gallium nitride (GaN) and indium gallium nitride (InGaN), which are considered crucial to the production of high-efficiency devices such as next-generation LEDs. Because of its low temperature and highly flexible nature, BluGlass believes the RPCVD technology offers many potential benefits over existing technologies, including higher efficiency, lower cost, substrate flexibility (including GaN on silicon) and greater scalability.
Last financial year, BluGlass made major progress toward commercialising the PPCVD technology, with the first “chamber” bringing deposition uniformity to a level that met industry demonstration requirements, and an upgraded chamber being built and installed at its Sydney site. The company is working with California-based LED maker Lumileds to develop a new implementation of LEDs, and with British epiwafer foundry and substrate maker IQE to develop specific enabling technology for high-quality nitride films on silicon and rare earth oxide on silicon substrates. Both collaborations aim to capitalise on the benefits of low-temperature RPCVD.
BluGlass has also worked on growing its foundry customer business, which continues to introduce its technology to new and emerging applications including novel LED, micro-LED, laser diode and power electronic applications: both the LED and power electronics markets are multi-billion dollar markets.
In June, BluGlass announced a process transfer deal with British firm Seren Photonics under which Seren’s semipolar GaN template process has been transferred to BluGlass’metal-organic chemical vapour deposition (MOCVD) platform, enabling potential commercial production. Semi-polar gallium nitride (GaN) is an alternative GaN template for the manufacture of LEDs, which overcomes many of the problems associated with the “green gap” – the inability to make efficient “green” LEDs using MOCVD – and also has the potential to also address LED efficiency “droop,” where the LEDs become gradually less efficient at high power.
It’s exciting times for BluGlass in its high-tech niche: the company will report a loss for FY17, but is poised to break into the black in the current financial year. Analysts expect BLG to earn 0.6 cents a share in FY18. BLG is a speculative high-tech prospect, but its technology is ground-breaking, and it is doing all the right things in terms of commercialisation.
Adelaide-based medical technology company LBT Innovations has developed technology that uses artificial intelligence (AI) to rapidly diagnose infectious diseases, and has just announced a laboratory trial at St Vincent’s Hospital in Melbourne. The company’s automated plate assessment system (APAS) Independence instrument automatically analyses and interprets growth on microbiology culture plates, enabling faster and more efficient diagnosis and reporting of infectious diseases.
APAS Independence, which is a joint venture between LBT Innovations and Swiss company Clever Culture Systems, has been approved by US and Australian regulators – last year it was approved by the US Food and Drug Administration (FDA) as a Class II medical device – and LBT says tests have shown it to be more accurate than reviews of culture plates by individual microbiologists.
About the size of a large photo-copier, the APAS Independence machine uses image analysis to detect colony growth on agar plates, number the colony types identified and apply AI rules to sort each plate for further processing.
In microbiology labs, agar plates are the most commonly used diagnostic tool. However, analysis of the plates is time and resource-intensive – microbiologists currently have to look at each agar plate individually despite, on average, 95% of them being negative. LBT says the APAS machine can scan and interpret 200 plates an hour and assess them more accurately than microbiologists can. In a study published in the Journal of Clinical Microbiology in November last year looking at 10,000 agar plates, members of panels of microbiologists reached agreement 96.4% of the time on the final interpretation of a culture, while the APAS instrument achieved 97.4% accuracy, looking at the same samples.
LBT’s other microbiology automation product, MicroStreak, has been on sale for five years, originally by French group bioMérieux: in August 2015, LBT took back the future development and distribution of MicroStreak, and the company is exploring opportunities for upgrading the technology and manufacturing a MicroStreak product in Australia for distribution in global markets. But LBT’s focus has definitely shifted to the APAS platform.
LBT says no competitor product can image and interpret plates like APAS Independence. Using the testing and data that supported the product’s FDA clearance – which included a 10,000-patient international clinical trial – the company has applied for CE Mark certification, which would clear the APAS instrument for sale in the European Union. First sales are expected late in 2017.
LBT Innovations made a profit in FY16, but virtually all of its revenue of $7.7 million came from the $7.5 million in proceeds from bioMérieux’s termination of the original MicroStreak licence agreement, and the new non-exclusive licence. Investors must bank on sales of APAS Independence generating revenue – and eventual profit – from here.