Good Morning,
Afren (AFR), appear not to have updated the market on "the
likely" outcome of the bondholders with monies allegedly already
being discussed. Speculators would be wise to acknowledge the risks associated
with the equity going to 3 pence.
This morning, Leggie rightly points out it's an identical
play to Petropavlovsk Plc (POG), whom Deutsche Bank AG put their head above the
parapet with 7%. AFR, was once upon a time a
darling of EMC, including most of the supporters, logically it was wise to
exit. Is there a lesson here about hedging and leverage?
Sticking with the rumours, Gulf Keystone (GKP) allegedly
have some visitors either heading to or currently on site in Kurdistan.
With a Competent Persons Report (CPR) due very soon don't expect too much
before this but with GKP about the money at the moment, it would perhaps be
wise to watch the volumes.
Eurocel (ECEL) are coming to the market with
conditional listing today and unconditionally on Monday. The IPO with the Dutch and management cashing out
circa 50% of their holding, we'll leave it to the pundits to assess the viability
of the company. With a valuation of £175M gives an implied yield of 6% assuming
no growth. Investors would be wise to look that all the
previous year’s performance, not just 2014!
A few analysts had some comical backtracking (belatedly) on
Fresnillo (FRES) today. The Financial Results for the Year Ended Dec 2014 are as
expected, crap. We do not need rocket scientists to point out the obvious
between 2013 and 2014 in terms of silver prices, with a 18% decline in realised
prices and nearer 32% if one was to include the last 3 months with the average
weight price down, towards $17/oz., at best.
It’s worth noting, with FRES's expansion and long
game, it'll give some comfort to long-only holders to top up/average
down. The news is a signal for yours truly to close shorts to reappraise fully,
FRES's production costs have dropped which helped to offset the grade declines
but could not keep up with the price of silver tanking. With averaged prices
significantly lower since the reporting period, FRES need to get a handle on
costs. Although it's ironic shareholder funds performed better than GLEN, a
whopping 5%.
What are Bacanora Minerals (BCN) playing at? Holders voted with
their feet today for good reason and to show their disapproval sold a minor
amount to give the board a clear indication of their views. If the board do not
take today's price action as an indicator of shareholder opinion, they would be
wise to learn.
BCN may go strength to strength from here is immaterial to
the value the company had yesterday. There would have been no successful outcome
on the EGM based on a quick poll of decent holders. Having closed spread
bets the profit has been left to run in equity, with a different risk profile
as a result of the appointment today. BCN can look forward to some Horse Hill
type twitter updates. On a positive, with funding readily available for "key"
projects and a CEO not far away from for BCN the outlook is positive for the assets
only.
It’s rare to see anything positive for the shareholders out of KEFI but today
they have come out with a decent update.. With some easy finance should be available locally
for Jibal Qutman, KEFI would be wise to focus some significant effort on
pushing the project into production.
The key for the stakeholders being the oxidised material
where recovery rates likely to be in the 80-90 percentile. Hawiah has some
appetising comments where KEFI seem to think they can “identify
large base metal (copper, gold and zinc) targets at depth." Could
KEFI just be turning a corner and warrant a buy? We'll await further base metal
analysis.
Limited time to cover the significant amount of oil hedging currently underway!
Atb Fraser
Fraser- Hi- thanks for the headsup re Eurocell- I haven't bought an IPO for years and we do seem to have had a flood of PVC doors and windows sellers recently, so perhaps they cant all corner the market...
ReplyDeleteRe BCN- I guess they caved in as they can see that the main support at present is the REM buying and holding strategy-- they have more lithium assets than it would be sensible to develop given the small size of the current market, so no doubt Big Dave will try and steer them towards the bits that REM has JV stakes in, rather than the La Ventana concession, which seems a more obvious first development at Sonora, given the work done to date and the simplier development route here. Big Dave also apparently thinks they should drop the borate dev plan, which is v low capex ($6m here but now $10m elsewhere) and would give BCN some quick cashflow to run the company from. Borates seem a no brainer first for me, but REM want lithium moves quickly-- they wont be around at first production, they will seek a trade sale well before from their mission statements. So welcome to Big Dave and the placing/twitter machine that he brings. BCN could well sell off some parts of the Sonoma projects without affecting the overall bus (apart from creating a direct competitor) so that seems likely for me and it could enable an amicable REM split too. V early days on that front though.
Cheers. The Leggie