Morning Mumble (with apologies): Kirkland Gold (KGI) &...what comes to mind post trading.

Kirkland Lake Gold Concludes Strategic Review Process

So Kirkland Lake Gold (KGI)) have concluded the "Strategic Review" and the conclusion is: While the Company received several expressions of interest, a transaction did not materialize. Well I am no mining analyst merely a trading perspective but lets face it, if you “cannot find a buyer for exceptional value at low cost” there are only so many reasons why:

• The market is suffering a depression and not valuing opportunities.

• There is better out there in terms of assets.

• It was not marketed in a way that parties did not see the benefits.

• The acquirers (potential) wasted the time of the management.

• The asset is not worth anywhere near what shareholders would expect.

• Its going nowhere…

• Another reason?

Admittedly, I haven’t looked at this company for some time so I'm making a number of assumptions about costs. Yes things are improving but I cannot help but wonder if "small scale mining is outdated". 

What has been shown is they are able to reduce their costs, but that's based on a headwind of consistent grades and achieving their forecasts. Something that potentially interested parties do not have a belief they will be achieved or a sale/merger would be ensuing now. 

The stock has travelled up significantly, but for me it's time to face facts after today. KGI is significantly ahead on any potential it has, and most certainly ahead of any likely dividend payouts. So when will the market re-rate? I believe today's RNS on the strategic review will be the start of it, but it will need momentum before this is confirmed. 

EMED, Leggie et al, will be waiting for the market to recognise the value of the final permit . One can hope there leggie, however if you look at the volumes, it looks to me as though parties are selling down those cheap shares “whilst there is support.” The timing of such an announcement didn't assist things either...people looked, thought "this is good news" and then went to the pub!

What surprises me is the obvious shorts appear missed by most. What was difficult to work out with Intu Properties Plc Publication of Prospectus for Rights Issue. Firstly there was Barclays, where to quote one chap, "I'm bloody daft and I'll lose the shirt off my back" when discussing Barclays as a short. 

Now we have INTU Properties with 2 for 7 shares at 180 pence coming to market. It's not rocket science in terms of parties flipping is it? No wonder its underwritten at that price...Well it would appear so, especially as the Rights Issue is so heavily discounted. yes the companies progressing but forget all the fundamentals and just look at the SP, when it was announced it hit £3 ish, so its on-going and guess what it hits today? 282 ish. So is it "based purely on probability going up or down? Common-sense prevails. 

Similarly Royal Sun Alliance have done what? Just a thought, sometimes trading negatively is no more than common sense. Just as I’m typing this, a decent shorter comes out the woodwork GuevouraFund Limited Short-Selling Disclosure has a small position, I assume it’s a hedge but either way will make significantly post Rights Issue. Would you be long? I certainly wouldn't at the moment without a 3 for 8 or similar hedge. i.e. the best of both worlds :-).  

The final thought of the FT Article Glencore closer to iron ore ambition By Katrina Manson in Nouakchott and Javier Blas in Geneva. Common sense prevails here, there’s a startling over-supply growing and as such this does not bode well for this African Project. 

GLEN may well know Africa well, however just look at the issues Rio Tinto and Vale have had in Guinea albeit the transport won’t be as “bad a problem” as Rio and Vale suffered. With the quality of the ore, GLEN are surely looking long beyond the surplus issues? The Glut to market could have significance to all producers as every MT’s surplus must be near 50 cents of Iron Ore? Just a fag packet calculation. Glencore went hard into Coal, Crash, now the same for Iron Ore? Hmmm

All the best, Fraser

As a postscript, I wonder what the issue is with Rurelec's listing? I do wonder if it's easier to sell a bargain basement story at 4p to a market than all in around 10+pence. It will be 2 months post the award whereby Rurelec are left with £10M give or take. Bolivia are likely to be Electioneering soon which won't bode well for prompt payment. 

It's always nice to see a company in the throws of being clubbed by the bank, something that GKP needs within 4 weeks was my estimates (cash). I'm trying to remember my commentary on the report into reserves, but it was something along the lines of "why wouldn't you get a well-known firm to do it." Well it would appear they listened and so did the market. 

Morning Mumble *(Belatedly): Mediterranean Oil & Gas Litigation Update: MOG Wins Legal Case + Coke (coal) the not so addictive or enticing resource.

Mediterranean Oil & Gas Litigation Update: MOG Wins Legal Case

There is an apology for not posting yesterday, albeit I did feel obligated this is secondary to trading and as such, sidelined when very busy. To the title, as discussed when parties do not pay their obligations they should not be entitled to the proceeds. For those lottery enthusiasts, you'll know the difference between paying your "share" or not, if its the latter you are not in the game. 

The news and content of the legal action between MOG and LGO is limited but there is a little birdie fishing away in the background to give an in-depth perspective. Perhaps had LGO paid their liabilities they would have been entitled to information? Did they pay their liabilities? Rather than trade them off and relinquish their share? If I do not pay for something I do not expect to be entitled to it. From the limited information I have read, this appears to be the case, but I am not in position of the full facts. 

There was some request about whether I am personally short on Iofina Plc (IOF). Yes, who wouldn't be?  I referred to this in Markets Live near 2 months ago about support and resistance with clear cut pricing of my actions. Well who wouldn't had it held seventy five pence but the support had gone so deserved a decent addition to the falls. The company on the market update mentioned nothing about sales. Iofina does not need to be waiting for an improvement in prices contrary to some commentary, it actually needs to be selling the product in larger numbers per se.

Some very interesting news from Oilers that I shall best leave to a more sensible thought process...suffice to say who's selling their Kurdistan assets to a well cashed up company? Any ideas? One item that surprised me with the gossip on Oilers was Xcite, one would have thought the "possibilities" in a potential agreement would add more value. Suffice to say its hard to predict the bottom at the moment...

Leggie, Phorm.....I wanted to do a lengthy piece until I realised Tom W had, for which covers a lot of the items. What I will say is, and as an assurance to Phorm, the fundraiser meets the criteria for a huge short...I look forward to the news with glee.

Well there's some press over London Mining, I have always rated the company. The company, unlike a lot has plenty going for it and without a significant 30% tank in Iron Ore Prices will expand nicely and do well. That is a risk and is being over-priced by the market. This company has very good management, some lower quality ores and moisture for me is an issue. I have purely been short on London Mining because of the Iron Ore price, no other reason. Knife catching? only if you believe what most of the press write whom like drama to their writing. Better still, they are incapable of working through a decent "picture" of a company. Iron Ore down London Mining is impaired, but not out.

Finally, Coking Coal, the price falls are not good for sector or Anglo American, with platinum strike issues and now coking coal prices under pressure the outlook does not look good. Indian Term prices are under pressure, with the Japanese driving harder for subs $120 a tonne in comparison to the Indian $125-130. For those wondering what it means to them, well very little unless they're holding New World Resources...the darling of debt and restructuring. Would you put more money into a company with margins already under pressure has been stressed further. Obviously, if one wears there rose tinted spectacles you could argue the cycle is at the bottom, it should increase. Lets face it with surplus coming to the steel markets one wouldn't be wise to expect an increase in Coke prices (non-columbian) without a dramatic change in Policy in China.

All the best, Fraser

Metallurgical Coal Benchmark Falls to Six-Year Low, Doyle Says, albeit mirrored with Iron Ore and Steel Prices it wasn't hard to predict #mostobvioustradeof2014

Anglo American: Cap in Hand

U.S.$15,000,000,000 Euro Medium Term Note Programme

Would you? 

Hmmm

Atb Fraser

Morning Mumble: My "King" doom for a horse...& slow market news!

When investing rule one is the "returns" and "potential." However with King I cannot help but wonder will the world wake up one morning and think: perhaps it’s time to read a book on the way to and from work.

In looking at Zynga's not so stellar performance, 1.0 version of the "Gaming Online Entities". Well, let’s put it another way January 30, 2014 - Zynga Announces Fourth Quarter and 2013 Financial Results results are slightly different to King's recent performance on numbers only but I suspect a similar performance profile for their Farmville Offering as Candy Crush. They tried spinning out different games, but the psychology of humans is well known, simplistic app games are fun "for a while." You only have to look at your teenage children, perhaps even you partner to realise Candy won't be sweet forever. I have resisted the temptation to go on pun-overload.

The rate of decline for games is well versed...so if you were to look at Zynga, I cannot help but wonder if the outlook doesn't bode well for online/app gaming as a realistic long-term venture at 'these prices.' The investment case for short-term trend profits bodes well, albeit people argued that for Apple and Samsung earnings, but the difference being something quite massive, parties are able to see, touch and utilise their purchase, it's tangible. It’s not the intangible offering of paying for an arcade styled mental benefit or challenge that, save for the odd addict, generally disappears as a fad or trend. 

The pricing doesn't appear to be so overcooked as Zynga's, Facebook's or Twitter's however in the short-term there will no doubt be some plus as there's plenty of people to sell the story to. So I’m thinking in the short-term (4 months) there may (will) be a material appreciation for the stock but post the ability to sell the story in any great numbers and the comparisons to previous dividend payments becoming reality the price of stock will be lower post the 1st Quarter of listed results. 

This theory is based on there being parties with significant profits on these IPO's and one suspects wanting to realise some gains. Any limits/lock-ins will bode well in the short-term but post which there's going to be a real depreciation in the share price. 

Candy Crush aka King and Zynga are reliant on primary platforms and equipment to function. Facebook, being the social interaction point of millions is indemnified against these risks (including the access point for these games). Candy Crush and Zynga , without a decent roll out of games that are "not reliant" on offering 'free lives' to the original app are doomed to lower returns but currently based on higher expectations. My trading head offers some lemming style longs for brief-periods prior to the reality kicking in post earnings. Let’s see...

Back to reality and normality, the Chinese are now spooked by defaults, China banks begin retreat from risk. It will have an impact on commodity demand again as the oversupply issue "to the market appears resolved with iron ore going back to $110/t for what reason? Well its common-sense that people, banks and bond traders are waking up to the fact that with defaults being real and the perception of guarantees disappearing the market will become real. Higher financing costs for entities (Risk) that really should not have survived in their own right. Consolidation will lead to contraction as savings need to be made to create 'going concerns'. 

It appears that there's rumours of an 'very well paid CEO' departing to attempt to reduce the scandal and distractions affecting a company that's trying to raise funds to produce oil. I can't think who that person is!?! 

The markets is betting on H&T Group (HAT) to benefit from Albemarle & Bonds position. I'd a liken HAT as the DSG to Comet if ABM go fully to the wall. Declining pledge books (across the sector) which is common after a large increase in sector as people realise there is not much left to 'pawn' or sell. The margins are being squeezed on the purchase price as well, which does not bode well for the companies over the longer term, without a reduction in the footprint of stores nationally. Some may benefit with the eventual close of ABM stores that do not meet a viability threshold or are not acquired. 

It’s a mystery why parties thought ABM's demise came about unexpectedly. The odds of a return for shareholders still holding stock (WHY) is likely to be nil. HAT's 2.5% dividend based on yesterday's SP on may present some welcome relief but my concern is these entities do not leverage well for which HAT are focusing on paying down the debt. The issue remains with regulatory pressure on the higher cost lending market is likely to impact on margins further.

Very slow market news wise for directional plays, save for LMI. As one party points to closing operations permanently which would make sense. When will South African's Miners Unions learn that you can't milk the cows nonstop. They do have to graze... Lonmin PLC Update on Protected Strike Action 05th March 2014 was over 3 weeks ago with little change. As such, the cost implications are going to be significantly higher. Russian issues are predictably positive for Palladium, combined with the on-going strikes, is Palladium going to break its 800$/oz. resistance and tick up to a new range? Certainly looks that way, which should benefit Platinum!

The mockery of "analyst" consensus is being exposed again by the revision of Tin Deficits (Reuters) only a near 7 fold increase upwards. Well there's no prizes to think that the price reacted accordingly. 

Finally, Mediterranean Oil & Gas (MOG) Litigation Update suggests that the judgement will be handed down tomorrow on the case Leni Oil & Gas brought against the MOG Subsidiaries. Now based on common-sense, with MOG's announcement so soon after the LGO relinquishment for $1/£1 (whichever it was) surely meant they took legal advice. Its still very odd for the claimants have not issued any news on this? Perhaps it’s on the basis MOG are? Not long to go before the results...

All the best, Fraser

Morning Mumble: Viability & Pricing (CEY) & Dreamland Horizonte Minerals (HZM)

Centamin presented an opportunity to walk in light of the price movement, I'd be surprised if people can warrant a higher target price save for the takeover rumours etc...bizarrely the price stepped up 10% (or near it). Well the market likes the odd blinker...to ignore the issues.

Horizonte Minerals, A stock I've had a few plays with over time, has published its Pre-Feasibility Study (PFS) that confirms economic and technical viability for Araguaia Nickel Project, Brazil. Now I hope you note my sarcasm here, but anything is viable on paper if you factor in "better anticipation and expectation" in the market place.

You read through it, like me, I won't try and pretend to understand the more complicated "schpeel," but what I do know is there are 2204.62 lbs in a tonne, and that makes my assessment easy! They're forecasting $19K/t a price that may well be achieved in the near future due to the Indonesian ban. However by the time the mine comes into production, its my view if the "ban" has not been modified, then its likely future supply will not be constricted. A ban by Indonesian currently and the price is range $7.2-$7.35/lb currently. You're thinking, this is the "PFS" there could be some modifications in the Bankable Feasibility Study, albeit HZM will need, ermmmm, cash for that part. 

When you balance it in, you should derive like I a Nickel price of 8.618265279277154$/lb. Sorry but you get the idea...it's only  modest $1.30/lb above the current price which I suspect will rise with further tightening of supplies around October. All positive, but all the same, I always thought you were meant to sell projects on past economics with "headroom" and cream for an increasing price. Am I wrong here?

Well with an average price over 20 years of say 15,000$/t or 6.803893641534596$/lb. I think I am being generous there, but guessing at the average without currently having access to the stats. You get the idea, its "only" 19% above the 20 year average, admittedly things have changed and it has peaked before at $53,000/t or just over $24/lb there's potential but at least be conservative with the pricing and expectations.

For the HZM holders, with the larger shareholders having 75% of the stock it'll be down to them to determine viability. Assuming one doesn't have rose tinted glassed they'll look for improvements in these economics at the BFS stage. Assuming they decide to go that way and not spin the project out to someone with deeper pockets at say 12pence a share "to keep some happy."

One of the mysteries in the market I have to say, assuming that all things remain equal there would be more upside in a Nickel long than there would be in HZM post a rise to 9p. Rather simplistic approach from myself but that's how I work.

ABM on the bank and just waiting to be clubbed by Creditors it would appear: Albermarle & Bond (ABM) Update on discussions with lenders. One begs to question what sort of discussions there were/are in light of the response: the lender "will not be able to support the management turnaround plan for the business The Board is continuing to work with the Company's lenders on possible alternative options for stakeholders."

So shareholders, pay up, or 'new shareholder' pay up and discount all the way. One thing is for certain, the leveraged model across the entire market whether it be Gold, Silver, Nickel (TALV) etc...does not work for parties thinking or considering it to be low risk. However it's positive for the press. They have been able to retrospectively write about what "was clearly and matter-of-factly" coming. 

Faroe Petroleum PLC Preliminary Results had a tone of consolidation. Perhaps the market will follow suit: Financially, with the positives coming for the company and development results should grow. There Net Cash situation is certainly a benefit and prudently (so far) spent and reserves being upgraded. The key to for me is the RBL (Reserves Based Lending) not burning a hole in their pocket and one will assume that will be prudently spent!

My long (Leggie sit down) on Kingfisher paid well, it’s a rarity for myself to go into results with full exposure. Kingfisherreports full year adjusted* pre-tax profits up 4.1% to £744 million and the markets somewhat surprised by the capital return programme. It boded well for the SP, for myself the longs are banked, purely as I do like to run a sensible operating rule of making a profit! One will await the ‘consensus’ before taking further positions, long or short…

Atb Fraser

Morning Mumble: The Press are wising up &...

Well it would appear that the press, so in essence the analysts will, are wising up to the growing issues in China and are starting to make a more informed approached to the defaults. Yes its good for any economy where defaults are naturally occurring however it also has certain indications that "contradict" the growth within the economy as a whole. 

Further clarification of the contra-indicators of growth are state chinese companies that are already announcing between 2-7% reduction in Capital expenditure; admittedly they have more of a global presence. The knock on issues will not be the end of the sector, but lets face it, contrary to the assertions made by Chinese officials on growth, their earnings/profitability have declined for 5 years, contrary to the presses statements about 7 plus years. What it does suggest is that expansion is likely to have tapered off. The defaults are in-line with these declines and as such, there has to be better assessment of the risks when issuing bonds. This "risk off" approach is likely to see a contraction in certain companies as they fail to raise fresh finance at a sensible level. How Solar bonds and real estate bonds/loans were priced so low in the market that had so much reliance on the state. The Capitalisation of economies is clearly going to have a significant issue. 

The press have well documented the Iron Ore issues, albeit the price appears to be holding up better than I expected in the very short-term. The one thing that has kept the price up is the changes last year that allowed the trading of Futures, making swaps not so dominant for the Chinese market. Figures vary on what is % China is consuming, but immaterial of market as China is at least accountable for 50% of seaborne, it comes as no surprise the price has dropped as futures have become more traded. (Common-sense)

The Chinese Iron Ore / Steel market is likely to be driven by Construction Industry as the season starts for planned projects. So one will be looking over the next 8 weeks for price changes in iron ore for the predictable October delivery. This is likely to be peak demand, so in essence, will indicate how strong the markets are and what likely stimulus the Chinese are going to put into the economy. If its as envisaged, it does not bode well with the surplus...

On the micro level, Centamin have come in ahead of consensus and with Russia's/Crimea's/Ukraine's issues it may bode well for the retail contingent that expect a sky rocket. The Geo-political environment appears to be settling in Egypt. Perhaps all the Egyptians a looking for the plane as well? Or Crimea? 

Centamin Egypt (CEY) have come in on the money, but based on earnings, forecasts and the like, one does not hold out for a dividend. So for that reason, Centamin, for myself at least does not present as having sufficient upside to hold or long. Albeit the figures do enable holders to take comfort that save for the legal issues and Ampella Holders selling, any shorts would be hard pressed to make more than a few points. 

Kentz Corporation Full Year Financial Results 2013 are yet again cooking on gas and ahead of market. I wonder if this will flush out the suitor to offer a more appropriate valuation. The Valerus Field Solutions has been a well-recieved acquisition, the darling of the market over coming months I wonder. What afterall could go wrong?:-)

Ormonde Mining plc Tungsten Offtake Agreement with Noble Group for Barruecopardo should enable the finance to go ahead, albeit, in the interim any upwards movement for me is an opportunity to reduce. 

The positive for the rental sector, landlords and slumlords alike is the Bovis deal today with Private Rental Sector Deals. You'd think this deal would impact on property returns. It's likely rental income will increase as there will be less availability for parties to buy. Albeit, why one would buy on a new estate/development, when the yields are higher on older property.

The trader in me, is watching Premier Foods  for some decent volumes and an additional 500M shares some will look to exit at a small profit...roll on volatility. 

Atb Fraser

Chinese afterthoughts & GKP (The pundits favourite)

The reliance on state bail outs is coming to an end in China. The excuses are many fold from "utilising this time to improve quality, lower pollution, improve economics." It’s our view China has to stop investing such a large percentage of GDP into capital investments; whether that be roads, railways or redeveloping towns.

The weighting of lenders towards specific sectors is not the only issue specifically where there has been the most defaults: Solar, Coal, Real Estate and potentially Steel Mills (two are rumoured to be looking for aid). There are number of bonds due this year in China, with the market exceeding the official figures.

The Chinese bond market should be a likened to the larger platinum producers raising capital for expansion, but unsurprisingly this has to be transferred to OPEX - a prime example being Aquarius Platinum and Lonmin. What parties should be concerned with is the "amount of cash raised compared to what is available to pay these coupons." In such a short-period of time the cash has all but disappeared. 

The most recent Baoding Tianwei Electric default is a prime example. With $328 million raised 2-3 ish years ago and it barely has enough cash to make a $500K part payment that was due on the 7th March 2014.

Chinese Bonds replaced the Development Grants that the Chinese awarded to the likes of the Solar, Coal and Steel Mills for stimulus. The investors mistook these grants for a bottom line operational profit, but someone forgot to ask how much development grant has the company had and how much less will it be receiving.

If major companies are defaulting on repayments within 2 to 3 years of the issue of Bonds, it raises a significant question about how bad the balance in the economy is or is not. The latter has caused the deleveraging of positions in the Copper and Iron Ore, with consequences being felt in the product pricing such as steel with oversupply as an additional problem. 

Ironically, if one is to look at the Rusal IPO and listing in Hong Kong, the figures rather glaringly stated what was going on not only in China but Russia. The Russian state bank is alleged to be looking at bailing Rusal out. From one perspective, bailing out international lenders at this time with the Crimean issues is very unlikely. "Lenders" are likely to compromise on a deals albeit at the last minute.

The property bonds, are not only pricing risk in on Copper, but also on the entire over-cooked/leveraged sector. With Zhejiang Xingrun Properties clearly unable to pay its $500+M bond's what next?

Well my view is simple, in order to meet growth targets etc...China ironically has to let these defaults occur to avoid further over-cooking in other sectors. 

First China had Coal Defaults (albeit bailed out), then Solar defaults, then Buildings and/or Real Estate. Its only time before these positions unwind so must the leverage in Copper, Steel (the most heavily leveraged one way steam locomotive that's running out of track!), Iron ore, and Oil. This will be a short-term correction but more pronounced.

With Iron ore likely to be 61-65 a tonne 12-18 month average and that is slightly higher than our revised consensus of 55-57$. I acknowledge it’s bounced a little, but I put that down to speculators doing the same as I and buying back their short positions.

The knock on is that aim market will suffer with economies of scale not being to a magnitude to become more efficient. The prime example being the Gulf Keystone, which was it really a surprise?

Some idiots, had a belief that two Chinese chaps in the Gallery at the trial meant a buyout. Correct me if I am wrong but the best time to sell Gulf keystone was when they raised the bonds Pricingof Convertible Bonds but more importantly when one of the head honchos sold ten million. 

Its acknowledged that it was a transfer under a financing agreement but let’s face it, it’s still a corporate activity between two parties (aka a sell). Namely, that corporate activity involved a person whom was meant to be enhancing shareholder value but strangely was not maintaining any exposure. 

As a thought, with the Bonds under significant stress, higher cash burn, and limited production, what's the odds of it going forward? But strangely, why has the market been so slow to react and will GKP be able to raise monies at a level that is affordable for the development. It’s looking more likely that a stressed farm in deal or massively discounted Rights Issue will occur perhaps a SEDA just to cheer the holders up some more.

Genel are funded, have cash and are certainly a cheaper option in terms of director salaries than say, GKP. However, any deal would have been done long ago, and with the risks GKP have, any suitor would surely be wise to wait to see how poorly the company is before approaching.

Interesting times, but its worth consideration with a spat of corporate bonds being inked over recent months, will there be defaults? Hmmm, these 5-6% high returns in a bond are not really worth the risks of companies whom have not got the prowess nor history to back up their assertions off repayment.

GKP have not defaulted, but it will certainly have some stress and or costs attached to make payment. I would not be surprised if equity was exchanged for the repayment at a discount to market for parties to load them off to cover their own liabilities. 

It’s nice to see blogger comments working properly, I'm aware it’s been a non-goer for some time. I can read them merely not publish most of them despite trying. Even those negative ones, extolling positives about my character and shorting actions (I think everyone knows there haven't been any of those!).

Perhaps shorters should be called realisers of true value, it sounds more acceptable. This is from someone that disagreed with the shorting principles of negative betting only 4-5 short years ago. It was a realisation that people were more likely to back a dog and hold it tighter, that I realised shorting was easier to start, realise and assess companies than longing. 

There are benefits though, trading is more exciting, and shorters have a mind-set that is ironically positive, don't moan about taking a hit, but most importantly of all have to make their own decisions.

I would go as far to say it’s addictive, what better validation than making money when the majority think the price will appreciate? The underdog of the market, the contender for the most abuse.

As a final thought for those thinking about all things trading wise, I will not be sharing my data, but what percentage of AIM companies have missed their self-reported targets? Doesn't bode well for the longs out there if there's so few companies where targets are being met. 

Just a thought...

All the best, Fraser (Sat outside in the UK in March without thermals)

Morning Mumble: Rusal's Reality & Ken's mare (Kenmare) with coffee/hangover.

So the press have decided to report that Rusal are attempting to delay the repayment of their obligations (Debt). So when people are thinking about Rusal, it doesn't take a rocket scientist to work out the following:

• Rusal's Russian (No prizes for that one) & has state aid during the crisis in 2008. No surprises with financial avenues contracting. However things haven't really improved for Rusal, save for Norilsk and that has not gone exactly swimmingly. 
• It has significant International Debt at the last toe and finger count it was nearing $11 billion excluding any interests payment due next month.
• Rusal's been well-document and/or well known to be attempting to restructure its debt for 3 months and is yet to reach agreement.
• Aluminium is down 30% since 2012 and lower than 4 years ago when it was obtaining state aid, so it doesn't bode well for commercial tests for repayment.
• Production costs are up unsurprisingly.
•  Market outlook is not good in the short-term for commodities

So what's the news? There is not any, save for yet again the market is not waking up to the realities of common-sense. This is everywhere, we’ve have Albemarle & Bond (ABM) that was a leveraged play on second-hand gold. Works wonders in an appreciating market (one of my largest shorts of 2013) whereby the debt to equity levels got burnt when gold sunk 20%. Restructuring is likely with either a massive placing or debt for equity being the mostly likely options there.

Then in mining there’s yet further leverage Petropavlovsk (POG) (I’ll never spell that) another leveraged play. However look globally and there’s significant leverage that’s been apparently bet on the stimulus globally working. What parties have totally ignored is on every level there is a glut to market of production then prices, yields and earnings all get impacted. Save for the obvious shortages.

So normality is returning and survival of the fittest, unless of course more stimulus is required. China is almost certainly going to have to step in. The leverage in specific sectors is untenable, most notably unregulated and the sale of bonds has been based on “stimulus” money, the same as the UK, Russia, and America.

From a risk perspective, one should be clearly reducing, this is mirrored in part by the number of founders cashing in their holdings in IPO. You only have to look at how many parties are exiting on IPO’s and/or selling down their holdings as Director. Remember, when founders or IPO’s which investors sell large amounts of their holdings including Directors, no matter what reasoning they’re giving for monetising their assets it says they’re derisk, so apply the same principle. The traders would do well to follow Hellermanntyton and Moneysupermarket to get an idea of the performance.

Well it would appear with Chinese defaults increasing and the global spat over Ukraine/Crimea, the commodities market save for Nickel is under significant pressure. Goldman Sachs in the Copper review failed to see the significance that if many have hedged their positions in the market for copper and iron ore, then the excess coming to market would have a significant impact on the price. This in turn is causing issues for the over-leveraged commodities traders, with depreciation in Iron Ore and Copper. 

Just consider the pollution upgrade requirements of Chinese steel mills, with massive leverage. This is impacting on the iron ore prices, but more closer to home and apparently ignored by all media save for the FT is the Stemcor default. Yes it has been on-going for near 12 months, but the resolution and sale of assets gives a clear indication of the leverage issues facing Chinese mills.

Gold, contrary to my view appears to be anticipating that Central Banks in Europe will start selling now the Embargo is lifted. It still amazed me that Gordon Brown sold all the gold at that price. Forget what price was obtain in the market, cover with the “sub $300/oz. phrase” but what’s important the allegedly intelligent person announced it so far ahead of time, you would have not been a buyer. Announced sales have the same reaction as “placings” Wolf Minerals a prime example you would have had to be ignorant of the trading opportunities to not sell down on the realisation. That’s what the market did, and is doing with Defaults in China and debt issues in Russia.

Leggie having caught your Baltic Exchange Dry Index BDI, is a very good indicator, however it also has some conventional and technical movements when going high and low. The Weighted average price over 10 years is creeping up but the overall average stands at $2200 (from Memory). What is of concern when weighing the BDI with the CRB is a (commodity futures price index.) The two were poles apart but with significant corrections occurring. What I prefer as the balance, pre 2008, both BDI and CRB kept a pace, then post 2008 there was a divergence, very predictably as “stimulus” money maintained the cycle for Commodities but the reality of the BDI. There is now a convergence between BDI & CRB occurring and something I would advise people to follow. 

For those that know my negative on everything view until proved otherwise approach, this is something that indicated the “top” of the cycle for Stimulus with realities in Iron Ore, Aluminium and copper bearing down on demand and likewise being mirrored in the lower prices assisted with the Glut to Market. Rio, BHP and the “big boys” have invested heavily, albeit lower guidance a fraction on expansion. With the demand slowing at least in the short-term for commodities and speculation exiting due to “margin requirements” it’s no surprise prices are under pressure.  The smaller Co’s however will suffer where their costs are historical around 25-40% higher and prices obtained “lower” by around 10-25% pending on logistics etc…

Do not get me wrong, the Chinese favour the Australian Iron ore at present and it won’t suffer the declines, but the smaller companies “with less demand and more supply” will. In essence a prime example of the economies of scale lower costs higher prices etc…So on the one hand you have JPM exiting Commodity trading but financiers backing Roy Hill iron ore project with $7.2bn funding. Iron ore was fuelled by the stimulus, Iron ore in essence is being tested for reality by the Chinese allowing Defaults. The market will find the true price save for more stimulus from China to avoid the realities in their leverage.

Moving swiftly on, Kenmare’s (Ken’s Mare) Director Purchases would normally be enticing for an investor. However what exactly have they made in terms of profit or achieved to target in the 25 years (please validate that year) of development of the Moma. Well save for the American DIY season being a driver for ilmenite and associated prices the market does not look good. I’m not here to overview the company but electrical issues, debt, placings and the like….Would you really invest? The knife catchers may offer some support in addition to the Director buys, but sheesh, there is not much of an investment case for a company that has done exactly what?

Well let’s just look at a basic requirement, electricity, which has been a problem, but by getting some generators installed this should overcome some of the power problems. So, just a thought? Why with the power problems is one ramping up production prior to resolving this item? It’s akin to building a house, plastering the walls laying the carpets and then thinking about the lighting? Or have I missed something? Perhaps I’ll be enlightened but looking over the past 14 years of share price history, it does not look good. Admittedly it was a glaring short at 50 pence, 40 pence, 30 pence, 20 pence, but I have to acknowledge its now about the price if you can value a leveraged play with $350M debt and an ABSA debt of $20M due March 2015? What’s left for shareholders? I really don’t grasp the value of the company.

Today should see some consolidation in the Insurers now the realities and common-sense are being applied with the merits of the policy being understood. It presents an intra-day longing opportunity for Just Retirement and Partnership.

A gorgeous day for the UK, clearly something up with the weather...

The Morning Mumble The Pensions Quantitative Easing Programme & Vedanta

There's a little known rule within the the UK Benefits & Welfare Policy whereby if a person has knowingly exhausted funds or disadvantaged themselves deliberately they are not entitled to means tested benefits. Will this be coming into play in a few years time as "Pensions Cash" burns a hole in people’s pockets?

For myself I have never valued my pension, for a number of reasons; the limitations, the compulsory elements of buying an annuity, the restrictions on bequests to spouse and child, and finally, the fact a company keeps all your cash when all elements of the contract have been met. So why work your proverbial off to then give it to someone else. Better to work on your own pot I say!

Not only is it a clever way of injecting other people's monies into the UK economy now to be know as PQEP (Pensions Quantitative Easing Programme). The fear should be whether it will lead to a majority of people peeing their pension up the wall on travel and the like in the first few years without security for the longer term of retirement. People's arguments of "well surely if you've saved for such a long time via a pension you'd resist blowing it are warped." 

The UK has historically been reliant on Welfare and Benefits, with the Labour Government (albeit it was planned by the Tories via the Children's Tax Credit (CTC)) perhaps improving the lives of Children via the CTC. What they did not realise was they actually exponentially improved the lives of benefit claimants whom "live" on the system. So now will we in 30 years be hearing of people 'conned' out of their pensions on a regular basis and parties investing in unprotected funds. At least it’ll give some consumer programmes some news in dry periods.

For the majority of people, annuities will still be attractive for those wishing to have longer-term security, but perhaps in a difference guise, akin to the mortgage deals offered in the UK, X% above base for 1,3,5,10,20 years etc...on top of the conventional models of the annuity of impaired life etc...Its known most are financially incompetent. Having seen people take significant interest only mortgages and the like, there could be an argument if "the pension policy is maintained" for most people investing in their own property rather than any pension at all. The average person could pay their mortgage off some 6 to 7 years earlier. This perhaps will compel property prices to go further north.

So thank you Colin, the news is welcome, but as my pension is specifically 3% of my wealth and hopefully will never increase above that, i'll continue to operate an all in policy, its achieved a minimum of 10% per annum once I got my hands on it. This excludes the settlement from a certain pension company whereby they preferred to settle rather than prove to a court that they had operated my risk agreement in appropriately. A long story, that may bore you one time when I feel the need to type with alcohol.

The tax issues make no difference whatsoever in my view. I'll come off the fence and state my view is Labour gain votes via benefit payments and the tories by rewarding workers; oops Tori-berals. So for those wishing to manage their pensions, I'd ask them to consider whom they're investing with rather than what. The management are more of an indicator on the whole. For me, I like low risk, cash cows, the reason I went all in on Genel (GENL) around the 635-655's and again into Bluefield Solar. Admittedly in the past 16 months has been somewhat of a rocket for my pension with a 65% in its value compare or around 48.5% in the last full year. Its slowed down a little...Anyway, you'll get the idea...low risk, cash is essential, don't bother with speculation of micro companies if you do not want to acknowledge the risks.

Edit: Assuming people are not asleep already...

Something most parties are not factoring risk into and was totally missed because of the budget is: Vedanta's largest shareholder A K Agarwal slowly creeping up and just 6-7% short of 75%.  wouldn't want to be short on that stock any more as there are certain risks presenting themselves that would cause me sleepless nights. Perhaps Mr Agarwal is going to put VED out of its misery, resolve its cash issue and take it private? Hmmmm…What does Mr A Agarwal know that the market does not? hmmm

What was interesting was Goldman Sach's view on Copper. It's common knowledge that Copper is driven by Property as well, what Goldman have not factored in is the stress levels in the Chinese Property market and over leveraging, akin to Self Certification for Mortgaging (My view). Unsurprisingly, there's now news of Zhejiang Xingrun Properties. For the traders out there, Copper is struggling not to break the significant support level of $2.91/lb with brief incursions below into 2.89$/lb. Currently holding at 2.94$/lb (ish) but will further default news push it further south? The speculative short coverage for the sensible will provide some brief respite as traders buyback their positions. 

Sirius Minerals appear to be trying to keep the news flow up with the Question and Answer document on its recently announced Mineral Transport System ("MTS").   Looks very positive in terms of showing their understanding…

For speculation, Iofina's change of Director . We know Dr Fay is a holder of the stock but the departure may be strategic in terms of the appointment of someone one assumes is not related to David Bellamy, Dr. William Delaney Bellamy, will no doubt prove a positive for the company. It may even provide some short-term positives to the share price. However the company still needs to be selling it’s Iodine in greater numbers rather than carrying stock.

NEXT have come in a star: Results For The Year Ending January 2014. Are Next management now at risk of poaching? Say for Marks and Spencers? Matalan? Will there be some senior changes? I suspect so, after all a Golden parachute, higher pay etc…is not to be sniffed at!

Now, I was informed yesterday about the longstanding speculation of Barclays Bank being split into Investment Bank and Retail. The view most have taken is it would leave the holder poor if they lost the IB 

Arm. Well surely it would not be poorer if the separation was purely a divestment with 100% of the stock being issues to the current shareholders. Barclays are likely to be considering this, in order to separate the brands. Lets see…

Anyone for some North Sea Oil Small-Mid Cap Consolidation, if rumours are true there could be some savy plays coming to a screen near you!

Atb Fraser

Wolf Minerals (WLFE) & Churchill Mining (CHL) inc. tangents.

Wolf Minerals (WLFE) & Churchill Mining: Placings & being wrong.

Wolf Minerals Ltd GBP99.2m Fundraise for Tungsten-Tin Project (16.3p)  is good news for the company, no matter the financial climate in the short-term (save for the end of the world or significant deterioration in the Tungsten-Tin markets), they’re funded. WLF is a lesson for AIM companies, value, reward and shareholder loyalty although that is not exempt from risks. Its positive to funds, namely Resource Capital Fund V L.P. (RCF) and TTI (NZ) Limited a wholly owned subsidiary of Todd Corporation Limited ("Todd"), have bought into the placing as it shows their belief in the project.

The concern from a trading perspective is this creates a greater percentage held long. The liquidity, or lack of it, has implications which are exploitable such as longing/shorting, with greater volatility. For myself it’s a god-send for Long only it can be of significant impact. The company, based on forecasts and fundamentals is going places, albeit there will be plenty of time to buy between now and production. The question is, will it have a marked drop below the placing price? I believe so. So patience...One would be wise to consider the share movements of Blinx and ASC as illquid comparators. 

Having been short, as I have been open about (I’m still uncomfortable disclosing positions not for loss but the overlap of views), Wolf have performed exactly how a stock should do. This for some long-holders is an unwelcome event but lets face it common-sense was on the cards for how long? Are parties really expecting a placing to be near the highs of 27-29 pence. Trading is not difficult once your inner voice of common-sense is listened to. So over time tranche buy the equity for a longer-term hold, yes it does happen, 

Sorry for the delay Leggie I was trading Ophir, well short and close, but it was a trading! Now today’s news, where I was wrong. Churchill Mining (CHL). This was one of the reasons the board game about. Having known Ian near 34 years, we ended up drunk one night and wondered if there could be significant monies made of out stocks “pre-news” that were in arbitration. Roll forward a significant amount of time, and it is working, albeit not without some learning curves along the way. My view, was that CHL needed cash more urgently and this was in wrong based on today’s news.

CHL have around $3.64 million as of today. Admittedly this won’t go far in terms of litigation, especially international arbitration. If you just look at the costs associated with Rurelec its fair to throw a ball park of around $10M on top of operating costs. What is positive is CHL do not need to (yet), but will want to raise monies, so this in terms of pitching the news is a positive aka less of a discount (hopefully). They haven’t done badly so far, so can only assume they would continue on that track.

The risks for CHL as an investor are being totally out now, as Intrepid Mining have shown things can become finalised/resolved quickly, albeit not necessarily to the satisfaction of all parties, but perhaps the best resolution ‘at that time.’

Today’s Ophir news was surprising in the market, and the value placed on the drill of Gabon Padouck Deep-1 Well (Duster) does not bode well for the company that’s SP has been in decline. Without the papers to hand in front of me, its hard to assess the damage of the duster. Albeit one thing parties do not appear to acknowledge is Ophir is ‘deepwater’ with costs higher, success rates lower and greater expectations parties would have been well placed to hedge 50% of their holding or go short pre-news as the upside was significantly less than the downside.

Finally, the long-awaited news on La Bambas Copper project is nearing its resolution. Parties are suggesting $5B for the asset, it’s cost GLENcore around $2B so far, so not a bad profit. I cannot ignore the back of my mind that GLEN appear to want to hold on to this asset, albeit when negotiating you don’t want to infer its crap! I wonder if the news will be closer to $4.2B all in…time will tell, Friday? With MMG, Guoxin International Investment Corp. and CITIC Metal Co. Ltd. All building and their advisors being the big boys, it won’t be far off the mark: BMO Capital Markets & Credit Suisse for GLEN & Deutsche Bank for MMG et al, its rare one will walk away without near their demands. 

Perhaps GLEN can "then" remove the obstacles to the Transglobe & Caracal Energy Deal and take them all out for around $2B..Paying down Debt by $1.5B and acquiring the assets it has nearly been involved with a few times.  

Unsurprisingly there's significant volatility and a lack of momentum in Zinc (Zn for those Scientist) and Copper (Cu) and the positive being the unsurprising rise of Nickel  (Ni). I still can't remember that saying to remember all of the period table! Old age? Or just brain lazy?!? Nickel's supplies have been totally over-estimated, myself included closing my longs too early. Indonesia perhaps knew more about the supply than other parties. Their confidence in the ban on unprocessed ores is clearly pushing prices. This won't pay the miners wages in Indonesia though!

Very interesting discussion with an Aussie Trader whom has spotted the tightening of supply in Gold (Au (go me with the periodic table recitals). I noticed the arbitrage of buying US and selling Asia for gold awhile back and the need for this to "peter out" (scuse the pun). This appears to be now happening, with a directional uptrend, albeit slow. The interesting element is there has been a consistent buyer in the market since the Ukraine fiasco/crisis. Aussie Rich believes without conspiracy, to be a place to put monies that would otherwise be able to be repatriated. Either way its certainly assisting the gold market stabilise for a push upwards if it continues for 30 trading days (big if)

For the shorters out there, with the confirmed trend on Smith’s Group’s (SMIN) the Interim Results won’t be assisting the push on the share price. With a perfect shorting principles being met, over-egged SP, figures not meeting consensus, higher lows and lower highs...assisting perfectly with profit taking. For those parties learning, look at the rises. Parties should be considering closing positions as the band of highs to lows narrows. Edit/Addition: Not hard to realise the negative impacts of earnings that will 'categorically' be hit by adverse exchange rates.

Atb Fraser

Without a proofreader!

Intrepid Mines (ASX:IAU): What does it mean for Churchill Mining (CHL)

This should have been published earlier due to Blogger IT issues it wasn't! However, I was surprised by the absence of commentary on the Intrepid Mines settlement which really puts things in perspective for an early resolution for CHL. There's not much to comment on from Intrepid's perspective, clearly they have elected to receive $80M in lieu of their $109M sunk costs, nevermind their all in costs which I estimate around $140M.

From a commercial viability perspective it makes sense, but it certainly doesn't bode well for CHL's 'high' end claim especially with the need for cash. The Directors of IAU argue the point very well about quick settlement and their reasoning. Like for like, the lower end of CHL's pricing would be more appropriate, say around 27p for which I don't see parties accepting; could be as low as 20 pence for "early" settlement.

Congrats to Scott for getting it away earlier than envisaged, albeit not to everyone's satisfaction. 

Extraordinary General Meeting 07th March 2014

Atb Fraser

Apologies for the delay..finally something Competent (GKP) Gulf Keystone.

Gulf Keystone Petrol Publication of Competent Person's Report Finally there’s a competent report. (CPR)

Can someone explain why they would hold this stock a) they need cash b) there’s been significant problems c) it was clear their move to Main Market would come at significant cost, whether it was the CPR, financing, or even change in shareholders and I suspect all three! All appear to be happening and now what about the financial elements requirement to get the assets going $500M?

M U P P E T S. Especially those predicting £10 tomorrow, sell up and buy premium bonds! 

Atb Fraser

Now there's a shocking change...

Mediterranean Oil & Gas Litigation Update to the market in comparison to the Leni Oil & Gas Silence is very odd especially as one party has been so 'forthright' about the issue. Now I’m not inferring that MOG have been successful in the defence of the LGO Claims based on whom has RNS'd first, that would be stupid (Ian :-)). Personally I thought at the time the matter stank to high heaven and was far from right but there is not long to wait for the verdict/decision/judgement whatever phrase you prefer. There are always two sides to a story in respect of the legal cases, so any decision will be very interesting to read as will the transcripts (which can be ordered for those wishing for some Eastenders like excitement). Perhaps Ian will not fail in his curiosity to order a set and comment on them, or just sit back and drink mojitos in Cameroon instead! 

The unusual silence by LGO does however give an indication for the sceptical among us, lets see who will be proven correct. I’ll remind a certain individual of his commentary on the matter “LGO appeared to have never paid on time, were allegedly in default of the monies owed and as such had no entitlement to any further information until such time as they had ponied up the dollars.”  Not long to wait to find out Rich!

However, Morrison's Final Results is the shocker of the day, for us shorters, its certainly going to be a day to consider a change in positions. MRW exceptional losses are a surprise, but the property update is higher than envisaged by most analysts, with a proposed £1b disposals which is ahead of the 350-500 consensus, albeit the timeframe is 3 years the like for like declines does not bode well. 

Personally, if there ever was to be an offer for Morrisons, there could not be a worst time as it would appear the LIDL/Aldi competitiveness is eroding their sales faster than the others. I envisage the declines settling over the next 6 months as competition heats up and the online offering is perhaps too late, albeit may delay some of the ROT. This could be a very good time for Sainsbury’s to become the victor and go shopping for Morrison, it would put it on a par with Tesco and perhaps even improve the outlook. Afterall, it’s not likely to be a Monopolies issues with Morrisons and Sainsburys sales, turnover etc…

Whilst typing this I have been closing positions in MRW, which has had a healthy return since Christmas, 214 (*a little early) but I’m not after getting 100% out of everything its not healthy to over manage or over play positions. A few parties have significant plays there to £2 but I clearly do not have their conviction. 

All the best Fraser.

Wolf Minerals trading halt to capital raise (12th March 2014), a little rant about Nyota & a Dinosaur holding of mine.

Wolf Minerals trading halt to capital raise (12th March 2014)

About time really...then I can get back in! 

I once had a significant holding in Nyota based on the potential of the resources but followed the strict rules about selling on rises (edited & falls) etc…Kefi Minerals PLC Upgraded resource at Tulu Kapi the upgraded JORC at Tulu Kapi is a positive.

So if all things remain equal and Kefi have defined this resource in such a short timeframe, why are Nyota holders (I think I still have 20K shares) employing the current management? Can someone spot any positives in the current management or their abilities that would warrant even 50% of their salaries? Admittedly I have been significantly short, but you really cannot blame me for that...

It looks like its best if to contact CEY and a few other parties to create some change. If the management think they’re worthy of their position or salary, perhaps shareholders should hold them accountable. Either way, I shall be digging in the background…

Finally, a stock I got involved in awhile back based on its cash and EBITDA figures (Pressure Technologies) means I can finally sell out and walk away with a half decent profit …it’s been a long-time coming and it’s only on the basis two other parties have sold Alan Harding and John Brown, two of the Group's founding shareholders sold. Having an average of near 215, it’s time to wave goodbye. I dare say it has more to go, but for myself, a profit is a profit.

Atb Fraser

Just to annoy those Solar haters: Bluefield Solar Income Fund Limited (BSIF)

Bluefield Solar Income Fund Limited Director buys stock. The dread solar and the "what's in approach."

This is my slow road, for those that don't know I operate an "all in" policy on my pension. I don't value it and most of the contributions came about by the sale of a company I was involved in and it was allegedly tax efficient.  

I pick lower risk elements and throw the whole pot at it and due to the lack of value I place on a pension because lets face it, you can't rely on them and someone ends up owning a significant proportion of them once you cack it if you're tied into an annuity. Just a thought for those pension payers, "you pay me an amount per month X, in 40 years assuming you aren't dead, we'll pay you a percentage of X and a cash percentage of X. When you die we keep the lot less any life assurance/insurance entitlements and widow/ers benefits.  

So having been buying I'm pleased to announce I'm all in on Bluefield Solar (BSIF). The Dividend looks the best place at the moment when balanced with the risks...aka low risk with feed in tariffs. Albeit I dislike those "consultant" management agreements, surely the Directors are employed to do that anyway. However it would appear I'm the only one to think a Directors role is to advise on the business and increase profits and not have another consultancy/business agreement to provide other "services" not included in the Directorship. Alas, this shall be my SIPP home for a few months or until it hits my return % to move on...

Having been talking myself out of INSP (Inspirit Energy) I am committed myself to a position based on the "higher returns per unit than most others on the market for Micro-CHP Boilers." After the last "PR run" I wanted to short this stock, but unsurprisingly no one was offering positions, now it's at a more agreeable level, I've dipped my toe in the water. This comes under the category "punt" as some of the management's performance to date has exactly been electric; cough cough.

All the best, Fraser

Trading thought: For those learning the shorting trade...

As a trading thought, if one hasn't already, it would pay to look at the higher cost and large leveraged Iron Ore producers/miners. At what point you'd take positions and how the market movements will impact on their price. This volatility is a godsend during slow news periods...

Any old iron (continuing on from 19th February 2014) - Defaults contributing to Defaults

Continuing on from Any old iron...overcooking, production & ignorance 19th February 2014

It would appear there were a few trades that caused the tank on Iron Ore overnight. Without adding the fear factor, this was one of the most predictable trades of 2014 and I suspect will the all-time trade of 2014 for those whom had been stacking positions for near 3 months.

So the consequences mean that the larger producer positions may be better hedged, but the Chinese are notoriously bad traders in my opinion, utilising childish methods of double or quits. The important element will be how this depreciation will impact on other types of credit available as fear sets in. This for me was a strong signal to close longs on Nickel.

The reason for the tank in my view is the forced liquidation by a couple of larger Chinese traders, its also common-knowledge that their are one or two steel mills on the brink of default and this has been exacerbated by the price drop. A very reliable piece of gossip that one of our well known 'big boy' traders is out of profit (large loss) due to the tank, I'd love to know how someone can lose near $1B on this...perhaps someone can educate me because I'm certainly too retarded to think how one could ever become over-exposed. 

With so much leveraged off so little in the Iron Ore market (especially in China) this house of cards could be very significant in terms of the global supply and demand. Obviously analysts will say they knew it was coming, but their previous commentary that caused splinters for being on the fence so long suggests they were hedging their bets. 

Personally, new to this area of trading (but not without beta testing my trades for 18 months) I cannot predict the supply and demand variables for the short-term. Personally, I don't think most can, as the defaults are merely rumour at the moment, but also in part validated by the Iron Ore Tank *(scuse the pun). 

As a side thought, my targets for 2014-2015 were met overnight, normally as a price goes in my favour and gets closer to my target price I lock profits in. It moved so fast, I was unable to but closed my positions at circa 105.50. Reece, you may want to consider, if you haven't already looking at locking in some of your profits from AAL and any other miners you have positions. My closing of positions is for two reasons: unpredictably now and all positions hitting my maximum position target to derisk/close.

All the best, Fraser

Having read the "Decision on Jurisdiction" in full: why...

Having read the "Decision on Jurisidiction" in full: why would parties invest in Indonesia after read the Indonesian Gov+t's arguments. 

Now this is a little verbose and I'm not known for Brevity, for those followers not interested I would recommend ignoring this post in its entirety. Parties should ideally read all the document, I've made a few notes (thoughts) specifically relating to the analysis and continuing issues. You may have downloaded the document already but for those parties looking to take the risk, common sense prevails that the Jurisdictional Decision is the most useful document so far. 

Churchill Mining the Case So Far

Items to Read Page 30 V Analysis

Very interesting item 87 – which clearly upholds Churchill Planet’s rights to protection under the BIT agreement. Reaffirmed by Item 88. As per below:

 87. Article 25(1) of the ICSID Convention reads in relevant part as follows: The jurisdiction of the Centre shall extend to any legal dispute arising directly out of an investment, between a Contracting State […] and a national of another Contracting State, which the parties to the dispute consent in writing to submit to the Centre. When the parties have given their consent, no party may withdraw its consent unilaterally.

88. Accordingly, Article 25 of the ICSID Convention provides for four requirements for jurisdiction. There must be (i) a dispute between a Contracting State and a national of another Contracting State,100 (ii) of a legal nature, (iii) arising directly from an investment,101 and (iv) the Parties must have consented in writing to arbitration.

More importantly:

90. Article XI of the BIT reads in relevant part as follows:

1. In the event of a dispute between a Party and an investor of the other party relating to an investment, the parties to the dispute shall initially seek to resolve the dispute by consultations and negotiations.

2. In the event that such a dispute cannot be settled through consultations and negotiations, the investor in question may submit the dispute, for settlement:

a. in accordance with the laws and regulations of the Party which has admitted the investment to the competent judicial or administrative bodies of that Party; or

b. to the International Centre for the Settlement of Investment Disputes (“the Centre”) for the application of the conciliation or arbitration procedures provided by the 1965 Convention on the Settlement of Investment Disputes between States and Nationals of Other States (“the Convention”).

[…]

4. Where a dispute is referred to the Centre pursuant to sub-paragraph 2(b):

a. where that action is taken by an investor of one Party, the other Party shall consent in writing to the submission of the dispute to the Centre within forty-five days of receiving such a request from the investor; or

b. if the parties to the dispute cannot agree whether conciliation or arbitration is the more appropriate procedure, the investor affected shall have the right to choose.

91. It is undisputed that Indonesia is a Contracting Party of the BIT, and that Planet qualifies as an “investor of the other party”, i.e. of Australia. It is equally undisputed that the dispute is “relating to an investment”.

Page 29 in its entirety covering consent and the assumption of ‘non-consent’ and has to be established on evidence.

Item 116 about Indonesia’s viewpoint – warped and mislead.

Items 203-208 & continuing to 215 where they focus on the small print and deliberate manipulation of the terms to avoid “giving or expressing” consent from the President in my view.

Amazing summary really, but more importantly outlines the risks associated with ‘approvals’ and also the licenses approved for the conduct of 'which' type of business. Indonesia’s argument about conducting “mining” activities is a mere distraction. The balance is that Churchill and Planet acted properly and were approved to invest in the associated structures that Indonesia now contends as illegal operations and fabrication of facts / documentation.

This case, when read in full just on the jurisdictional issues, clearly shows Indonesia’s contempt just for “consent” to International Arbitration nevermind the reluctance to be willing to comply with the process.  Exciting times ahead in my view, nevermind the potential, but not without acknowledging the “claims” made by Indonesia that hint at their defence for why they should not be held accountable or made to comply with the Indonesian/Australian BIT agreement. These facts, I would invite people to consider fully rather than make assumptions of a clear ‘cut’ victory.

One thing outstanding, and as mentioned previously is Churchills need for finance, the Directors have already shown a willingness to conserve cash by the payment of renumeration/salaries via share issue. This however won’t pay lawyers unless a funding agreement whether direct or via third party funder is agreed. Admittedly Churchill have so far been prudent in their fundraisers, it doesn’t not guarantee the future equity placings will also be at a premium.

All the best, Fraser