Morning Mumble: LGO (Leni Oil & Gas), "why" am I holding...(sighs) & Wolf Minerals

LGO's Reserves Clarification, Trinidad was issued yesterday! So not only do they admit to pushing out information that has been previously released on the 22 January 2014 (wouldn't that normally get criticism in certain pages?). We can add this to the need for the placing more recently, that had LGO not pursued their "legal" claim would have avoided any need to conduct a placing.

Its becoming annoying to hold a position in this stock albeit up, as on the one hand the assets are good and that's about all I rate...I await Ian's "transcripts" but suspect I'll be living on the moon full-time by then. We shall of course 'ignore' the need for a placing currently being considered for an 'associated company.....'Alas, today's spudding will remove any 'need' for further clarification on the next 3 deviated wells with this Goudron Drilling Update. Sarcasm is often lost, today my humour is dry.

I'm not sure of the relevance of Hemerdon Tungsten Project Construction Update for Wolf Minerals albeit we can be satisfied with the news some trees have been planted and earth works commenced? What next, Friday's drinking session RNS?

Weir Group pulls out of Metso Corporation Merger which I suspect the Market will be relieved at this news but what next for Weir? Getting on with a nicely hedged company between Oil/Gas Services and Mining..perhaps a suitor for Weir now? They've kindly lifted their skirt, over to Flowserve Corp (NYSE:FLS) and Catapillar as GE is 'too buys elsewhere...

With Anglo Asian Mining (AAZ) news I've elected to close my short with the final audited results for the year ended 31 December 2013 ('FY 2013') confirming the dire position of the company if you include "the working capital loan." The cash costs, albeit not stated as "all in" may benefit the company assuming they can actually start funding themselves with cashflow as this currently is not the case. Is it a buy? I would not be sure, but its certainly about the money unless "another placing is needed" which will be confirmed soon enough either way by the progress of the company. 

This morning I have closed spreadbet positions in Hochschild (HOC), typical to do it then it drops further, I had hoped for 125/128, but need to reduce a few positions and take some profits!

Atb Fraser

Morning Mumble: Wolf Minerals Directors putting more than their toe in the water

Ronnie Beevor buys 250K shares,  John Hopkins acquires 130K shares and  Russell Clark buys 83,333 shares. For those that know the company its common-sense. You'll see the obvious pointed out, for which those whom were waiting to acquire back would be wise to take it as a signal to consider following suit. For those catching the bottom of anything good luck, funded, and progressing with the Hemerdon tungsten and tin project in Devon. It's a matter of time for a rerating, but don't expect too much too soon its likely with limited news until production its one for patience. 

For the bears of Iron Ore, Rio's news about the Simandou Miner Resources (FT Link) will assist their psychology of the tank! However it's 5 years off and its unlikely to change the landscape above and beyond the current forecasts. Albeit for Papua New Guinea it'll assist the economy massively...subject to terms.

Ophir's hopes were dashed today with the shows of rock and liquid indicators (my terminology) Gabon: Affanga Deep Well Result one assumes they're praying for better prospects from Mbeli Block. The Okala-1 well. Time for renewed speculation on Ophir? 

Faroe Petroleum are catching more of their losses back! Ian's still on the money with some oiler speculation there! For me it's a 1 in 4 chance simple as...Pil oil discovery

Enjoy Tuesday the new Monday!

Atb Fraser

Morning Mumble (Very brief): In light of the "recommended" offer for MOG Mediterranean Oil & Gas plc by Rockhopper Exploration plc. & Blur Group (I was right)

Am I missing the obvious? As a holder and long on MOG, I should be ecstatic when quite frankly the recommendation is a disappointing factor in the value potential of MOG. The justifications of the alleged benefit and contingency for success in Malta is a a let down to holders whom bought into the value.

A cheap way to get its hands on some decent acreage. If the board think the best value including an all in of around $1.2 a barrel, then I advise parties to write  down the names and make sure they include the under performing recommendations. With cash around £8m plus perhaps some element from LOG for the defamatory comments, the price per barrel drops to a paltry $0.85 there's a zero there folks...I'll remind parties of MOG's own investor presentation. 

MOG Investor Presentation

My view, which is no doubt wrong to the market is, if one wanted Falklands exposure I'd have kept the stock when it was high instead of selling! I dislike all elements of the Falklands its high cost and for me, one to avoid/short regularly. My last thought on MOG goes to the regulator whom perhaps needs to look at the trades late into the day on MOG!

Finally, to what I was commenting on last night! Albeit I missed out on a further 20+ points that's immaterial to what my trading gut was saying. Blur Group Proposed Placing and Open Offer. What a surprise, this sets the trend for a number of stocks, more importantly disenfranchisement will become wide so I will look to short further post the placing news. 

Atb Fraser

Morning Mumble: (PM Edition) For those following Blur Group (BLUR)

I suspect the Board of Blur Group are perplexed by the lack of support for the stock and will no doubt have a sense of relief as most people were closing out over this week on the stock. For myself, I need more information to be sure fire negative on the stock now so have closed my CFD and spreadbet shorts. Fear not, I shall be returning to it in due course, but my gut says "there's something afoot" but I'm not prepared to follow that conviction.

For long only in BLUR if you haven't sold now, you should be asking yourself why! This is not to gloat but the writing has been on the wall for definitely four months, if not longer. For those interested in yet another top performing short, I'd look at the business model to understand why the majority of analysts got yet another wrong. 

Royal Mail Group (RMG), will there be any support? It appears not currently...

Having read an article about Tangiers which clearly means you bought on a ramp, I'd disagree (edited changed from Disappear). Having now read the article, you'd be a mug to buy in on those figures. Perhaps common-sense is required to be pointed out to everyone (*addition: but it does not remove the high risk / reward punt prospects). What next? Someone advising of some serious issues with a company 'that's currently a darling?' Glass houses and all that!

Have a good weekend!

Atb Fraser

Morning Mumble: Jumpy to say the least...where to start!

Today jumps about a lot as it’s a bit of a review that’s forward looking, its been a funny week, flying by with various meetings and the speculation around certain miners. I had started a piece about the IPO of Bagir Group (BAGR) and the pricing including the reliance on one customer that has now decided to reduce its orders. There was gossip awhile back the client was Marks and Spencer’s which to my view would be the only reason to withhold such information as it’s not exactly positive in light of their sales. We can only wait and see in a few years time (I hope you see my sarcasm) as to whether BAGR's Director Dealings will be found to be prudent. Samuel Vlodinger Non-Executive Director purchased 133,333 @ 22.5p &  Tessa Laws Non-Executive Director purchased 24,390 @ 20.5p. When did BAGR know about a material downside in trading and should this have been pointed out at IPO as the company was only listed on the 15th April and the profit warning/trading statement came only one month later (15th May). 

For those that read my commentary on Amara Group (AMA) you'll note the Director dealings that for once aren't a paltry £10K 'but believing in the value.’ This does confirm to those fixating on the takeover event by Randgold that there's nothing happening 'currently.' Its my view the directors did not have much choice, with the 1st Quarter Results being so grim, they had to appear to align their interests especially with the placing just gone. The positives are they will have circa £27M in cash now, a decrease in cash costs (16%) to US$1,082 per ounce (is that all in? I don’t think so but will have to check), but shareholders should be concerned with the guidance being towards the lower end of the 60-70k company given ($2m short on top end guidance EBITDA). Yaoure is key to AMA and the PEA evidences that...patience is the key, over to Randgold to get its juggernaut into action.

In reviewing posts here I have noticed a number have gone missing, the Chinese Nickel market fiasco (trades) and the market for some reason ignore the fact the Chinese have been funding smelters in Indonesia for some time (If parties got them in an email could they be so kind as to email me them at so I may repost them).  The Chinese Government unsurprisingly didn’t inform the market of its intervention in Nickel and Iron Ore. The plummet was only supported by Asian trading, I suspect saving the bacon of a few over-exposed Chinese traders. The press merely repeated what was news in 2013, namely the deal between Ibris and China’s Yong-Xing Alloy Material Technology Taizhou Co. Ltd which was well ahead of the recent developments, its nothing new, the demand is still a touch above supply on Nickel. However the Chinese Government position was well played and caused a pull back, or cautionary note being taken by the speculators. 

In addition my Tronox review and the impact on Kenmare Resources (KMR) disappeared...From memory the results were a little ahead for Tronox, but nothing spectacular. The main noise coming from Tronox is the pigment market has stabilised. As such there’s going to be “no planned increase in demand” but what I can make out is the stocks and demand have turned, which should bode well over the longer-term. This however in the current climate won’t do well for Kenmare without some improvement in the market over and above stability. What is concerning is, that demand is down around 12% for Tronox and prices down 30%+ with this is mind Kenmare may have had a belated sell off as people were slow to react to the little improvement in the sector, which for Kenmare is always worse…no wonder with a performance history. I’ll hold what little I have as a higher risk exposure but I’d certainly not be running to buy more even at these prices. Tronox Quarterly (PDF via Tronox Site). Remember Tronox is a ‘fully integrated producer’ which saves them some of the significant pain that Kenmare have been experiencing. It does however raise significant questions when you compare the pay between the Tronox Board and Kenmare…perhaps I’m missing something?!?!

One that deserves a re-rating is Central Asia Metals (CAML), this stock I’ve held for some time now, its rare to have a decent asset and a dividend on AIM. With the stamp of approval on the Kounrad copper project in Kazakhstan CAML kick off with expansion plans which are stated as being fully funded from cashflow. Things may be delayed a little with expansion if the price drops to $2.45/lb or below, but with a fully inclusive Kazakhstan cost of $1.13/lb (2012: $0.98/lb) for f/y 2013, things look very rosy. One hopes the Kazakhstan Government don’t think they’ll just take the entire asset and be damned? Or take and sell to a certain larger Kaz miner, all country risks, but the approval process gives some reassurance for the orphans. Until the full expansion plans can be pulled apart, £2/£2.15 is about the money on fair value, so perhaps the market may get ahead of itself.

It would appear the Nickel’s strength and current Indonesian position is forcing companies with crap assets, oops higher cost assets, to attempt to sell them on. There’s a rumour Anglo America (AAL) are very close to a deal to get shot of their Barro Alto nickel operation in Brazil. AAL need to refurbish their furnaces at Barro Alto, that’s been known for a significant amount of time, what most analysts are missing is the fact Anglo’s returns at Barro Alto do not justify any refurbishment programme, some one assumes Vale having smelt blood have agreed a price that reflects the issues. The issue for AAL is the cost of refurbishment and return on capital, and with the dog of years previously, its one Mark Cutifani is guaranteed to get rid of, the write-downs on the asset is unsurprising, what may be is the price that the willing buyer pays! With no other interest save for Vale, its clear its going to be a 'buy one semi-useless furnace and get another for free."

On to more profitable items, Centamin Egypt’s Dividend Policy was announced last week providing significant support to the stock above the crucial 55 pence level, this was followed shortly by the Director purchases. With taxation now likely to be a positive for the Egypt Government including no subsidies, one would assume the “ministers” would be wise to strike out the license issues and pending court case, albeit I suspect they had this in mind with the retrospective legal changes restricting challenges to Government awards/contracts.

There’s some gossip going around about EMED doing a fundraiser at 6 pence, the reliability of the information is with a cautionary note and surprising as they could raise at 8 pence like before. Perhaps the company has realised what happens when they punish shareholders by deeply discounted and well known prior placings. EMED’s board have a lot to change here including improving the confidence of their holders. The asset is good, the economics positive and the Government very receptive of the project/mine. Its surprising with offtake agreements, and forward sales, why EMED would need more than £30M but let the rumours of £100M do the rounds. 

We had Afren announcing these week and took the opportunity to start buying again in the stock. Its numbers were plumb on developments going well, albeit a little behind in timing. With Lekoil and Afren need for the OGO’s development to evidence their spending and discovery, one expects “good news upon full appraisal and step out well.” Afren is an acquisition target, why this has not happened is anyone’s guess…Perhaps a merger with LEKoil and a dividend policy in 2 years time would be more beneficial? The company are certainly putting the capital/cash to the hardest work possible…unlike many that could be mentioned.

As a thought back to higher cost, low realised prices for iron ore producers, with the market being awash with lower grade Iron Ore it’s unsurprising that African Mineral’s results were so dire, and that’s excluding the most recent price drops, the rainy season being May to November for Sierra Leone and the shipping risks that are totally ignored by the market (save for a few shrew individuals) which may be prohibitive to shipments around October.

It’s acknowledged both London Mining and African Minerals have put measures in place to reduce the moisture build up, but one would be wise to keep an eye on anything above 7%. Africa Minerals is being punished by the demand cycle for superior ore, anything below the “ideal” is being discounted significantly and with the recent price move down to $98-100/t it’s likely to have impacted significantly on London Mining and African Minerals revenues. I’m not pricing out London Mining as bust, but in the current cycle of pricing, London Mining has bills to pay…the Board have done well for me over the years (this does not stop me shorting them), and its predominantly the slowness of ramp up in production that will punish London Mining further. African Minerals are full steam ahead, the faster they can get to their 25Mtpa by the end of December the better. For the knife catchers, the buy reiterations will provide some psychological support, but with the “unknown yet known direction of the Iron Ore” it will punish these two without very close eye kept on costs. AMI/LOND were the Muppet shorts of this year/week whereby everything was known the market just had to catch up, time to now close and await the direction. This was also mirrored by my FX play GBPVs.AUD, which lept nicely from 1.7850 to 1.82+.

Whilst typing this, my news feeds have just shown yet another buy for Centamin Egypt, when time allows…In addition there's a working capital loans for AAZ (Anglo Asian Minin ) coming as no surprise whatsoever with a placing likely…one wonders how they’ll repay all their loans if they cannot fund the working capital? Anyone care to enlighten me?

Why: Polymetal Int PLC Acquisition of the Kyzyl gold project, surely one needs to get their house  in order before attempting to make other assets work?

I took a high risk play in Tangiers Petroleum Ltd, its a 20% chance of hitting a better time for the stock, so 5-1 odds for a significantly higher return in the stock. Its not one for those people that like premium bond exposure though. Whilst on the phone to D yesterday, he shrewdly noticed when the market moved! 

Items of discussion are: RGM/RRR (I'm long on Regency Mining and Red Rock Resources and not mad) and closed my shorts on Ocado (OCDO) along with ASOS (ASC), and Supergroup (SGP). Folk will notice the cancellation of the Fat Face listing, one can only speculate why, but suffice  to say, have the Insti's and Mugs finally woken up to being loaded up with over priced stock? I doubt it, just they're aware of paying too much at the start, they don't really care if they pay to much after a few years! Due to my indecision and unknown variables in Pets at Home (PETS), I have closed my short position. Royal Mail Group (RMG) having been out of the money from 577, is nicely back in profit and moving forward. The company has to restrcture, it's an archaic company with a Governmental Ethos. 

For those vying to take glee, I closed my Mothercare (MTC) position today not at a loss, but wiping out some of my profits...Mothercare Plc : Final Results. Still not looking good, debt up, total UK sales down 7.5% but overall worldwide growth. With the focus on the UK, it still does not bode well for MTC unless more significant changes are made but clearly headway has been made in turning the company round. Perhaps Morrison's spinning Kiddiecare out may be prudent if don't quickly?

Quite why New World Resources is still listed beggers belief...

Finally for those looking for positives in Iofina, one would be wise not to look for too long in the SQM (Sociedad Quimica Y Minera) Q1 results but the numpties will look at the share price recovery and think Iodine being 25% of SQM's earnings rather than anything else including  lithium, potassium-related fertilizers 

and industrial chemicals being the reasoning. The market may wake up to this with IOF this afternoon.

Its my Friday! 

Atb Fraser

Note to self: start typing in word rather than "blogger".

Morning Mumble: Any old iron, the tank-a-thon.

Well the Chinese and Asian buyers have been throwing caution to the wind and reducing their positions selling significantly into a headwind that broke the back of Iron Ore Crucial support level of $100.50 (Often missed). Overnight it managed to hold its head above the $98.40 but by nail room only. With $87/t the next bottom if support is not found, one could expect a few kicks in the proverbial for the higher cost producers. One will look to Friday's close to see the 'true' direction but suffice to say, those Chinese traders will be 'toast' at anything below $94.50, will the Chinese Government step in? I suspect so, with leverage running at silly levels. 

With other commodities, Copper, Nickel (the highest p+ve% mover) and zinc all on the move positive one expects some profit taking again on Nickel as it nears the magic $9lb/cire $20K/t. The doom-mongers will be enjoying the predictable element and the impact across the miners more aligned to Iron Ore, Rio and Vale are likely to be punished the most for obvious reasons. For the muppet selection you can't get better timing of shorting Iron Ore miners/commodities than now, unless you're two well-known trading houses with an inability to smell the stark reality of common-sense. One can only wonder why a Co's are long Iron Ore at $111, short nickel $7.30/lb...no one needs hindsight for common-sense, so expect some significant coverage (volatility).

For those able to think on a Monday with such glorious sunshine, with the Chinese National Bureau of Statistics (Digital Look Link) reporting eight of the country's cities seeing a monthly decline in the average commercial house price, compared to the four which saw a fall in March. Does these mean a need for stimulus or realistic returns and consolidation. Main Chinese Bureau Site for those wanting an in-depth read...

Vale being the historic version of reactive in my view, its no surprise they are now closing their Thermal & Coking Coal operations in New South Wales: Vale to shut money-losing Integra coal mine in Australia (Reuters). One wonders if the Asian Consortium will grasp the opportunity to take the asset of their hands whilst its on care and maintenance, or better still cut their losses and await someone more foolhardy? 

Atb Fraser

Morning Mumble: AO (Appliances Online)...

Apologies for the lack of communication at the moment its been full on week trading with short on ASOS, Ocado, PCI, and a few others...I'll come back to in due course but suffice to say my Friday trading ban was broken significantly. Asos is likely to be en par with the long on Nickel for the best trades of this year.

For those that read, you'll remember the commentary Morning Mumble: Appliance Online (AO) what next? A short piece...and the week.  Well guess what happened….Appliance Online (AO) starts selling TV (Home Entertainment). So for those analysts not realising the competition value of Appliance Online perhaps they’re starting to realise the brand building. Steady progress with “more to come”, but I will never own this stock as a long-termer for the simple reason it’s so illiquid it can be so predictable.

My brief thought goes to Morrisons (MRW), with news the Management may have found a backer for a take out at Morrisons (I’m long on MRW on dividend date 191/192/194) purely because I see great potential in the vultures play here, no other reason. Unlike most ‘alleged’ retail analysts, they may know about Heinz or Bramston, but their commentary shows they know nothing about the stockmarket forces or social elements to demand.

Leggie, get that bottle of Hendricks ready haha…Kudos on the coverage on Metro Baltic (MET), it was surprising entering the market for a few paltry buys today that enabled me to close the main part of my longs (tax free). So in essence I’m left with equity and no tax efficient spreadbetting and a few CFD’s. All the same leggie, cheers.

Will endeavour to do a Saturday piece !

Time for a gin...Atb Fraser

Morning Mumble: Nickel & Randgold hunt...with not so strategic natural resources boom boom!

Speculation, or should it be called "factualisation" of the growing imbalance between the demand of Nickel and its supply. Contrary to the assertions by the press that are writing 'reactively' to the events unfolding, the speculators did not get involved fully to the realities of Nickel until last week. The price was purely increasing on a physical need and panic about limited supply. Speculators, hedgies et al, were slow to react the growing realities and aided the run significantly.

Oneis watching the significance if Nickel stays above $21318/t and the Chinese trade data later today that will, if negative create a short-term coverage of positions. The stark reality is that China, requiring Nickel in large amounts around September was forced to step into the Market. Chinese supplies are running low, with the contract season just gone in China, the surge was predictable. The Question is, will the Chinese hedge by buy their Nickel in the run or await some cooling. Logics dictate they're in the fray and will have to acquire, China has the low levels of Nickel reserves now, having stocked up in readiness for the Indonesian ban. 

This afternoon's LME session will be very interesting...for the sad so and so's like me.

One thing that Roger Bade picked up on (Randgold chair mulls takeover deals in Africa) that I have been building a position in is Amara Mining (AMA) meeting the criteria for Randgold's Acquisition Trail. Remember Randgold has just had a change at the top with Philippe Lietard replacing Christopher Coleman. He's looking at cash needy small caps with decent assets. This is nothing new Mark Bristow @Mines& Money (December 2013) outlined what Randgold was looking for but its positive that both parties are singing from the same hymn sheet. 

So have a look at the Mark Bristow Randgold Resources Presentation (slide 15 for the idol folks)

So in considering Randgold, then consider Amara Mining's Technical from the 1st May 2014 Report (highlights below), which rather sums up the case and gives a view for me that the stock is worth 28 pence+ and potentially, up to Roger's circa doubling of the stock. One awaits the market to wake up and realise...

• Post-tax IRR of 33% at a gold price of US$1,250 per ounce
• Post-tax Net Present Value ("NPV") of US$613 million at a gold price of US$1,250 per ounce and a discount rate of 8%
• Strong returns at lower gold prices with post-tax IRR of 25% and NPV of US$388 million at US$1,100        per ounce
• Average annual production remains strong at 279,000 ounces over a 10 year initial life of mine ("LOM")
• 6.5Mtpa scenario is based on an US$800 per ounce pit design with an average head grade of 1.53g/t, a       10% increase on the 8Mtpa scenario
• LOM average total cash costs (including royalties and refining) of US$594 per ounce, a 9% decrease on the 8Mtpa scenario
• All-in sustaining cash costs of US$624 per ounce, a 10% decrease on the 8Mtpa scenario
• Plant and infrastructure capital cost of US$244 million, with a contingency of US$37 million and an additional US$75 million for an owner-operated mining fleet - a 13% decrease on the total pre-production capital cost of the 8Mtpa scenario
• Rapid total payback period of 2.6 years
• Amara is fully funded to deliver a Pre-Feasibility Study ("PFS") for Yaoure in Q1 2015, following the successful placing and open offer in March 2014, which raised US$30.5 million, with in-fill drilling now underway.

So logically it fits, the question now is, does Randgold want it...there's no rush as they had a placing for $30M 2 months ago for AMA, which in fairness wasn't at much of a discount (pending on which graph you select) but more so was above the current SP. The case is more than probable on the bases that Yaoure will deliver the PFS by Q1 2015 (9months ish away) and Randgold's need to look for more developed asset or risk losing yet more of if its unjustifiable premium. 

Tissues may be required at Strategic Natural Resources today, with the fund raises that allegedly is good news for the company. For those interested in following the limping horse: Strategic Natural Subscription and board changes. Further pain is to come with yet more financing required...anyone for a highest convertible bond, with warrants? GKP holders should watch just to make themselves feel better...

Fox Marble, may however have some realisms priced into/out of their price with the AMG Statement which doesn't bode well for a 'darling'. Fox Marble AGM Statement.

The final thought goes to the debate about selling into the rise on FPM Faroe Petroluem and holding tight, I elected the Widow's and Orphan's approach of selling into it, whilst the "Dr Livingstone" elected to hold for the black gold. He will never learn...

Atb Fraser

Morning Mumble Par Deux: Superdive because of China or the realities?

For those following the ASOS (ASC), Super[dive]group (SGP) and Boohoo sagas, should be well aware Supergroup has been a blatant short. Supergroup's Interim Management Statement was a miss...a clear miss, but whom is out of the money? Both down as there no doubt in part as a result of the over expectations that were priced wrongly priced in, including some silly targets on ASC and SGP.

Certain analysts need a reality check, obviously these price targets will be 'under review' in light of the Chinese Premier President Xi Jinping’s, words over the weekend. The Chinese position is not unexpected, the main indicator was the reaction of iron ore near 6 weeks ago, giving a signal to what is coming. The trade figures, gave some support to iron ore, but the consensus is right that the price is set for a drop. 

The Chinese Government may have to change track again, surely a few more railways to 'nowhere' will assist this...More importantly the Chinese expansion and realities of lower expectations are setting in…

Over to the Australian Dollar to weaken further...going out to £1 Vs. AU$2 is surely more valid in light of the change in the global environment. Considering: Get used to slower growth, Xi Jinping says amid weakening China trade figures (South China Morning Post Article)

Perhaps D will publish his thoughts on WANDisco as well, they were very valid, but would have been costly until the trend changed, which was confirmed around 1150/1100. All the same a nice sport…

Atb Fraser

Morning Mumble: This Month China On Russia Off = NIckel Wins & Diamonds where's the Dividend!

Well it appears over in Asia the markets they were aligning themselves with China "now" (read as currently) not being as bad as people thought, so in they popped on Chinese stocks, dropped Russian/Ukrainian exposed (belatedly) and ran for metals. Iron Ore even got some support, despite the obvious happening in the Steel Mills. It seems a prudent time not to bail out the Mills on the basis that it will 'naturally' remove any slack and higher polluting operators. 

Nickel is now in speculation mode with momentum over the weekend pushing the price near 5% higher, and benefiting the likes of Vale, Glencore, BLT and even ANGLO will benefit, (Vale being in number two spot to Norilsk Nickel). I've elected to exclude Norilsk on a temporary basis due to the Russian / Ukraine debacle, not just because of the booing at the Eurovision!) The world has gone mad, but I dare say that's a conversation for a differently focussed blog on 'Eurovision' winners. 

Friday enabled me to have a good session with Dr Livingstone (Ian with no Doctorate) about his recent antics and his alleged return to blogging? I've heard it all when one needs a week "to catch up". Alas, Saturday was recovering due to the excesses of the night before, whereby Livingstone did not surface till near 4pm, due to a slight bit of 'jet lag' strangely sounding like a hangover.

What is interesting is BNP have caught on that the basics of supply and demand I discussed some 5-6 months back (and more) in respect of Nickel are now occurring. Often parties are so focus on one they miss the other, which was the reasoning for building various positions in Nickel in the first place. BNP noting that supply is often a greater driver than demand, albeit with demand positive and supply down there's only one train until news of Indonesia 'going' soft in the interim. Surely miners can't just stockpile for 2+years in Indonesia and will have to mothball?

The momentum traders and speculators are finally in Nickel over the weekend with no reason for the run bar speculation. The price rises up to Friday were purely physical demand, which would have historically dropped off a little. Nickel is now a hoarders dream, stash, go long on it and hold it dear, the tighter held, the quicker $30k/t will be made, after running through the 20k/t mark, or 9$/lb for those in older monies. Its 'almost' guaranteed Nickel will test $13'lb and potentially $15'lbs, with some volatility along the way (common-sense). The move on the weekend added $100M to Glen's profits going forward over the weekend on top of the recent gains. One assumes they aren't exposed to too many forward sales agreements between $7-8/lb?

Already one company is running with the bulls, QCG Resources are rushing to the market with an IPO based on their Avebury mine in Tasmania (NIckel). Personally, why China's Minmetals subsidary MMG selling Avebury it beggars belief but kudos to QCG, the stock, if "IPO'd quick enough" should bode well in the current climate. One couldn't have time it better with Indonesia's ban, the Russian issue and demand pushing any likely surplus in the market back to 2018 at the earliest it bodes well for prices and trades. Long Long Long!

Gem Diamonds came out today with a very positive Interim Management Statement. With cashflow and cash at bank improving mainly thanks to the Letšeng dividend. Sadly the market was expecting the magic word 'dividend' which never came forth in the IMS. My figures show GEMD could have afforded 5.5pence a share dividend. This would have certainly provided some "motivation" for the stock. In addition to the likely benefits of Ghaghoo  coming online as they've 'finally' hit Kimberlite in Botswana. One awaits the "joyous news on production ramping up H2 of this year (subject to the Cameroon sand playing ball with their access pit). Ghaghoo’s progress and ‘being on schedule’ was further validation of rewarding holders with a 5p divi! Alas, perhaps the Management will do a ‘special’ announcement.

I have been short on Anglo Pacfic (APF) despite being favoured by an analyst I have respect for who's rather shrewd/open. Having been short since November the company’s Interim management statement  is starting to make me thing the bottom is near. The dividend should provide some assistance, but their over positiveness on Coal made me to think negatively on the company for quite some time, so with closing positions I will bide my time before/if going long. 

Being in the monies on LGO, Leni Oil & Gas, I'm not sure what the additional noise in the RNS today was about bar a drilling update. However one chap has a conspiracy theory that its to get as many announcements out to push the legal debacle out of sight (really?!? Surely not!) The announcement is a positive, but I reiterate I do not hold this stock because of management only the asset(s). LGO's Production and Drilling Update Trinidad. 

Finally, the money printing is going on for the shorters on Blur, the company were so kind to the satans of the stockmarket (us shorters), to give us advance warning to go short. On the 17th April 2014, in Blur's trading update and Notice of Results announced that a "more conservative and prudent approach to revenue recognition." What took the market so long between then and today's announcement for investors to realise, trading update to realise cash would be required and more importantly recognised profits would be lower? Good luck to Singer N+1 in raising the cash required. Convertible loans well in the money? Discounted (even more so) placing? One will await the news before shutting any position..kleenex may be required for those long!...WANDisco continuing its fall, D, you were merely 6 months too early.

Atb Fraser

Morning Mumble: Supergroup (SGP) the performance echo(or lack of in mini version due to time constraints), Zanaga Iron Ore (ZOIC) Project Feasibility Study Results.

Chaos this morning was greeted with my retail shorts for which they have performed remarkably well. 

Mothercare (MTC) unsurprisingly being kicked yet again and strangley analysts and the like are now suggesting it's bad times ahead. Well unsurprisingly its been bad for a long time, and will be for the forseeable future unless things change, the liabilities and performance (the rot) are becoming overwhelming. At their last update in January the guidance was revised and no further drops have been evidenced.

Mothercare the brand, is being devalued by a lack of investment in it. Forget the noise about the debt and the trading, as this is secondary to brand (company) value. For sometime now I have positioned myself as an amateur expert in footfall (getting Comet's collapse correct, Halford's increases, Curry's wonders and the Supermarkets "lack of expansion.") So without blowing smoke up my own proverbial, its with no surprise that Mothercare scare stories are doing the rounds (so belatedly its dire!). It was whilst having a drink that I realised Mothercare is what Jessops was, the place to test out the kit before buying online. The consumer will pay for this later, by their incessant belief and insistence that the price is the be all and end all; but we'll ignore that for now as consumers will be over a barrel in a few years. 

Mothercare's woes mean that the possibility of a premium take out are limited or perhaps the word is non existant. The stores have value, which as it stands are perhaps the only asset. There's got to be a cash call on the way or lights out, purely on the basis that shareholders are unlikely to ever see a return on the current model. The market should be looking for a change in its strategy to push the brand, how they will do this is limited by the lack of ability to take risks from a top down approach and innovate their customers. Their scale is not being utilised in their pricing nor is it of benefit to the financial structure either. For that reason, Mothercare needs to persuade a giant to take them on, refurb more than just the stores and close the underperforming, sadly for the longs this price cannot be justified at anything above 98 pence and that's excluding the potential rights issue for £35M needed sooner or later at 85pence if they get it away sooner rather than later. One shall await the 22nd May 2014 for MTC to enlighten the market...

SuperGroup’s results are strangely identical to May 2012 in terms of disappointment, I’m sure the analysts will see more positives than I. In light of ASOS’s moves and lack of target achievements it comes as no surprise SuperGroup’s Market expectations were clearly higher than the results!

Zanaga Iron Ore Project Feasibility Study Results (ZOIC) (as Leggie pointed out) has announced the Feasibility Results. 

The ZOIC have you believe that Glencore (GLEN) are going to take out Zanaga at NAV? Surely one would have included the NAV within the Feasibility Study in order to give the Shareholders some cheer? So ignoring the fact its in the Congo (for which I now know better having been shipping Pork Semi-Meaty Pork Ribblets to Matadi for some time (long-story).

A blended return between Stage one and two infers an Internal rate of return around 15%, or specific to stage one of 12.7%. To be honest, I can’t see GLEN getting excited about that, then again I could be proven wrong (but I doubt it!). So initially ZIOC was a $7.5 billion 30mtpa operation, that wasn’t that great either. However they’ve finally worked out that cashflow could fund a proportion of this, so it’s with NO SURPRISE whatsoever there’s a two stage development, and potentially three stages if one was to be picky. They’ve reduced the development costs to a ‘modest” $4.7 billion. The main benefit for ZOIC is the premium grade pellets its suggesting is achievable, although its only suggested 2mt’s have been identified as DSO, one will be left to wonder whether that’s per annum or one off…

With GLEN busy with Mauritania and looking for nearer term cashflows, one cannot help but wonder if a fresh (greenfield) development is likely. One could argue that GLEN could sit there for ever and a day and merely bide their time. A criticism for today is there’s no assumed tax rate, nor does the Internal Rate of Return go far enough to suggest whether its including tax, afterall they included Royalties so why not specify the taxation? When someone realises, even an Amateur likes me needs the basic yet significant detail of “taxation included in the announcement.”

GLEN’s deals in Mauritania with Société Nationale Industrielle et Minière (SMIN) are years away…2022 by my estimated (albeit a positive for pipeline). The poignant element is that life does not bode well for ZOIC when Ivan Glasenberg highlights GLEN wants to focus on Brownfield sites, something ZOIC’s Mine is not…shareholders in ZOIC may have to be patient for their deal with GLEN…how patient? Who gives first Mauritania Government on Taxation or ZIOC on NAV?

The final thought on ZOIC / GLEN goes to the agreement, someone remind me of the terms having not read them for awhile, but if I’m correct GLEN are only commited to funding ZOIC up to the Feasibility Study? However GLEN do need to trade commodities as well, perhaps a different angle to the Zanaga Project is to be able to trade the supply, after all, as a major would you sell GLEN stock to impact on the price?

BT Group (BT.A) Final Results come in nicely and money for old rope for us longs!

Morrisons (MRW) need a saviour, will that bottle of Gin be mine Leggie! Surely the management and a few family members haven’t had more meetings with a PE firm have they? It would be pure speculation to suggest MRW’s “time to be taken out is now or never.”  

Uranium: Woeful low, the long positions must now being torched as houses/banks dump stock to monetise ‘something’. One holder had no choice but to ditch or pay dearly, not that they haven’t already, why someone would assume such large positions at $40 a lb without considering the slow journey down and back up beggers belief. I suspect that trader is now relegated to sharpening pencils albeit on a guaranteed bonus! If parties remember my belief about not buying into Uranium producers with costs above $22/lb, you’ll now see why.

Sadly I haven’t got time for the Aluminium impact, Randgold’s positives but a sell nor a Goodbye to Eastern Platinum thankfully delisting which is delightfully entitled Miscellaneous high priority announcements. I would like to thank the Board and the holders for one of the most obvious short plays in the last year in the Platinum Sector. Perhaps this delisting will bode well for their future? One doubts it, but at least it’ll save a few quid a year.

Atb Fraser

Morning Mumble: British Sky Broadcasting the summer doesn't look rosy..without one drop of mining!

So Sky's results the city seemed to think were a positive for Sky (BSY), well in part they were. They added new subscribers, albeit one does not know the cost of 'adding' these nor the reporting element, was it a profitable package or not? How were they new aka existing customers giving retention benefits? Were they utilising the ever increasing "trends" of Half Price Sky to benefit? 

In monitor consumer actions its interesting that Sky's model is showing a lesser reliance on the "Sports" package and more about the connectivity/plus features in Entertainment. Analysts seem to know but have not realised the significance of this years World Cup. It's not on Sky, its been known about for ages, but this impacts on a variety of add-ons. 

What the results don't allow for is the competitiveness in the market, "the additional costs" that Sky are likely to need but more importantly, the retention costs. The market is growing in terms of retailers being encouraged to cancel contracts, most "advice" type websites are informing their readers better. This will also have an impact on Orange/T-Mobile aka EE, with their inflationary rises. One thing they tried to catch me on. As a heavy user, with various phones on my plan, they decided that a "cursory £3 a month on a £120 per month bill pay was rewarding loyalty." Alas, they lost they lot, I got savvy and am now pay half that....+ VOIP etc...

Anyway, back to Sky, the football, a key advertising driver is not available on their platform, the plays off, F1 and Golf (yawn to both) are but the World Cup the furore and everything that drives the Football non-fans mad (ME) is starting soon. In essence, Sky Sports and Sky will have a User 'sick note'...Dear Sky, we're busy watching something you failed to get the rights on (yet again) and we'll be back after the World Cup. The difference is, those not in contract will see no benefit in retaining Sky for 4 months as 'advice' sites are now suggesting they put in their cancellation notices and rejoin post World Cup. Sky's model ultimately means that most are not in contract post 18-24 months of being with Sky so the affordability measure comes into play 'being out of contract.' Lets watch for signs in Q4/Full Year Results and Q1 next year of what is likely as a result of Sky not retaining certain rights. Sky could change these trends significantly,, if they utilised some very basic and common-sense practices.

The results in Q3 were just another reason for me to short the stock, so thank you bulls, it was just assisting with making money for literally old rope. With a total ignorance of the fact Sky has to do something to fall in with the "Quad play" that consumers are demanding...a tie up, merger, acquisition? Hell who knows Sky may actually hunt for Vodafone akin the to the RBS/ABN Amro debacle? Either way, I'm surprised holders are not pushing for this deal...

As a thought for those whom are looking for trends and having personally had a daughter at the grand old age of 38, it got me thinking one day. If i'm slow to the game and everyone's having babies, the 'boom...' Then surely entertainers earnings are likely to grow, Walt Disney's results came in ahead of expectations showing this trend, more importantly, its showing signs that their parental pound and spending ...especially around entertainments. The worrying sign is, this has not been seen in the child care sector of Mothercare, Kiddiecare and ToysRUs which suggests there needs to be some structural alterations to the companies and their cost basis to improve. 

Kiddicare is up for sale, will it be developed properly or haphazardly conforming to its older model...The brand/company I've always liked, it has some significant potential, above and beyond the likes of Mothercare and ToysRuS. Albeit Mothercare would have been a good bet for Tesco/Sainsburys, stores, locations and a bolt on that could be managed. Morrisons simply was not up to the task of Kiddicare, it had all the right bells and whistles and simply wasn't pushed. Kiddicare has not lost ground its stagnated in an undervalued and archaically structured sector which has so much potential but sadly needs a draconian knife to it. 

There is some gossip about ABM holders making a profit on their stock with a potential sale. Really? I suspect the room to maneourve comes from their pledge book which was conservatively valued and debt at £53M, Vs. the pledge book at £37M. So was ABM worth circa £15M? The company stripping out the debt and the like was a good entity, albeit a leveraged play on Second hand gold.  Once you take any reconcillation of pledge book, debt I'd be surprised if the debt is repaid nevermind something for the stock holders. 

With the FCA reforms and lending expectations based around affordability, we have One Savings Bank's intention to Float come to market. "one"ders will never cease...sub prime?

Atb Fraser

Morning Mumble: The News is finally out about Xcite Energy's collaboration with StatOil & Shell

Collaboration Agreement with Statoil and Shell

Now I read somewhere about Xcite having its hand forced in respect of their licenses as they had to be active. One thing for sure the party suggesting it, was ignoring the logical elements and the market. The acquisition of data was rightly pointed out by "some mugs" as the start of a potential JV, this indeed seems to be gathering pace. Xcite's SEDA and cash situation should not be ignored but there is likely to be more news flow, perhaps September? 

This news, removes any doubts about the UKCS Maximising Recovery Review whereby Xcite's position was allegedly at risk. Yes of course the company would have lost their rights had they done SWFA but there was a lengthy process before it even got to the stage, with a public notification and various elements before one could even consider 'losing' ones license/operatorship. This is a positive in a bleak winter for XEL, is it the bottom? Who knows, but it's certainly starting to show signs of progress. I have for awhile felt XEL were unlikely to develop their assets (in their own name) and will be taken out when the timing was right. 

One will await the broker's push. 

Atb Fraser

Morning Mumble: Rurelec: why has the market not been informed &...LGO (Cash)

Rurelec: So its been known for awhile but busyness meant I have been out partying and was waiting the post Friday news updates. We know Rurelec have had a material decrease in their award as a result of a number of elements a) Birdsong agreement with revised terms (which are unknown). b) were unwilling to play hard ball and seek recovery of Bolivian Assets c) had no alternative but to 'compromise' to obtain payment plus a few other items. 

It would appear from various news flows that Rurelec to receive $31.5 million for expropriation of shares. Staying with the 'suggested' amount Rurelec will receive, and with Rurelec's announcements, that matter has been reduced now to around £3.65M, not far off the gossip. The company requires funding and stock support the latter is unlikely including I dare say a reconsideration for the Santiago listing in light of the most recent announcement. 

It would be interesting to know why the £6.5m reduction has not been disclosed to market as its a material event and falls under disclosure. Now a contractual agreement has been made removes any commercial sensitivity. For this reason, I'm taking the view not to short or long, but to stop page coverage on the basis that the company has not only risks with disclosure but the ability to grow has been significantly impaired without additional funds. Further the information tones have changed with limited information creating greater risks due to speculation, one to watch for volatility to trade or a change in disclosure/news flow before returning to the stock.

Rurelec need to announce a) what monies they are receiving b) what exactly is happening with the Santiago Listing which I suspect was more about financial transparency than AIM Regulation. Surely if one was "going to achieve such a premium on the Santiago markets one would have merely cancelled AIM? 75% of the Votes required with Stirling holding a significant proportion not a difficult task.  Finally C, how they propose to finance the developments. There's a short fall on the planned receivables to the reality of the 02nd May 2014 announcement which is lacking the significant information a shareholder wouldneed. There's perhaps a reasonable explanation for this, but the fact remains it was not disclosed, I'm sure there will be a fanfare for the amount received...either way for the long-term buyers holders they should have still made significantly. 

Over to Rurelec to inform their holders.

We were discussing the LGO position the other day and it was surprising that a couple of people whom are better informed than I on oil asked a couple of interesting questions:

Question: Did the Company known about the "drilling report" Leni Gas & Oil PLC Goudron Drilling 28th April 2014 showing the discovery of Oil on or before the Funding and New Trinidad producing fields review 25th April 2014. If this was indeed the case, it raises questions of why LGO raised the funds at that time to "assess a number of potentially attractive producing oil fields in Trinidad." C

Question: following on from above, were LGO so desperate for cash to pay someone/something urgently before further details came out they would have waited for a full assessment of the Leni Gas & Oil PLC Update on GY-664 Goudron, Trinidad. (i.e. a better placing price).

Question: Is LGO suggesting that the full amount of the funds was/is required to assess a number of potentially attractive producing oil fields in Trinidad, which have recently been made available to the Company. £1m to assess 'further opportunities', Two readers I know, your fees are not high enough! add a zero on the end please...don't send me the bill.

  

Nickel: Has anyone noticed the price of Nickel? Well there's a surprise...Will Indonesia be caving in at 9 month mark as native Indo miners lay people off, businesses suffering and China has an issue with the price and the pig iron mills closing down in their homeland. Nickel is 25% up (on futures) from the beginning of the year and some parties expecting it to Double. I closed a number of larger positions perhaps too early to make solid gains purely on the basis of common-sense. Longs working positively...

(Disclosure: No position held in Rurelec as of 02nd May 2014).