Morning Mumble: Its all positive, Jubilee Platinum (JLP) IRR30%? Based on what?, Polypipe (PLP) & Scotgold (SGZ), have they gone into printing?

Good Morning,

Jubilee Platinum (JLP), a company whose share price has bounced, allowing for the platinum price and overall industry outlook. In support of the share price movinement, JLP put out an announcement confirming financing discussions are progressing, "almost" all the financing is there, but better, the surface treatment returns are a whopping 30%. This may be so, but based on what calculations? See below...

The Platinum Surface Projects target to process 80,000 tons per month of platinum containing surface material delivering an estimated production of 42,000 ounces of PGM's per annum. The Platinum Surface Projects are expected to achieve an IRR in excess of 30% net of taxation.

One is fully aware of the efficiencies of the ConRoast process and how this benefits recoveries. How has a NOMAD (SPARK Advisory Partners) signed off on this IRR expectation? Based on what numbers? What is the platinum price assumption? $950/oz ? What is JLP's expectations of the PGM prices? What is the prill split*? Admittedly, JLP’s outlook is a a lot better than previously, although is JLP a company where the assets/tech should be valued not the management? 

The acquisition of Nuaire by PolyPipe (PLP) is very good for both businesses. The market, is wise to rate it on a number of levels including the purchase price and earnings enhancements. Not often that deals are conducted at levels that are sensible in today's markets. 

It’s rare to read a bankable feasibility study (BFS) on AIM with some sensible assumptions. Recognition has to go to Scotgold Resources's (SGZ) Cononish Gold and Silver Project, Having wanted a cheeky short (intraday) on SGZ previously, the company have to raise some cash but financing on the back of the BFS looks more positive. SGZ, post financing is likely to look like it has potential. These sort of BFS numbers make financing a lot easier. 

With amusement, when one was looking for the Appendix to the BFS, unless SGZ have gone into printing, the perhaps would be wise to give their correct company website in announcements. SGZ’s website is http://www.scotgoldresources.com.au/ not as quoted, http://www.scotgold.com/ (printing company).

Yet more Fortescue Metals Group (FMG) speculation, last time it was Baosteel and CITIC Group. This time round its China's Hebei Iron & Steel Group and Tewoo Group (separately). Over to the FIRB (Foreign Investment Review Board). Being both state owned entities and FGM wanting to derisk minority stakes at mine level or the rail and ports assets, there may be a good chance of a deal, but do not expect anything to be concluded at speed. Hebei would perhaps be the favourite, but does Tewoo's need to diversify/distance itself from Real Estate...? 

FXPO noted, but limited time. 

Atb Fraser

*Prill split, is platinum group metal ratios of production including PT (Platinum), PD (Palladium),, RH (Rhodium), AU (Gold), PGE (Platinum Group elements), RU (Ruthenium) and IR (Iridium). Note: PGE, RU and IR are often excluded from the prill split.

Morning Mumble: I CU all the way...BLT pushing with expansion, and CAML hitting the mark!

Am I missing something with AIM? Admittedly it makes no difference to me, but what are companies doing awarding themselves 4%+ of the company based on??? Tower Resources PLC Grant of Options and Exercise of Warrants Only 75M shares at the placing price from Tower Resources PLC Placing, Acquisition and Preliminary Results from the week before. Where else in the world can you get the ability to buy stock at last week’s prices? It would appear the board room of Tower Resources is one of those places! 

The company wants to be very careful, as its these sort of things shareholders are looking at. Imagine if the placees were told...we've got a brilliant company that needs cash, are you interested? Were they at any stage informed that a significant percentage of those monies would be diluted to award "options." to Directors. The event is so material of the mind-set of the company parties would be wise to flip the stock and go elsewhere.

So back to the markets: BHP Billiton's results  are obviously bullish with the 10% headline increase in production. 

So the race is on to force companies out of the market place not only with Iron Ore but Coal as well, with an additional 2Mt's hitting the market despite it being so dire. The fittest companies will survive, but certainly not those overwhelmed with debt. Copper increasing and I suspect revised guidance upwards is on its way with expansion plans. With RIO and BLT's dividend one would be wise to hold them in a long portfolio. 

BLT's news bodes well for RIO (as they weren't as bullish as BLT in their announcement yesterday). In addition to the news from Mongolia that things are progressing at Rio’s Turquoise Hill Says Parties to Seek OT Funding Extension is the Government finally giving clarity on Royalty, Taxes and the like. Turquoise can then be taken out by Rio, the 1700 workers reemployed and everyone's happy in the bliss that is Oyu Tolgoi. We knew back in March that AMEC were advertising for workers, so one assumes this process is further along than the press realise?

We all must welcome Polypipe (PLP) to the market with Admission to Trading on the London Stock Exchange. Will the founders/PE backers run to the door quickly? A quick look over the market shoulder at the Appliance Online (AO.) share price is positive for me. Will they have to change their name to "Insurance Online?" 

So with Fresnillo and Hochschild's announcing yesterday would you be holding silver stocks long? We have Fresnillo coming out with production inline however its higher cost sector friend Hochschild's results yesterday don't elude to much in the way of any positives nor is there much commentary of the Silver Price down 20% on average over the last 12 months, costs will be key and HOC are now limited in their savings. 

HOC announced in March that their costs were around $18.6 per ounce and that was during a year of "savings/costs focus", with the current silver price not leaving much headroom and after the $27+M annualised interest costs on their Senior Notes, there's little left for shareholders. If you're in profit at HOC, you'd be wise to sell up or switch to FRES with costs around the $5.6 per ounce all in, significantly better than HOC. 

Now who'd have thought Tesco would have been cooking on gas today? Would you have been short going into results final results. Tesco have some relief, but it takes no rocket science to realise the three companies have to transform their pricing perception and offerings in light of significant competition. Asda clearly are winning, albeit all appear to be losing between 4-6% of their turnover to the lower priced offerings of Aldi and Lidl. 

The final thought for the day goes to Central Asian Metals 2013 Full Year Results, with 100% of the Kounrad Copper Mine income being attributable from now going forth, the earnings are set to benefit further. With 9 pence per share final dividend, there are not many around AIM doing what they say! The costs per pound are spot on, albeit I see some increase in these going forward at around 5%, the dividend coverage is more than affordable. Currently in at a fully inclusive cost in Kazakhstan is $1.13/lb albeit last year was $0.98/lb (2012).

Atb Fraser