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