Morning Mumble: Hurricane Oil & Sundry...

Its been a chaotic time, getting ready for trips/holidays/vacations plus various business commitments. 

Hurricane Energy: Successful Test of Lancaster Horizontal Appraisal Well. Pleasing for all "us" longs, it's had potential for a long-time and finally the drill bit supporting the price and now passing the first day of dealing that long-time ago in February 14. Rock Nominees will certainly be pleased! 

Staying with Oilers, Ophir had further disappointment albeit without much cost to themselves...there's not even the glint of promising information, more so a 'deeper' understanding of the basin etc...Gabon: Okala-1 Well Result. As there wasn't much in the way of Okala being priced in, one can't help but think the sentiment isn't great. This has been followed by Padouck Deep-1 Well Result which was also poor and the Affanga Deep Well Result (poor). Three strikes...doesn't bode well at all. 

More time come, pending time, including the Kenmare takeover by Iluka. Perhaps, like Anglo Pacific (APF) they see minerals sands as progressing and it's near the bottom. I have to question why anyone would bother with KMR, perhaps they perceive themselves as being able to do better? The history for Kenmare is dire, nevermind the inability to resolve power issues until recently with the Aggreko deal announced yesterday. Maybe I'm being harsh...Will review in due course.

Atb Fraser

Morning Mumble: Bowleven (slight disappointment on the $) but all the same positive

Going back through the coverage, Bowleven was a no brainer. Etinde Farm-out agreement signed with the highlights: 

Highlights of the Transaction - Bowleven will reduce its interest in the Etinde permit from 75% to 25% and receive aggregate consideration of approximately $250 million (subject to final working capital adjustment) comprising:

• $170 million cash payment at completion;

• $40 million staged deferred cash payment due at Etinde development project FID and on completion of appraisal drilling; and

• $40 million (net) carry for two appraisal wells.

• LUKOIL will acquire a 37.5% interest and NewAge will acquire an additional 12.5% interest in the Etinde Permit to increase its group holding from 25% to 37.5%

• Camop (a wholly-owned subsidiary of NewAge) will become Operator of the Etinde Permit following completion, allowing Bowleven to focus on its proven exploration skillset.

• Bowleven will retain a 25% interest in the Etinde Permit, ensuring continued exposure to the considerable resource and future development potential of the acreage.

• The significant cash consideration strengthens the Group's balance sheet providing funding flexibility for Bowleven's pre-production share of Etinde development expenditure and the progression of exploration activities. 

• The two acquisitions are interconditional and the principal conditions precedent to completion of the transaction are normal regulatory approval by the Cameroon government and approval by Bowleven shareholders to be sought at a General Meeting.

Overall, it looks positive for Bowleven, and perhaps will give some appreciation in their share price. My figures were well off the pace, expected $350M perhaps that's due to my lack of understanding? All in all it crystalises the past for Bowleven, the future is what counts now...the two funded drills will 'surely' add to the value of Etinde. However I cannot complain with 35% in some months!

Sadly no time for the coverage of "very bizarre Chinese Iron Ore trading...perhaps later with my elevenses.

Atb Fraser

Morning Mumble: Churchill Mining files claim for damages.

Arbitration claim for damages US$1.315 billion perhaps 'some discount for early settle (please see the humour).

Monday 23 June, 2014

Churchill Mining plc

Arbitration claim for damages US$1.315 billion

RNS Number : 2696K

Churchill Mining plc

23 June 2014

 

23 June 2014                      

                                                                                               

AIM: CHL                                                     

                                                CHURCHILL MINING PLC

("Churchill" or "the Company")

ICSID claim against the Republic of Indonesia

Churchill/Planet update claim for damages to US$1.315 Billion

Further to the announcement of 15 May 2014, the Directors of Churchill (AIM: CHL) wish to provide an update on Churchill's and its wholly owned subsidiary Planet Mining Pty Ltd's ("Planet") international arbitration cases against the Republic of Indonesia at the International Centre for Settlement of Investment Disputes ("ICSID") in Washington DC.

The arbitration relates to the revocation of the mining licenses that made up the  East Kutai Coal Project in East Kalimantan ("EKCP"), Indonesia, in which Churchill/Planet held a 75% interest.

Churchill/Planet's lawyers, Quinn Emanuel Urquhart & Sullivan, LLP ("Quinn Emanuel"), have filed a supplemental memorial on quantum and damages following the engagement of international valuation experts FTI Consulting Canada LLC ("FTI") who prepared an independent assessment of Churchill/Planet's damages.

FTI determined the damages to Churchill/Planet of US$1,149.90 million plus pre-award interest of US$165.70 million for a total of US$1,315.60 million.

FTI calculated the fair market value of Churchill/Planet's investment in the EKCP using the industry standard prime methodology Discounted Cash Flow analysis. The analysis was based on a production rate of 50Mtpa and a railway haulage scenario.

"This valuation further confirms the billion dollar plus loss that we believe was suffered by our shareholders as a result of the actions taken by the Republic of Indonesia in relation to the EKCP mining tenements. We are, accordingly, looking forward to having the merits of our case determined by the ICSID tribunal as soon as possible" said Churchill's Chairman David Quinlivan.

The next step in the proceedings is that the Republic of Indonesia is now required to file its memorial of defence by 12 November 2014.

The Company will provide ongoing updates during the course of the proceedings.

END

Morning Mumble: Fraser the competent Robot Operator

It would appear I've not killed anyone whilst operating the Beam bot or been screw-drivered or thrown in a pool! I suspect he will be awaiting his "user" error issues on the day! Quite a unique experience...Perhaps there's a video option to upload my experience? Time will tell..Thanks to Philippe for a simple and speedy user initiation programme :-) 9 mins start to finish.

Atb Fraser

Morning Mumble: Cyan Plc (CYAN), Ithaca and...+ (Health & Safety)

Cyan & Vodafone m2m Team Up's news came in today. The company is unloved for clear reasons, perhaps the market and/or the Company were guilty of over-expectation in the markets that Cyan is attempting to operate at a profitable level. It was not so long ago, I was in discussions with a couple of chaps to look at considering an acquisition. 

Cyan's tech I rate, I do have to question the purpose of the company being listed previously. Its my thought they came to the market too early and as such have devalued themselves/the brand. Perhaps this was their only option? There's been a steady stream of news more recently, which adds a 'placing' risk to the stock but certainly one to start considering, if the news can actually keep coming which is of more significance than the Team Up, and the following:

The First retrofit commercial order - India came in with a paltry 5K units being ordered which won't really pay the bills, with the order being more than likely Q/2015 recognised. This in-conjunction with the Update on Metering Partnership in Brazil has given some support the stock. Patience required, but at least a consideration if the targets are met. At 5K units per 6 months, it's not one to currently get excited about, perhaps wait post any placing? To re-evaluate. 

It was bemusing to see the Iron Ore price over the weekend up tick a fraction, no guesses for why! This however provided some moderate relief for the usual suspects, so expect some of the same on the FTSE today.

This morning 9am GMT, I am being trained in the dark arts of "Avabot" operations. I'm not sure why I'm being trusted with an electric web/communication machine but the HSE training was perhaps "rather obvious." Also, can someone explain to me how if I'm not there in person, how I'm meant to put my fingers into the wheel or operate a screwdriver; surely someone won't screwdriver me! So for those more excited about tech

In my brief today, its off the radar a little but Ithaca Energy's acquisition of of Sumitomo Corporation's subsidiary Summit Petroleum Limited is a very shrewd move. Expect more consolidation in this sector but the move, albeit pricey compared to others looks well placed for shareholders. Obviously the pricing of the senior notes offering will have to be consider as this could add around 11% to the costs, certanly now a way forward for Ithaca.

Kromek, Contract Win and Grant Allocation from UK Gov+ is a positive but not sufficient to maintain the valuations. Yes the longer-term eyes will benefit will if the Company can hit the revised targets etc...for myself I'm now starting to review what/which position I'll be taking. 

Its worth noting that gold had its biggest trades the other day for near 2/3 years. The last time this occurred the yellow stuff ran, albeit not the way longs liked! Is it enough to start some directional movement, or as I was told, gold needs to consolidate to stabilise before appreciating...time will tell. (no gold futures positions) only physical holdings.

Atb Fraser

Morning Mumble: Manx Financial (MFX) & Avoiding Football...

Manx Financial Group's trading update came not as a surprise but more so reflecting the current climate in the UK for lenders in the higher interest rate sector. What is surprising is how "low" key MFX is, whether its the company's inability to attract investors or the perception of the likely negative changes in regulation. The Director's do raise a few risks/questions for me, however I'll save that for another day. 

MFX Report and accounts for the year ended 31 December 2013, shows the company is on the turnaround. I withheld buying the stock at the lows for a number of reasons, partly because I was busy with larger trades and didn't want to be distracted. This was in addition to confirmation of the trend changing, so did not get in until 12 pence (poor). The results from December have improved significantly, with what was perhaps written off were the outstanding liabilities in connection with the Litigation Funding which now appear to be majority recovered. The assets are on the increase, but at a premium (100%) to Net Asset value 8 pence ish, I've elected to bail on this news. partially because there's a risk of shares being issues for the 'odd' acquisition and/or raising monies to acquire. For those reasons, I'll be looking to exit on good news today.

What is interesting is the Iron Ore market, parties should be aware of the contraction in the financing, due to concerns about multiple leveraging (known a long time ago). As if large Mills would have financed the same stock a few times over, surely not! Well apparently, the Chinese banks financing these items have been restricting lending until they have had "sight" of the assets leveraged. More so, with tighter controls comes a contraction in trading over the longer term. 

Risk awareness promotes tightening in any asset where the terms have been lose before. So with Chinese Iron Ore being at record levels back in February, is anyone surprised by the depreciation in the price? With the financing of import loans being the final straw some Mills may need to speak to their lenders/Gov+t by September. Especially in light of the unwinding of massive losses in the market. Yet amazingly no commentary whatsoever from the "press" on any of this as its occurring. 

As of today, Stocks are near 15% higher than at ports in China since February, at near 115Mt's, with the price off between 25-33% there's further glut coming to market as positions are liquidated. Of course the sellers won't want the buyers to know it's because they've had their financing cut (honey) and with the deterioration in positions means any equity left in the trade will be down to 1% if they were remotely financed appropriately. 

Today, we take a minute's silence for Eastern Platinum and wish them the best post their AIM delisting. They now just to delist from JSE and TSX to have a full house! I'll won't miss Eastern plats as there wasn't anything left to short. 

With positive news on Gold and Silver expect this to be mirror by those exposed to it! Has Gold finally given a decent indicator of direction that was so desperately needed? Or more so the fact near $3.6B of gold swapped hands yesterday. Shorts covering? Hmmm

No Football commentary! We're avoiding it...

Atb Fraser

Morning Mumble: LOND (why I've closed) &....Erratic'ness

Yesterday, was the last day of my short on London Mining (LOND) closing yesterday and today. The price of Iron Ore is about the monies for LOND now, their discount for the inferior ores does not bode well for LOND. The management are capable but sadly the economics of higher grade lower impurities are neglecting the second tier producers.

LOND's like AMI's (African Minerals) rainy season is upon them, the moisture content will be very topical from a shipping/freight perspective, last year left me wondering whom was insuring the cargo without increased premiums/costs. LOND are delaying their capital expenditure, albeit this does not bode well for them in the depreciating prices. Interesting there's rumour they've found a strategic partner with deep pockets to assist with funding to 8-8.5mt per annum for around $150M up front. This is more favourable than funding from cashflow at the current prices...whereby margins are thin to say the least.

AMI have the benefits of scale and paying down debt and lower costs...LOND's risks in the absence of a strategic partner are limited. Not a case of bankruptcy but certainly an unloved company, once with significant prospects. For the shorters, the risks are now with news of additional funding to ramp up, reduce costs and improve revenues (hopes on India's imports increasing). Likewise, LOND's management are prudent with the costs and reductions they can work with.

With limited supplies of higher quality ore and India's increased demand it's only time before the discounts narrow. As such, the prices for the lower quality ores are likely to be near or if not at the bottom of their prices with recovery likely in Q3. 

It was pleasing to see SuperGroup (SGP) bounce as every man and his dog took significant profits on their shorts. Yet again the market is becoming predictbale...will ASOS (ASC) follow? I suspect it'll flip on the bank before depreciating to around the 2500 mark, albeit I maintain my target of 2250. Serial offenders of targets do not do well!

Amerisur Resources (AMER) operations update bodes well for holders, albeit at the money for now. The rises need to consolidate, albeit the news could be argued as doing that instead of the price. One will be amazed if they complete the pipeline on time or budget, afterall its Ecuador not Walthamstow. Remembering the well was more about infilling the assets, one expects a reserves adjustment upwards once the full impact of the well has been considered. With Platanillo-15 coming in on the money that's 14 wells in addition to the 3 sidetracks, that's some record.

Yesterday having discussed Carclo Plc (CAR), yesterday it was interesting to see the price. Director buys, post results and trading updates when considered in full look to be about the price. I never liked this company's price when I first looked at it near 18 months ago. It was truly overvalued on the basis of revenues, profits, and prospects with value being wrongly attributable to the limited earnings. 

Having taken the morning to start researching it certainly looks fair value with little in the way of positives being attached to the current price. The debt's increasing significantly but affordable, likewise the 2% dividend is a bonus, but not without risks. Being poised for growth does not often equate to increased earnings. The most recent final results underping a way forward for CAR, perhaps the brokers need a kick up the arse as well! 

The traders will look to Rolls Royce's share buyback to start trading! Buybacks often beg the question of whom truly benefits in real terms!

Atb Fraser

Morning Mumble: Iron Ore (Hitting the 2015 target early) & Oil

Been an odd morning, there's more supply of Iron Ore out there perhaps a lot of traders realised. With the higher quality hematite/magnetite ore retreating significantly one can't help but wonder how well a large well-known Iron Ore trading house is fairing!

If parties have been keeping a keen on on the numpty short trade on iron ore, you’ll have noticed the price movement of the majors Rio Tinto (RIO), Vale & BHP Billiton (BLT) losing some of their support along with Fortescue Metals (FMG-ASX) being hammered more so without any good reason.

One wonders how FMG will shape up in the longer term, March 2014 Quarterly Production Report. With more than enough headroom even on an all in basis of around $44/wmt FMG is starting to look like a buy. For myself I shall be waiting awhile longer, to see how things pan out. FMG, are already expanding their own shipping fleet, albeit awhile off (post 2016), it’s certainly benefiting from a “modern” approach that has less of the archaic dinosaur mentality of Rio. With a near 20% drop in pricing, FMG’s quarterly due 17^th July will give a better indication of the companies health, Full year due 21st August 2014.

Staring closer to home via Egypt and Sukari it’s alleged by a number of sources that Egyptian Government is going to increase their lease rental values twenty fold; Panic! (Sarcasm there). For Centamin, just as it becomes confident of winning its October listed Court case, its another kick in the proverbial for those incapable of doing basic maths.

Egypt's Mineral Resources Authority (EMRA) (also Joint Owners of Sukari) are purported to have recommended the lease rental values increase twenty fold. For Sukari that’s 160Km’s with a potential cost of $7000 per sq km of exploration and $1400 for producing assets. One assumes to make interested parties get on with things…? So significantly, or not so, pending on your viewpoint, it’s likely to impact Centamin by around $1.1M based on a ‘worst’ case scenario, or just under $3 an ounce cost this year. Nothing to be worried about! (Source: Ahram Online: Rental values for Egypt's mines to increase by 20,000%). With Egypt gradually derisking, Centamin look like one of the few gold miners to hold longer term, being barely 10% up on my purchases more recently I won’t break out the bolly!

On to Oil, (for those slackers amongst us, there’s still a compelling article needed regarding a certain Court Case but I suspect I’ll be disappointed yet again!) for those following Ithaca and utilising the more recent disappointment to buy. The only disappointment to Ithaca is/are the timeframes which are may have further disappointment, but either way, longer-term it bodes well for the savvy longs without short term myopia about it doubling tomorrow. However, patience always rewards those waiting for stability in a share price, both mentally and financially. My revisit to Afren is a prime example of buying on weakness without the price stabilising, albeit what’s 4 ish pence between friends?

Ian, despite welching on his obligations, was excited about the Serica Energy plc (SQZ's) acquisition of the Erskine Field. One hopes Serica have got their decommissioning figures correct! As people are aware, SQZ had disappointment with BG Group Bridge Linked Platform ("BLP") adjacent to the BG operated Lomond field not being constructed. With all bets now on production being directly tied in to the Lomond Platform. Additionally, rumours tenders are all but done for a rig for Centrica’s paid drill bit any time soon, one hopes it will underpin a change in share price for SQZ.

The final thought goes to Asos and Supergroup, for the first time in a long time, ASC and SGP are en par. Both ASC and SGP, for the shorters should have contributed to a stellar year, Iron Ore significantly contributing…

Atb Fraser

Morning Mumble: GKP (The shorts are on) for this morning & Hummingbird (perhaps NYO wasn't so bad)

Whilst reviewing the situation in Iraq as al-Qaeda forces have seized Mosul and Tikrit, being far from an expert, it was noted that this is likely to be a significant push lower for GKP. GKP will suffer from volatility as traders beging playing on sentiment and a total lack of support for the stock. The problem GKP/Genel have is the news is very slow out of the reason which adds further 'risks'. I don't perceive it to be as bad as what has been made out and as such, will be looking to acquire Genel (not GKP) over the coming days/weeks. Surprisingly, I’m long…spring madness in the Summer!

The reaction to the Victoria Oil & Gas announcement was unsurprising really. Genset Connections and Thermal Update which albeit positive leaves me wondering if VOG should change the management. I’m fully aware I say this a lot, but there appears to be a theme. Better still why don’t VOG get someone in to manage the IR; it’s an issue that needs addressing! I could spare one day a week and show them how its done! I hold VOG but strangely, I have this sensational feeling its going to always be lack lustre.

With the miners taking a kicking because of the outlook for commodities its no surprise the favourites are out of favour today! I suspect the markets are likely to price the doom and gloom well before the realities dawn and a realisation that “things” aren’t so bad as the price. The numpty trade for today was Rio Short from the off, close by 11, if  not before!

What are Hummingbird Resources (HHUM) playing at? Yes I’m aware issuing shares for an asset that cost $45M 5 years ago and has had near £60M spent on it may be viable, but ‘word has it’ that no man or dog wanted to touch the Yanfolila Project. I had to stop myself typing asset, yes the metrics look encouraging, the grades encouraging but surely Hummingbird should perhaps focus on their “other asset.” The Dugbe 1 Project Definitive Feasibility Study (DFS) is currently on-going. Proposed Acquisition of all of Gold Fields' Gold Assets in Mali (Yanfolila Project) Of course this may have material benefits such as “potential” funding for Dugbe, but one cannot help but wonder if its getting to thin on the ground.

For those following Anglo Pacific (APF) you’ll note the overlap with Hummingbird (HUM) for a 2% net smelter royalty. One will await the DFS soon before any excitement for APF can be shown, it has to be said that for a royalty company some ‘acquisitions’ are questionable, not forgetting their most recent Maracás Vanadium Project royalty. One will be hoping for a ramp up at Dugbe to 250-300K ounces per annum to make a decent return for APF. Likely? We won’t have to wait long to find out!

Finally, parties are recommending that people buy Kefi? Surely sensible investors already hold Kefi if they’re holding Nyota? If that’s the case expecting a price drop on Kefi post any issue of shares to holders in NYO! For one I’ll be tipping out! I don’t rate gold stocks on the whole…Kefi, yes has some shrewd management but alas, if gold exposure should be physical. Placing after placing puts a cap on things!

It is the weekend for me in a few, then I must make preparation for a jolly next week, having decided to take up an Ascot invite I wasn’t so excited about. Having been persuaded with the offer of transport and lodgings, one will evaluate the hospitality in the fullness of time..with my horse racing success limited to picking failures all tips appreciated!

Atb Fraser

N.B in the time it has taken to type this and multitask GKP positions are closed…

Morning Mumble: The week so far! LGO...The Asset not the Management & Nyota Minerals

Having taken profits at LGO, leaving some positions to travel remembering this is for no other reason bar the asset. The most recent RNS from LGO, Goudron Drilling Update gave some decent upside. One will hold their breath and wait for the "appraisal" of new opportunities that the fundraiser was allegedly for!? Is it likely neighbouring licenses/blocks will not now realise there's more potential? One suspects the neighbouring real estate values have just gone up. However as a producer, LGO are about their monies till further news, common-sense should have prevail.

Well there's a surprise for Nyota Minerals. The board are outlining they cannot raise monies and there's no future for being able to fund development. What does worry me is why the management have not quit? NYO enter aconditional agreement with KEFI Minerals plc ("KEFI") for the sale of Nyota's remaining 25% direct interest in the Tulu Kapi Gold Project in Ethiopia. Jesus, NYO have sunk a significant amount of monies into the Tulu Kapi and have managed to get what for it? Mothballing would have been better!

Better gold license sales have gone through recently off the market at a better price than NYO's. Its with regret I have a holding in NYO, more so by a terminal error than anything else post a significant trade short and being left with some equity...it actually disgusts me to hold stock in this company. Partly because there's no opportunity to short! Perhaps the Board would let me know which Donkey sanctuary they wish me to donate the shares to? Answers on a postcard! 

Nyota, with the present and past board is shafted...The company in the current form is set to perform in no way...shares will be returned to shareholders. Why not the cash! The board clearly admit they cannot raise funds, so put the assets up for sale, give us the cash and stop paying the board (albeit reduced recently.). It was hilarious at Epsom that a NYO discussion came up and people would have been willing to fund it had there been a complete change in management, alas that's never likely. 

Its been quite a time of it for Oilers, one thing that was gossiped about yesterday was Xcite being 'very' close to a deal with StatOil and Shell. Ian's thoughts were quite interesting, in so much he does not perceive much value for current XEL shareholders above 105 post any deal. Farm Outs/IN whereby the main party is cash strapped have not gone to plan as such, going for a song. XEL, do not have long before the market becomes 'more' impatient. 

From an FX perspective and in light of the ECB (European Central Bank) decision, there were some significant opportunities for those trading. For myself, my French trip this year has got slightly cheaper, more interesting is the Villa owner wanting GBP. As a previous FX trader with a larger book, it's interesting he wants GBP's rather than EURO's. Time will tell...

Iron Ore is on the slide, gradually, with a soft landing managed purely by the Chinese and a US IB whom I assume wants some brownie points in claiming a small house of overexposed cards in China didn't collapse that would have had a few consequences for some "invested" ex-politicians and/or associated families. Nevermind the stocks issue which has finally come to light that there 'may' have been some corruption in the stockpiles reported and/or held such as copper, aluminium, alumina and surely not Iron Ore?...This may have significance for Copper/Nickel, but one to watch...Nickel has been capped pending Indonesian's decision to stave off a mining crisis that would take longer to recover than the building of smelters! Will the Chinese obliged with another 8 smelters? Surely...One hopes that there isn't an ensuing crisis of the same stocks being leveraged from multiple banks without consent. Perhaps parties would be wise to check the larder before approving further advances. 

Atb Fraser

Morning Mumble: Yesterday I was being paid to work! Shocking...Anglo Pacific's Acquisition &...ASOS

It was a pleasure to be back in Bristol as I have not been there for awhile and was working with a few traders. Yes professionals (shocking term), and doing some paid work. The chaps were decent, some old school and some more "modern." Picture a twenty-something in a Miami Vice suit (we’ve all seen them) but crossed with a Laurence Llewelyn Bowen that I’m assured was ‘designer’. (No accounting for taste). You would not expect this Company to be going into active shorting but times are changing, perhaps they won't be after that visit! Well I'm back there in August for near 10 days...just don't tell security. Albeit, in passing, the Director did say to charge all expenses to them! Gin anyone!?!?

What is odd is the limited number of short selling funds out there. Yes there's James Chanos, with his notoriety of Enron and Paulson, but on the whole there are not many "discreet" shorters and funds out there. A quick glance across appears to be more about screaming why its short only when going in the right direction for them! Or post-obvious-news, with "blah blah blah why I'm short." Yes the market needs these critiques (Kynikos (see what I did there) + Chanos) and the chap Simon Cawkwell aka Evil Knievil? Perhaps its a psychological barrier or maybe their ethics? Morals? Well surely if one was 100% pure you'd not invest but grow vegetables and watch Cricket? Leggie?!?!:-) Albeit, I suspect there will be more Companies changing practice very soon.

One thing I noticed awhile back was the decline in volume yet prices have stayed up, this creates an imbalance, on liquidity, i.e. the number holding long or more positively for the bears, long cashing out whilst the floor looks for direction. One will wait and see, but there will no doubt be comparisons to the market crash / financial crisis and money supply restrictions of late 07/08. When in fact money is flowing fairly well save for a few blips, likewise, consumers are getting shrewd and China is wising up...the soft landing of realism is the Rising Sun and Chinese knows this (Setting Softly). See: Defaults in China, Pollution impact on pricing of low quality base metals, growth expectations and better still, changes in their currency. One will be looking for the next earnings quarter to evidence any shift, which would be nicely timed for post St Ledgers day for market reactions…expectations of some form of sideways trading in the interim (yawn).

Whilst on the train yesterday, despite the assurance of Wi-Fi that should be called 1/2 Wi-Fi as it only worked that much, I was able to review a number of items. Namely the predictable dire positions of Tesco et al (Leggie those returns WILL be reducing in dividend terms either via inflation or a real terms drop (perhaps off a cliff). What I believe is happening is the shoppers have 'suddenly' wised up to avoiding (please note the term) shopping in one location and forcing the retailers to be more price sensitive, rather than 'sales incentive based.' This was reiterated in the Tesco announcements. One suspects the discounts will come to an end soon along with “the heavier” enticements of spend £60 get £15 off. The market simply cannot afford all these incentives. Please note Asda's model of fuel discounts and the lack of enticements. 

I'm not sure I'd agree with the APF acquisition. Namely the market has/had been led to believe or should I say, expected, a decent deal and then the Maracás Vanadium Project acquisition comes along. Quite why anyone would want a Vanadium Oxide Royalty (there’s some potential in the “other minerals” possibilities) is beyond me. So if you look at the figures for Largo and Vanadium in the short-medium term and based on what APF paid, you’re looking at 10.8% IRR if you price the warrants in as well. Then add to that its in Brazil…lovely location for a holiday but vanadium? Hmm. A bet on the bottom of Vanadium might not be so wise and as always time will be the measure. The plus side is, the Kiln's are in action for Largo.

One of the reasons I’ve been previously short on APF, was the asset class does not hold up well with deteriorating (or current) prices, least we not forgot the RRR/RGM Royalty. Will I be a buyer on APF? No, they really need a decent deal to support their balance sheet/company model. Yes Kestrel earnings should improve as production moves into more of their Royalty license and land but there's better returns elsewhere.

Gossip: APF is there is some gossip that London Mining are ‘in discussion’ to sell their Isua iron ore project in Greenland. As APF followers will know, or LOND for that matter, APF have a 1% Royalty over Isua. The size of Isua is likely to mean the Royalty is going to be bought out rather than left to run. This all bodes well for APF over time, however, in the short-medium term their asset class isn’t seeing any improvements in prices…one will wait for some positives in APF before considering a long, but the news is slowly stacking up for a short. Viewed in contrast with APF Director Buy this morning, one will be patient…APF would be wise not to refuse $45-47M, not bad for 3 years work. The historic royalty to the previous owner of Isua might be as sticking point as they 'perhaps' aren't so keen to convert their USD0.40 per tonne of ore mined royalty.

There’s a significant unwinding of positions in Nickel currently, with raw demand supporting the unwind. Indonesia’s realities are coming to force, with mass worker layoffs and a decline in exports, investment and development in the country. So expectation some relaxation of the law but with a firm stance on “smeltering” and processing requirements…a modest tax on raw exports is more likely. Expect Nickel to react accordingly…

My final thought goes to ASOS, well what can the bulls say, bar have some form of stale reiteration of potential over the long-term? Profits not as expected, currency far from going in their favour and let’s face it yet another disappointing update! What I expect analysts to finally comment on is the increased cash burn and father deterioration. Will they? That’s another matter, by my estimated the company is burning cash, and more so as a result in the recent decline! Is the model sustainable? Of course, but not at stupid valuations! Rightly I closed my positions in ASOS near two weeks back, we don’t have the benefit of hindsight...for trading. ASOS (ASC) Trading Update (RNS) and market realism.  

Atb Fraser

P.S. Will get round to Black Sea Property Fund (BKSA) soon Leggie, suffice to say, you could buy at 1.36-1.50 range yesterday so not sure on the quoted.

Morning Mumble: Bowleven (BLVN) and the Rumour Mill ~~~~

So finally we have got a permit,  with the BowLeven Plc Etinde Exploitation Authorisation Update. Perhaps now the management can move forward with monetising the asset now, albeit there's a significant amount of stale bulls that will be looking to exit at less of a loss. With BLVN's past, one hopes the official paperwork does not get lost in translation! Perhaps the news flow will improve now...

Zanaga Iron Ore (ZIOC): GLENcore have found a partner Chinese to assist them with the development of the asset bringing the “financing” to the table if GLEN excise their ZIOC excise their rights. This is not surprising gossip in light of the 25% falls, perhaps with a caveat there’s some desperate folks in psychologically too high. With the potential return, unless improved in the DFS, one wonders why GLEN would be bothering at some of the suggested prices. The deal is alleged to be with the state back Ansteel Mining Company that intends to produce 50% of its own iron ore for steel within 10 years, so makes more sense. Personally why GLEN would need to pay above 26 pence a share is beyond me…at this stage. Over to GLEN and more rumours to propel the price up and down with on off on off, wasn't there a British Gas advert about "on and offable"?

Plenty more to cover here today, but sadly not the time this am...Iofina's Production update should assist their shares 

Atb Fraser

Morning Mumble: LGO (The saga continues) & Goodbye to Vatukoula Gold (VGM)

The weekend was fab! Couldn't have asked for better timed weather for a BBQ/Get together with a few people. Save for the significant amounts of Gin that were consumed, and a certain person sleeping on the lawn, it was a really good shindig! Albeit back to Monday with a bang...

So the reasoning for Leni Oil & Gas (LGO) is validated; a shame that I will never rate the management. One doesn't see how someone can be a prolific company director and give positives to all companies. Perhaps someone can enlighten me, I can spin plates, but that's some spinning...least we not forget the recent legal action. Today's LGO GY-664 Production and GY-665 Update, stick to reading the production elements and any commentary, just the facts, not the speculation. Its a positive for holders, but one cannot help but wonder if its now time to sweep out the old guard which would assist significantly with any rerating. Obviously some common-sense profit taking should be considered at a point in the future.

Anglo Pacific Group are raising funds but likewise paying a dividend? Anglo Pacific Group PLC Proposed Placing of New Ordinary Shares Is that value for shareholders? The ones in the book build maybe? I'm not sure I'd be wanting a 2% Royalty at those prices on Vanadium oxide, albeit it is a 'nearer' term producer and has an offtake agreement with GLEN, it seems pricey if one includes the warrants etc... Cancap Investments Limited must be smiling today!

On Friday, I was greeted with a case of Hendricks from a friend, whom latterly attempted to drink it all (not on his own I might add). This was a long-standing bet about VGM delisting below 5 pence and about my short on VGM...that was post their consolidation and ran for near 22 months. Then again more recently...The company is dire in terms of costs per ounce and the outlook isn't good. The delisting makes sense for the owners and anyone in subs 3 pence (Majority). So with their assurance that they will acquire shares at 3.72 pence, one wonders what the markets playing at...or perhaps VGM's history means no premium can be given to the statements made: Vatukoula Gold Mines plc Proposed Cancellation of trading on AIM This company won't be missed, it will however not be forgotten by a "lot of holders" long.

Loads of noise (gossip) about oilers over the weekend, with rumours of a bid for Hardy Oil & Gas (HDY) no doubt caused by the 12% stake (6% increase) in recent days by Richard Griffiths and controlled undertakings (Holdings RNS). Not sure I'm such a believer but has a presented a nice opportunity all the same...Afren also apparently being "more than sniffed" at, but when aren't they...ticking all the boxes, as I commented on, the weakness was an opportunity to take a few more positions. The higher value plays of longs have been closed to be replaced with equity in due course. 

Iron Ore doing the predictable in light Chinese data of giving a glimmer of hope and all base metals following "in a sort of fashion.". 

Atb Fraser