PM Postscript: Afren, no update but an update!

Afren PLC update us on the Independent Review and as previously stated, "WFG has identified no evidence during the course of the expanded review of further unauthorised payments and the Board remains of the view that the assets and operational position of the Company have not been negatively affected. The Company continues to keep the FCA informed of the progress of the investigation."

[For those getting up to speed, WFG refers to Willkie Farr & Gallagher (UK) LLP]

As sheer speculation on my part I sense there's some lawyers in the background acting for various parties and as such the part I have highlighted in bold is a broadside in respect of potential legal proceedings. Speculation all the same, but why else would such a statement be made? Obviously to inform shareholders AFR/WFG are taking the matter seriously.

The update looks to be 2 weeks away...perhaps some more action before then? 

Atb Fraser

Morning Mumble: Dirty tactics against Churchill Mining.

Churchill Mining's arbitration update shows the desperation of the Indonesian Government. One assumed that all data or information was backed up outside of Indonesia? I have asked the same to CHL. Atb Fraser

RNS verbatim below:

30 September 2014                       

                                                                                               

AIM: CHL                                                     

                                                CHURCHILL MINING PLC

("Churchill" or "the Company")

Arbitration Update - ICSID claim against the Republic of Indonesia

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 ("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.

ICSID Document Inspection & Contemporaneous Police Raid on Jakarta Office

In accordance with the ICSID Tribunal's ("Tribunal") Procedural Order No 10, representatives from Churchill and the Republic of Indonesia met in Singapore on 29 August 2014 to inspect a designated bundle of original documents relating to the mining licenses. Whilst this Tribunal-ordered document inspection was in progress in Singapore, police officers from Indonesia raided the Company's Jakarta office and seized a number of documents, computers and back up drives supposedly as part of a new police investigation into alleged license document forgery.

It is the Company's view that this police raid was strategically timed to harm and prejudice the Company's case currently being heard by the Tribunal. The Company has accordingly made an application for provisional measures pursuant to Article 47 of the ICSID Convention and Rule 39 of the ICSID Arbitration Rules that the Tribunal recommend that Indonesia (i) return forthwith all documents and other items that were seized by the Indonesian police in the raid on 29 August 2014, and (ii) refrain from engaging in any conduct that would aggravate the dispute, alter the status quo or jeopardise the procedural integrity of the ICSID proceedings.

With regard to Indonesia's resurfaced allegations of document forgery, the Company categorically denies that it ever participated in or that it was ever in any way involved in the forgery of any documents. Furthermore, prior to the revocation of the EKCP mining licenses in which the Company held an interest, agencies of Indonesia regularly (i) visited the EKCP site, (ii) sought and received payments in relation to the EKCP properties, and (iii) were provided with exploration and other technical reports relating to the EKCP properties. The Company also notes that previous investigations, carried out by both the Indonesian police and the Independent Stage Agency (BAWASDA), into these allegations of document forgery concerning the Ridlatama EKCP mining licenses concluded there was no case to answer.

Intimidation of Churchill's Arbitration Witnesses & Jakarta Office Staff

Churchill wishes to advise that in addition to the raid on its Indonesian office, the Indonesian police have also recently issued summons that (i) identify certain Company personnel as suspects and (ii) require a number of the Company's current and former staff to attend formal interviews in the new police investigation into document forgery.

Consistent with the threats openly made by Indonesian counsel during the ICSID jurisdictional hearing in Singapore in May 2013, Indonesia is now targeting the Company's Indonesian employees (both current and former) presumably to harm and prejudice the ICSID arbitration proceedings. The Company has accordingly incorporated into the above referenced application for provisional measures that the Tribunal also recommend that Indonesia (i) refrain from threatening or commencing any criminal investigation or prosecution against the Company, their witnesses or employees pending the outcome of this arbitration, and (ii) stay or suspend any current criminal investigation or prosecution against the Company or the Company's personnel.

The Company has also requested advice as to whether the action of Indonesia targeting the Company's Indonesian personnel in itself constitutes a breach of the Bilateral Investment Treaties between Indonesia and the United Kingdom and Indonesia and Australia.

Indonesia's Request For Stand Alone Hearing On Forgery Allegations

On 15 September 2014 the Company received notification from its solicitors, Quinn Emanuel Urquhart & Sullivan, LLP ("Quinn Emanuel") that Indonesia had written to the Tribunal requesting that a stand-alone hearing on its forgery allegations be conducted within 30 days. The Tribunal subsequently requested the Company's comments on Indonesia's request by 26 September 2014. Quinn Emanuel duly submitted the Company's response on 26 September 2014.

It is the Company's view Indonesia has lodged this application in a calculated attempt to derail the procedural timetable in the arbitration proceedings as is absurd for Indonesia to claim, as it has, that its application could be ruled on while preserving the current procedural schedule, under which Indonesia is due to file its full Counter Memorial on the merits on 12 November 2014 (i.e., in approximately six weeks).

The Company has accordingly filed submissions with the Tribunal strongly objecting to any alteration to the established schedule.

Indonesia's "Application" For Dismissal of Churchill's Claims

On 26 September 2014 the Company received notification from its solicitors that Indonesia had written to the Tribunal on 25 September 2014. Further to its submission of 15 September 2014, Indonesia submitted a so-called "Application for the Dismissal of Churchill and Planet's Claims".

This unusual "last minute" application by Indonesia has also requested an order by the Tribunal to modify the procedural timetable to schedule an immediate hearing within the next 30 days or sooner if feasible to resolve the forgery allegations as a discrete issue. Again the Company sees this application as part of a calculated strategic attempt to derail the arbitration proceedings a whole and notes that Indonesia has had 18 months to consider the Company's case on merits which include Indonesia's theory of alleged license forgery.

Whilst Indonesia's disjointed application raises a number of issues including allegations of forgery, background and actions of the Ministry of Forestry that seemingly contributed to the revocation of the EKCP mining licenses, as well as the economics and feasibility of the EKCP and the damages value that has been claimed by Churchill/Planet, it does not address many of the substantive issues raised in the Company's Memorials and claim for damages.

Accordingly, the Company through its lawyers, Quinn Emanuel, has requested the Tribunal reject any attempt by Indonesia to litigate piecemeal the merits of the case and to direct Indonesia to complete its submissions on the merits by 12 November 2014 as set out in the established procedural schedule.

The Company will make further announcements when the Tribunal's decisions on its application for provisional measures and Indonesia's application for dismissal of Churchill's claims are delivered.

END

Morning Mumble: Nickel, even Talvivaara can take positives, IAP (ICAP), is there a letter missing? ASOS and NEXT, my validation of vitriol.

Talvivaara Mining (Interim Report) can find positives but investors should be looking at what went wrong. This, despite my positives for what was a good management team at London Mining, will happen at LOND, or similar in terms of a haircut to existing equity holders (Talvivaara's draft restructuring programmes submitted to the District Court of Espoo). LOND announced this yesterday...they have some good assets, but the leveraged model of yesterday year is shown not to work. So when investing, consider what happens with realistic pricing models. 

This has significant for African Mineral (AMI) whom had a little more cash than LOND, but all the same it does not bode well. Who exactly has rights over AMI's mine is another story...are the Chinese entitled to this? One shall wait and see the outcome of both strategic investors. Ironically there's savings of near £11M a year if London Mining and African Mining could combine, albeit would you want either with the current iron ore price?

Today's Rurelec (RUR) interims announcement was surprising, as I envisaged the cash situation to be significantly lower sub £2m. At £4.172M it was near £2m above what my intelligence was telling me. As the company states, with a NAV of near 9 pence its looking like it has a bit more of an offering to buy. For myself, I take issue on why the company claimed such a high amount, having read the items, claiming such a high award based on the information available, was not in the best interest of shareholders. 

The cash situation for RUR, had the claim been of a sensible level, would have been near £11m higher as costs would have been claimable. So irrespective of discount to NAV values currently which imply upside, its going on my avoid list. This is sure fire guaranteed to get RUR performing well, but all the same one has to have faith in what one is being told. With delays to a dual listing, for the umpteenth time and financing going slower than planned its for the patient and those with complete trust in the information.  I acknowledge the company was shafted by their third party funder, or where they? Was that not down to the terms of the offering that Rurelec signed? The deadline agreed was over-expectant if they had to revert to a compromise settlement to avoid default. That's for the RUR Directors to learn from at the expense of the shareholders (which without a doubt they are also holders) at significantly higher prices.

With no surprise whatsoever, IAP (Icap) Plc has come out with a trading statement showing a decline of 10% in revenues, but really 15% on a reported basis. With one email stating it was a surprise, they were on Holiday in July when the company announced in its Interim Management Statement "Tough market conditions continue to impact trading activity in Global Broking and EBS Market." 

IAP appear to be making head way with cost savings:· Group revenue for the half year to 30 September 2014 is expected to be 10% lower than the previous year on a constant currency basis (15% lower on a reported basis). The pain for Interdealer brokers/Intermediaries Brokers is far from over. Of course we won't assume the FD Iain Torrens is leaving for any of the potential risks that IAP are suffering at the moment and it's to further develop his career with TalkTalk? Likewise the board wish him well for the future, but appear to have forgotten to thank him for his tenure at IAP. In the absence of any M&A rumours or even fact, which is needed in this sector to be able to operate efficiently, one finds it very hard to press the buy button above £3, certainly not £4. 

So we'll leave the final words to a copy and paste from the trading statement, Michael Spencer, Group Chief Executive Officer, said: "Market conditions remain challenging, but we are increasing the efficiency of the Group while continuing to innovate. Low volatility levels and a focus by our clients on costs and regulation resulted in execution volumes remaining suppressed during much of the period. There was some good improvement to client activity in September, as central bank actions led to an increase in foreign exchange and interest rate volatility pushing average daily volumes on EBS to more than $100 billion per day for the first time in twelve months. While I do not expect a linear recovery, this provides a basis to be guardedly optimistic about future market activity.

For the LO (Long Only) holders of IAP, they might wish to thank Michael Spencer for giving out the warnings for IAP to start to be reviewed for significant shorts. Yes I shall be among the motley crew spending my time on a train reviewing this company to short (further). It has all the principles, interims, today's trading statement, all of which the market appears to be blinkered to, preferring to focus on the cost savings as some saviour. 

You have to love management whom are forecasting the results before the event (please note the humour here). Sirius Minerals Plc York Potash Project - approvals submissions, (SXX) were completed today. Yes its nice things could have such basic ideals attached however with a lot of water to flow under the bridge before the approvals, one would be wise to rename the RNS, planning applications submitted. Perhaps SXX are seeing it, like I, as a formality? SXX have a lot going for it, including the cost benefits and growth/application benefits. The key risks are fundraising as with AIM companies, at least its known with SXX!

My sympathies go to ZOIC (Zanaga Iron Ore) with Updated Reserve Statement. One would be wise to read the Notes (I've highlighted in bold the key areas I have concern with to save time!):

1. Long term price assumptions are based on an IODEX 62% Fe forecast of 100 US$/dmt (162 US¢/dmtu at 62% Fe) with adjustments for quality, deleterious elements, moisture and freight.
2. Discount Rate 10%
3. Mining dilution ranging between 5% and 6%
4. Mining losses ranging between 1% and 5%

Now finally, this is a subject I have had significant vitriol on for obvious reasons. NEXT (NXT), as most will be aware I'm short for various reasons, in fact its my largest short in financial terms for some time. Just to leverage, as Dave pointed out, costs a small fortune in margin to the average PI. As I operate on a 100% margin coverage (not leverage) it has limited my trades elsewhere. I have been vilified by today's update. For those following Markets Live, you'll note my commentary on the punter preferring a holiday without as many new clothes etc...impacting on retail. Now what have NXT announced today, yet another miss? I'll leave it to NEXT to summarise: whilst I close my larger positions: 

Later this week NEXT will be conducting its biannual investor meetings. Given the recent spell of unseasonably warm weather it is inevitable that shareholders will enquire about current trade. In order to ensure that we can have open conversations with our investors, we make the following observations:

1. Cooler weather in August resulted in several very strong weeks. However, warmer weather in the more important month of September has had the reverse effect. The overall effect is that Quarter Three sales to date are up 6%, which is lower than our previous forecast of +10%.
2. At present our profit forecast for the full year remains within our previous guidance given on 29 July and reiterated on 11 September, and our experience suggests that some lost sales are regained when the weather turns. However, if this unusually warm weather continues for the full duration of October then we are likely to lower our full year profit guidance range of £775m to £815m.

Please see the earlier commentary on Morning Mumble: Amateur analysis...of Next (NXT) from a trading perspective, Ashmore (ASHM) &....what are Fresnillo (FRES) doing? Massive rerating for AVEVA?

So what has happened to ASOS (ASC) this morning, I need to dig out some emails from certain parties with TP's of £40/50/60/70 a share...and the case of Hendricks I am owed by Christian! One would be wise to see if Marks & Sparks have bucked the trend, I'm putting this purely on the fact I bought some shirts from their recently, and have no other validation!

Now in true Academy award tributes, I would like to thank my computer for surviving a peanut butter ninja attack (as Leggie delightfully described it) from my daughter. It is truly amazing how a computer can survive such attacks, never mind the fan still operate with digestive biscuit and peanut butter in it under my desk. A credit to the build quality and Paul (Mr IT man) for sorting things out so quickly!

Tomorrow morning is a treat for myself as the room off my office gets fitted with a Miele "Bean-to-Cup Coffee Machine." So if people notice I'm more wired (not weird) than normal it shall be due to excessive amounts of caffeine. Ian's comments about the caffeine version of a crack house perhaps do it more justice. Thankfully my daughter attends pre-school from Friday, that is her induction day, attending in her pre-school uniform (who'd have thought it!). 

My question for those to consider is...if NEXT is impacted by the weather for sales (which I doubt and its more parties away on shorter breaks) would that make the main four supermarkets affected? For those well-versed on such things, perhaps it would be wise to look at the highest clothing sales?

Atb Fraser

(No proof-reading as usual so do your best:-))

P.S. proof read by Ian :-) Cheers F

Morning Mumble: The joys for shorters & avoidance for the over-exposed or the angry folk in London Mining.

It wasn't that long ago I was being berated in London by one investment fund chap that disagreed with my view BBY (Balfour Beatty) was a stonking short. He'd allegedly read my views about BBY via FTML in April and May 2014 and it was "apparent to him I am negative anything even quality stocks." This, unsurprisingly, lead to a discussion about what one perceived as quality, with my reasoning being BBY was at the start of a wave of bad news, with FX currency losses and trading far from being in line. 

Well today validates my call, with January Trading Update (Australian Issues in Professional Services), Balfour Beatty Final Results "significant deterioration". May Trading Update (Group pre-tax profits for 2014 are expected to be significantly lower than previous expectations, in the range of £145 - £160 million); May 2014 Trading Update (expect a £30 million shortfall in our UK construction business in 2014); One could have hoped that May was the worse, it wasn't as it plainly hadn't resolved the issues within sector or department, with July compounding my statements which only came about by the January update. 

With July 2014 Trading Statement (We have seen a further worsening in the trading performance of the mechanical and electrical engineering (Engineering Services) it was not looking rosy. The final nail in my trade plan was today with a further profit shortfall of approximately £75 million in Construction Services UK. Worse, from an investing perspective and one for which I take issue with is the managements apparent lack of understanding in the business that they have to appoint outside eyes to evaluate /and or focus on commercial controls, on 'cost to complete' and contract value forecasting and reporting at project level (namely KPMG). For anyone holding long, you need to be asking yourselves why? what for? Better still, how many warnings do you need before you see the dire position. 

The Nigerian Lottery, for which allegedly I am a regular winner, has more chances of success when the 3 rules of deterioration in trading are announced. Today will mean the closure of most of my positions, as 600+ points is not to be sniffed at and certain CFD intermediaries can have their stock back at 178 pence as I type. 

My thought goes to Mr X, whose fund saw BBY as a safe haven of long-term growth and prospects. He knows my number if he wishes to phone up and apologise for his derogatory remarks about my trading and market understanding...or perhaps lunch and olive branch:-) (you can pay!). 

Due to the demands of being the the mop, the cleaner and dogsbody currently whilst other parties swanning off around the globe, I was going to cover LOND (London Mining), but I think the RNS sums up the position when the Iron Ore price dropped. London Mining financing update. Does not bode well for being on one side of the table negotiating. 

Now for the longs on GBPVs.AUD, perhaps its wise to take some profit now it's hit the target. Mainly on the back of Chinese and Iron Ore weakness having travelled significantly quicker than envisaged. near 1000 pts in a month. Forward trades are still in the region of $1.88 to £1 currently, but all the same with such swings and banking/liquidity issues in China stimulus is their only option (read as lack of banking reform) which will be positive for the Aussie Dollar. 

After discussion (offers of proof reading haha) and messages, my posts are generally written in 3 mins, if parties do not like the basic typos, poor grammar and mistakes, please utilise the X button at top right of the screen. :-).

Re: a question about Fresnillo, the pure silver negative play is Hochschild with Fresnillo a trade but with more resilience. Silver slipped another 10c over the weekend, which doesn't bode well for any producer, trading around $17.50 (+/-5c). Expect a contraction in the supply and some support around this level in an attempt to support the price and change the trend. With apparent blind and ignorant support for the silver producers, perhaps the investors think the metal is at $30/oz. 

Gor those people trading Uranium up near 50% from its lows trading (pending on quotation) around $36/lb expect some news of some trading desk disposals shortly. Its amazing how long the market took to wake up to the deals being completed in Japan. 

Atb Fraser

The weekend was filled with being in Bristol and Bath (Business), a fabulous time with a visit to Cheddar Gorge (pleasure) and seriously needs some investment. Dining out in a lovely small restaurant I had visited some 4 years ago. The service was just as slow, but the food was fabulous. The detox continues without interruption! It's either 3 weeks or 4 pending how you twist the calendar! Its likely I may have to stay in Bristol for 4 weeks soon, god help them! 

Morning Mumble: Any old iron (or old debts) & reality biting...

Sinosteel woes resurrect China debt concerns By Lucy Hornby in Beijing. What Lucy has missed is the significant of debt within the more private steel and iron ore traders. Sinosteel has been rumoured to be out of the money on a significant level of Iron Ore contracts. All priced around $105-120/t, so the bail out makes sense, especially at $79-80/t.

The problem is multiplying on the basis that Sinosteel supplies the indebted steel mills, that unsurprisingly, cannot make any viable monies at the current steel price. Steel production/demand is slowing, with China popping its head above 800m tonnes of steel this year, the growth has exponentially slowed and the price is slowly rebalancing in light of the drops in iron ore. So is the Chinese Gov+T going to bail out the mills to improve payments to Sinosteel? Not in the slightest, it will however take the loans on or ask the holders to roll the loans over for the larger mills/the ones not emitting the most polluting.

For those wanting to be baffled, Chinese Steel production was 272,8m tonnes in 2004 this year its near 800m/t. No wonder the iron ore price and investments have performed the way they have. My estimates look as though there's no demand above the 800m/t and more than likely 750mts. The figure is based on achievable growth rates. The IMF believe the Chinese "have many tools to maintain the growth rate well above 7 per cent next year" Rhee said. The word tool sums of what is required, healthy (to a degree) from an investment perspective, for sustainable foundation, most people will disagree. 

Thanks to the observant Roger Bade whom was the only one to highlight the story of Vale's 35 Mega-carriers, they've found a purpose for 14 of them . So to top off the Iron Ore saga, we have Vale reintroducing supply to China, also available here: Cosco-Vale deal to end giant ore carrier ban (South China Morning Post). With 11 ports able to handle these characters, what will the Chinese authorities find as an excuse? So with Chinese imports seasonally low, its set to be lower according to Shanghai Metals Market’s. Could September be the low for iron ore? Its more than looking that way...maybe contradicting my view of consolidating at $75/t longer-term.

Royal Mail Group (RMG), UK Mail Group and TNT Express have made it on to my Christmas list today with the top performing short of Sept. With all other carriers/couriers/postal type companies announcing issues i.e. TNT yesterday (TNT Express Link). Now what do traders want more than advance warning of printing cash? I'll quote TNT for parties to realise RMG was a sure bet....

"Since the interim results of July 28, 2014, overall trading conditions in Europe have deteriorated further and competitive pressures have increased. This means that it is no longer prudent to maintain our 2015 guidance – which assumed an economic growth rate in Europe of between 2 and 3% – of an adjusted operating margin of 8% for the combined Europe Main and Other Europe and Americas segments."

Wait the story doesn't end there...UK Mail Group Plc today announces...so it would have been rude not to be short DX Plc as well. 

Continuing yesterdays theme and ML Commentary, I think the market has woken up to the potential of SXX, with parties realises how big the global cabbage market is. On the back of yesterdays news, another further potential for offtake agreement to supply up to 500,000. The UK Gov-t now will be hard pushed to refuse the permission here, as viability is now met! 

On my gold longs, it was surprising to see the shift in Asia with Gold losing $13/oz, 1210.13$/oz this morning.

Initially I thought what were CNE (Cairn Energy) doing farming down Catcher, but when one engaged their brain (me), the CAPEX is reduced significantly. A clever play and congratulations to the management. 

Today I sold down the capital holding in Tung on today's market update. Having held on despite the peek at £4, I sold on the belief its prudent to take the capital off the table after rises. 

The main thought goes to BLT, they should get the award for how to destroy a share price by the lack of in-action on listing the "spin-off" in the UK as well. 

Atb Fraser

Rumours with the caveats of common-sense required: KMK are on the verge of signing a company making contract and BG Group may just improve its shareholders fortunes!

Morning Mumble: Who is Ian trying to fool & something perhaps worth covering...

Its been an amusing morning, with Ian trying to covert me to an iPhone 6 by sending me one! I am not sure who is more the fool, myself not wanting it or him for sending it. Its nice to have friends like these, but all the same, when all the muppets stop using iPhone's I shall start.

So with that in mind, I've gone all trendy and its time to say goodbye to my Blackberry Bold 9900 hello full-time use of Samsung S5. My BBerry was my work horse, very rarely has the phone let me down, it's been washed, had the odd drink (and been replaced) but battery wise, Apple, Samsung couldn't touch it. . Now I find myself having to manage what what information is shared, stolen (oops I mean taken) and better still an app to control the television for which I rarely watch. So, as Ian will now have a spare one, best offers to him quickly, you might get it cheap as he's already got one! 

Do not get me wrong, I love the Apple-Vision, it's a goliath of cleverness and is positive for the god knows how many that work in its supply chain. See UBS's recent version covered on ML. I fear for the first person I know wearing an "iWatch". Apple will continue to strive forward albeit the pace is going to be significantly slower as the competition up their efforts. Saying that, Samsung are in the same boat with "China launch for new Samsung phone"

UBS_Apple Supply Chain

With the amount of 'news' £1.75M placing...for Nostra Terra Oil (NTOG), this will evidently make the promoters think twice about firing out buy notes, well at least for 5 mins. Similarly, having topped out of RGM, I could see the sense in the Horse Hill investment, but what are Regency Mining playing at with their investment in the West Virginia Shallow-Oil Project. It may be positive, it may not, but my question is, are RGM's other investments not progressing? What is RGM's focus, its quite clear the acknowledge they are not experts in this field from their last newsletter update, so why are they continuing down this path? 

On to the positives of AIM, Sirius Minerals have been studying vegetable growth, when reading the crop study results one can be forgiven for thinking they gave out out free samples to analysts at a mining conference to study the result. The positives from actual Cabbage Crop Study Results are:

• POLY4 improved cabbage yield and growth whilst maintaining quality

• POLY4 outperforms SOP in yield by 7% and MOP by 105% in a 'straights' tria

• POLY4 based NPK blend delivers a significant 90% yield increase over traditional MOP based blend

• Do not forget to view the webcast: Sirius Minerals Agronomy Update (24th Sept 2014).

One has to wonder will SXX be allowed to progress on its own. The viability, for which I researched some time ago, was shot down by analysts because the studies I quotes were small scale, nor backed by the relevant research authorities. Nowit appears to be proving the positives of the earlier studies in to polyhalite. Please also see:  ICL Fertilizer Arm to Expand Polyhalite Mining in England & Intercontinental Potash Corporation Presention into polyhalite (see page 5) and Trigon's Intercontinental Potash Corp. Provides Update of Operations (2009).

Now if ever there was a concern about a company it's the fact the best they can do is, as a junior, buyback their own shares. Ovoca Gold Plc (OVG) proposes to buy back up to 20% of their capital. With arbitration going on there may be some upside, but OVG haven't realised why they're discounted to asset/cash value. Perhaps they'd also like to explain why Directors remuneration remuneration (page 51) cost  of €1/2M (Euros) a year whilst earning the shareholders what? 

No time to cover the oilers again! Albeit those that ook the prudent profit from May 2014 on Tangiers Petroleum will be thanking themselves for after today's announcement. Someone turn the lights off...

Atb Fraser

Morning Mumble: Carnage Part 1 Retail, Sugars & Safety in metals...Tate modern...(not so) and Silver WTH

With commodities on the slide the market introduced contempt  for the pricing with recovery in the iron ore producers in Asia and flat in the UK. However, looking at retail, why did Mothercare not snatch their arm/hand body off. The rights issues is a joke, as stated, any holder should have sold on the news...not now! It's cost them dear, the rights issue is a positive for the company, not for the holders. See: Morning Mumble: Iron Ore (From Kumba via Pilbara to Marampa) & LGO's placing...and does Mother Care?! (Poor I know).

Tate & Lyle came in with a lot of known issues all being stacked together, what the market are doing pricing the Co at such a level is beyond me. I have an aggressive target price on TATE of 465 pence. I'd avoid any longs in principle (subject to news changes) until the next warning coming in January. Sucralose might just save TATE, but quality is the key. Something PureCircle might need to look at...Tate still not valuing their Stevia Tasteva (TM) brand with no mention of it. The dividend statements might save them some short-term pain!

Metals has had support come in at last, with some stability across the board save for Iron Ore. Precious metals steady as they go, one would have thought the new trading opportunity would have improved things for gold? The Shanghai Gold Exchange should sort their data out but perhaps that will come over time but volumes were the highest for awhile so I dipped my toe in, the conversion issues to Yuan are very prohibitive, will the exchange last? 

Staying semi-precious with profit being a rarity, what are some silver producers doing with the current price is beyond me! What's the purpose to produce something more expensive than the price achievable! Hochschild’s (HOC) might just have a shock if this continues. Perhaps changing banks and broker to HSBC would assist the price? (please excuse my sarcasm there). Afterall, the writing was on the wall (Morning Mumble: ManFlu (Death Bed) & Pedra Diamonds & the fall of silver?). Rather obvious and not so long ago?

Its best if I let people work out what's going on with Chaarat Gold with NFC and NERIN to prepare DFS for them. Why parties would not be taking profit is beyond me....perhaps I'm myopic! Chinese involvement and cooperation, perhaps there's more profit to be had? Surely there's better out there, Amara? 

Apologies for the brief it has been a manic morning, with Alibaba shorts going brilliantly and in short supply now! Mothercare, FX and gold, I bought some gold at 1217$/oz (Volume is increasing), long that is!

Atb Fraser

PM addendum to the Morning Mumble: Chinese Investment (Continuing on from the Theme the FT published)

FT Article: China’s war on graft leads to drop in outbound investment by Jamil Anderlini in Beijing. It would be wise of parties to read the more reliable data here Regular Press Conference of Ministry of Commerce on September 16, 2014, Although this is snap short reporting, there is a growing theme, significantly in the lack of associated Chinese deals. Who would have thought it!?!?!

Atb Fraser

Morning Mumble: The reasoning behind Phones4U. Very clever...Phones4U disposals

Phones 4U Finance Further disposal of Stores. Carphone Warehouse might have just have had the biggest competition increase for some time! (Dixons Carphone) DC. suffering off the news today, with the competition set to increase...this changes the dynamics of the downfall of Phones4U. 

All one needs now is someone for the 120 other stores, save for natural wastage surely Telefonica have some areas that don't overlap their current offerings. 120 stores to be sold the remaining 400 to be closed? 

As with most sectors, including intermediary brokers (and. Mobiles) there's a significant shift coming where the middlemen are being squeezed. 

Surely EE/VOD weren't fully knowing of their actions in terms of acquiring key locations? 

Atb Fraser

Morning Mumble: London's Burning??? Any old iron! & the rules of 3 warnings (Tesco validating my view), all that glimmers certainly isn't gold (at the moment).

(RNS) London Mining announces that it is in dispute with Glencore regarding a cash prepayment amount which the Company has requested and which Glencore has refused to pay. Does not bode well for LOND. The company states it has interested parties for its offtake agreements including prepayment financing. In the interim, the company does not state why GLEN have refused to pay? Quality Issues? Oversight? Perhaps the moisture content is too high? 

The risks in LOND, over and above the quality of ore are increasing, with finance disputes, one envisages in the absence of a deal and partner, LOND equity holders need a haircut. One will await an update from LOND but with the weakness already in the stock, the shorters will sense blood! 

Fortescue Metals Group (FMG) on the ASX continued to show its weakness breaking $4 a share and slipping quickly to $3.58 a share. The market is waking up to the realities of Iron Ore, as predicted here first haha...an exclusive demise of the Iron Ore higher cost producers. Now I'm not one to knock bulls on China, but had their assertions been correct about China then Iron Ore would have maintained near 98-103$/t based on growth modelling. FMG, even with the quality of Pilbara is suffering and so are Rio Tinto and BLT (BHP Billiton). For those not FMG aware, but it would pay to be, FMG is 100% Iron Ore, 100% bet long China (By supply/demand). it's not difficult to see the very basic ideology behind short FMG, short Iron Ore and leverage via OTC on China real estate developers to short. Its far from complex, more so simplistic. 

So with Friday hitting my short term target with the Tianjin Chinese spot price at a five year low of $US81.70/80.99 a tonne (pending on which terminal you use), it doesn't bode well for the industry as a whole. I had pooh-poohed the idea of Glencore and Rio becoming GlenTinto, initially I thought what would Rio, a company of fairly good returns for shareholders want with an entity (GLEN) that only dilutes their returns. You just have to look at shareholder returns of the past to gauge the differing quality. The past however, is history, albeit an indicator of the future, the landscape is changing and as such, ignoring all the regulatory approvals required, Rio might just need GLEN more now than ever. 

The Chinese realities and/or capitulation are setting in, with those bulls that were stupidly blindly to the obvious even admitting they were a little over zealous with forecasts. The stimulus model works, it does reward investors, but China's growing slack (waste) and requirement to meet target are its down fall and that of the Iron Ore price, slackening more so than most analysts perceived. For the wise, it would pay to close the shorts on Iron Ore, its near to the matched supply and demand pricing of 75-81, which allows for no contingency. Perhaps with the builders in the UK announcing normal results, one would be wise to consider the same for the rest of the world in terms of normality rather than excesses. 

India may provider some welcome relief as traders attempt to bottom feed on the price. I would dislike being long to the tune of $2.5B on Iron Ore currently at $105-130 but that is something for the over leveraged Steel Mills of China to worry about, with losses approaching near $4b by my estimates. There will be a sense of urgency at today's price...Australia is certain due a kicking as a result...

Tesco, the woes of the supermarket announced today, Tesco has identified an overstatement of its expected profit for the half year. Currently circa 209, there's going to be significant volatility in the stock, the psychology behind these types of companies is simplistic, low risk, dividend minded folk. The door will be best for some, others may look at the "end game" in 5-10 and the purchases could prove prudent.

With shopping changing and the landscape for the next 15 years being totally different, you would be hard pushed to justify owning any supermarket, trading yes, but not owning longer term. Across the sector, the market has rightly assumed the entire sector may have made a faux pas, time will tell as MRW et al run off to check! With the spreads widening on TSCO to near 1%, the trading companies now not so confident. What traders and investors should take note of is my rule about profits/trading warnings, when they hit 3 its time not to bottom feed, it's time to short. Don't get emotional and hope...

A few questions for Tesco, perhaps a reporter with some clout could ask them "when they first learnt of these issues; when was the board first made aware and was there a 3 month time lapse between the concerns being raised and the announcement today." 

Avoiding focusing on specific prices of base metals, its interesting to see that Nickel broke a key support line of $8/lb having held well, it came as no surprise with the larger trader closing only the other day (he/she/they were long) (commented only here). Nickel is however of importance, with what is the closest commodity to equal supply and demand; there appears to be a total absence of speculation, trading and a reducing demand. Indonesia may well be punished more than they realise as the price declines and the smelter requirements are harder to justify now China is becoming more realistic. 

Gold has the biggest absence of traders in near 14 years by my estimates. The only sensible reason for this is in 2013/14, traders brought forward budgets (read as Chinese) to buy at alleged lows. What the traders (myself) did not fully consider, which is essential with higher volume is that other buyers may be committing monies that would create a market at a later date. i.e. 2014/15. So gold, contrary to my previous belief is likely not to change much until 2015 or until traders return whichever is the sooner. Something certainly worth watching.../trading. Gold currently $1214.19/oz is very close to another key level of support...

Sticking with gold, does anyone notice a theme with Amara Mining (AMA),Yaoure High Grade CMA Zone. Now I'm far from a geologist, and won't pretend to be, you only have to ask me to explain shale oil and gas to make you laugh about the earth's workings in all forms. However, speaking with someone better informed this is just getting better on the announcements. See: Amara Mining Plc RNS Announcements. Even allowing for the gold drops, AMA becomes viable for a lot of majors that can afford the CAPEX, perhaps even Samsung for those well versed in AMA.

Atb Fraser

Leggie, Red or White Blue Nun:-) and hope you enjoyed your hols!

Morning Mumble: Petra's dividend hopes improve & Caza (Well well well) a mexican fiesta...& Déjà vu (Earthport) & Monitise (Thank you for the Christmas Bonus) It pays to use visa!

Morning, its been a long day already with the impending doom of FX and obvious trades meaning hay is made when the sun is shining, having just closed my latest longs on GBP Vs, almost everything. 

Now overnight, here's something Bloomberg are missing a story on; China Home Price Drop Spreads to More Cities as Demand Weak (Bloomberg News). With figures coming in as far back as March 2014 with Experts urging that preparations for home price drop needing to be made (Official People's Republic Ministry of Commerce). Following on from my commentary on the declines Real Estate Transaction Taxation Revenues the theme is set to continue. Is it really news? No, although the speed of declines is increasing. Perhaps parties are not aware of the significance in the declines, housing is an essential ingredient for driving the Chinese economy. 

For those looking to get the news before its recycled, one would be wise to get on the mailing list for National Bureau of Statistics of China. Today's announcement, Sales Prices of Residential Buildings in 70 Medium and Large-sized Cities in August 2014 has something significant in the fact even affordable housing is under price pressure with an absence of demand. With commercial property sales in decline its no wonder the Chinese Government introduced further stimulus. The 2013 Chinese figures show when compared with the yesterday’s show a trend with wider implications. 

With the Fed's news out of lower interest rates for longer than expected, the obvious contrarian play on gold occurred with longs significantly reducing their positions despite some only having acquired them earlier this month. One wonders without support if Gold could be heading towards 1065$/oz. Instability and volatility is required, plus a few more Indian and Chinese buyers that are categorically absent. Gold currently around $1,224.90/oz doesn't bode well for the larger producers. A 1% drop is not something to get concerned about in normal market conditions, but the absence of buyers and sellers very recently raises questions about forth coming volatility. Are players starving the market of speculation to profit? 

Caza Oil & Gas, Inc (CAZA) came in well ahead today, the stock will benefit from a significant rerating. On the phone with Ian this morning running through it, believes Caza to be worth around 31 pence conservatively with some longer term value. Perhaps the Muppets are so focused on SOLO et al they cannot see quality. In light of that, I took another long on the pause today! 

For those wanting some humour, does anyone notice a trend? RNS Earthport PLC Successful Placing of GBP26.6 million. Monitise PLC Visa Inc. to assess investment stake in Monitise, enough said...

Atb Fraser

Morning Mumble (Edited due to FT link disappearing): China FDI declines, now there's something unsurprising! Have AIM Companies finally learnt?!?! I doubt it but one can hope!

Good Morning, whilst was reading the FT this appeared: Foreign investment into China slumps By Jamil Anderlini in Beijing. Now I'm not one to criticise reporting, but this has been on the cards since the price drops in commodities, risks associated with the property sector, solar, you name it. In fact it's been declining since the Solar Bonds debacle. Now it's not just about the anti-corruption elements of China, it's about i) corruption ii) real time growth risks and iii) concerns over the stability and prospects. Ahh but now people are waking up and smelling the roses to my belief of China's growth, the declines are increasing. 

China is far from an ex-growth story but is an ex-exponential growth story and as such there's better places for those higher risk funds to place their monies than China. China has merely, via their anti-corruption stance, increased the risks of slowing growth and investing in China. One only has to look at the vacant unsold properties, that they can't even entice people to rent. Yes property is improving, but only leveraged. If the developer (as every paper has missed) cannot rent the property out what hope is there for the leveraged fast track approved purchaser that's allegedly getting a bargain? If someone would care to inform me. This could enable me to start a Chinese slum-lord business as well! 

Ironically if you look at the figures for FDI (Foreign Direct Investment), you'll note that it’s almost identical to a 4.5% growth rate for the company country. This may even be toppy in light of the property sector, coal mining sector (recent low quality bans), iron ore/steel mills and worse, retail starting to become very competitive. 

Following the AUD (Aussie dollar) against the basket, it’s my main FX trading currency (manually). The AUD has weakened more significantly against the US Dollar, obviously as facts (read not as concerns) come to light with China's economy. The probability of a stimulus in China was guaranteed with slowing developments and reducing tax receipts across their major industries. 

Now here's a surprise, China Boosts Stimulus With $81 Billion Credit Injection for Largest Banks. This is only the start of a broader stimulus that the Chinese Government has avoided to date, one could argue bringing forward projects, and injecting new capital is broader stimulus when the sums of the parts are added together. Please note the bulls, including Aviate are being contradict by the financial situation and events unfolding. 

We'll ignore the slump in China property taxation revenue the Government slips in the bottom of reports in small print. AUD will come under further pressure as support for iron ore drops further, with predictions coming in of around $75, which would suggest with 20% of Aussie exports being Iron Ore, there is an over reliance (read as massive weakness) that will create predictable volatility in the currency. As iron ore drops, the play is USDvs.AUD, GBPvs.AUD long, save for a Scotland issues which would be long USD, short GBP. 

So for those bulls out there, if Australia are factoring real risks into their forecasting and financial decisions, then surely the rest of the world should be. Minutes of the Monetary Policy Meeting of the Reserve Bank of Australia. 

So you have conflicting messages from the Chinese Government, Commerce Department: the use of foreign capital will enter the low-speed steady growth (FDI China). One stating its slow steady growth, the other a blip in the financial markets and is not permanent, despite the figures showing a consistent decline. It’s not for me to point the obvious out with China, but read, Statistics of FDI in China in January-May 2014, with the absence of FDI investors, comes a need by the Government to take this slack up. A well placed investment trust could take advantage here of quality investments, rather than the scatter gun, I think Invesco have one returning half decent returns, 16%... 

Worth considering for the more diverse investor are the prices for agricultural land in the UK as a hedge, having invested in this for some years, Land is now at 12-15K for smaller plots which suggests even post any fees that people pay this as a safer bet than savings accounts. 

Mariana Resources secures up to US$6 million investment to fund growth of South American exploration portfolio over the next 12 months. MARL have finally learnt what AIM companies should have learnt years ago about SEDA's (Standby Equity Agreements) and EFF (Equity Finance Facilities), please see the terms of financing. Now who'd have thought MARL had financing on the way? Knife catchers on the way... 

All commodities appeared to be supported by the Chinese "injection" measures, however finance isn't the only issue, demand and reduction in wastage are king here. The finance may assist the demand but only increase the wastage on a basic level. 

A hat tip goes to the over-exposed Nickel trade whom was short to get out quickly post the Chinese financial stimulus news, with a paltry 20c/lb dip and bounce he got off lightly! Steady as she goes $8.25lb... 

Atb Fraser 

To follow Chinese FDI: Ministry of Commerce People's Republic of China

Yet more positives for LGO: Leni Gas & Oil PLC Initial Flow Rate GY-665 one expects some decent coverage to come on LGO, with the potential towards 8 pence.

Morning Mumble: Anyone for a haircut? (Petropavlovsk Plc/POG Holders), Rurelec & No News...

Petropavlovsk updates the market on financing but what will be left for current shareholders? Not a lot I can imagine. Any die hard holders now need to wake up and smell the roses. This had to go the way of Albemarle & Bond based on the same principle. Short it out! during volatility...

Rurelec Trading & Project Update suggests there's nothing new but with "progress." The company was a sell post taking profit on the basis there were items that should have been disclosed in terms of value of the claim. The listing for Santiago Stock Exchange has been put on hold, yet again. So there was concerns about the AIM Listing and now it's pending the completion of the share stakes in the Parinacota and Illapa projects.

Rurelec now have a material risk due to yet more delays which are likely to impact on longer-term value but there's something not sitting right in terms of delays (again) on all counts. Trading in Argentina is up and repayment of loans is a positive, albeit no indication of revenues. When someone has the time perhaps they can update me on the meaning of the following, "Rurelec is exploring one or more major alliances in Latin America to allow the Company to accelerate its growth without the need to ask existing shareholders for further capital." One or more? Am I reading that right...the market will react positively, when ironically it should be conservative. 

The Chinese have started their pollution stance with the ban on high ash, low quality coal. Well what a surprise, with the impending doom of low quality iron ore on the mills and a clean up in progress its not going to assist the producers of these finite items. With the price dropping to predictable levels the market has finally concluded coal is not the new black (I know I'm sorry!).

In the no news section, Wolf Minerals to Draw Down £75M Senior Debt Finance Facilities the shrewd will be buying over time off lows on this stock. Even allowing for a market correction on commodities, WLFE may just be exempt.

Ophir Energy Plc Silenus East-1 Well Result and Resources Update means theres finally some good news for the OPHR share price which has been dogged since the middle of 2013. Due to time constraints I missed the largest oil holding announcement on Hurriance Energy yesterday with their Post-Well Analysis of the Lancaster Appraisal Well 205/21a-6 coming in better than the market expected. Continuing with the positive oil theme, Ithaca Energy Inc. Successful Flow Test on Fourth Stella Development Well which has been completed for a speedy hook up once the floating production facility is in place...I envisage there to be some positives out of the block on IAE and now is certainly a time to be reviewing a buy consideration. For myself, thanks to the absent Indiana confirming he is indeed alive, its time to consider longs.

In the humour section, a) will Mr W start emailing his wife instead of me. As much as I like to be told I was looking so hot in the morning, there's a few differences between his wife and I! b) Can someone please advise me what "Provisional" audited results for the year ended 30 June 2014 are? Albeit their all in cash costs is better than expected at $1,124. One assumes the debt will be paid down improving returns for shareholders? At at Market cap of £250M that's some multiple of earnings, supported poorly by the dividend. One hopes South Africa's inference of greater Black Ethnic Empowerment (BEE) suggestions on the BLT spin offs doesn't erode any potential value in Gold and Platinum companies further. 

No time to cover the Crest Nicholson Holdings plc (Crest Nicholson) Interim Management Statement for the period from 1st May 2014 to 5th September 2014. Any surprises in light of the Berkeley Gp.hld (BKG) interims two weeks ago! The "normal" appears to be returning across the sector and was a blatant and evident short. The market is getting slower and slower to think for itself! This time its not "a return to normal" its a slight moderation...give over please!

Anyone following Ocado? Where's that Ocado buyer note again! (Please remember sarcasm).

Atb Fraser

Morning Mumble: Why I'm long Dixons Carphone (DC.) in the short-term & Oxus Plc (OXS), Gregg's & FML.

Phones4U Trading Update has entered administration as speculated by the weekend papers. Dixons is likely to benefit the same as Curry's did when Comet departed, albeit with margins in Europe in decline and I suspect the same for the UK there's some negotiating to be had by the carriers now Phones4U has become the casualty. What quite happens with Phones4U is yet decided as there's a lot to unwind and they do have contracts in place in the short term. 

Comet benefited by being the main high street retailer, Dixons Carphone is likely to benefit around 10-15% in turnover and but lower in profits as a result of today's news. With a potential rerating to around 460 pence. The key point is the margins and Europe, what will DC. do post iphone 6 and 4G fever? The gimmicks are coming slower and the advances the same, nevermind the length of contracts increasing. So for the Christmas cheer, I'm long!

Now correct me if I'm wrong but if the primary function and operating business in Oxus's business is the Arbitration case (UNCITRAL arbitration proceedings), why is the cash burn so high? The half yearly outlines nothing unexpected. The company was contacted awhile back about an alternative to the Equity Finance Facility (read as short), however the company did not respond for their own reasons. Not exactly exploring alternatives...or giving the impression of doing so more importantly. One will await the news from Oxus on the award, specifically the size of the award. 

Gold is on a cusp in terms of physical ETF margins and support, if buyers are not found one would have assumed with the weak data out of China causing an Asian markets low, buyers would want to hedge. Now where's that bull analyst gone, South Korean Won Drops to Five-Week Low on China Factory Output By Jiyeun Lee (BBerg). It was nice to catch up with Li from China this weekend and be told about the Chinese focus on productivity and cost savings. One assumes that with the decline in factory output targets that wastage is now becoming more evident. Time for the Chinese bulls to review their investment cases now, with all sectors contradicting their beliefs, commodities, service, factory output, banking lending up (including fast track applications) so are bad debts...we'll ignore the issues with coal producers, iron ore producers and the steel.

For the followers of Greggs, it would appear they've embraced the image and offered healthier choices (Balanced Choice options as Greggs prefers to call it) and improved their service and appearance which has benefited the bottom line. I've never liked Greggs personally, but the company has all the things an investor likes. Their Interim Management Statement (IMS) shows the signs of some luck in addition to a quality strategy that is simplistic in roll out. So with the cheeriness you should expect I am now reviewing Greggs looking to go short on the stock. Today's results were so materially ahead of expectations I'm calling them a fluke. Gregg's locations (Location Location Location) and a credit to the management, but the unexpected change in trend means there were factors outside of Gregg's control, namely the sun shining (my view).

For some thought for holders of Greggs, from the IMS; "Whilst we face tougher comparatives in the final quarter the combination of strong sales performance, lower costs and our outlook for the remainder of the year means that we now anticipate full year profits to be materially ahead of our previous expectation." Some food for thought (sorry couldn't resist), but one would be wise to watch the weather!

Now looking in my emails from near 3 years ago, its interesting to see Frontier Mining (FML) shares have hit my target price. FML inform us, that they can cover their costs but the debts are another issue. FML needs the sale of Naimanjal (Circa $30m) to appear to its lenders they're making headway. This is making any agreement on borrowings harder the longer it is delayed and the essential monies need to improve operating performance won't appear. Naimanjal was announced in March and yet to complete with Regulatory Approval to proceed with sale of Naimanjal end of July (29th); not too long a time frame but concerning if you have the grim-reaper at the door (debt).

Yerlan Aliyev, Chairman and Chief Executive of the Company, said: "While all of the operating cash flow is being used to finance ongoing operations, during the first half of 2014 Company continued conversations with financing institutions and counterparties in order to negotiate extensions of debt repayment obligations. The sale of Naimanjal is viewed as a source of financing to pay down part of the loans and provide finance for the purchase of new equipment required to improve production levels; however, the transaction has yet to be completed and so we were not able to use the sale proceeds to prepare for the 2014 production season. 

In the event of no sale pre-christmas the company needs cash or a strategic partner which is likely to be announced post the sale of Naimanjal...time will tell but FML might be turning into a high risk binary punt on success. Not for the sober folk!

Looks like yet another company is waking up to the dire state of the Iron Ore and Steel industry, with Arrium, Elders offer investors a fair go. I specifically found a chirpier article to avoid a Samaritans switch board overload!

Atb Fraser

Morning Mumble: Amateur analysis...of Next (NXT) from a trading perspective, Ashmore (ASHM) &....what are Fresnillo (FRES) doing? Massive rerating for AVEVA?

Yesterday was positive in terms of Ashmore (Final Results) coming in negatively along with Next (NXT) also performing well for the contrarian. For ASHM there's likely to be a benefit as the shorts close (aka buying back their positions) but do not get too excited unless of course the GBP gets kicked further by the USD, things will change but yesterday validates the sell side opinion.

It was surprising to read that NXT surpassed/beat expectations with their first half results, when it was a miss, along the same lines as Primark's (Associated British Foods (ABF) pre-close trading update . Again the shorts are actually swelling but no one confident enough to kick in with a decent position of any worth a disclosure, NXT have an issue this year with their "no pre-Christmas discount" policy is significantly under threat, more so than any other year. Of course, its very well managed, so they may have a better understanding than I of their business model. Will they hold their nerve?

The question the long only (LO) investor in NXT should be asking is, "how will the brand stack up without incentivisation during this peak period?" Last year NXT benefited by companies needing to maintain margins / profits to underpin their business model. This year, across all retail, grocery and services sectors there is a different theme, "price." Cheap is best perception, is mirrored in the grocery sector currently with a significant change in the dynamics of shoppers (currently reviewing this). NXT are offering more "non-own label" in comparison to previous years and the theme of "margin" erosion is already happening down to 14.2% from the previous years 15.6% albeit better than July 2013's half year update of a net operating margin this year 12.4%. I prefer to call NXT a financial leverage on the clothing sector in terms of their directory. So with that in mind I won't state the obvious, but have a look at their first half results yesterday: 

Then compare than for the F/Y Results to January 2014:

Credit customers down (less credit account profit), cash up....albeit an increase numbers by 81,000, it's still not near the 3.1% comparative they're showing from the previous year. So with lower than expected growth and margins declining again, a more realistic prognosis for the future is required...positive but my view is not as bullish. The wonder boy (NXT) of the retailer sector is currently overpriced on fundamentals, albeit on the market (including NXT's historic performance) its a save haven coupled with a buyback and the rest of the sector will show support plus dividend / capital returns. 

NXT's results are a miss, albeit small at around 1.5%...So just to cheer people up, I'm maintaining my shorts...that aren't purchases from NXT either. Its acknowledged that NXT is well managed and has performed well, however, its my view for the valuations to be maintained they need to consistently hit their targets, this is slowly being missed...it's by far terminal and as such I trade from peaks.

LO supermarket holders should question what the future brings, having had a look at the valuations of Supermarket land after Roddy's suggestions about the leases including the inflationary links to the rent, there's now a real risk there's a liability. Morrison's may actually fair this better (Disc currently: Long Equity Long Spreadbet and Long CFD purely on intra swings at the moment). 

It appears Fresnillo (FRES) are on the expansion trail, with their acquisition of 44% stake in Penmont JV. FRES's net cash to June 2014 was US$327.5 million after short term funds of US$1,164.3 million net of the US$795.3 million interest-bearing loan (Senior notes issued in Nov 2013) and the US$41.5 million loan from Newmont. With Mega Centauro and Centauro Deep requiring $515M CAPEX its more than affordable on the 425K/oz promised production even at $1250 economics. Fresnillo Presentation & Phone in here. I'd recommend skipping to the Questions & answers section...for myself without having a full understanding of the deal, I have had to close my shorts currently to enable a better assessment. Its not a reason to buy the stock more so reassess, with a buy more than likely around December 2015...Silver's dire at the moment, more so for HOC.

Finally, the market reacting poorly to Aveva (AVV) and why has today's Aveva Trading Update taken the market by surprise when the writing was on the wall from the interim management statement. Perhaps a pro-Aveva fan club would like to explain it to me again. Ref: Bristol, over priced and deserving a sell/short. Now just to repeat what was concerning, from the IMS in July:

"The timing and phasing of rental contracts tends to result in the majority of rental renewals occurring in the second half, where we often see incremental licences purchased for existing software together with customers licensing additional products. This effect is likely to be somewhat more pronounced in the current financial year based on our expected schedule of renewals, which will see revenue geared more towards the second half compared to previous years. Our expectations for the Group performance on a constant currency basis for the full financial year remain unchanged." (Disc: Short)

Is today's news any surprise when looking back at past performance and the company informing the market 2+ months ago it's going to be more pronounced than previous years ? Evidently and to quote exactly I'm "an amateur with more luck than judgement and no city experience to back your thoughts or any qualifications. Your money & you will soon be departed with that outlook." This stands me in good stead for the future?!?  You bet it does! That's another one for my scrap book. 

Plenty to cover there is not time to cover including Thermal Coal, the China Effect, Gold still consolidating and Ocado; which should really move to a sensible valuation in light of the current market conditions in the UK. 

Atb Fraser

(sorry no proof reading due to a teleconference).