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Why Are Landore Resources Ltd., Sepura Plc & Lakehouse PLC Making Waves Today?

Worth a closer look

Shares of Landore Resources (LSE: LND) have rocketed up 200% today to 2.26p. The AIM-listed mineral explorer reported a “significant gold discovery” on its flagship Junior Lake Property in Ontario, Canada.

Landore said the discovery was made as a result of follow up drilling on the prospect reported last month. Latest drilling indicated a wider gold mineralised zone with higher grade intersections, suggesting “the mineralisation could be coalescing with depth”. Meanwhile, mineralisation near the surface has potential for initial development as “a low cost, bulk tonnage, open pit operation”.

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Clearly, this is good news, and should help the company raise further funding. Landore has no debt and last raised £656,820 at 0.6p a share in October, compared with the current price of 2p. So, in a reasonably strong position to progress the project, and with its operations in Canada (none of the geo-political risk of many junior explorers in far-flung places), Landore could be worth a closer look by investors interested in what is one of the more speculative sectors of the stock market.

Fall overdone

Shares of Sepura (LSE: SEPU) have dived 30% to 138p, following the release of a trading update ahead of results for the company’s financial year ended 1 April. The group, which designs, manufactures and supplies digital radios, infrastructure and applications for professional mobile radio (PMR) users, said earnings for the year will be below expectations.

Reasons given for the miss were two “significant opportunities” failing to close before the year end, weakness in a couple of areas of the group’s business, and also a hefty adverse impact from foreign exchange movements. Year-end net debt has increased significantly, mainly due to working capital expansion resulting from the contract delays and slower debtor collection.

The good news is that Sepura’s debt providers ‎have waived any potential breach of year-end covenants, presumably on the strength of the company’s “particularly strong trading” during the final weeks of the year, and management’s expectation that the two significant opportunities will close imminently and the working capital expansion will unwind.

Based on 2016/17 analyst earnings expectations and following today’s dive in the shares, Sepura is trading on a price-to-earnings (P/E) ratio of less than 12. For a company that had previously been averaging annual earnings growth in excess of 20%, the fall appears overdone in light of what seem to have been largely short-term issues.

Shareholder revolt

There’s a right old ding-dong going on at Lakehouse (LSE: LAKE). The support services company, which is focused on the UK public sector, listed on the stock market at 89p little more than a year ago.

The chairman was “delighted” to report maiden results on 10 December, and said: “The Board remains confident of its expectations for the current year and the future”. Less than eight weeks later, Lakehouse issued a profit warning, which saw its shares crash 58% to 35p.

A shareholder revolt is being led by well-known small-cap fund manager Mark Slater and Lakehouse founder Steve Rawlings, who have requisitioned a general meeting on 19 April. The requisitionists’ proposals include kicking the three current non-executive directors off the board and replacing them with Rawlings and two others.

Referring to the current board’s “disastrous stewardship” of Lakehouse, the requisitionists reckon the proposed new non-execs will be able to “identify quickly action that is needed and to develop, with the executives, a strategy to restore shareholder value”.

In a statement today, the Lakehouse incumbents reiterated their recommendation to shareholders to vote against the requisitionists’ proposals. With the company in turmoil, this appears to be a stock for investors to watch for the time being.

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G A Chester has no position in any shares mentioned. The Motley Fool UK 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.