Friday 6 December 2013

Christmas cheer from Rurelec albeit not necessarily planned for with a mini placing to 'trade partners.'


Now call me miserable today, Friday I now don't trade merely research and enjoy life generally with the odd lunch out. I'm also looking at things negatively for short positions on stocks.

I am all for mechanisms to make a company progress, but correct me if I'm wrong but was there 'meant to be no further issue of shares?' The company's cash situation is far from dire and better still, could this 'subscription' have not waited till after the award? I know it's a small amount 'in real terms' but all the same I don't like it. I  won't be selling, but I will be questioning it!

In due course, I'll see if the company wish to comment on it. I have to on balance, acknowledge they've managed things well so far and far from the likes of the Oxus Monthly dilution which you have to factor in as a risk there, so buying over significant periods of time will help things. Oxus really need to resolve the cash flow and dilution with a one off placing! I did email the company to this affect but no response. With the Calunius link etc...a fundraiser is easier than they perhaps imagine and would stabilise the SP and avoid the longstanding short via the equity raising agreement SEDA or EFF. 

The company (back to Rurelec) have been fair overall, but I see absolutely no reason for this placing at this time, with potentially "a maximum" of 18 days before news (according to the BRR article). Alas, time will tell!

I will in the  New Year be changing the blog to cover more items, people will be able to comment but subject to approval etc...So continue that theme...

A number of rumours flying round Bellzone have allegedly agreed terms for the CIF (Chinese Investment Fund) to finance their activities through to production and Emed finance is now just a matter of Governmental Approval of permits. Something I don't see the Spanish Regulators dilly-dallying over for obvious economic reasons. However, the ownership issues caused by Trafigura Beheer BV (Trafigura) might cause a buying opportunity in the New Year pending how its resolved. 

So will Utilities become Dogs along with the Financials next week or will there be a Christmas run? I don't think so on all fronts, with the FTSE having done so well over the year its very unlikely. Watch for the tapering noise though, there is fear (significant trader fear) in the impact across commodities and with the significant deterioration of the Gold $, it could find that Gold makes/settles in a level around the 1100's. 

So with that in mind, have a good weekend! I kindly had a case of Hendricks delivered today for Christmas, many thanks Rich! I shall duly toast you when I partake in the odd one!

Atb Fraser

8 comments:

  1. Hi Fraser- yes, I too was concerned when this came up as they did say in the annual report in Sept- "Rurelec does not intend to issue any new shares as part of its Santiago listing", albeit this may not be anything to do with the listing. It is also a little mysterious that they are just named as "trade partners in Chile", nothing else, suggesting it is some form of gift, given the upcoming arb news and the hopeful rerating. I hope the trade partners give us generous terms on their services/goods to reciprocate. It does at best look a bit suspect.

    Thanks for the BZM snippet- my hints were that Vale were getting more serious about Simandou (which is half a RIO project) and that the route to the coast seemed to pass pretty close to Kalia, which is the main BZM greenfield site, and Kalia is around 50% nearer to the coast, so a possible Tete type regional development plan may be on the cards in Guinea. Mt Nimba, another massive deposit, is just down the road too. Who knows, these big miners hold the key to many projects that could otherwise be stranded and fairly worthless.

    Im not sure if you are watching PFP, but the whole story makes fascinating reading, and it will no doubt one day be made into a Hollywood blockbuster, but a former director is almost out now and the UK court ruling was empathic, so it could be investable some time soon.

    Have a great weekend.

    Cheers. The Leggie

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  2. Leggie, my annoyance is not the need to issue stock but as you rightly point out the contradictions and the very poor timing. I have emailed to that fact. I have been buying RUR for a long period of time and don't wish to lose out to what appears to be "profiteering". Unless I get a decent explanation I will consider it profiteering...

    There were a number of problems with BZM, one of which has left and the rest I am sure are being 'ironed out' as I type!

    Pathfinder Minerals, I have reservations as due to the market cap I would be unable to take counter-risk measures (hedge). By As such it's "naked" long and I don't like that any more...a few years back I would have faith, nowadays I like to perhaps make a few % less and protect my positions. I might buy some because its significantly lower than you first said, just to rub it in!

    Indeed, enjoy your weekend!

    Atb Fraser

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  3. Fraser

    LOL- Very entertaining, in all respects. Bravo! I especially like the "rub it in comment". Then again the red wine is evaporating at this end, and I had a good day (despite the illogical movement re EXI- I am looking forward to the mysterious endgame, whatever the outcome there, as I will either make some money or create a "learning experience"). Let hope the ENRC oligarths don't get involved, or Im out. :-))

    Back to the bottle now.

    Cheers. The Leggie.

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  4. Leggie, dont get F startedon ENRC- he called the short v.well on KAZ VED & ENRC. Im not complaining at all BUT he will get big headed over it - Leggie ask F to share an email from a 'super' analyst who told F he didnt know what he was talking about re: ENRC. Gloat? No but dont make pathetic statements about traders calling it right time&time. Im in africa at the mo so intermittent reading - looking forward to you blogging F-cheers ian

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  5. Ian

    Hi- can you check out some of the African miners inbetween safaris for us. :-))

    I know just the sorts you are referring to and after 32 years at HSBC, I am now happy that I have very little contact with these guys nowadays. I guess its the case that the more powerful most people get, the more arrogant they can become. It can get to a point where they stop listening, which can be dangerous for them and their employers. Still, they do create opportunities that we can exploit so long live the arrogant analysts !!

    Take care.

    The Leggie

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  6. Fraser

    Any thoughts on todays CHL "options for the board" announcement ? I guess that the good news is the price (50p) but do they really need this additional incentive, given that the fortunes of CHL are surely in the hands of my learned friends now- perhaps CHL should be giving options to the barristers instead!

    http://www.investegate.co.uk/churchill-mining-plc--chl-/rns/issue-of-options/201312090940320215V/

    Cheers. The Leggie

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  7. Leggie, I don't tend to worry about options that are significantly above the current SP. The company needs additional monies to fund the case; they need to win it and the team there are as near to what I'd pick for the ensuing battle. That doesn’t validate any award…

    There is an argument for just having one Director but would that represent shareholders interests? Unlike other companies and I can name many, to their credit they're at least double the current SP with 450K of them at 75 pence. The legal team get options, in essence by proving up the case, they get to continue their work. Poor legal work is often punished by less work, rare you find a crap lawyer earning decent monies; the firms being used are of good repute and the teams I ‘believe may add significant value.’

    Alternatively, what most people forget is, they could just buy in market at the current SP to benefit from this price. So what they're saying is "they can buy stock at 50 pence within 5 years." So they have some protection that they have an option, but from where the SP is now, to the options is some significant profit for most holders? Alternatively the price could tank and they could left safe in the knowledge they didn’t risk their own monies.

    However David Q has some options at 12 pence and 75 pence (some of which are significantly in profit) but I did not hear people’s concerns at the options he bought at 35 pence http://www.investegate.co.uk/churchill-mining-plc--chl-/rns/director-pdmr-shareholding/201105241325021937H/

    They need by my estimates £8M GBP to continue the case and funding, so far that’s been achieved by placings above the SP significantly…so they aren’t doing their job? Name me many companies including international arb that have done that? Rurelec? Perhaps…So what’s that worth? Vatukoula? I’d been short there a significant amount of time, so to raise any money was in part a positive.

    Options I use as a symbol of the boards mindset, i.e. profit or zero risk, remember they have to at least pay for them! Likewise placings I use as the same measure...hopefully this will continue with the next 'placing' or funding scheme. Pray not a SEDA! Unlikely with the 'pala' connection.

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  8. Fraser- thanks for the reply- you raise some very valid points there and I guess they need to keep the essential members of the team at CHL through this period, some of whom would no doubt have had offers from other employers. I too am happy with the CHL approach so far, with the obvious delays coming from the ROI side and you are right that they have been placing above the share price, which is one of the better ways of raising the monies needed to keep the CHL wagon moving forward.

    I agree re the dreaded SEDA- I cant see why SEDAs are attractive to any but the most desperate of companies, given the creation of a forced seller and the shorts that they will take out to protect their positions. They are a big red flag for me and I cant think of any that haven't led to a massive drop in the underlying share price for the company "benefitting", at the cost of the shareholders.

    Have a good morning.

    Cheers. The Leggie


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