Tuesday 31 March 2015

Morning Mumble: Atlas Iron Share Price Watch.

Good Morning,


Separately, Atlas Iron hit a new low overnight, with increased pressure on costs and the price of iron becoming difficult to predict, the 'drift' is on. With BC Iron, Mount Gibson Iron and Atlas Iron all being evicted from the ASX 200, expect selling as tracker funds dump their stock, better late than never. 


Atb Fraser

Polite statements/comments will be published. 

Morning Mumble: Kingfisher (KGF), GKP (Part 2) and....SLP + CMCL via ANTO

Good Morning, 

Kingfisher's "ONE" is now to a point of being unworkable. Any expansion for B&Q is capped, with Screwfix LFL sales increases hindering the 'one kingfisher' B&Q's turn around. Simply put, KGF cannot continue without closing stores and expanding the Argos DIY model we know as Screwfix. 

With FX issues, and European woes the market will, for a perverse reason, like the store closures and yet another grand plan. Blah blah, customer needs etc...If one gets the product offering correct, avoids competing against its own margins, and expands the model, it is simple. The market will embrace the cash return and go in denial of a growth impaired model, incapable of identifying an acquisition and resorting to a cash returns.

EMC's KGF analysis wasn't far off the pace from earlier this month. What is worth considering is whether Kingfisher's operations devalue Screwfix or vice versa. Would open competition via a separate listing be more beneficial? Margins, all under pressure, many thanks Screwfix, forcing B&Q into higher promotional activity. 

GKP raised US$40,693,235 / £27,488,000 via the placement of 85,900,000 shares at 32 pence with Simon Murray leaving.  With a caveat of significant gossip and a lot of it being BS, it’s been suggested this morning that Mr Murray is leaving due to a potential conflict of interest. Surely this would have been disclosed?!?! With one company disposing of property assets and being alleged to be on the hunt for petroleum 'opportunities', time will tell whether it’s anything to do with GKP. 

News on Sylvania Platinum (SLP), with  "future" management options, another  broker change, and a Grasvally update. The chrome license is historic, notoriously difficult to work with but apparently this overcome with 'small and shallow pit type operations. One day the market might be informed who owned the Grasvally license prior to SLP? 

The broker at the time of the ' Grasvally deal' didn't seem to want to answer this question. Despite the managements' assertions of all is well, the lack of share price movement is starting to test the patience of those long-term investors, even those willing to trade the stock! Perhaps holders should watch the SLP space. 

With AIM also becoming tired with Chinese companies leaving the investors disappointed, Aquatic Foods Group (AFG) revisits the positives in a statement in the hope of over-coming a disinterest in their stock. Simply put, one doesn't envy the position of the broker of any Chinese related entity in the current environment.

Limited time for Caledonia Mining (CMCL), the results do not read positively and investors will hug the potential expansion. With a shrewd analyst picking up the complexity of assessing any shareholder returns (at the moment), it would be wise to not buy in to the potential. Unusually the EMC doesn't have a long or short view, but there are whiffs of potential. (Apologies for the art weaknesses). Simply put CMCL's taxation and returns should have been better, especially allowing for FX benefits. 

The no news award goes to Antofagasta (ANTO), what is not said is more telling for the Copper producer! Going out of favour with the market in terms of growth and "potential" ANTO's management are under pressure. 

Atb Fraser

Relating to an earlier question, T5 Oil & Gas Strategy.

Monday 30 March 2015

PM Bolt On: Largoe Resources (TSX-V:LGO) that Net Smelter Royal Anglo Pacific (APF)


Good Evening,

In the absence of an update from from Anglo Pacific Group (APF). Largo Resources has informed the market about their Maracás Menchen Mine, that APF has 2% net smelter royalty (NSR) on all mineral products sold from. Shame about the current market price, dropping near 20% in 6 months, but production is going along swimmingly. 

Over to Largo Resources, 

NEW DAILY PRODUCTION RECORD ACHIEVED

Shareholders and friends,

We are extremely pleased to inform you that we achieved a new production record late last week at the Maracás Menchen Mine.

Production over a single day totaled 21 tonnes of vanadium pentoxide which represents approximately 81% of the plant’s Phase 1 design capacity.

Overall, March 2015 will be a record month for production at Maracás as production rates and recoveries have demonstrated significant improvement.

We are looking forward to providing a thorough update on production as soon as possible following the month’s close!

Atb Fraser

PM Bolt On: Gulf Keystone the placing (Part 1)

Good Evening,

Gulf Keystone had no choice but to announce a proposed placing to raise approx £30M (approx gross) circa 35 pence. This not only gives sufficient headroom (short-term) in cash to avoid the paltry offers that have been gossiped about over recent days, but more importantly some leeway whilst production is ramped up  and the all important cashflow is coming in.

This is far from the last you will hear on the GKP saga, over to the bondholders whom, despite the £30M raise still hold all the cards in the absence of a corporate action. It shall be interesting who picks the majority of the book up, if the word on the street is correct it'll merely bypass a certain party from acquiring in the market. 

Atb Fraser

Morning Mumble: (Holiday Mode) EMED Plc & CAML, and a QPP Cheeky One!

Good Morning, 

Its pleasing to see a decent amount of news-flow on a Monday.

EMED have an extension to the loan facility. This extension reads as though a strong armed is being applied to force (or appear to) force EMED into accept 'some' terms that are on the table currently from the 'three' (Trafigura, Orion Mine Finance and Hong Kong Xiangguang International). One assumes they'll be able to organise a meeting by 30 April 2015 to avoid incurring extension fees. 

Some egg on the faces of those with very large positions in QPP (Quindell) today, with the gossip proving right. QPP, for those with any interest now, was something to avoid as the risks being significantly unknown. It was surprising to speak to such a well-versed trader today whose position was impacted by the news in Australia of Slater & Gordon overnight. One for the learning curve?! Today it would have been rude not to have a cheeky short "on the news." 

Central Asia Metals (CAML) full-year results beat even the most bullish expectations, dividend up, revenues up and profit beating the whisper by near 30%. Return on shareholder funds even allowing for FX impairments and rebalancing of Kenges Rakishev 16.02% holding, are positive. 

Improving EPS, bottom line and the Tenge devaluation aiding costs CAML's cause. 60% of the cost base is Kazakhstan Tenge. Expects further bottom line improvements as the full affects of the Tenge devaluation kick in, assuming production levels are maintained. 

With the copper market adopting a more realistic outlook, even with the current prices, its hard not to justify 'turning positive on CAML (again). See  EMC: CAML from January. The EMC is slowly getting over its issue with the director sales by Mr Nick Clarke, Chief Executive Officer, although one will always have an issue with a director without skin in the game? We'll save that for another day, expect a special dividend in due course. 

Arian Silver (AGQ) achieves first concentrate production at San José, with the more recent net smelter royalty purchase AGQ's woes may just about to turn. Today's "not" very interesting news is Bluefield Solar (BSIF) most recent acquisition, those SIPP investors will find it hard not to have some form of lower risk stability, with a yield of just under 6% isn't too be sniffed at (EMC 2014 (BSIF).  AND, GKP (Gulf Keystone) get an extension on their homework!

Anglo American's (AAL's)  inability to sell its assets and now looking to give them away doesn't bode well for Jubilee Platinum's (JLP) Tjate project in the mid-to-long-term. Blackrock realising AAL's woes a little too late, or perhaps "just in time" and selling down.


The news award goes to Randgold Resources (RRS), whom see growth opportunities.

Atb Fraser

Friday 27 March 2015

Morning Mumble: Fortescue Metals (ASX: FMG), solely...

Good Morning,

Fortescue Metals Group (FMG) finally hit the $2 a share not seen since the financial crisis. FMG have debt, expanding into a saturated market and are almost 'begging' the sector not to oversupply. 

The sheer desperation hasn't boded well for their shareholders or the iron ore price. Being near 90% complete and operational towards full ramp up to full production. FMG will survive despite thin margins and large debt repayments to make. 

There's a number of articles running in Australia that are misguided and factually in accurate, playing off the woes in the industry. Amazingly the market preferred to give credence to these views rather than the facts. 

FMG recently had their half Year Results (2015) and for those with a modicum of intelligence would have realised the statements about debt, production costs and viability are not just inaccurate, they're grossly wrong. 

Even allowing for Gross Debt at circa $9.5 far from the $10.5+B suggested, FMG aren't down and out yet. There would have to be a consistent period below $35/t to materially impact upon the company. 

Assuming a lower oil price continuing through to 2017 and iron ore not dropping below $48/t, FMG should be able to renew their debt and continue to make 'voluntary' payments. For this bear, one is watching with for any glimmers of hope for FMG (read as to go long), closing shorts and considering FMG may just be nearing over-sold (the bottom)

FMG need not only a decent headwind of iron ore prices but a strengthening of the Australian Dollar (AUD). It’s unlikely to recover in the short-to-mid-term, requiring a perfect headwind to hit targets, even those revised. 

One shouldn't ignore FMG's sole focus of iron ore, net debt ($7.5b) and total liabilities approaching near $9.5B and negotiations regarding debt on-going. Their costs have been proficiently managed and debt is being repaid, CAPEX pared, with a focus on cashflow. 

Perhaps more later, pending time! 

Atb Fraser

Thursday 26 March 2015

Morning Mumble: Hanergy and the SRX anomaly

Good Morning, 

There was a good intention of covering the Hanergy debacle that's unwinding in Hong Kong, that was picked up with Mick Johnson and Gavin Jackson at the FT, Hanergy: The 10-minute trade. Those with youth on their side will remember, EMC Hanergy back in late January. 

Whether the tank is imminent or not, the positions "will" have to unwind. One suspects that there should be a very good look at the share register and also those with derivative positions. Certainly one to watch! If the valuations were LFL, then what would make Apple's recent solar acquisition, VERY cheap, or perhaps Hanergy is totally overvalued, built on a stack of cards?

It’s amusing to read Sierra Rutile (SRX) year end (2014), where its wise to consider what "focus" means in terms of "actual." SRX highlight there is "sustained focus on cost control resulted in a decrease in unit and operating cash costs". So SRX have increased sales volume, up 17% at 129,602 tonnes compared to 111,018 tonnes (2013). Revenue was down on a fall in Rutile prices near 20% but quotes by SRX at 21.6% to US$117.8 million, compared with $123.4m (2013). 

SRX inform holders that direct costs are down on various measures, "Significant reduction in unit operating costs despite the effect of inflation in certain products and services due to Ebola and lower than planned production:
  • 7% reduction in direct operating cash costs1 to US$546/tonne (2013: US$588/tonne).
  • 5.4% reduction in operating cash costs3 to US$646/tonne (2013: US$683/tonne).
  • 10.5% reduction in all-in cash costs4 to US$683/tonne (2013: US$763/tonne)."
BUT, "On an absolute basis, cost of sales were higher at US$111.3 million for the year from US$93.1 million in 2013 due to the greater volume of rutile sold, impacted by:
  • increased change in inventories of finished goods of US$ 14.2 million (2013: income of US$5.3  million) due to greater volume of rutile sold; and
  • an increase in depreciation charge to US$21.0 million (2013: US$17.6 million) mainly due to additional depreciation on Lanti Dry Mine assets."
[Obviously], the Group remains committed to controlling costs and continue to focus on many cost efficiency programs.

Over to SRX to cover the entire issue, "Despite a difficult market environment, sales volumes remained strong during 2014, with Sierra Rutile selling a record 129,602 tonnes of rutile and reducing inventory held to more normal levels. Demand for natural rutile was strong but also highly price-sensitive as the overall TiO2 feedstock was in surplus from an abundance of lower-grade feedstocks. This resulted in a cap on the premium customers were willing to pay for natural rutile over lower-grade products and dragged the market downwards overall, with average realised prices 21.6% lower for 2014 than 2013. Consequently, despite strong sales volumes, turnover fell 5% for the year.

SRX share price had a brief recovery this time last year on the back of their news, but as covered previously, there was little in the way of a headwind to improve the outlook for SRX or Kenmare (KMR). The news does improve the prospects for the ‘on-going’ discussions between KMR and Iluka Resources.

With SRX cash declining, net debt up, one wonders if they would be wise to place a few shares before 10 pence? Net debt is now $36,436m, from $26.476m, with deferments obtained from the Government of Sierra Leon (GOSL), one hopes NED bank and GOSL won't have their patience tested. Watch for any news on Rutile, Kemnare, Iluka or a general improvement in rutile pricing. The latter improvement in pricing with the market having excessive supplies is unlikely. Jam anyone? 

On the gossip front, its alleged that Central Rand (CRND) have had a cash offer from one of their suitors for their dutch subsidiary (Obviously no more than $150M). Copper's appreciation has not gone unnoticed, nor the narrowing of the WTI / BRENT pricing and wonders would never cease, China's Oil Storage, ru here near two weeks ago (EMC Chinese Oil Storage), with the FT running yesterday with China low on crude oil storage capacity

Atb Fraser

Tuesday 24 March 2015

Morning Mumble: Debt overhang (Negative Equity) and...GMD, Copper and ESG, the decline continues.

Good Morning,

China's banks have been reviewing the impact of declining house prices and risk of a debt overhang (negative equity), occurring in 'most cities ' (66/70) in China. Obviously, this will include syndicated loads to property developers and the probability of repayment or perhaps rolling over of loans/obligations. 

With new builds down circa 22% and new land purchases by registered developers, approaching a 40% decline year on year. The impact to the 'average' earning Chinese worker is significant, and is being felt across all of China. Whether Migrant workers, steel-makers, factory workers including those in equipment and machine manufacturers, none are exempt from the downside is slower growth. This contagion has already started to happen with a decline in factory output, and laying off of personnel. Today's flash PMI HSBC data confirms this (compiled my Markit).

Without further intervention, albeit, what else can the Chinese Government do, as they have reduced interest rates, relaxed borrowing requirements and eased property ownership rules. Save for further bailouts like those of Evergrande Real Estate Group (HKG: 3333), the developers are up the creek without a paddle. Same for Local Governments, whom were previously reliant on land sales and sales taxation revenue, all now significantly lower with the possibility of council tax/property taxation being considered to make up the short-falls in budgets. 

The Chinese Government have put a band-aid on a shark bite with the Chinese loan facilities extended to Evergrande (Circa$16B). With debts approaching $31.8B (EMC figures inc. perpetual bonds $7B approx.*) and revenues in decline, Evergrande's woes have only been delayed the inevitable, save for 'further stimulus'. 

Evergrande can make space for a Ghost Cities segment in their reporting? Or delayed developments? At what stage is the button pressed on a rights issue (to the Chinese Government or asset sales similar steel mills?) to scrub the debt off Chinese Property developers books. This will of course continue the perverse bull run on their stock prices, despite the sector running above 90+% net debt (average) across the industry and by a recent reports over the 120-130% debt to equity (EMC) estimates. 

Citron Research, had a view, "that Evergrande was insolvent and had consistently presented fraudulent information to the investing public." The Securities and Fraud Commission in Hong Kong has an on-going misconduct case against Citron. This started last Wednesday (18 March 2015), due to be finalised sometime beginning of March 2016 (yes 4 years later) on or around 6 March 2015. It would be wise to update ones diary on the tribunal. Although Citron's commentary hasn't always been blinding, but it is certainly worth considering the views of the short seller. Sometimes catching the mighty Deloitte on the back foot!

Today's mumble was delayed due to the requirements of Game Digital (GMD), with Benedict Smith (CFO) stepping down after lengthy 26 months in the position after dire  interim results.. With a decline in first half profits, (the company already sign posted in January), it’s no surprise the stocks on the tank (again), and any recovery in the SP from January was totally unjustified. The market is competitive, with delivery available next day for those wanting to trim their purchase price further. 

The entire gaming industry is suffering the woes of a lack of 'new' blockbuster games enticing the loyal followers to part with their cash. Margins squeezed on near the same revenue, although digital/online sales should provide some support. At anything above 200 pence, one finds the price very hard to justify. EMC remains negative on HOME and GMD as per the January commentary.. Although it’s wise to bank profits in the latter on the news today. From a technical perspective, can GMD hold 240 pence...

Copper had a brief recover, going to $6000/t ($2.72+/lb.) and now at $2.795/lb ($6160/t) despite the weak Chinese data, one assumes the market has spotted the Chinese trades as well and the rush to cover short positions on the dollar strength. The bets are on copper for Chinese stimulus and national grid developments...for now.

Reviewing the AGM announcements for ESG (Eserveglobal) it was a timely reminder for EMC's commentary on CFO Stephen Blundell flipping his options. The EMC was subject to criticism from certain parties. With threats of reports to the FCA for market manipulation 'based' on the EMC view of Stephen Blundell's director share sale and that of Investec's, being an indicator of what is to come. 

ESG shareholders and the board consider it prudent to appoint Stephen Blundell as the Chief Operating Officer. If the gossip is correct, Stephen Blundell has put himself forward for the permanent CEO position, where he is currently "interim" CEO as a result of Mr Paolo Montessori's resignation. The AGM statement, for those who have missed it. One would find it hard to criticise a share sale where the stock performance has been positive. 

GATE ventures watch, circa 12% down, 'ramp-fabulous!' With some significant rumour flying round about Oxus (OXS), its wise to avoid further commentary until the result of the arbitration and the Jerooy Mine update. A reminder for those getting carried away, the Prime minister Joomart Otorbayev of Kyrgyzstan warned back in January that "Each prospective investor [for Jerooy] should be warned of additional legal costs."


Atb Fraser

Friday 20 March 2015

Morning Mumble: Vedanta, CHAR, MKS, Indonesian Copper blockade and WRES (Tiddler Watch)

Good Morning, 

Avoiding much in the way of commentary before Vedanta's (VED) Capital Markets “live webcast", the question on most analysts minds should be, "cash cash cash." Simply put a) where's it coming from and b) with the complex structure of VED, without simplification, limits how the cash going to be directed towards each subsidiary? VED's structure isn't complex as such, it's just simply wrong.

As Roddy pointed out on FTML before most journos (hat tip), you will note Tesco today are rearranging their affairs, with a stores transaction with British Land, (21 in total). The key point to note is the deal is not subject to RPI-indexed increases, admittedly TSCO do receive £96M into the deal. On that basis, what are the risk elements to all the deals with RPI attached? Today is the day all positions are closed in Tesco's. Thanks to Duncan who's settling in well and getting used to the systems at Bloomberg, it was a very shrewd call. 

Its a brave call to be positive on any oil stocks (Malcy does a better job), however this amateur (+ a few) has been in the market for Chariot Oil & Gas (CHAR), not only anticipation of the results being a reminder to the market, but of the deals ahead and the cash balance. A discount to cash doesn't always represent value, as seen by certain Chinese listed entities, but CHAR may just be turning the corner. 

Ian's limited view on CHAR is Neanderthal, "they have the acreage, farming it down for free carry / part-carry is a no-brainer and have $." Time will tell, yes on a Friday being long into a weekend, wonders will never cease, what next, holding equity in Marks & Spencer (MKS) long-term?? Not for much longer! 

Some antics over in Indonesia with a mine blockade at Grasberg (Freeport-McMoRan Inc) that will provide some support to Copper. There's discontent growing in Indonesia as miners are laid off due to the ban on unprocessed ore, it would be wise to watch the situation.

In tiddler watch, WRES Resources (WRES) have woken up and  dealt with the Bergen facility. They may just be calling the bottom of the Tungsten price, as China's prices are gaining a slight premium to Europe. Expects Europe to follow exactly 27 days later. 

Atb Fraser

Thursday 19 March 2015

Morning Mumble: NXT, Cautiously trading & the outlook.

Good Morning, 

Well those without a rocket science degree were proven right about Next (NXT) numbers (albeit revised). The wisdom of de-risking into the news proving worthwhile for most of the traders right up to the bell yesterday, with the bi-polar shorts jumping on the bang wagon upon weakness today. 

The re-occurring theme *(yet again) at NEXT of the margin pressures and the retails sales growth as cautioned by management. Sales Growth up circa 4.8% on last year but implying saturation or limited growth, with new stores contributing the most to growth with 3.4%.

Next have almost made an outright admission that their own brand is under pressure from other [third-party brands] labels. Perversely Next see a benefit in calling another offering provided by them "Label." The only benefit being the service offering including the delivery (Next Day). Margins in the third party branded business are near 14%, from 19% in 2014, and 11% in 2013, lower than own-brand and more importantly expected to grow at circa 50% per annum. 

NXT credit account customers have declined a further 2.4% (74K) with cash on the increase, implying there is a loss of loyalty (remember that). Next, without a doubt have delivered, admittedly with revised margins, but one cannot find many reasons to hold long from now. Management leaving, margins under pressure and an implied stagnation with some "collections not as strong as last year.

Next's Sales Outlook, although the consumer economy looks benign, we remain very cautious in our sales budgets. Whilst we are happy with most of our current product ranges, we recognise that some collections are not as strong as they were at this point last year. In addition, during the Spring and Summer seasons, we face very tough comparative numbers from last year, when sales were assisted by unusually warm weather. There is a potential upside in the second half as the comparative performance last year weakens, particularly in the third quarter.

Christos Angelides (left 6 months ago and announced here) after 28 years and only a week ago David Keens (Finance Director) departs after an almost impossible 28 years departs in April (as announced here.). A cursory reminder just six months after Christos's departure, “some collections are not as strong as last year."

Christos has moved on to Abercrombie & Fitch whom are looking for increased exposure in Europe and an improvement in brand perception and performance. A timely exit by both goliaths? The long-standing stable with matched performance rewarding those for shareholders over the period rewarded with their patience is just about to come under pressure. 

With the market, including EMC expecting so much more from NEXT the realities are certainly coming to bear. 

Many thanks to those knee-jerk traders! More later...

Atb Fraser

Wednesday 18 March 2015

Morning Mumble: HochsChild (HOC)...SOLG & SNTY

Good Morning, (It would have been in I had published it!) Good Afternoon,

The preliminary results for HOC are in and this company results are worse than the EMC expect, apparently the market disagree, validating the closure of shorts for the news. HOC is the cursory reminder of the risks of leveraged plays evolving in slow motion. HOC need silver above $17.55/oz. to break-even even allowing for hedges. 

HOC advise the market that there's some Jam tomorrow with, "all-in sustaining costs [are] expected to be $15-16 per silver equivalent ounce." Validating the shorts, AISC's (all-in sustaining costs) for the reporting period at $17.4/oz., which lets face facts is dire, and apparently exceeding guidance. 

Very belatedly, HOC's mine plans are being revised to deliver profitable ounces in lower precious metal price environment. Surely when ramping up production and mining, efficiency is key, an entity should be aiming to deliver the "most" profitable ounces irrespective of metals prices over a mine life. 

Considering the currencies that HOC operates in, namely Peruvian Nuevo Sol (PEN) and Argentine Peso (ARS), but reporting in dollars, one would have expected a significant improvement in costs.  Yet HOC only beat their cost guidance by 1% despite a weakness in local currencies. 

Inmaculada, looks further delayed and is only 90% complete, but as they've sunk significant capital into Inmaculada, its rude not to drop another $70M in their for good keeping. Hochschild's bonds are starting to mirror the share price, at what point does it become viable to own the bonds rather than the equity, aka Afren and Gulf Keystone? Or avoid totally and short the lot...'under-review'.  

SolGold (SOLG) announce an open offer to review/progress the Cascabel project in Ecuador. Why they didn't do it all in one go in December?!?! Yes it would have required shareholder approval, but better in the long-term. Over to someone savvy to pick up Cornerstone Capital Resources whom need a little more cash later on, they must have just under $1m available. 

Oil….the Chinese will enforce crude take-home for storage at these rates! The no news of the day goes to SNTY (Synety Group), many thanks (added: see comments FTML!)

Atb Fraser

Tuesday 17 March 2015

Morning Mumble: BHP's South32 (Short32) allegedly less debt & BLT favours, yeah right! Rio's SP10 *(No Sun-protection) and ANTO.

Good Morning, 

There appears to be a lot of misinformation surrounding South32 in the press, where the journos need to take their socks off. There's no way in the world BLT could have loaded Short32 with any more debt, without significant risk to its debt rating and/or higher borrowing costs. Worse, the press have ignored the level at which BLT would have created a defaulting structure that would breach the legal requirements of corporate governance. 

The press ignore the fact that BLT have to ensure that South32/Short32 must be able to operate as a going concern. The commentators prefer to 'believe' that BLT are doing Short32 a favour by reducing the debt. When the sums of the liabilities are put to a total, they are in fact higher, merely labelled differently. 

For those not wishing to split-hairs, the liabilities are higher than 'consensus' with rehabilitation and closure ($1.5B and that may be circa 15-17% on the low side) plus debt of $674M, taking the liabilities and debt to $2.174B, with a $1.5b revolving credit facility being made available. When one considers the on-going liabilities, excluding those clearly labelled debt, its going to make leveraging (without dilution/equity raise) for any acquisitions very difficult, irrespective of the alleged financial prudence attached. Let’s see how the dividend policy goes. 

BLT define South32, as having high quality metals that will be a cash generator, that allegedly the "larger investors" welcome. We'll ignore the volatility of the entire asset class, with a cursory prompt for readers to check the price movements of aluminium recently, manganese is under pressure and coal is not without its significant woes; not so enticing when put in context. Of course Short32's dividend policy will entice the low risk miss-believers into acquiring the stock. 
 
With Manganese, Silver, Lead, Zinc and Alumina making up near 38.6% of Short32’s EBITDA, Short32 may benefit from the Bauxite supply issues thanks to Indonesia's unprocessed ore ban, and declining stocks of Aluminium/Bauxite and Alumina, but how have silver, lead and zinc performed? With any further slowdown in China, don't expect too much in the way of price appreciation, more so a levelling out of both Nickel and Aluminium.  

Staying with mining, and an indicator of the state of the market, Rio yesterday put a tender out for a cargo of high alumina SP10 iron ore cargo. Suffice to say this cargo has had limited interest. The Chinese simply are not prepared to take it without a huge discount, in fact, many aren't/weren't prepared to accept it. 

Higher alumina (circa 3.5%+) content in iron ore causes the slag to become 'rather' fluid during the steel-making process. Processors can be blend the higher grades with lower grade. Simply put, pollution/environmental regulations restrict these deals and limit the price. 5 years ago, some savvy traders would have combined the deal with some low alumina ore from Vale, blended it and made a profit. In today’s commodity cycle, it’s simply not worth the effort or time for most, without a decent discount circa 10%+

Antofagasta (ANTO) have surprised the market with worse than expected preliminary results (2014). We'll save the readers from obtaining an accountancy degree and wade through the waffle in machine gun like fashion. Copper prices down near 14%+ on the corresponding period, taxation in Chile up (it’s only been in force since 1st October 2014/PWC did a very good peace around this time). With margins under pressure and desalination likely to increase costs per pound, what were the markets hoping for today? Simply put, if the investors haven't already priced in lower expectation, they should be from now one in, but all is not lost! 

ANTO's Los Pelambres issues will have an impact on the next set of accounts. With a trending reduction in oil/energy costs, ANTO only managed a cash costs before by-product credits at $1.83/lb, a modest were 2.2% higher than the previous year despite a decline peso. These costs will grow as the wage deals / salary increases kick in over the next 4 years and the declines post reporting period in the copper price.

On a positive, any weakness in the Peso will benefit the reporting cash costs and CAPEX/OPEX expenditure with net cash costs, including by-product credits being a healthy $1.43/lb. The potential upside from Antucoya, Encuentro Oxides and Centinela should not be ignored.  One might just start to turn positive on ANTO with its cash costs being an envy, save for any more radicalisation and issues at Los Pelambres (and the El Mauro tailings dam). The reoccurring theme of grades should not be ignored though but better than management guidance, nor for every 1% movement in the PESO (CLP), it equates to $0.0075 cents P+ve/N-ve to production costs at the current USD Vs.CLP (Chilean Peso).

Unnecessary cheer at Lonmin (LMI) with the appointment of COO Ben Moolman and Bowleven (BLVN) finally have the cash in the bank. The market "may" just re-rate the company, albeit past performance and sector/industry woes will hinder any blue skies beliefs. Juridica Investments (JIL) disappointing the market for no particular reason with their final results. A long-term hold with some very good dividends so far, illiquid so one for the traders as well!

Atb Fraser

Monday 16 March 2015

Morning Mumble: If Boohoo (BOO) and ASOS (ASC) can do it...B(H)S and oil+shipping (as promised).

Good Morning, 

It wasn't so long ago in a meeting about 'where to invest' in a low oil price environment, I found myself recommending short oil/associated products including washing powders and the like, whilst longing holiday companies and retail leisure.

Next's validation will come shortly on Thursday (Preliminary full year results) with the "beat" being reported as a head of consensus. Perhaps not all blue sky as the market is becoming more active, expect margins after this quarter to go under-pressure again. Simply put, if BOO and ASC can do it, then NEXT should be staggering. 

The debacle of BHS, has no doubt been amusing for the sector pundits, but if the journo's don't have a clue, then we hope those fronting the company do. So whilst at the races, there was speculation from those in the industry that BHS has been acquired by a subsidiary of Iconix China Group and the daughter of Silas Chou, Veronica.

Whether Iconix or the Chou's are the reality behind BHS or not, its speculation based on Silas Chou/Veronica Chou alleged desire for a UK acquisition. For myself, if they're behind big brands, why own department stores? Those of you like I thinking,...who, what, where is Silas Chou, being swiftly told off on Friday, apparently they’re behind the IPO (2011) of Michael Kors and the purchase of Tommy Hilfiger in the late 80's, Karl Lagerfeld and Pepe Jeans. Clear as mud to I, but if I'm honest, not something I will be keeping an eye out for. 

Staying in retail, it looks like Richard Chase is exuding confidence in AO World (AO) stock slotting 5,583,475 shares  at £1.80.  John Roberts (Chief Executive Officer) assures the market John Roberts, Chief Executive Officer, said: "The share sale by Richard Rose follows the expiry of the post-IPO lock-up and will help to further increase liquidity and the number of shares in public hands. Richard remains committed to the Company, both as a shareholder and as its Chairman.

If one thinks selling 85% (circa) of your stock (a sizeable holding) is commitment and confidence, then this week I shall spend a few hours applying for Chairman type positions of stocks that are stonking shorts. Richard Chase has unknowingly made the Christmas card list of every shorter in AO. 

Kefi, the amazing performing Gold stock, you'll note the sarcasm, gives an update on Tulu Kapi. KEFI are apparently only having to find $20m to obtain $100M in debt financing. They have a number of possible sources currently being assembled, including financing from contractors and equity at the project or parent company level. Over to the International Finance Corporation (IFC) to stump up sum (poor!)! if the equity is at the parent company level, one hopes the current shareholders (including yours truly) do not need a snorkel for the impending dilution! 

Ian was discussing his long in HOC (Hochschild Mining) over the weekend. Having spent so much time away from technology, its apparent he's incapable of differentiating between a long and a short. Today, with silver finding significant support its wise to close any shorts on HOC, not for fear of a change in trend but to lock in significant profits since the Christmas Silver bounce. They're also announcing their annual results on the Wednesday, and they might not be as bad as the market expects. One hopes there all in sustaining costs of circa $17/oz. is much better! The common-sense coverage of HOC via EMC from November 2014.

It would be rude not to consider oil and shipping rates, WTI at $44.26/bbl, and Brent at $54.20/bbl. these prices are likely to impact on shipping rates as speculators exit their floating storage rates. These rates have continued under pressure with Suezmax Tanker Spot Rates into Q1 2015, dropping near 20% from the start of the quarter having peaked at $80K+/day down to $47K/day, Aframax Tanker rates fairing much better at circa $38K/day. LR2 Tankers rates at $26k/day. All classes all (excluding Suezmax) are near 50% above the rates of 2013/2014 and Suezmax up near 100% on 2013/14). 

The industry men describe the current rates as very strong. Based on the oil price being low, with continued strong demand (Asia from Arabia) and stockpiling (surely there can't be much more), and the rates benefiting from the storage speculation (albeit reducing). The market has missed the reduction in Russian export duties (circa 40% lower), where oil producers/exporters delayed shipments to save a few $$. So more oil out of the Black Sea, Mediterranean and Baltic! The weather is impacting on the Turkish straits, delays near 6-8 days. 


With the maintenance schedules coming up at refineries around the globe, this will push higher inventories and impact further on the prices. Will the trend in rates encourage speculation in fleet growth depressing the industry? Oh yes, tanker/shipping rates are likely to come under significant pressure end 2016 into 2017. 

There's been contracts placed on around 49 long-term Very Large Crude Carrier (VLCC) and Ultra Large Crude Carrier (ULCC) in the past two weeks, giving a floor to the rates and removing excess capacity from the market. All boding well for the tanker market rates but limiting the spot market delivery capabilities. 

Afren (AFR) down another 20% today, perhaps holders have smelt the roses? Don't be silly...over to GKP! 

Atb Fraser

Friday 13 March 2015

Morning Mumble (Via Email): Indian Taxation (cost savings), VED+CNE, Polyus Gold (PGIL) not quite what it seems, S'ard Africa and the bets!

Good Morning,

Being dressed very conservatively "autumn warm", with a sense of decency and propriety (as per invite), and with the compulsory braces and hip-flask just in case service slows down, it was rude not to check on the state of the market. Autumn warm? Who writes these things!

Yesterday, Vedanta got slapped with a tax demand. Can Vedanta make a joint claim against India? Unlikely, but it would be wise for VED and Cairn Energy to collaborate and really stick it to the India Tax authorities. They must surely be aware of the damage it is doing to FDI* in India. VED just aren't having a good time of it!

We'll ignore the obvious from Polyus Gold (PGIL) where those with a basic maths qualification can see the obvious in their annual accounts. Afren's coming has happened today, with the term, highly dilutive to existing shareholders summing things up. 

There's rumour's coming up out Republic of South Africa (RSA) that the banks are putting pressure on Lonmin putting the cap around for $500M post Glencore divestment. With common-sense prevailing, Lonmin's Furnaces need some long-term work, their capex expenditure can be pared back to some degree but there's a lot of $ to sink yet. Expect news in due course...Some decent analysts suggest it's as low as $300M. 

The going today is good to soft, having bet the ranch on Road to Riches ridden by Bryan Cooper today. Noel Meade wants the win more than the Grand National, the horse will obviously have the final say. With all the confidence in the world, it’s rude not to back AP McCoy's last attempt, Carlingford Lough as well. 

Atb Fraser

* Foreign Direct Investment

Thursday 12 March 2015

PM Bolt On: Kingfisher (KGF) read across from HOME (Homebase specifically), + Hippo's sweets.

Good Evening,

A long day, and limited time for any thoughts tomorrow as its Cheltenham Gold Cup and tardiness is not allowed. We have Indiana (Ian) heading back to honour us with his company for the weekend +2 days, as he never replies to text at least he can read here that Hippo's sweetie is stuck the vent of his car.

Some thoughts on the train home, with Kingfisher’s (KGF) preliminary results due on the 31st of this month, with Homebase's performance not instilling much in the way of confidence for KGF. 

France, as a country, has struggled to achieve anywhere near the 2% EuroZone target and is now in deflation.  The outlook for retail including DIY and building projects isn't positive as a result of the deflationary pressures. 

Psychologically, we as the consumers (surprisingly the same in France) delay purchases (especially significant purchases) for longer when in a deflationary environment, in the hope goods or services will become cheaper. Last November, Kingfisher's French Castorama and Brico Dépôt sales declined adding to an overall 11.8% fall in profits to £225m. The cause was clearly weak consumer confidence in France (and Europe) and adverse currency moves, which have continued through to January 2015. 

More recently, France had a 0.4% decline in annualised prices in January (released March 2015). This previously occurred after the financial crisis in 2009/2010 where the French economy slipped into deflation (notably margin pressure from consumers), so the read across for the economy does not bode well in the short-term. 

Kingfisher's bottom line will be under-pressure not only by the currency strength of the pound (in reporting terms) but France's weakness in addition to the retail outlook in Germany, Poland, Portugal, Romania and Russia (Ruble watch out) along with their margins. Fools bet against buybacks of considerable size, however Kingfisher are likely to cap their price in the coming weeks. Save for some short-term momentum in the SP by the closing of the B&Q China deal for £140M.

The market should rightly be cautious about KGF performance, excluding the UK & Ireland revenue being marginally better (circa 2%). Kingfisher is logically up on the share buyback and special dividend. One will be very surprised if anything within KGF operations has been outstanding above and beyond the known. Screwfix will most likely be the shining star and still cannibalising the margins over at B&Q. 

With the buyback continuing for some time and being in the market for circa  5-8% of the stock most days, its not rocket science to know which way the stock was going. The news on the 31st March should change sentiment, save for speculation of the PE boys liking KGF cashflow and business model its hard to justify a target price of 270 excluding B&Q China special dividend of 6 pence. One wouldn't rule out The Home Depot lining up Kingfisher, but speculation is short lived in the absence of news. 

Whilst reviewing KGF, there was a fatal flaw in KGF operations, that not only did the man from Halfords (Matt Davies) identify in his strategy at Halfords, but changed the entire direction of the company. Having mused the possibilities of KGF, it was wise to close the last of the KGF longs today. (The prize for identifying the flaw is a pair of socks).

Atb Fraser

Dairy date of interest: PLUS500 (PLUS) Ex-dividend and special dividend date. 

Morming Mumble: APF's Largo Resources Royalty + ANTO's $25M Whoopsie (small change), Serco Group (D'err), Glen-shrewd, Soco (SIA), DOR, and GKPence + ASOS savvy traders!

Good Morning,

Anglo Pacific (APF) completed on the Narrabri Royalty Acquisition yesterday without updating its shareholders on the Largo Resources (TSX: LGO) refinancing. Just so those TSX: LGO holders are aware of the risks, there is a 20% coupon  bearing down on them via the Canadian $12-Million Convertible Bridge Loan. One hopes there's light at the end of the tunnel and not a train!

EMC was near as damn it on the money with the $CDN12M raised so far and a proposal to raise a further $CDN40M; with the likelihood of a little more cash being put up. Had APF waited and conducted a sensible deal, they would have got more bang for their buck, although historically speaking, it's hard to say when they have timed any purchases well, see share price. 

Antofagasta (ANTO) have resolved the Los Pelambres issue with their cheque book and proposals for desalination for any expansion at Pelambres, plus funding a few items. Rather contradicts ANTO's statements in their first protest announcement about "a small group who do not necessarily represent the valley community." ANTO's statement caused a 'ramping up' not in production, but of protesting, costing ANTO circa 3K tonnes more of lost copper production, circa $25M worth. Whoops!

ANTO didn't think through their statements treating natives that way, especially those with some degree of education and an internet connection! ANTO would be wise to appoint a local representative/diplomat to Les Pelambres to listen to concerns and establish a social fund to assist those directly affected. The desalination plant (the future of most mining ops in Chile) for expansion impacts on costs, with some estimates being near 50 cents a pound on production. One hasn't worked through this yet, but it gives an indication of the struggles. 

We need a fanfare, it appears that Glencore has conducted a decent deal with Russneft (FT), not to be confused with Rosneft, whom they have a crude supply contract (circa 2013) and a prepayment facility of $10B circa 2014. 

http://eng.russneft.ru/
What next for GLEN? GLENseft? Contary to the article Russneft only produce 13.9m tons of crude oil or for the old school, multiply that by around 7.1475121 to equate to barrels (pending gravity at 99.35041819M/bbl per annum). 

The deal is very good for GLEN, even allowing for the $900M exchange of debt and current outlook. The benefit being it gives Russneft some breathing space and allows change to be conducted purposefully. One wonders who next for 'West Africa.'

Having been in dialogue with ex-employee of a gold company, I am flabbergasted to learn what lengths companies will go to manipulate assay results and production when they are looking for finance. If the statements eventually prove correct, I'll endeavour to publish in full. No underwriting required, but for those knee-tremblers, do not worry this company has already gone to the wall, the creditors might not be so pleased however.

For those novice shorters out there, where every many and his dog should have been short on Serco Group (SRP), 10 November 2014 since the update on strategy, capital structure and trading at least until January 2015 and certainly into these results for a double up. SRP have managed to get a fully-underwritten rights issue away. At one stage holding SRP shares were long for the recovery and this proved misguided, with further warnings, shorting was the only answer.  

A few more hit the Christmas card list, Soco International (SIA) preliminary results reading a a candidate for contradiction to their update in January. Having risen 20%+ on the back of their last trading update in January, there was little upside to the stock. TGT drilling programme will be scaled back and the flow rates at TGT/H5 being conservative, all has aided to kick the SP. Don't we have Enquest reporting soon? 

With absolutely NO SURPRISE, we have Doriemus Plc (DOR) have conducted a placing. A member of the Horse Hill contingent, but more importantly, one would be wise to read the RNS properly. Over to DOR to explain I've underlined the irony of the part of the statement:

This funding will be used to strengthen the Company's balance sheet and used towards further farm-ins and other potential investments within the UK conventional oil and gas sector, and in accordance with the Company's stated investment strategy."

Donald Strang, the Company's Chairman, commented:
"This new funding will be put towards general working capital, expected 2015 contributions for on-going work on the Horse Hill discovery and for assessing further acquisitions in the UK and European oil and gas sector.


For the candidates in denial of the risks with Gulf Keystone (GKP). They have called a meeting of bondholders, to remove the "Book Equity Ratio ("BER") Put Option of 0.4 in order to strengthen the Company's ability to negotiate with the interested parties regarding the Corporate Actions." 

Now if you were a bondholder...save for something promised in return, what would you do? Would you really buy the stock now or the bonds? The latter certainly has more security over it, perhaps those followers would be wise to follow the trades in the bond rather than the stock from now? Sounds like the low ball, was indeed, very low-ball!

One hopes decorum and limited profanity from a certain party will be kept after selling the last block!:-). Hat tip to the trades pilling into ASOS on the back of BOOHOO yesterday, sadly one can't be everywhere all of the time! 

ITV acquired  Talpa Media (Big Brother creators), that is good for both parties. Were ITV playing poker with Entertainment One (ETO) or looking to acquire both. If the reports/gossips of a deal with Entertainment One were correct, then its unlikely (without more debt) that they could fund any such deal in the near future, one of ETO's size anyway, over to a US Big boy! 

Atb Fraser

Any web-designers with spare time please contact! Having now been let down by three parties, despite paying, I'm after a freebie! 

Wednesday 11 March 2015

Morning Mumble: Ormonde Mining (ORM) with a caveat of risks associated with trading on Gossip,

Ormonde Mining PLC (ORM) have allegedly received an offer (no cash folks) that equates to 1 Almonty Industries (TSX-V: AII) share for every ten ORM shares. Logical, would/should the management of ORM like to update their shareholders?? Whoops! 

Seems a bit rich but willing to be wrong, considering all the same, perhaps the market knows more. Do AII see more value than the market at circa 3.5-3.75 pence pending how you do the maths? Over to Oaktree whom won't be happy having their party crashed. Could there have been a bit of egg on the face of certain individuals? 

Atb Fraser

Morning Mumble: Kenmare (KMR), Chinese car manufacturing and the Copper Giant's misguided belief about demand + SXX, Cairn (CNR) ++ ORM's spanner in the works for management!

Good Morning, 

Kenmare today confirmed the EMC view that operations should have only been nine months of the year. KMR Operations Update confirmed "the effect of the power outage will be mitigated due to the significant levels of ilmenite product inventories on hand. The Company has recently secured additional off-take volumes with a new ilmenite customer for the product that makes up the bulk of the inventories on hand at Moma." For the punts in at circa 2-3 pence, things might just be improving enough or Iluka Resources to finalise all the due diligence conducted so far. 

The FT inform us of that the fate of copper hinges on Chinese demand. The EMC ran with looking further east for copper demand, to Japan and America. What the traders are currently missing is the absence of speculation in copper for China at the moment. 

Demand and restocking is occurring post Chinese New Year and with better stock management, stocks are not being filled without consideration for the market. Li's quote of the day is, "they're learning how to trade and restock" without contracting supplies sufficiently to spike the prices. 

With China adopting a sensible approach to any stimulus and resetting market expectations by lowering the GDP to around 7%, the market cannot justify the speculation. So far, none of it has worked, with the supply of housing at all-time highs, one wonders why the prices aren't declining more. 

Li, has had a couple of dinners recently, despite piling on the pounds post Chinese New Year has found Chinese property prices are declining further. His opportunity surveys of up and coming professionals is threefold, wage to loan ratios (affordability), wage stagnation (and unemployment risks) and most importantly of all, delayed purchases on the basis there's too much of an offering and limited bargains. 

The FT copper article suggests the funds short on copper on the "Shanghai Futures Exchange show that the same funds have not reduced their short positions following the end of the new year holiday." With growing speculation in Japan and America, one would be unwise to take the foot off the pedal in Shanghai until your full game has been unwound. Apologies for the lack of city speak of the hedges in the purchase of physical metal (the longs) that the same funds are making at the moment. 

What the city and those sent musketeer-like to ascertain the demand for copper is the planned "build out of the electricity grid" isn't on the scales that have previously been guided nor is it likely to be. China is accepting growth and over-capacity. The grid was in part dependent on the growth in housing and 'urbanisation'. If housing is stalling, with factories demand erratic and exports under-pressure slightly (via shipping figures), the outlook for growth in copper demand is going to be down on the current expectations. 

The outlook is for growth, however, limited on the expectations of the likes of Glencore and Rio. With a high-users finding demand visibility harder to predict, most are electing to avoid longer-term contracts where they have been previously punished or locked in at a significant higher prices. Just in time...

Car factories, one might be wise to check the number of car factories in China and the absolute over-capacity in car manufacturing. For those simple like myself, a brief statistic is there were 125 car factories (plants) in China 2014 running at 90% capacity and by 2017 there will be 148 factories (EMC:Li based on current intended use). So with over-capacity, car manufacturers would be wise to factor in a significant pressure on margins. With every manufacturer hugging the same space of Chinese growth, over-supply, margin contraction and dwindling growth in sales are going to be a common news item. 

Sirius Minerals (SXX), placing and warrant extension, SXX would be wise to attempt to cover near £28M to avoid the need for further funds in the short-term. The placing is likely to be the cap now until such time as the approvals are in place. Ten percent discount to the price in light of the potential is somewhat of an insult, then again, it's not selling a placing nowadays it’s called giving away. 

Thanks to Roger, Allied Nevada Gold Files for Chapter 11 Bankruptcy Protection. and Ormonde Mining (ORM) watch, Canada-based Almonty Industries proposes to acquire Ormonde Mining, has to be better than the other?!?! Over to the shareholders but putting a spanner in the works of certain management?


Limited time to cover the aluminium (AL) woes (testing significant levels of support), EMC considers the weakness in AL as a contradiction to some sectors of growth.. The gossip of Nevsun's (TSX: ANV), most recent potential acquisition. Cairn speculation upon us as the market digs in to the realities of the tax demands, orphans and widows need not apply. One hopes the speculators with some waterproof shorts managed to lump in on the short! 

Atb Fraser

Atlas Iron didn't drop overnight and is still 15 Aussie cents. 


Tuesday 10 March 2015

PM Bolt On: Lonmin & Connaughty

Good Afternoon,

The market has finally woken up to the large short courtesy of  Glencore (GLEN) with a drop of near 40% drop in any LMI value that was there. LMI at this rate will be a penny dreadful. Today, LMI has hit the target price for EMC to close short positions and review. EMC LMI GLEN Short. One expects photos of certain analysts eating their hats as the price went sub 115 pence!

Connaughty (poor I know) FCA statement (Connaught Statement). and finally, something useful for even the most savvy of analysts getting the country of operations wrong. Listed AIM Companies main country of operation and incorporation (LSE)

Atb Fraser.

Morning Mumble: The Drought with ANTO and SQM, Largo + APF and Allied Minds, + IGAS/INEOS

Good Morning,

With a growing discontent in Chile over the drought, the press are awakening to the idea it's not good for Chilean copper production, more so the natives. Yesterday EMC reported on the protests at Antofagasta's (ANTO) Los Pelambres. For those needing to the geographical model, Chile Copper Mines

It was asserted that, "The protests were triggered by a small group who do not necessarily represent the valley community and are seeking action by Pelambres and the local government to help alleviate the current drought conditions. Discussions regarding water availability have been proceeding for some time with the intention of establishing a lasting solution." Yet today, almost entirely contradicting that statement is the court ruling against Los Pelambres (ANTO subsidiary) we’re notified of issues regarding the Pupío stream flowing through Los Pelambres. 

The majority of miners in Chile are suffering, those myopic iodine speculators will still be focussed on SQM's iodine production, will be well versed in the problematic history of security of water supply. The sector is not without its issues of corruption and the legal system / prosecutors are starting to pay attention. 

A few families control 50% of all mining interests in Chile (read being perceived to be above the law), with growing resentment from the locals. Not only brought on by a perception of greed but increase belief that profit comes above all else, the 'stream' at Los Pelambres being a prime example.

With various other options available to the miners including a sea water pipeline (at cost) and not necessarily viable at the current prices, it's going to be a difficult situation to manage. The blame is placed firmly at the door of El Niño (a rather large swelling amount of warm water in the eastern tropical Pacific ocean), although the miners get the pain/blame by the locals. 

APF (Anglo Pacific) still do not appear to have updated the market on the Largo Resources (TSX: LGO) refinancing issues. If these end negatively (although unlikely) could have a material impact on the royalty.  Largo emailed out the corporate update last night in respect of its Maracás Menchen Mine and announced the appointment of Mr. Mark A. Smith as its new Chief Executive Officer. 

Basic maths suggests TSX: LGO needs $60M (CDN), with Mark at the helm financing should come easy for those old-timers of Molycorp and more recently NioCorp (Niobium at Elk Creek). Perhaps on the 25 March, Anglo Pacific (APF) will give some indication of their knowledge. Based on their share price performance since, 2011/12 it doesn't bode well.

Shorts were scambling to cover on Allied Minds (ALM) this morning. Those betting on sentiment should be more short-term, with the announcement of BridgeSat costing some profits. BridgeSat intends to develop optical connectivity system that aims to increase the speed, security and efficiency of data transmissions from low Earth orbit (LEO) satellites at a reduced cost compared with traditional radio frequency solutions. 

Igas Energy (IGAS) finally came forward with the long-awaited UK Shale Farm out Agreement with INEOS. The figures aren't bad at all for both parties, the Swiss Chemical Group (INEOS) get to fund some decent acreage with Igas getting some much needed cash, and carry. The market, perhaps, should have reacted better to a deal worth £65M, alas there's no pleasing some people. 

The news is sufficient to find even the negative of investors now reconsidering. The large bets (EMC) causing some drop as they take short-term 30% gains in six weeks, perhaps they might just leave some skin in the game. 

Leggie, Cairn Energy out today! 

Atb Fraser