Morning Mumble: Gemfields' results lacking sparkling, Allied Minds, Tullow. Savannah Resources, Thorntons and BCN, with SRX (one hopes not the new AMI).

Good Morning,

Brief today as have a number of meetings then a school trip!

Gemfields's Singapore auction closed yesterday with an average of $617.42 per carat down a near 10% on the December 14 higher quality stones auction ($688.64/carat). In the absence of a decent marketing push, the decline in number of lots and sales revenue from these higher quality stones is going to continue. Not only were the lots sold a paltry 61% of those offered (46), but also was the price achieved. Over to GEM to find a way forward.

For those that didn't top slice, sell or trade Allied Minds (ALM), today brings news of their joint venture, ABLS (Allied-Bristol Life Sciences, LLC) acquiring licenses from Harvard. ABLS is a jointly owned entity between Allied Minds and Bristol-Myers Squibb Co.

Tullow Oil (TLW) have got off a little lighter tax bill than the Ugandan Government had hoped for. Both parties have agreed to a full and final figure of $250M, near $273M below what was claimed at $473M. TLW also have got an instalment plan put in place. After consideration of the $142 million already paid TLW have a mere $36M ($108 million in total).

Providence Resources (PVR), yet again gives news that is pretty much academic in the absence of the lack of a farm out for Barryroe. The Technical Update, Newgrange Prospect, although "good news" isn't what the market is looking for. In the absence of such a deal for Barryroe, one has to wonder how long Tony O' Reilly's position remains acceptable to the shareholders. 

Surely there are not rumblings of disgruntled and 'impatient' shareholders at PVR. Or worse, has the soon to be partner realised PVR are over a barrel and hard ball is being played out.

Savannah Resources (SAV), appears to being pushed in the press, with a deal where SAV can earn up to 51% Mutamba/Jangamo with the formation of Joint Venture with Rio Tinto of all companies. There's a number of woes here, firstly investors would be wise to consider the woes of this deal. Why Rio would want to be a minority partner in any business it conducts raises significant questions about Heavy Mineral Sands. This is guaranteed to be revisited in due course, expect a fund raising in due course on the back of the "significance." 

Ormonde Mining (ORM) will be grateful of the Oaktree financing as their final results out last Wednesday, show they had around 200K ish left in the kitty. Had investors paid attention to the EMC (EMC: ORM February 2015) they'd have saved themselves near 40% and some 70% longer-term. After today's update, one would be wise to consider how the financing assists with working capital requirements, same as SAV, this will be revisited. 

Shareholders in Thornton's (THT) have been saved, with an offer from Ferrero at 145 pence. In the absence of additional interest, it’s wise to take the cash and run, especially those in more recently over the past 3 months. Hat-tip Richard S and CwC for some decent research there, have conducted none of it myself it was a pleasure free-loading for once, although very small! 

Its noted that a certain small brokerage should get more commendation for their work especially after 3 kills in near as many days! Perhaps Charles Stanley can save themselves considerable time reviewing their targets and just put 145 pence! 

With a chance of Director at Bacanora Minerals (BCN), maybe the company forgot to thank him for his services? Of significance is the change at Sierra Rutile (SRX) whom has appointed a chap associated previously with African Minerals. A brave appointment in light of SRX's recent share price recovery. 

Atb Fraser

Morning Mumble: Par Deux, KEFI's Tulu Kapi, Minco (MIO) and SRX

Good Morning once again,

Kefi Minerals (KEFI) came out with update on the progress Definitive Feasibility Study (DFS) and financing. Amazingly, the DFS is starting to look "slightly" different from Nyota's DFS all those years back in December 2012. It will certain be interesting to see how the company has got to all-in-costs (including operating, sustaining capital and closure) of c. US$783/oz (excluding initial investment). Based on what was previously suggested all in costs were circa $900/oz. so the $783/oz will be very surprising! 

We'll await with patience on the full update next month (?). If the headlines are near, it could be a very interesting time for Kefi's Tulu Kapi, unless of course there's a JV which removes a lot of the potential for the long-suffering Kefi holders, although this is believed to be very unlikely, its still a risk as KEFI still need their share circa $50m for their equity contribution. 

From the RNS, as it appears to be copy and paste day!

• After-tax NPV of US$112 million assuming an 8% discount rate and gold price of US$1,250/oz and US$73 million at a gold price of US$1,150/oz
• The targeted funding mix is for up to approximately US$100 million from debt-style financiers (conventional project financiers along with the structured supplements thereto) and the remainder from financing arrangements with project contractors and/or equity from investment institutions at the project or parent level

The draft of the 2015 DFS is now being reviewed by the short-listed secured lenders' independent technical consultants to ensure plans, and substantiation thereof, are aligned with financiers' expectations. The Company's management is also preparing final tender documents for the mining operations and for construction of the process plant and infrastructure. Short-listed project contractors have indicated willingness to participate in project funding.

Continuing on from EMC - Mio Woodstock, was something Roger Bade highlight yesterday. Roger's conducted more work on this but limited time its easier to cover his words yesterday. Interesting the differing view on the returns on Woodstock, which contradict my view of Hongxin Group's (potential/gossiped) interest in the Woodstock asset. 

Minco (MIO) - Reiterated BUY

The shares shot up post their Q1 results as they indicated that a Chinese electrolytic manganese metal producer had initiated technical due diligence at their Woodstock manganese project in New Brunswick, as Minco looks for a partner to develop it.

More academically, at end March they had US$5.43m of cash, while drilling continues at their Buchans base metal project in Canada. A breakdown of the various carrying values of their projects was provided, with Buchans topping the list at $5.921m, Woodstock $3.659m, the Pennines $2.494m, for an overall total of $13.412m. From this portfolio we only carry a valuation of £1m for Buchans, thus illustrating the potential for exploration success throughout their portfolio.

Their June 2014 compliant Preliminary Economic Assessment on Woodstock indicated potential returns way below our criteria for excitement, hence we look forward to be pleasantly surprised if they find an interested Chinese partner.

We still think the main value is to be had in their 2% Curraghinalt royalty and continue to value this at around 50% higher than the current share price.

Get well soon Roger, one hopes the tonsillitis doesn't turn into Ebola! 

Its hoped I can come back to the Sierra Rutile (SRX) announcement for Sembehun Dry Mine scoping study. Without digging through paperwork its hard to establish their assumed market price, but the returns suggest it may be a tad bullish. SRX's pre-feasibility study is due Q3 2015, so plenty of time to get there before the market! One assumes they utilised the consensus pricing from last year that was rather bullish at $1/t+ Edited $1K/t+, when sensibly consensus suggested Rutile's low is around $800/t. More when there is time. 

Although admittedly, the economics for SRX's Gangama Dry Mine even at the $800/t are compelling, at circa £150M market cap SRX "may" just have some prospects good prospects. With the rainy season upon SRX, one hopes the bulk of earth works were completed for the Gangama Project (Sierra Leone rainy season June-November). SRX have Wayne Venter joining from Norilsk Nickel on the 1st August 2015, as chief operating officer. Certainly more potential...than previously. 

SeaEnergy's trading update "may" not be as bad as one first thinks, perhaps a little knife catching! Although SEA's may be a little optimistic of "when the time is right" to divest/flog their Lansdowne Oil & Gas plc (LOGP) might be a long way off! With Providence's Resources (PVR) issues, perhaps a bird in the hand is worth.

Atb Fraser

Disclaimer

Morning Mumble: REM increases its stake, POG's links to PVR and CNA being the new Tesco?

Good Morning, well for most, as there's a dreaded manflu and virus is here!

REM (Rare Earth Minerals) increases strategic holding in Bacanora Minerals to 14.37%. Doesn't bode well for Bacanora, based on past performance. With Graham Edwards having (or potentially) having an interest in 24+% it will be interesting to see how voting goes at the EGM.

The developmentss at Petropavlovsk (POG) are becoming a circus with an update.. So the board believe their proposal is better than Sapinda's that is allegedly at a higher share price than that being underwritten. Surely those underwriting the current proposal don't what the apple cart rocked, with belief that is very high risk of insolvency in the event POG board and bond holders don't get their way. Sapinda should outline their proposal with all necessary paperwork including evidence of funding sooner rather than later.

For those with an interest or following of PVR (Providence Resources), Sapinda are involved in Sequa Petroleum whom are rumoured to be the farm-in partner for PVR (EMC Sequa and share sale) and are currently alleged to be raising the necessary cash to fund this deal. So are POG correct in their analysis about the ability of Sapinda to raise the cash? Over to Sapinda to up the ante or better yet, ante up!

PDL (Petra Diamonds) have come out with very positive results and a paying down a significant proportion of debt in their interim results. The numbers are healthy, in fact higher than what the EMC expected. Having recently been short (EMC) across the sector for the play. We are becoming more positive after PDL's interims so a review is needed as financing is coming back into Antwerp via the Middle East (EMC GEMD + Antwerp Bank.)

Russia is impacting on precious stone sales in 2015, the contraction should have already been felt. PDL believe prices have stabilised. And with a few new lenders in the market, they'll be cautious about over leverage. Israel may just surprise us yet with a new diamond fund, but don’t expect too much price appreciate in the short-term (if any).

There's been some gossip in recent days about Centrica (CNA) acquiring Smart Metering Systems (SMS), could the wires have been crossed? With SMS’s contracts with major energy companies would not necessarily have any added value added in acquiring SMS, more so its likely to be a negative.  

With CNA results out today, one cannot see them making too many acquisitions whilst they slash the dividend. They have announced a small contract with Total Gas & Power Limited (TGP), with the potential for an uplift in the order size. It would certainly fit with Centrica's longer-term plans, but perhaps not SMS and certainly not now! A logical fit would perhaps be Melrose and incorporate SMS within Elster.

No need to comment too much on CNA’s final results. An Oil & Gas + utility company disappointing the market. Revenues up, debt up, profit down, group investment down a whopping 68% with a further 40% cut in E&P capex by 2016, as a result they've 'reset' the dividend. CNA could just be the Tesco of the energy sector...? Over to London to push those close to the margin to spin the Canadian interest in CNA into the rumour mill. 

Atb Fraser

Pm Bolt On: Providence Resources (Share sale)

There's apparently good news in the offing for Providence Resources as a company is willing to attempt to raise the monies to farm in to Barryroe. So with PVR having lifted its skirt and Sequa Petroleum allegedly having liked what they've seen in the data room, it's down to the price. Sequa like to take discoveries to production so have a better understanding than some of the market, but also are savvy in their transactions!

What holders should be concerned about is Anthony J F O'Reilly (major shareholder) and founder investor has slotted 6% of the company holding 6,136,565 ordinary sharesaka 9.49% of the issued ordinary share capital. Its wise to take these sales as signals, or as a little bird tells me to wait for a holdings RNS from a like minded individual. Hmm...not sure I concur with the latter. 

Atb Fraser