Morning Mumble: PGM Horse Trading &...and real economics.

Good Morning,

The rocky road of Republic of South Africa (RSA) PGM industry, or soon to be known as the shareholder gift-aid scheme. Aquarius Platinum (AQP) has managed to find a sucker in Northam Platinum (NHM: Johannesburg) for the Everest Mine that's been on care and maintenance since mid-2012. The costs associated with mining, allowing for a weakening Rand(ZAR) and labour disputes settling down, makes the industry untenable at current costs and a surplus in the platinum industry mean prices are going to stay around production costs plus 7% (ish) for the foreseeable future unless something changes. So any leveraged outfit is unlikely to achieve a sensible level of shareholder returns. 

Will it benefit Sylvania Platinum (SLP) J/V at Everest North tailings operation? Unlikely, but the management can of course use some crystal ball gazing to award themselves some more no-cost options to reward them if Everest North does come back online. Its difficult for a platinum company, if they don't invest in platinum they're essentially saying what everyone else knows, there's better returns elsewhere. Until the gap between demand and supply narrows mothballed mines coming back into production will only prolong the pain for the sector. 

Inspirit Energy (INSP) signs letter of intent yesterday and conducts a "micro" placing today. This appears to go in for a seasonal ramping. Having a position and traded this stock according to ramps and news flow. The company needs a decent partner with funding that removes the risks to the current holders. It’s "almost" identical to LGO's Spanish oil news flow all those years ago. Not without risks, but with some potential, one hopes any deal isn't hindered by a JV with a Goliath that has little interest in pushing the market share. We'll ignore the obvious with the Micro-placing terminology, it’s a placing and very small at that...almost implying its crowd funding. One just hopes they don't open a microbrewery! 

With Oil tracking the bi-polar mood of the world economics at the moment, it’s disappointing to see the likes of TUI AG Plc (TUI) hedging so significantly in their 1st Quarter Results. Forget hindsight, when would have TUI have not benefited from a 50% (approx.) hedging and fill the rest from the spot price? Perhaps this amateur is missing something, but a quick gauge over the past 5 years would have meant a net benefit of circa 6-7% on fuel costs.

Copper is hanging on the cliff of appreciation or depreciation, with some gossip in China that the numbers and trade are down further. In contrast financing seems to be improving for leveraged trading (attempted bottom feeding) and restocking taking place contradicting all those bulls the market was artificially low. trading circa $2.5450/lb. Chinese trade data now increasing the odds of Chinese full-on stimulus if they wish to maintain their growth targets, the market awaits the direction or revisions to growth. 

London Property Bets in the FT. EMC commentary on Berkeley Group & Foxtons, the first set of shorts were 5 months ago and now the market is waking up to the realities again where there's a secondary short as the market accepts the facts. 

Zoopla (ZPLA) and Rightmove (RMV) have to do maintain their competitiveness with their fees and advertising. OnTheMarket.com (OTM.com) is the dilution for the sector and a disruptor over the long term for earnings, whether it is a success is immaterial to estate agents whom can negotiate harder, with London normalising, ZPLA and RMV will be under pressure. Expect the denial and ignorance to persist with price appreciation in the market, until OTM.com's marketing and impacts are felt. 

UBS find themselves with the no news award today confirming they've been affected by the CHF both short-term and longer-term. It will impact on their longer term results, unless of course they've employed a magician.  

Atb Fraser