This is definitely a summer to remember in terms of weather
and market stupidity with IPO's priced above viability...I'll perhaps save that
for a separate post pending time etc...
LMI's 3rd Quarter Production Report & IMS is
rather simple to run through, net cash is Nil, but they have banking
facilities, they expect to have a cash surplus by quarter four of FY2014
but strangely only be at 80% of normal monthly production. Yes
that's right, LMI are such a powerful and cash generative company they'll have
surplus cash at 80% of the company annualised production. We'll ignore the fact
of labour costs up 12%, energy costs going up near 11% and PGM prices around
$1465-1480 an ounce with slack in the market.
As most are predicting there is an increasing risk of a
further placing to save the company. Personally, after the last rescue placing in 2012 the righting (sorry I know) is
on the wall. By my estimates, pending the banks tolerances, this is likely to
be April 2015 "to assist the company's balance sheet." So the
Market irrationally rewards LMI with a morning uptick, wonders will never
cease. one shall await the next update before taking a position. The time to
close LMI was amazingly, at the end of the strike...
Anglo American, yesterday we saw news of them putting their
Manganese Projects with BLT up for sale. This is in addition to Anglo May Announce Nine More Assets for Sale says Standard Bank.
All obvious but perhaps more relevant to shareholders will be any
price achieved. It doesn't bode well for a company when you realise you've
got some "lower" value assets to sell which are priced significantly
higher on your books. "Driving Value" (the names they think of, what
next "back to basics making decent returns"), appears in their eyes
to be working, they have their work cut out with the asset sales. The Coal
division seems very well managed indeed, yes improvements across the board, allowing
some for a significant decline in coal prices.
Minas Rio is on track and having secured long-term
agreements for the majority of Minas Rio's forecasted 26 million tons of iron
ore production, its now a question of what price. Saying that with yet more
increases into the market, AAL's targeted returns are now coming in
to question (+15). End of the year is the date to watch....perhaps this
time next year one will be able to assess the true and factual potential of
Minas Rio, which has allegedly come in on budget.
Save for the potential bad news in iron ore and ignoring the
debt targets, AAL has come in significant better that most envisaged. Perhaps
its time to revisit the viability of an investment with gearing around 23%
and the potential turnaround now in full swing, rather than just being spoken
about. It was pleasing to see De Beers coming in very well indeed, even
above the most bullish of estimates. The new rough diamond sales contracts
with more rigorous financial and governance requirements in order to be
eligible for supply should already be priced into the market. Most lenders
have already required the same of the market for near 6 months, reducing the
levels of financing, so should bode well for stability in the market. De
Beers, will be set to benefit, along with most AIM Diamond miners/explorers
whom will significantly benefit from stability in terms of looking at
borrowings and financing new production/developments. Currently, with my target
price of 1385, I should perhaps review this figure in light of today's
announcement.
Minco appears to be missing the point re: Woodstock, as I
covered awhile back. The Technical Report on its 100% owned Woodstock Manganese
Property, New Brunswick, Canada still doesn't give me any confidence
to part with some cash to invest...One would be wise to look at 2% NSR
royalty on the Curraghinalt gold property in Northern Ireland which is being
explored by Dalradian Resources Inc. (TSX-"DNA"). Assuming fair value
and production. This perhaps could be sold off to give Minco some cash, say £7M
at fire sale prices...to spend on their other wonderful assets.
RBS was rather predictable/amusing...Preliminary Interim Results 2014 given the American
results and better still, the litigation and conduct costs will have more
clarity, then the bank can get back to profits rather than transition of wealth
from the private to public sector.
Finally a dog of mine for which I have been pleasingly short on for some time now (without Checking around Jan/Feb), Balfour Beatty (BBY) has found a date! Who would have
thought it, very well timed by but not without risks. Possible merger between Balfour Beatty plc ("Balfour
Beatty") and Carillion plc ("Carillion") Possible Merger,
this has some significant cost savings and over lap of costs. It would be no surprise if Aecom (NYSE:ACM) came out of the closet after a more definitive statement by BBY & CLLN.
Atb Fraser
Fraser- Hi- The Boss is now happy so I have some time to get caught up on my stuff :-))
ReplyDeleteRe AAL- yes, not a great tactic to make it clear that they are desperate to sell assets- perhaps they will sell at any price, surely they have to consider retaining at this stage of the cycle if they get the sort of offers I would consider "fair" :-)) They seem to have painted themselves into a corner and the shareholders will now put them under pressure to deliver on these sales. A crazy way to manage imo, for what that's worth.
Re BBY/CLLN- BEs nailing a jelly to a wall quote was well aimed here- what other holes are there in the BBY order book?? And how can it be valued, apart from at a heavy discount, in the current circumstances. Will CLLN catch the BBY knife or lose a few financial fingers in the attempt? The deal with have to favour CLLN substantially.
Re BCN/REM- Its clear that REM was substantially mispriced re the BCN float- its their main asset, it supports their £100m mkt cap overwhelmingly, and REM and its directors have been buying BCN shares in Canada for months. The main asset imo is La Ventura, which is 100% BCN owned, albeit the 2 REM JV assets are of value too, plus the 100% owned borate mine, which is partially developed. So BCN hold the major share of the value, but they had a mkt cap of circa £35m. It all comes down to whether you feel the mines will be developed. With David L as a mouth piece now, and fairly low PEA capex figures (plus good IRRs), the key will be the PFS, which should be out soon. Im long BCN and happy to stay long, despite todays predictable moves.
Cheers. The Leggie