Morning Mumble: Vedanta (VED) confusion, Blurred Vision by EMC, and Applied Graphene (no news).

Good Morning,

A timely downgrade by Standard and Poor for Vedanta (VED), its likely after today the ratings agencies will have to revisit their work. VED's have had some decent results and record production Zinc, Copper, There's some positives with record production in Aluminium, Copper, Zinc and allegedly pig iron. 

Its best not to attempt beating around the bush with VED. There's a wave of issues excluding the obvious commodity price woes. VED inform the market that "the Mines and Minerals (Development and Regulation) Amendment Act, 2015" is likely to double the existing royalty rates reducing margins for VED's operations in Bauxite, Iron Ore and Zinc.  

Perhaps VED would like to update the market on the Pig Iron woes in Goa, (Sesa Sterlite). Contrary to the Q4 production report, VED may have to close their pig iron operations by the 25th April if the e-auction issues go unresolved. The limited availability of iron ore will have a knock on effect on VED's coking operations. So VED are strong arming the Government by informing the Dept of Mines and Geology that they 'may' not be able to supply the grid with circa 16MW of electricity. Slightly contradictory to VED's assertions that progress is being made (See: Times India article 9 April 2015). 

A damn good piece researched by Neil Chenoweth was emailed to me the other day, with an interactive explanation of the movements and taxation benefits in layman's terms. Tax office pursues BHP Billiton and Rio Tinto over Singapore tax shelter. Rio Tinto and Bhp Billiton may just have to review their taxation and operation arrangements, the question for investors should be "what's the downside!?"

Having put some time into Blur Group (EMC: BLUR) and finding no reason to go long or short, the writing is now on the walls. Blur today confirm in their 2014 trading update, they appear incapable of turning things round. Worse, Blur apparently need the assistance of KPMG to determine "that a number of older projects started between late 2013 and early 2014, which have experienced delays, have shown a lower likelihood of completion." 

Why KPMG need to be consulted on the likelihood of completion of projects is beyond me. BLUR as a result of today will be battered further. Having previously shorted this company, this weekend is a good time to review and test theory that BLUR's value is circa 2 pence. Statements like today erode any trust left in a stock. 

There's been some speculation about Applied Graphene over recent days, simply put a) the shorts are out b) there's a buyer in the market and c) there's limited stock available. Anything else is unknown. 

Atb Fraser

Afternoon Death Bed recap: BLUR Group

For those following on from Thursday, 22 May 2014 Morning Mumble: (PM Edition) For those following Blur Group (BLUR) and Friday, 23 May 2014 Morning Mumble (Very brief): In light of the "recommended" offer for MOG Mediterranean Oil & Gas plc by Rockhopper Exploration plc. & Blur Group (I was right). 

Today's interims may just be the true turnaround of Blur's company rot, Unaudited Interim Results. To quote: "Blur Group completed its $21m fundraise (net proceeds after costs) in June which funds the Company through to profitability and enables the continued acceleration of new customer acquisition, technology development and regional expansion into Asia. The better than planned 1H 2014 EBITDA of $(3.995)m reflects the management's tight focus on achieving profitability."

So it raised $21m burnt $6 and is left with $24.4M excluding liabilities which ironically is almost identical to the "net cash generated from operations of (5,586,050). The brackets aren't a typo, that's a negative. Quite why anyone would have held this stock long is beyond me. Apparently J O Hambro Capital Management Limited disagrees upping their holdings. What is apparent is there is some scale to the revenues, albeit the EBITDA isn't exactly something to brag about. Nil or negative cashflow from operations doesn't exactly tick a box either.

What is interesting is the growth and with this in mind the ideology of Blur Group might just become enticing to a major whom has the cash and scalability to make the presence felt. For this reason I'm reviewing Blur for a possible long. The stocks off its July lows of a tad under 60 pence those holding less than 2 months will have done well. Where next for BLUR....if they can get to cashflow positive (and profit) within their targets it'll be a win, if not expect a further placing. currently its a higher risk long, but not for any widows or orphans.

Atb Fraser

Edited for some typo's

Morning Mumble (Very brief): In light of the "recommended" offer for MOG Mediterranean Oil & Gas plc by Rockhopper Exploration plc. & Blur Group (I was right)

Am I missing the obvious? As a holder and long on MOG, I should be ecstatic when quite frankly the recommendation is a disappointing factor in the value potential of MOG. The justifications of the alleged benefit and contingency for success in Malta is a a let down to holders whom bought into the value.

A cheap way to get its hands on some decent acreage. If the board think the best value including an all in of around $1.2 a barrel, then I advise parties to write  down the names and make sure they include the under performing recommendations. With cash around £8m plus perhaps some element from LOG for the defamatory comments, the price per barrel drops to a paltry $0.85 there's a zero there folks...I'll remind parties of MOG's own investor presentation. 

MOG Investor Presentation

My view, which is no doubt wrong to the market is, if one wanted Falklands exposure I'd have kept the stock when it was high instead of selling! I dislike all elements of the Falklands its high cost and for me, one to avoid/short regularly. My last thought on MOG goes to the regulator whom perhaps needs to look at the trades late into the day on MOG!

Finally, to what I was commenting on last night! Albeit I missed out on a further 20+ points that's immaterial to what my trading gut was saying. Blur Group Proposed Placing and Open Offer. What a surprise, this sets the trend for a number of stocks, more importantly disenfranchisement will become wide so I will look to short further post the placing news. 

Atb Fraser

Morning Mumble: (PM Edition) For those following Blur Group (BLUR)

I suspect the Board of Blur Group are perplexed by the lack of support for the stock and will no doubt have a sense of relief as most people were closing out over this week on the stock. For myself, I need more information to be sure fire negative on the stock now so have closed my CFD and spreadbet shorts. Fear not, I shall be returning to it in due course, but my gut says "there's something afoot" but I'm not prepared to follow that conviction.

For long only in BLUR if you haven't sold now, you should be asking yourself why! This is not to gloat but the writing has been on the wall for definitely four months, if not longer. For those interested in yet another top performing short, I'd look at the business model to understand why the majority of analysts got yet another wrong. 

Royal Mail Group (RMG), will there be any support? It appears not currently...

Having read an article about Tangiers which clearly means you bought on a ramp, I'd disagree (edited changed from Disappear). Having now read the article, you'd be a mug to buy in on those figures. Perhaps common-sense is required to be pointed out to everyone (*addition: but it does not remove the high risk / reward punt prospects). What next? Someone advising of some serious issues with a company 'that's currently a darling?' Glass houses and all that!

Have a good weekend!

Atb Fraser

Morning Mumble: This Month China On Russia Off = NIckel Wins & Diamonds where's the Dividend!

Well it appears over in Asia the markets they were aligning themselves with China "now" (read as currently) not being as bad as people thought, so in they popped on Chinese stocks, dropped Russian/Ukrainian exposed (belatedly) and ran for metals. Iron Ore even got some support, despite the obvious happening in the Steel Mills. It seems a prudent time not to bail out the Mills on the basis that it will 'naturally' remove any slack and higher polluting operators. 

Nickel is now in speculation mode with momentum over the weekend pushing the price near 5% higher, and benefiting the likes of Vale, Glencore, BLT and even ANGLO will benefit, (Vale being in number two spot to Norilsk Nickel). I've elected to exclude Norilsk on a temporary basis due to the Russian / Ukraine debacle, not just because of the booing at the Eurovision!) The world has gone mad, but I dare say that's a conversation for a differently focussed blog on 'Eurovision' winners. 

Friday enabled me to have a good session with Dr Livingstone (Ian with no Doctorate) about his recent antics and his alleged return to blogging? I've heard it all when one needs a week "to catch up". Alas, Saturday was recovering due to the excesses of the night before, whereby Livingstone did not surface till near 4pm, due to a slight bit of 'jet lag' strangely sounding like a hangover.

What is interesting is BNP have caught on that the basics of supply and demand I discussed some 5-6 months back (and more) in respect of Nickel are now occurring. Often parties are so focus on one they miss the other, which was the reasoning for building various positions in Nickel in the first place. BNP noting that supply is often a greater driver than demand, albeit with demand positive and supply down there's only one train until news of Indonesia 'going' soft in the interim. Surely miners can't just stockpile for 2+years in Indonesia and will have to mothball?

The momentum traders and speculators are finally in Nickel over the weekend with no reason for the run bar speculation. The price rises up to Friday were purely physical demand, which would have historically dropped off a little. Nickel is now a hoarders dream, stash, go long on it and hold it dear, the tighter held, the quicker $30k/t will be made, after running through the 20k/t mark, or 9$/lb for those in older monies. Its 'almost' guaranteed Nickel will test $13'lb and potentially $15'lbs, with some volatility along the way (common-sense). The move on the weekend added $100M to Glen's profits going forward over the weekend on top of the recent gains. One assumes they aren't exposed to too many forward sales agreements between $7-8/lb?

Already one company is running with the bulls, QCG Resources are rushing to the market with an IPO based on their Avebury mine in Tasmania (NIckel). Personally, why China's Minmetals subsidary MMG selling Avebury it beggars belief but kudos to QCG, the stock, if "IPO'd quick enough" should bode well in the current climate. One couldn't have time it better with Indonesia's ban, the Russian issue and demand pushing any likely surplus in the market back to 2018 at the earliest it bodes well for prices and trades. Long Long Long!

Gem Diamonds came out today with a very positive Interim Management Statement. With cashflow and cash at bank improving mainly thanks to the Letšeng dividend. Sadly the market was expecting the magic word 'dividend' which never came forth in the IMS. My figures show GEMD could have afforded 5.5pence a share dividend. This would have certainly provided some "motivation" for the stock. In addition to the likely benefits of Ghaghoo  coming online as they've 'finally' hit Kimberlite in Botswana. One awaits the "joyous news on production ramping up H2 of this year (subject to the Cameroon sand playing ball with their access pit). Ghaghoo’s progress and ‘being on schedule’ was further validation of rewarding holders with a 5p divi! Alas, perhaps the Management will do a ‘special’ announcement.

I have been short on Anglo Pacfic (APF) despite being favoured by an analyst I have respect for who's rather shrewd/open. Having been short since November the company’s Interim management statement  is starting to make me thing the bottom is near. The dividend should provide some assistance, but their over positiveness on Coal made me to think negatively on the company for quite some time, so with closing positions I will bide my time before/if going long. 

Being in the monies on LGO, Leni Oil & Gas, I'm not sure what the additional noise in the RNS today was about bar a drilling update. However one chap has a conspiracy theory that its to get as many announcements out to push the legal debacle out of sight (really?!? Surely not!) The announcement is a positive, but I reiterate I do not hold this stock because of management only the asset(s). LGO's Production and Drilling Update Trinidad. 

Finally, the money printing is going on for the shorters on Blur, the company were so kind to the satans of the stockmarket (us shorters), to give us advance warning to go short. On the 17th April 2014, in Blur's trading update and Notice of Results announced that a "more conservative and prudent approach to revenue recognition." What took the market so long between then and today's announcement for investors to realise, trading update to realise cash would be required and more importantly recognised profits would be lower? Good luck to Singer N+1 in raising the cash required. Convertible loans well in the money? Discounted (even more so) placing? One will await the news before shutting any position..kleenex may be required for those long!...WANDisco continuing its fall, D, you were merely 6 months too early.

Atb Fraser