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Today’s Small Cap Winners Are Zanaga Iron Ore Co Ltd And Vernalis plc

Today’s first small-cap winner is miner Zanaga Iron Ore (LSE: ZIOC). Zanaga’s share price has pushed higher by around 7.4%, to 18.5p at the time of writing.

Licence granted

Zanaga’s strength can be attributed to the company’s revelation that management has received the mining licence for its flagship iron ore joint venture in the Republic of Congo.

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This is great news for the company, as it removes another barrier to development of its highly attractive mining prospect.

opencast.miningHowever, Zanaga is yet to receive, or even secure, any funding for the development of the project, despite having mining behemoth Glencore in its corner, as a joint venture partner. It has been estimated that the first stage of mine development will cost Zanaga $2.2bn. So the company needs to get a financing package in place before further development.

That being said, Zanaga’s iron ore prospect is one of the largest in the world, with 2.5bn tons of high-quality probable iron ore reserves. The project’s production costs are also expected to be some of the lowest in the industry, at $32 per ton.

Zanaga is a risky bet, but the company has plenty of potential in the long term.  

No news

Today’s other small-cap winner is development-stage pharmaceutical company, Vernalis (LSE: VER). Vernalis’ share price has risen by around 11.9%, to 42.8p at time of writing.

Unfortunately, there appears to be no news from the company, which makes today’s rise suspect. However, it has been revealed that Aviva plc and its subsidiaries increased their shareholding in the company recently. Aviva’s holding has risen above 5%.

Further, City analysts have recently increased their price target for Vernalis, with Canaccord Genuity advising its clients to ‘buy’ with a price target of 54p.

However, it remains to be seen if Vernalis is actually worth holding. The company slipped into a loss during the first half of this year, as revenues fell 18% to £6.2m and research and development costs rose. For the first half, Vernalis reported a pre-tax loss of £4.6m, compared with a profit of £2.6m a year earlier.

Nevertheless, at the end of the first half the company reported a net cash balance of £25.4m and no debt. What’s more, the company has a promising pipeline of treatment under development, which could boost revenues in the future.

What to do

It’s up to you to decide whether you want to buy, sell or hold Zanga and Vernalis following today’s gains.

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It’s just ONE innovation from a little-known US company that has quietly spent years preparing for this exact moment…

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Rupert Hargreaves has no position in any shares mentioned. The Motley Fool has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

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