Monday, 15 December 2014

Morning Mumble: Pathfinder Minerals (PFP), Fox Marble (FOX), Greggs (would be rude not too) & WRES (tide turning)

Good morning, a hectic weekend and myself finding myself in the Christmas spirit, yes I'm officially long Christmas

Pathfinder Minerals Update Re. Mozambique Court Proceedings brought some Christmas cheer to the holders of the litigation fuelled PFP. The market has rightly ascribed a value to PFP's claims and the outlook is better after today than had previously been priced in. Over to General Veloso and Diogo Cavaco to decide the next move. One assumes now that ownership is not in dispute the remedy is closer than most parties envisaged. Obviously there's more to do it in terms of legal representations. The supreme court paperwork based on the information in the public domain makes for a common-sense outcome, this does not mean that shall happen but its certainly looking more than likely. 

Fox Marble Holdings Sales Agency Agreement came out today, with sales agency agreement with Zhong Shengdestone Co, ("ZSC") headquartered in Beijing, China. It bodes well for Fox Marble, but an exclusivity agreement does not for Fox, this should have been a regional agreement over any Country licence. We'll ignore the fact should a customer become the agent as there's pros and cons to this type of agreement but exclusivity like certain issues Baxi faced with British Gas a few years back, did not turn out as planned. This is something to consider if/when INSP (Inspirit Energy) if the gossip is to be believed. 

We'll await further sales agreement updates before going negative, but suffice to say the company's positives are being limited by this type of agreement. Upside yes, but now being limited, exclusivity with the quality of stone should have been with some form of financial payment to FOX to motivate the partner. The minimum order of 10K tonnes is...erm...paltry.  

Gregg's (GRG) came out today with yet again better than expected results in their trading update today. Expect some reviews and upgrades, the comparison year should not be read as like for like based on the previous years figures being below par. Its not wise to attempt to go negative with the company performing better than market expectations, so yet again the patient are waiting for the turn (negative). The GRG model appears to be well received by their customers including the face lifts and product offerings. Was I wrong to call the results in September a fluke? My view not, but the market and the company have clearly told me otherwise today. With my eye more so on the weather and retail, its under review  with this type of model / business likely to benefit from falling oil prices (more money in the customers profit). 

Johnson Matthey sold its Gold and Silver Refining Business for £118 million to Asahi Holdings IncJMAT has yet to suffer on the same scale as the likes of most refiners / commodity operators due to the value the market is placing on its chemical and technological applications. Why JMAT are flogging the refining business with returns of Circa 25% which is above what JMAT's other parts of the business provide gives an indication on the outlook for Gold. It's a good return in the current climate for gold. Being valued at Circa £6.8B JMATs above its money, expect it to give up some of the recent gains, in light of commodities and pricing including some pressure on JMAT's margins. JMAT's previous half year results for the six months gives an indication of the pressure they're under until the cycle in commodities (and commodity based tech) improves.  

Today's no news award goes to Kefi Minerals (KEFI) as they announce that the total Mineral Resource at Jibal Qutman is approximately 30% greater than previous estimates (whoopee?). With the current gold price and recovery of around 80% on this low grade project its really a question of why they're bothering with it (at the moment). The focus is on the ex-Nyota Minerals Tulu Kapi, perhaps Kefi should reduce the number of spinning plates post honouring the new 4 license commitments to minimal exploration. The noise will be about Tulu Kapi through to June/July 2015. Should I be turning bullish, unlikely...

W Resources Plc (WRES) turns the Power On at La Parrilla Mine Connects to Spanish Grid. This might go some way to stop the rot in the SP. Investors seem to be blind to the declining tungsten prices, led 4 weeks ahead by China (yes it has got that predictable). The funding arrangement with Bergen Global Opportunity Fund, LP did not help matters but now with a further reduction in costs, assuming this doesn't make its way to boardroom remuneration the company is starting to tick a few boxes. 

The punt is on the ramp up in production and the utilisation of funding to scale the ops, currently targeting around 25t/pm looks more than likely with Production rates at La Parrilla increased significantly. WRES state they're achieving target rates of around 1 tonne per day on a number of days during the second half of November following the installation and successful commissioning of new feed systems in early November. Strong interest has been expressed from a number of customers for 2015 supply contracts and deliveries continue to our European customers. 

Limited time, Atb Fraser

1 comment:

  1. Fraser- Hi- back from helping deal with a water leak up at the cricket ground- I seem to have done more digging than AFPO did recently and its a good job done at the end of the day--- I may hire myself out to the AIM miners in due course- perhaps not the uranium miners tho :-))

    Re PFP- yes, the final Moz court decision seems to be predefined now, as the basis of the General and his pals claims has been taken away completely now. Ironically the two losers re todays legal judgement have 19% of PFP so they have seen the value there kick up considerably today. They have been unwilling to talk so far, they owe £1.1m re their UK court action and heaven knows what re the Moz actions to date--- some common sense would be welcomed but perhaps they feel they need to wait for the final Moz judgement, confirming the UK findings, before they wake up. Could you please post two of your famous mirrors to Moz asap. :-)) The PFP Blog is their mouthpiece so that will be worth watching this week- no response yet.

    Re FOX- the lack of sales was the real elephant in the room for FOX, so a deal was vital, but as well as the exclusivity re China, which isn't ideal but is subject to quarterly verification they are selling block marble, not polished marble, which will be much lower margin and not what FOX would have preferred here. So the jury is still out, they have thousands of years of marble and yet they add more quarries, and they need more sales to meet their projections. And they wont be sales into China. Hmmmm.

    Re BT- so they fancy EE- nice 4G kit but £12bn plus looks pricing given the leverage they had re the possibility of a O2 bid- the jury is again out and the deal subject to some poking around under the bonnet and kicking of the wheels first. It looks like Orange and DT are happy so far, but will the offer be watered down in due course, as it should be given good business practice.

    Cheers. The Leggie

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