Good Morning,
The past few days have been rather silent, for a number of
reasons. It’s best if readers see the disclaimer,
which is already covered by Google's "disclaimer about
content." In the event parties disagree with the disclaimer either of
EMC or Google then they should close the webpage and not return.
SGZ came out with a resource upgrade on their Cononish
Gold Project (in Scotland not as some think Ireland or Cornwall). SGZ
have increased their resources by revising their Mine Development Plan, en par
to a Prefeasibility Study. One got all excited about the announcement and share
price to look for the borrow to short, sadly there's zip! Even retailer spread
bet firms couldn't/wouldn't! Although it was intraday greed! Purely on a belief
of an unjustifiable appreciation in the SP, normality has since returned.
Anglo Asian Mining final
results, continuing on from the director loan from EMC
22nd May 2015 Director Loan AAZ's going concern is a tricky statement.
Its common-sense the AAZ's forecasted cash position and ability to repay debt
have a number of assumptions.
- Achieving
the forecast production of its gold production operations, principally its
heap and agitation leaching; [Also an assumption about grades
and recovery should be considered].
- its
gold price assumption; and [it’s difficult to validate that
gold price assumptions as the all in associated costs per ounce appears
absent].
- the
small scale flotation plant being commissioned on time and achieving its
planned performance. [Crucial].
Bold is EMC not AAZ!
With some sensible rearrangements in the debt repayment to the
Bank of Azerbaijan (IBA) it is a going concern. With cash at the end of the
year at less than the price of a semi in London, it’s no wonder the director
loan was organised, and in hindsight, one could have argued a higher %
should have been charged.
One doesn't envy AAZ if their grades drop below 3g/t as
costs will increase and thus impact on cash flow. Personally, AAZ require circa
$10M in capital to improve the balance sheet, and in an ideal world $20M would
be welcome. The leveraged play at the current levels means they can survive as
long as IBA are willing participants.
EMC estimated of cash costs were a little conservative at
near $945/oz AAZ have come in at $971/oz. Simply put, it’s not
without its risks, if one assumes they can continue with grades above 3g/t,
keep cash flow positive, floatation plant on time, budget and working properly,
improving recoveries, oh and the gold price remaining stable. Please remember,
every Chinese person and their dog is favouring equities (no doubt leveraged)
over gold and increased supply in the gold market. It doesn't sound that great,
especially with net debt of $52.4 million.
Kingfisher (KGF) came out with Q1 trading statement. No change in sentiment here, one
just needs the buyback to end and the realities of poor trading and conditions
in France (the acquisition or lack of may have been very fortunate to
KGF).
Screwfix are still cannibalising revenue from B&Q, one
wonders whether KGF would be better shrinking B&Q stores and farming space
out to other providers whom don't duplicate the offering. Perhaps something for
supermarkets to consider or...car sales or similar? Gyms? This would maintain
Screwfix in growth and costs seem to be easier to control and traction in the
market making it the shining star.
KGF are quick to point out about margin improvements,
although on the comparative period this would not be hard! UK gross
margins up 90 basis points reflecting weak comparatives (-210 basis points Q1
2014/15) due to more promotionally-led showroom sales last year.
One has to wonder whether KGF's costs focus is something
they shouldn't be echoing to the market, more so maintaining efficiencies.
Costs benefited from on-going productivity initiatives offset by phasing of
marketing costs. Could Kingfisher benefit by cancelling their over 50's
discount scheme that appears not to be abused by anyone whom can grab a
granny/granddad. It does not promote loyalty, it just promotes abuse of the
system!
Its somewhat hilarious commentators and the press are
suggesting the handyman is driving sales with a belief all these workmen are
disappearing off to Screwfix. Having been in a Screwfix recently, its
surprising the lack of trade, although Screwfix are enticing trade with free
tea and coffee when picking up goods.
Simply, the punters have realised the catalogue model is
easier, you don't have to walk round a huge great bloody warehouse to then ask
where such and such valve is. For heavy materials or plants there's a difference,
simply put, for tools and "Screwfix's" key market, you're better off
getting someone else to get locate and organise your order for no charge.
Screwfix simply meets the three C's of Convenience,
Consolidation and Conservation of time, in terms of marketing. As always, ones
very foolish to bet against share buybacks. Today was merely aiding closing the
longs as the market laps up the premium applied to the buyback that in reality
shouldn't purchase any stock above 325 pence.
Iofina (IOF) popped their final results out yesterday. There's a big difference
between positive EBITDA and operating profits. Global iodine prices have
continued to be under pressure, we'll ignore SQM (Sociedad Quimica y
Minera S.A) issues as such, on the basis they have a very different
balance sheet and muppets seem to think it’s relevant. So save for comparing
margins or performance within sector the EBITDA figure (or lack of) is like a
chocolate teapot for a developing company.
Iofina hope by 06th June they should be in a position to
update fully on the Atlantis Water Depot Project. With a high probability
of being granted the permit, it would be rude not to have some binary money on
the possibility for high risk exposure, although IOF's downside may deter some
speculators!
We'll leave Iofina to summarise their accounts, record
revenue, record loss...hmmm
Atb Fraser
