Rurelec but so nearly a result! Its all about the timing...

Further re: Timing of Bolivian Compensation Award

Well it was so so close to the end of January, fair play and nothing up with that. I have elected not to post the massive amounts of comments about Rurelec (all 11 of them) save for 1 which sums most of them up. The reasoning being that they're very similar, and I will say it's brilliant that people are top slicing, taking profit and the like. Except 'Ben' best of success to you on your 100% all in strategy, takes some balls in today's market so you go! Please let me know how you did and when you sell.

I suspect the Company and holders will breathe a sigh of relief, and then Rurelec can get on with Energy Production and the PCA well behind them. Ironically, depending on the award it may make Bolivia more invest-able. Who'd have thought it, alas,  it doesn't come without caveats.

The summary to Rurelec: I believe on the whole Peter Earl and the board have handled the process very well. Yes there's some ups and downs to come but they're fairly obvious even the gamesmanship on Bolivia's part, but at least 'where possible' Rurelec have endeavoured to keep the market updated. In comparison to Oxus, it should be taken as a well done for managing the fund and loans etc...The placings, I haven't agreed with at times, but hey there's no pleasing me all the time. After all, Rurelec had a very valid argument of continuing with business outside of the PCA claim, for which they have done. The contentions I have with the timing of the last placing hasn't been hidden, but then again, I'm not aware of the full facts. The Santiago Listing I suspect isn't far behind either.  

So where too next...tranche buying on other claims? So it looks like Oxus is next, perhaps even Metro Baltic Horizon (MET)? Churchill will have a nice ride assuming jurisdictional validation. All to come...I may need some Beta testers for the new site assuming Patrick finishes it. I shouldn't moan he's not charging me a penny, albeit he did ask for three tips! So I reckon we're equal on that basis...or perhaps he owes me more work!

Atb Fraser

Wolf Minerals: The Finance Question with the rule of Common-Sense.

Wolf Minerals Ltd Quarterly Report 31 January 2014

This is growing into a good company. However, I have sold, not for fear of losing but common-sense and take profit . The rule applies (or should) to all investors but is often lacking and not just in investing. By my estimation, they have to raise a further £55-62m depending on which rules/estimates are used. Its my view it's higher than the companies estimates of £50m in addition to other finance if I was off the fence it would be £56.5M albeit not difficult for a company of this calibre. I suspect the terminology used will be 'due to an over subscribed placing/rights issue.' 

For me, its unusual not hold any equity in Wolf Minerals (the company) and certainly wont until the placing/rights issue is out the way. There will be a material drop in the price either prior or after the placing. Will I be short? Only if the indicators present itself which they don't currently, so I suspect I'll miss it. However, I don't believe there's any material upside that warrants continuing to hold. Perhaps I'll be wrong...but that'll be hindsight and its cost me nothing only missed profit which you should never worry about. 

The company has all the benefits and advantages of a decent company, unlike many I could list and for those that know me, the one I'm attempting to make them change their management ethos of "it'll improve some day and when it does we'll all be laughing" Yes, there's actually a company out there whose strategy is to do absolutely nothing bar award themselves 'shares' and significantly high fees whilst the company barely breaks even at Group Level. Sounds like many doesn't it! They are gradually giving in, with one falling by the wayside already, just 3 more to go and reduce their salary and jobs a good'un. Of course, their view is their salary is consistent with all the other companies. So let me get this right, they have not achieved their targets, issued options, have not achieved financially, pay rises and salaries in excess of 1/2$M a year ($5M collectively), but best of all, they believe they can do absolutely nothing to improve the share price 'until the market turns.' So if anyone is on such a retainer/salary and has that ethos, can you explain how you actually get motivated?! (bar a stonking salary). I personally would be unfulfilled!!

Its my view, and rightly pointed out by the what appears to only be Tom Winnifrith & Co, that companies treat PI's once they've got their monies (i.e. bought shares) as immaterial, with expressions of "if I could buy I would be filling my boots." I don't agree with some of the companies that Tom picks and discusses but that's investing. I dare say he wouldn't agree with some of the stocks I short that are crap but that's the market. What Companies don't realise is, after various promises and failed attempts to ignore the situation that company(ies) are in, they now face shareholders asking serious questions ad being better informed. I 'doff my cap' to Tom, I don't know him, have not met him, but do read some of his articles. A normal chap with a passion, whose ability to withdraw from controversy is nil, I suspect he loves the kill!

So have a good weekend!

Atb Fraser 

A reminder: Rurelec Plc Claimants [Rurelec's] Post Hearing Brief.

I was reading this after napping [a very long day for me], not to reaffirm my investment decision having already had profit and capital returned the rest is cream. I hope others have been prudent not to carry an all in policy unless of course you accept the pros & cons of such a strategy albeit the company is at a transformational point. Contrary to my original views this will also be a long-term holding, with trades where possible.

One of the messages which I won't post due to the explicit element of the language is "how can the PCA [Permanent Court of Arbitration] be allowed to let the decision go to the wire [the polite and short version]. The answer is simple, they do not have to give a decision even tomorrow, as they have the powers to extended the date if they see fit.

Obviously, due to the comments Peter Earl has made this would be disappointing for all holders in terms of expectation, but it is my view that Peter has been sincere in relaying the news from the PCA. Likewise, unlike a lot of companies, most directors have skin in the game around the price it is now. So it's fair to say, they see value above the current share price (the time-frames may agree or disagree with other holders but that's the name of investing).

I won't post immediately upon any award and/or decision as there are other things in life bar Rurelec. So for those wishing to read a one-sided view of the process, claim and case, here is Rurelec's Claimants Post Hearing Brief (31 May 2013) Source: Guaracachi & Rurelec v. Bolivia (Entire List of Documents)

Claimants Post-Hearing Brief (31 May 2013)

Atb Fraser

CMCL (Caledonia Mining): Geopolitical Risks

The new marketing arrangements Caledonia Mining Crp New New Marketing Arrangements for Gold Exports (28^th January 2014) have just given continued momentum to the decline in the SP. Most brokers will play down the item as not warranting the SP declines for the sake of less than 1.4% decrease in the value of the gold, now 98.5% as its more than affordable and also, in part surely can be offset as an expense.

For those with a longer memory, they will recall the events in 2008 (Caledonia Update on Operations 28 Oct 2008) whereby CMCL were not paid for their gold and had to put the Blanket Mine on care and maintenance/suspend mining. 

It’s a Geo-political risk that should be allowed for, but I hold and will continue to do so until things either hit my sell point either way or they’re bought out (the latter unlikely). If news presents itself it could well turn into International Arbitration, although I don’t see that currently, there could be a delay in payment but envisage there being an RNS typed around midday to confirm cleared funds  as it’s a material event and change with history showing there is a risk. With any news of payment I suspect so see the price stabilising…or the opposite without (buying opportunity potentially.)

Atb Fraser

Edit: Link taken from comment to make it work here Fidelity Printers and Refiners, ZB tie-up bears fruit (Zimbabwe Sunday Mail)

Fraser's ultimate short: New World Resources (Edited: Not quite ultimate)

I've left this as a title for Fraser to wake up and explain what the problems are with New World Resources. Feel free to state what you think they are. F's been short for some time now 14months- very insightful. Cheers Ian

Haha thanks for that one Ian! 

Edited: 

New World Resources (LON: NWR) was simple; higher costs, lower prices in essence a deteriorating coal market which they acknowledged in their own announcement dated: 14 January 2013. 'Declining Market etc....' On top of that, they raised EUR 275 million Senior Notes due 2021 just after the 14th January 2013 announcement to refinance notes due 2015 and for 'for fees, expenses and general corporate purposes.' 

My view was they were 'remortgaging' and got a coupon rate of of 7.875%. The overall coal prices were set to decline and costs were set to increase even allowing for "synergies." So they were trying to save monies in a declining market with forecasts of 10-15% deterioration in Coal expected across the board aka 'risk of dividend being cut totally and that meant a 'change in market valuation required.' So how they could have a benefit and justify what was a near £750M market cap with the entire industry and market against them there's only when way these Coalie companies are going in the current climate including in America. Coking Coal perhaps a different story but thermal is certainly over supplied and undervalued/demanded. 

My short was give or take February, so only 11 months, I think you're mistaking the "coverage" and the actual trade Ian. NWR I believe will have no shareholder value soon, if any, the Trading update and review of capital structure clearly shows they have to do some form of financing to cover the debt. This in my view is going to be a heavily discounted placing soon enough!

One certainly to learn from...

Atb Fraser

FX GBPAUD: The Aussie Dollar & Gold

For those that are ML contributors / readers you'll note the Aussie Dollar has hit my target for the short-term of £1:$1.91. I have no indicators to take a further position and closed all trades on the GBP. Mining wise this will impact on the bottom line of most exporters so look for a weakening in the revenues forecasts (RIO). 

The GBPAUD has had some significant run of late, appreciating near 13% in 6 months. I have been trading GBPAUD for a significant amount of time its the only FX I really understand, the others are too big in terms of variables for my small mind.

What it does suggest to me though is the spike is Gold in Asia over night and the relative weakness in America means that Gold may have sufficient ingredients for a directional play for a few months. I have not taken a position as of yet because I'm learning the correlation, but its starting to look more bearish in the short-term, perhaps $1150?

Personally I would be looking to India for a directional play, as currently the import restrictions and smuggling have assisted those short on the precious metal in banking significant gains. For coverage and thought, start here:  Sonia Gandhi seeks easing of gold curbs (Reuters 23 January 2014). Its not likely to have a massive impact but in the short after such news I would expect Gold demand to go up. 

My question for the weekend is, "when will New World Resources hit my short target price of 20 pence." The closest comment may get a few empty bottle of Gin!

Atb Fraser

Victoria Oil & Gas (LSE: VOG) & a small discussion on Rurelec...

Victoria Oil & Gas RSM Settlement and US$16.3m Received

Now, its positive for shareholders that some change in the attitude of all parties concerned is being evidenced/displayed. Why was this not put forward as a resolution by VOG in the first place? Perhaps it was, but it was clear in their RNS that this was absent at the time, so if they had put this as an offer it should have been notified within the RNS as it was material to the Company. 

Its my view there is some contempt being shown for shareholders and who that is is difficult to identify but I am beginning to wonder if it's more than one party. What there is in my view is a need for a change, its clear that the current parties are limited with a fractured relationship and not forgetting their RNS which showed they had some culpability when they released the RNS. 

Now if I had a share price performance similar to this, would I be thinking its time to let someone else move the company forward? I would like to know how much the International Arbitration cost VOG seeing as only a limited amount of monies were/are recoverable due to culpability. 

I shall maintain my holding, not for the benefits of any of the management as I class them as a risk in the company and to my profits, but for the assets which surely cannot be impacted further.

Now what would make me laugh about this RNS from Tower Resources Operational Update and Issue of Equity. Answers...

Finally Rurelec. It was pleasing to see parties take some profit and the price consolidate in the process yesterday. For the message relating to "why the %&%* would I be selling now unless I know something he/she doesn't." My answer is simple and perhaps difficult for those that would struggle to be an amoeba at scrabble. I was derisking a position as I had been acquiring the stock over a significant period of time, I would be stupid not to take/close positions that made me a profit. Did I sell all? No, but irrespective of what happens next I will have made a healthy profit. 

Practice Guideline 6: Guidelines for arbitrators dealing with jurisdictional problems

Practice Guideline 6 jurisdiction

I have had some questions and messages around what jurisdiction is. I wish to reiterate it IS NOT and never will be trialling the case. 

It is for clarifying if the ICSID (International Centre for Settlement of Investment Disputes). Now with the utmost respect, if people are unsure of this or do not have a clue, then either continue gambling or sell up and walk away. It is tiring to read childish statements about what is a very simple process. It makes me wonder why people bother investing and stick with horse racing or betting on goat races (aimed at Ian). For that reason, I will not be responding to any other questions or queries about it.

Ideals: Rurelec (LSE: RUR)

In an ideal world, I would like an announcement of the listing in Santiago sooner rather than later so they may take the risks forward for those that have carried the company this far forward. I've had a few messaged about how to trade this stock and for the long-terms its my view you should have banked significant profits already and still have skin in the game.

There is no point whatsoever in travelling 36+mths in trading or buying to not do anything upon the news. That's my view others may differ, but I certainly wasn't screaming for Iofina to go back to £2+ now it's at a pound because I sold pretty much all . Common-sense prevails, but make sure you have a plan, whether that's over the really long-term or not is your call but have some definition to your investment. 

For Ian and I, its the culmination of hard work, we've attended various conference to learn and various seminas on Third Party Funding, International Arbitration and in some cases, been very lucky to have good friends whom work in the Industry. This doesn't mean Ian or I will always get it right, but its common-sense investing based on the principles of "did they have an asset...etc..etc.."

Rurelec, as some people know that I speak to, was originally short-term investment sell up "on the international arbitration" and move on to the next. My view has changed where I will keep some in for the longer-term because it'll have all the ingredients to move forward and pay a dividend one day. That's for everyone to decide on their own, if you sell up and the price tanks, that's your call, your decisions. No one can be blamed and best of success in whatever profit you take. 

All the best, Fraser

Roar-lec (LSE: RUR) : See what I did there - Timing for Announcement of Bolivian Compensation & WH Ireland on board

I have had a phone call with excitement so he's forgiven, thanks Ian! Timing for Announcement of Bolivian Compensation. So the starter gun's gone on off and now down to sheer speculation, is it a pound total compensation? $142M? Common-sense shall prevail of course and so will derisking during the process. Plus a change/appointment of joint-broker :Rurelec PLC Appointment of Joint Broker. Shall be an exciting week! 10-1 the spread bets are tight/non-existent now!

Atb Fraser (sleep!)

Rurelec PLC

("Rurelec" or "the Company")

Timing for Announcement of Bolivian Compensation Award

Rurelec PLC (AIM: RUR), the owner, operator and developer of power generation capacity internationally, today announces that the Permanent Court of Arbitration (PCA) in The Hague has confirmed that the Bolivian compensation award decision will be released before the end of January .

The PCA will not make the award public on its website until Rurelec has notified the London Stock Exchange.

Shareholders in Rurelec should note that this new timetable for the award announcement is shorter than the seven day timetable originally agreed through the offices of the PCA during the course of 2013 and reflects the fact that shareholders have already suffered from uncertainty as to the outcome of the arbitration for more than eight months following the final arbitration hearing in Paris in April 2013. 

The award announcement, which is final, will bring to an end a process started in May 2010 when the Plurinational Government of Bolivia nationalised all of the Bolivian generation interests of Rurelec.

-     Ends -

Surely Victoria Oil & Gas are aware of RSM's announcement?!

I am surprised by the absence of Victoria Oil & Gas (LSE: VOG) announcement in respect of RSM Production Corporation disputes $26m cash call 20th January 2014. 

Twenty-four hours is a perfectly reasonable expectation for a company to comment on such statements by a partner in the VOG Asset. Am I being overly expectant to assume that VOG should be commenting to the public statements made? I don't think so and have included the entire RNS (at the bottom), because it's interesting to consider the terminology. This was not unexpected news either, its clear that partnership is fractured. Likewise, if the figures were excepted by the ICC (International Chamber of Commerce) then RSM will be liable for costs.

Its clear VOG now have to fight for all costs, so what are their options? Buy the defaulted percentage? Force default? I do hope common-sense has been applied this time in the "timing" of default rather than being premature as per the ICC findings.

Its also noted that the RNS for Victoria Oil & Gas on 13th December 2013 has "disappeared." Now why would the RNS be removed? What reason could there be for the removal? Who asked for its removal? I save a copy of everything, call me paranoid! So, for those that still wish to download a copy: Victoria Oil & Gas RSM vs VOG and RDL Arbitration RNS Number : 4543V Victoria Oil & Gas PLC 13 December 2013 I will also post the item in full to make sure a copy is saved for perpetuity. Just so you get what I mean: look below 13 Dec 2013 there were too...now? Even if you search the using criteria such as RDL, RSM and the like...

Monday 20 January, 2014

RSM Production Corp.

RSM Production Corporation disputes $26m cash call

RNS Number : 0063Y

RSM Production Corporation

20 January 2014



RSM Production Corporation disputes $26m cash call by Victoria Oil & Gas PLC

LONDON (20/01/14) - RSM Production Corporation ("RSM") announces its intention to dispute a cash call request by Victoria Oil & Gas ("VOG") for $26m relating to RSM's interest in the Logbaba Concession in the Republic of Cameroon. 

RSM confirms that it has made an application to the International Chamber of Commerce ("ICC") for emergency measures to defend against VOG's notice of default and enter arbitration concerning the cash call.

This action follows RSM's recent success in the ICC in December 2013 when it defeated earlier attempts by VOG to acquire RSM's interest.

Jack Grynberg, President of RSM said: '"The ICC confirmed RSM's 40% interest in the Logbaba Block.  VOG's claimed cash calls are invalid and vastly over inflated.  This predictable and wrongful demand by VOG is damaging to the project and to RSM's interests.  RSM intends to find out exactly what VOG has been spending shareholders' money on and RSM will not be paying any improper, unauthorised expenditure."

RSM was excluded from the operational management of the asset from August 2011 until November 2013 during which time they approved a work programme and budget.  RSM does not accept that it is liable for the $26m that VOG asserts it is owed as a result.  RSM views the sum requested as invalid and designed to force it to default and forfeit its holding. 

In arbitration, RSM will also seek an order that cash calls should be made in accordance with RSM's rights under its Operating Agreement, including the right to attend and vote on the Operating Committee and approve work programmes and budget.

---Ends---

For further information contact Davidson Ryan Dore

Lawrence Dore	lawrence.dore@drdpartnership.com	+44 207 520 9218
Claire Davidson	claire.davidson@drdpartnership.com	+44 207 520 9215
Hannah Northern	hannah.northern@drdpartnership.com	+44 207 520 9219

Notes to the editor

Timeline of events

31 May 2001	The Logbaba Concession is granted to RSM by the Republic of Cameroon
30 November 2013	ICC Tribunal confirms RSM's 40% interest in Logbaba Concession and that VOG's allegation of forfeiture is wrong
23 December 2013	VOG issues cash calls.  The first cash call is alleged to be for RSM's participating interest share of incurred expenses since the end of the first arbitration (July 2011) - $24,044,870.  The second is for a January 2014 advance for $1,977,600
20 January 2014	RSM applies for injunctive relief not to have to pay the cash calls; and seeks ICC arbitration of the validity of the cash call for expenses incurred since 2011

About Jack Grynberg

Jack J. Grynberg is the President and CEO of RSM Production Corporation. He is an eminent and highly experienced expert in the fields of hydrocarbon research, exploration, development and production. He has been resolute and highly successful in defending his and his family's companies' interests where necessary through negotiation, arbitration and other litigation.

About RSM Production

RSM Production Corporation (RSM) operates as an oil and gas exploration and production company. The company was incorporated in 1996 and is based in Denver, Colorado. RSM owns a 40% interest in the Logbaba Concession.

About Victoria Oil & Gas

Victoria Oil and Gas plc (VOG) is an AIM listed oil and gas exploration and production company with assets in Africa and the FSU. The company's principal assets are the Logbaba gas and condensate project in Cameroon and the West Medvezhye project in Siberia, Russia. VOG Chairman is Kevin Foo.

Background

The Logbaba Concession was granted to RSM by the Republic of Cameroon on 31 May 2001. On 9 August 2006 RSM assigned an interest to a VOG subsidiary, which was approved by Cameroonian Presidential Decree on 29 November 2006. It is a matter of contention as to whether the assignment was of a 50 per cent interest or a 60 per cent interest in the Concession. In 18 July 2011, VOG asserted that pursuant to the provisions of an operating agreement between the parties, RSM had forfeited to VOG its remaining interest. This assertion is disputed and is subject of ongoing and protracted Arbitration between the parties.

In July, 2011, VOG refused to accept RSM's payment of an outstanding $4,100,000 forcing RSM to demand arbitration.  RSM rejected VOG's claims that RSM had forfeited its interest in the Logbaba Development and the Government of Cameroon has not approved the transfer of RSM's remaining interest in the Logbaba Development to VOG. A Republic of Cameroon Presidential Decree executed on 3 December 2012 confirms RSM's interest.

RSM also has an International Centre for Settlement of Investment Disputes (ICSID) claim against the Republic of Cameroon which is proceeding to arbitration.  The case was registered on 1 July 2013 and a first hearing is expected early this year.

Oxus Gold Plc (LSE: OXS) Update on Arbitration Proceedings

Good Morning, I'm shattered so apologies for the lack of Grammar / literacy. 

Oxus Gold Plc (LSE: OXS) Update on Arbitration Proceedings

I'm going to publish it in full so the context is easy to follow (see below). I'm not sure what frustrations there can be for shareholders, surely one was aware of the confidentially clause(s) and the limited news flow. What is positive is the anticipated ruling is this year. Its my view the appreciation in company value and/or the legal claim is entirely missed by the market. 

Some people belt on about "target price" base on some hope of value etc...Nothing up with that at all, makes perfect sense and good practice. With Rurelec and Oxus Plc specifically, and in part Churchill and Pathfinder, its a case of the assets being expropriated whether directly by the Government or by individuals with the consent of the Government department or legal system (you could argue co-conspirators). However, what I do not understand is for the analysts incapability in assessing value and potential. It either shows a flaw in their modelling or a misguided belief in the process or systems for International Arbitration. Alternatively I could be totally wrong and they're all worthless, please remember that...Victoria Oil & Gas, irrespective of my view on responsibility, has clearly improved their financial situation, but with a messy 'Emergency Tribunal' to clarify items (deliberate stalling in my view). 

As such, at least there will be some excitement in 2014, with Oxus and potentially Churchill Mining, that's in addition to Rurelec and Pathfinder, which even allowing for the Mozambique 'slowness' will prove fruitful, potentially a final ruling for VOG to move forward. 

Of more importance in today's RNS is the terminology, "updated independent quantum report, and updated expert opinions on mineral deposit valuation and on issues of investment finance." Which covers the issues surrounding 'finance and valuations.' Albeit with the change in gold price etc..there has to be some allowance for the change in price but on the flip side, for the significant higher prices previously and the availability of Gold Finance due to the price being higher previously. I am sure Oxus will present the facts much better than I've described them.

Atb Fraser

20 January 2014

Oxus Gold PLC

Update on Arbitration Proceedings

Oxus Gold plc ("Oxus Gold" or the "Company") refers to the ongoing UNCITRAL international arbitration proceedings commenced by Oxus Gold against the Government of Uzbekistan on 31 August 2011, in relation to the expropriation of theCompany's investments in Amantaytau Goldfields and the Khandiza deposit, as described in RNS Number 3270N dated 31 August 2011.

Update on the Arbitration Proceedings

Oxus Gold's Rejoinder, prepared with the assistance of its legal counsel, Derains & Gharavi, was submitted to the Tribunal in 2013. It developed the position of the Company in the dispute as previously set out in the Statement of Claim (see RNS Number 4620M dated 18 September 2012), and was accompanied by numerous factual and legal exhibits and witness statements, and supported by an updated independent quantum report, and updated expert opinions on mineral deposit valuation and on issues of investment finance.

Calendar

A procedural calendar for the remainder of the arbitration proceedings has been established by the Tribunal. Confidentiality obligations of the arbitration do not allow Oxus Gold to disclose the procedural calendar but the Company can confirm that the hearing will be held and the decision of the Tribunal is expected during 2014.

Shareholders will continue to be advised, subject to confidentiality obligations, of any further material developments in respect of the arbitration as and when they occur.

Richard Shead, Chairman of Oxus Gold, commented:

"I understand shareholders' frustration at the lack of informationbeing provided to them as a result of the confidentiality obligations of the arbitration. However, I can confirm proceedings are progressing as expected and the Board of Oxus Gold remains positive that shareholders will be appropriately compensated for the blatant expropriation of the Company's mineral rights in Uzbekistan."

For further information, please contact:

Oxus Gold PLC Richard Shead	Tel: +44 (0) 20 7907 2000
SP Angel Corporate Finance LLP Ewan Leggat / Laura Littley	Tel: +44 (0) 20 3463 2260

Pathfinder Minerals Plc: Courtesy of Doc Holiday's & The Leggie

When I'm told about a stock, I go away and look for the negatives. I am totally negative in terms of trades now, not for short or long, but I find my mindset works better for my trades. I've been reviewing Pathfinder Minerals (LSE: PFP) with thanks to Pathfinder Minerals – a tale of intrigue BY Doc Holiday. 

The judgement of Pathfinder Minerals obtained via Doc Holiday's article: Pathfinder Minerals Plc Judgement 19th October 2012 and the appeal of Pathfinder Minerals Plc Court of Appeal Document (via Pathfinder Minerals) 21st April 2013 RNS'd 13th May 2013).

I'm not going to rewrite what's been well written by others on this, what hasn't been discussed at any level is the what has one of two likely outcomes in my view:

1) Pathfinder are successful in getting their licenses back, succinctly covered in the background summary by Pathfinder Minerals then there should be an uplift in the value.

2) In the unlikely event the proceedings are not honoured within the Mozambique Judicial System then in essence Pathfinder will have unlawfully had their assets expropriated with the assistance of the Mozambique’s Ministry of Mineral Resources. This will have breached their rights under the Foreign Direct Investments Bilateral Trade Agreement (2004 for Mozambique) and as such be liable for any compensation as a result of their actions in failing to protect the investment of the UK investor. This is covered by Bilateral Investment Treaties (BITS): The Case of Mozambique 

The legal document here: Agreement between the Government of the United Kingdom of Great Britain and Northern Ireland and the Government of the Republic of Mozambique for the Promotion & Protection of Investments

As such, I have been taken positions in PFP; it shall be interesting to see developments, at a very different stage to others, and different risk stages as well.

Atb Fraser

What the...clarity on the Indonesia Mining Laws (well at least some).

To quote my email box, WTF...are they mad: Indonesia Gives Details on Its Mineral Export Ban Rules Clarified to Allow Exporting Six Forms of Concentrate

For all us long on Nickel etc...LME broke its trend to trade late and the prices moved $15/pt very quickly in midday trades, today now there is clarity there should be some way to go yet. The concern for Indonesia should be the amount of small miners it'll put out of business. Its clear they have no consideration for those miners whom cannot afford to pony up 'smelter' monies. 

I still have this view Indonesia will get assurances from producers to agree to build Smelters then relax the laws to allow sufficient time to implement the policy for Nickel in exchange for higher taxes. Afterall, the risks involved with financing means Indonesia is cutting its nose off to spite its face. So Indonesia needs to finance smelters and believe International / Foreign Investors will assist with this. Really...With the taxation increasing it adds additional risks.

The saga goes on, I envisage some manoeuvring pre-9th July elections, you could argue relaxing the rules will be a vote winner?

Atb Fraser

Churchill Mining: Rumours & the Silent Oxus Plc

The value of rumours is often misguided. Tullow's more recent alleged buyout by Statoil is a) very unlikely and b) after significant drops in the Tullow share price.

Its alleged in Indonesia, that Churchill's Jurisdiction isn't something they can leverage off and it was merely utilised to impact on costings for Churchill and play the 'game'. There's a number of people expecting news very soon, some have said this week, but I'm sure Churchill, like Rurelec, would let the market know if they had been informed of a decision. For me, the position or news will present another trading opportunity, this is a long game and trading the stock offers more opportunities to increase position or derisk whichever is your tonic!

What appears totally under the radar is the Oxus Plc Case, there's a number of impacts upon Oxus, not only are the shares verging on Confetti and the issuance is on a regular basis rather than doing a one off placing, admittedly their administrative expenses are low with around 75K per month but I'm curious why they are this high with 3 Directors/Senior Management. I do hope their broker fees are minimal and all other costings, such as PR, as there's not exactly much work required.

Oxus is due its hearing for International Arbitration this year, as per Oxus Plc's Preliminary Results announced on 17th May 2013  they state early 2014, I assume by that they mean Q1 of 2014. The company, whether I like the funding arrangement or not, have no issues save for the Lease Agreement and Convertible bond. The Lease agreement (Atlas Copco Customer Finance AB for exploration equipment) is due for review this Month (Jan 2014 for those that need to look at their watch). Interest is 7.5%, so assuming a rolling over of this agreement. The interest rate was reduced from 8.7% but  the cost of the lease agreement should be reclaimable as well. I am surprised there is not a claim on insurance for this equipment as it amounts to Theft, so is one to assume that one million dollars worth of equipment was not insured?

The main consideration is the repayment of the notes $16,886,000 (copying and paste from Oxus Gold PLC Half Yearly Report 12th September 2013), if not converted at 12p per share, is the earlier of 14 December 2015, or the date on which the proceeds of an award, settlement or other realisation for value in the arbitral proceedings are received by the Company, or 60 calendar days from the date on which the proceedings conclude or terminate in the case where no payment is receivable by the Company. Interest payable at UK LIBOR + 3% per annum and falling due on or after 6 July 2012 is accruing but remains unpaid, and is convertible at the option of the note holder at the average closing middle market price of the Company's ordinary shares for each separate 6 month interest period to which that portion of interest relates. 

Oxus's case is like Rurelec's in that they had an asset that was taken away and as such due compensation. The case it terms of difficulty isn't that problematic, what will be is establishing the value in light of the current gold price. After all discounts there's still upside, on the current SP. 

Any award has the near $17.977M to deduct before Oxus can pay shareholders, excluding the litigation funding %'s, so we'll call that $23M in total to date (excluding the third party funders percentage of claim). So there's a long way to go before shareholders get a return but there should be a significant piece of the action left. 

Atb Fraser

The Aroma of a fundraiser? Iofina Plc (LSE: IOF) (Edited due to oversight)

Iofina PLC Change their Adviser to Numis

One could be accused of being overly sceptical on Iofina if their Balance Sheet wasn't the way it was. The change in my view is to tap a few investors for a few quid. The question is what amount of funding is required, with dilution or not? Historically Iofina have always placed funds well, however the story is getting harder to sell at a premium. As an investor, the question always has to be revenue/potential revenue, so far Iofina haven't delivered on this, despite Iodine being at such a high price they did not achieve much in the way of sales, more so increased inventory. You'll note other producers did not have the same issues with regards to sales. 

Time will tell...Atb Fraser

Edited: Change is specific to NOMAD not currently broker, however perhaps there's a change coming there as well! 

Now there's a surprise: VOG's partner in the Logbaba concession RSM Production Corporation given a default notice!

RSM - Default on US$26.0 million of cash calls

So every time there is a cash call, its likely RSM will scream Arbitration to give themselves time to pay. I wonder if the first cash call of US$4.1m received from RSM, following the ICC Arbitration Award was in Cheque or money transfer? If its a cheque, have the company RNS'd the payment 'post' cleared funds!? 

Getting rather predictable, and shows the fragmented nature of the relationship between RSM and VOG Management. I hope there will be no statements in any further ruling that the VOG management issues the default notice 'too early' again!

Atb Fraser

Chinese Nickel Supply & Talvivaara (LSE: TALV)

It's going to be an interesting year for Nickel (& Bauxite) and will Indonesia be able to maintain the ban as internal pressures grow when people get laid off and cannot find alternative jobs. Indonesia's 11th hour turnaround on all things not Nickel or Bauxite shows the contempt for their own people nevermind their international customers. 

Indonesia's stubborn stance on Bauxite and Nickel will lead to some price recoveries in the sector by those companies that didn't think Indonesia would u-turn, perhaps even some of the companies on life support can benefit from this, companies such as TALV may even be able to save themselves. I do wonder why they maintain their their key facts (TALV Website) about their mine for efficient mining, when the company surely wouldn't be in the position they are if they were efficient?

To me it looks like Indonesian companies are going to carry on mining on the basis that there is a U-turn in the ban, but for how long. How long can they afford to mine without sales funding mining costs? One thing the Nickel industry knows but appears to ignore is the over-supply issue that was pushing the price down. This trend should reverse with the assistance of the Indonesian Government Policy, it may even force people to look elsewhere. Albeit the saving grace is the quality/grade from Indonesia. If you consider the stock levels to be a reverse graph, where global stocks have dropped to say 15K tonnes (approximate) the price has hit new highs...a standard correlation between supply and demand.

London Metals Exchange prices 2007-2014

China appears to have managed to stack enough Nickel for 6 months production and around 12 months of Bauxite. Indonesia's Bans Ore Exports in Push for Metal Smelting seems to be totally ignorant of the time it will take to be able to process it. I wonder how these policies are view in terms of global trade agreements, will they continue to supply China on the 'QT', as they can't afford any spat there. 1/7th of the Indonesian economy is reliant on Chinese trade. 

The main driver for Nickel will be those companies who are forced to pay a premium and this should drive the price in the short term.Will Indonesia change its policy for Nickel and Bauxite, it appears only when there's enough internal pressure.

Churchill Mining...no early settlement coming.

Good Morning - Thanks for the updates & views on the stocks Fraser - started well with Supermarkets down, STAN hit & Dialight being valued properly. Happy New Year to everyone. What's suggested in ROI is the Govt are making allowances for Bonds/Financing & transparency in the money mkts only.
Contrarian to Fraser, my is the view that ROI wont settle with CHL. They will fight it all the way so the Govt dont lose any face. They can claim like the Malaysia's prime minister it's a conspiracy to spark an Asian Crisis or disable their economies. CHL is an only longterm result there will be no short-term settlement & Indonesia will delay as much possible. Cheers Ian

Malaysia media claims Jewish plot after rally Associated Press.

Indonesian common-sense...(Churchill Value)

Indonesia has settled a potential ICSID dispute with a Japanese consortium by paying US$557 million to acquire control of a hydroelectric and aluminium project in Sumatra.

There's a lot of 'limited' news (work that out) coming from Indonesia (thanks Ian & Dave for the links; I've only published one to save space) that the Government is clearing up their International Arbitration issues and focusing on their 'new mining laws and policies.' 


The January deadline of 15th January 2012 is coming where Indonesia's ban on unprocessed ore exports comes into force, albeit they've relaxed the law now till 2017 with the exception of Nickel. With only 3 years extension, can the Country process all their ores by then? Not likely but at least its got more common-sense than the previous deadline that occurs 6 days. In the event there's no turnaround, Nickel could hit $20K a tonne or more, although its come off its end of December peaks. If so, Talvivaara (LSE: TALV) will become viable, who'd have thought it.
I envisage some backtracking by the Indonesia Government. To what degree? Who knows as they've realised that its not likely to work, but how many small miners will it put out of business in the process? Not exactly a vote winner and worse still there some 130 Nickel miner/producers in Indonesia and only two complaint that's a serious issue in itself if they all have to shut up shop. Common-sense says "surely" a Government wouldn't do that. Well they've been saying it since 2012, so why change now.

The backtracking is significantly last minute and as such the Rupiah has also been battered; as the earnings for Nickel will impact on Governmental earnings (Talk about shooting yourself in the foot). With only two companies in the Country processing Nickel, Pt Antam and Vale's Indonesian Subsidiary process their ore in Indonesia; it makes you wonder what the Government were thinking. Although once the Nickel issue is resolved (assuming it is) there's a potential short GBP Vs IDR (Indonesian Rupiah). 

So back to the positives for the 12 Japanese Consortium of Investors, it would appear that Indonesia have settled the dispute paying out for the controlling interests in hydroelectric and aluminium project (Sumatra); yes it was known back in November 2013 they had settled, but the value was unknown (Reuters Article). From what I can make out the Japanese stake for the Aluminium plant was valued at around $710M (+/-5%) so the settlement of $577M isn't a bad result for the Japanese Contingent. I'm unsure if its inclusive of costs. However, a bird in the hand...

How does this bode for Churchill Mining? Well, subject to jurisdictional issues/clarity, its likely Indonesia would be 'more' motivated to settle.' The one problem I see that will reoccur is that the CHL problems arose as a result of  "a dispute within the partnership." I eluded to it in an earlier post about the differentials, this does not mean they won't be successful but I believe the burden of proof is "that their rights have not be protected within the Indonesian Legal System as a result of fraudulent activity." 

If one was to consider the alignment of the Directors interests yesterday and the options (9th December 2013), I'm of the view the board believe their prospects are good. Cash conservation etc...but don't rule out a Third Party Funding Agreement or Fundraiser post the jurisdictional clarification. 

Will Indonesia pay up quickly? Depends on what the motivations are...even 10% of the amount claimed is a significant uplift in market cap but I don't foresee CHL settling at that level; if you have a case you may as well go to a level that there is a balance of risk/reward. It's certainly not a stock for the impatient!

Well what a surprise, dire(light) LSE:DIA

For those that read Markets Live, you'll note my commentary about revenues and over-valuations on Dialight (LSE: DIA). I've been short now for give or take 4 months. Its the type of company that had no basis to be valued anywhere near the £400M Market Cap it was, or 1200 pence. 

So Dialight PLC Trading Update 08th January 2014 for today comes as no surprise with net of £7M cash, burning around 660K a month so far on the previous year. With the update they clearly state EBITDA of around £14M. So we're looking at around 315 pence per share, or thereabouts as the target or Five times earnings. 

One question I have is, which surprised me, their November update being positive, Dialight Interim Management Statement 07th November 2013 (IMS) albeit cash was £1m and that's increased to £7M. I have a suspicion this is based on selling down stock and not restocking...but the next set of results will confirm this. Reading through the IMS you'll note that DIA were reliant on the Q4 trading as their model is weighted towards this. This has not occured, furthermore, their staffing has doubled in December 2013. Admittedly they've recouped their cash from inventory but with higher costs and reduced revenues....hmmm

Atb Fraser

Churchill Mining & Victoria Oil & Gas (with annoyance).

Hope everyone is now trimming the fat on their waistlines after the festive break. The first time I've ever lost weight over the festive period, not because I was being healthy, but because I upped my exercise. The same however cannot be said for Mr Plump, aka Ian! Who is now currently in Cameroon of all places, so I look forward to a promised update.

As Oli kindly pointed out yesterday, and the followers should have noticed with Churchill Mining (LSE: CHL), there was a belated RNS's regarding an Issue of Equity in Lieu of share last night. I haven't run through the figures in terms of costings, but Churchill Mining plc Issue of Equity 7th January 2014, can't be suggested they are not aligning their interests to those of the shareholders. 

It was amusing to chat to one chap that believes Churchill is a dead cert short over Christmas, till I explained the International Arbitration process in basic terms. Is he converted? Time will tell, but amusingly it's another prime example of someone believing the negative view when its actually very difficult to establish the short argument in any way save for financing that is needed/will be needed.

Financing will come after the Jurisdictional argument has been clarified, and for that reason, people should have de-risked or acknowledged the risks on the last spike in anticipation of the judgement. I'm holding but it would have been rude not to close longs on the last run and bank some profit. The positives of Arbitration game are the long ball means you can make trades as well as hold. I have to acknowledge CHL raised monies at a premium to the SP last time, so its highly likely that they're protecting shareholder interests again but not guaranteed. Personally I'd like to see an open offer without a discount or perhaps a premium to the current SP. 

Now when is good news not good news? Victoria Oil & Gas (LSE: VOG). From an investor perspective, what can they not expect in terms of building in 'unexpected' shut down of operations for companies. There are formulae for this, it's amazing how other energy companies allow a certain % for this but amazingly VOG don't appear to have allowed a certain amount for "unplanned maintenance" and the like. To me this is saying someone/parties are not understanding their company and business model. For example: If you are anticipating X mmscf/d then you build in an allowance for the unplanned. This is simple, asking your end user about their model and demand then building in allowances for events / contingency. 

Personally I think it's time for a change at VOG in terms of management with a clean sweep with people that understand production/energy supply as their expertise found. Simply because, their targets have on the whole never been met in full, always diluting and worse still, the cost to shareholders as a result has been significant. People need to utilise VOG as a reason for why targets are missed and a share price has performed in such a way. I've mentioned this before but today's RNS is a prime example of sandwiching the proverbial. Yes there are positives within the RNS today, however, the history speaks volumes. I was trying to work out how much of the book is underwater in terms of their holdings, but I'll not waste my time!

Victoria Oil & Gas Commercial Developments, Gaz du Cameroun 8th January 2014

So assuming VOG can sign the parties mentioned and assuming VOG's targets are realistic, the share price should perform better. I am happy to hold, but its purely based on the fact that things beyond the current Board's control will make the business viable. For this reason, save for further 'crap' to be sandwiched between expectation it should go further. I will however be expecting people to vote through change on the next AGM. Its about time companies and their Directors started to be accountable for their actions, targets or lack of. However, I don't hold out much hope, as most PI's just moan about their stock and do little to enact change. 

Atb Fraser