Wednesday, 16 April 2014

Morning Mumble: I CU all the way...BLT pushing with expansion, and CAML hitting the mark!

Am I missing something with AIM? Admittedly it makes no difference to me, but what are companies doing awarding themselves 4%+ of the company based on??? Tower Resources PLC Grant of Options and Exercise of Warrants Only 75M shares at the placing price from Tower Resources PLC Placing, Acquisition and Preliminary Results from the week before. Where else in the world can you get the ability to buy stock at last week’s prices? It would appear the board room of Tower Resources is one of those places! 

The company wants to be very careful, as its these sort of things shareholders are looking at. Imagine if the placees were told...we've got a brilliant company that needs cash, are you interested? Were they at any stage informed that a significant percentage of those monies would be diluted to award "options." to Directors. The event is so material of the mind-set of the company parties would be wise to flip the stock and go elsewhere.

So back to the markets: BHP Billiton's results  are obviously bullish with the 10% headline increase in production. 

So the race is on to force companies out of the market place not only with Iron Ore but Coal as well, with an additional 2Mt's hitting the market despite it being so dire. The fittest companies will survive, but certainly not those overwhelmed with debt. Copper increasing and I suspect revised guidance upwards is on its way with expansion plans. With RIO and BLT's dividend one would be wise to hold them in a long portfolio. 

BLT's news bodes well for RIO (as they weren't as bullish as BLT in their announcement yesterday). In addition to the news from Mongolia that things are progressing at Rio’s Turquoise Hill Says Parties to Seek OT Funding Extension is the Government finally giving clarity on Royalty, Taxes and the like. Turquoise can then be taken out by Rio, the 1700 workers reemployed and everyone's happy in the bliss that is Oyu Tolgoi. We knew back in March that AMEC were advertising for workers, so one assumes this process is further along than the press realise?

We all must welcome Polypipe (PLP) to the market with Admission to Trading on the London Stock Exchange. Will the founders/PE backers run to the door quickly? A quick look over the market shoulder at the Appliance Online (AO.) share price is positive for me. Will they have to change their name to "Insurance Online?" 

So with Fresnillo and Hochschild's announcing yesterday would you be holding silver stocks long? We have Fresnillo coming out with production inline however its higher cost sector friend Hochschild's results yesterday don't elude to much in the way of any positives nor is there much commentary of the Silver Price down 20% on average over the last 12 months, costs will be key and HOC are now limited in their savings. 

HOC announced in March that their costs were around $18.6 per ounce and that was during a year of "savings/costs focus", with the current silver price not leaving much headroom and after the $27+M annualised interest costs on their Senior Notes, there's little left for shareholders. If you're in profit at HOC, you'd be wise to sell up or switch to FRES with costs around the $5.6 per ounce all in, significantly better than HOC. 

Now who'd have thought Tesco would have been cooking on gas today? Would you have been short going into results final results. Tesco have some relief, but it takes no rocket science to realise the three companies have to transform their pricing perception and offerings in light of significant competition. Asda clearly are winning, albeit all appear to be losing between 4-6% of their turnover to the lower priced offerings of Aldi and Lidl. 

The final thought for the day goes to Central Asian Metals 2013 Full Year Results, with 100% of the Kounrad Copper Mine income being attributable from now going forth, the earnings are set to benefit further. With 9 pence per share final dividend, there are not many around AIM doing what they say! The costs per pound are spot on, albeit I see some increase in these going forward at around 5%, the dividend coverage is more than affordable. Currently in at a fully inclusive cost in Kazakhstan is $1.13/lb albeit last year was $0.98/lb (2012).

Atb Fraser

4 comments:

  1. Fraser- Hi- Out all day (again) but catching up now.

    Re TRP- I think the options granted today we as a direct result of the directors not being able to participate in the 3.5p placing a week or so ago. This was confirmed at the time due to closed period rules so I sorted of expected something of this kind now, and at the same price of 3.5p as you say. Im not a fan of confetti type issues but the risk/ reward for a 30% share in that well does still look positive for me, albeit no widows or orphans should heed my view.

    Re CAML- yes- its nice to see the prod costs set out so clearly, unlike a few you and I could list :-)) Just the mining licence tfr now and then the prod increase via the much larger western dumps and the intriguing looking Copper Bay project to look forward to later in the year. An excellent company with great mgmt. and great potential.

    Cheers. The Leggie

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  2. Fraser- Are you watching the QPP move today- it looks like a BLNX type raid, with some similarities re suspect turnover and margins and a v low target price (3p) thrown into the mix. I don't follow QPP but I was surprised to see the massive growth rate in the last few years and projected for the next 2 years. It looks like some have made a packet here today, and no doubt a "no reason" RNS will follow shortly.

    Cheers. The Leggie

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    1. Morning Leggie, Yes I was watching and have read the dossier. If the facts are correct there's a massive issue there, one which would have more than "market regulation concerns."

      The chap's concerned were involved with Delhaize Group (Brussels’s based supermarket) awhile back and people interested in understanding the market would be well advised to look closely at the positioning.

      Not sure I agree with the PR on it...but one will await the 'full and indicative response' to the bundle in due course. It's easy to immediately respond, it's the substance shareholders should look at.

      Ironically their analysis or style is similar to mine, not in terms of concerns but the company review I did on Albemarle & Bond, ENRC, KAZ....London Mining, Nyota Minerals etc...

      Atb Fraser

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    2. Normal service will resume soon, been very busy on the mark and had a few days off. Was my Daughter's birthday over the weekend...second! Full of fun haha

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