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
Fraser- Hi- the day is almost over here as the sun is eclipsed-- v confusing for our garden Robin and some of the humans too :-)
ReplyDeleteRe VED- the debt is pivotal here, despite the fact the boss owns circa 70%, which does give them some extra breathing space. The main saviour was Cairn India, the cash cow but the tax dispute has put another cloud over VED and the multi commodities structure is so dated now, with most looking to simplify/spin off peripherals. So VED is an avoid for me and no doubt high on the evil shorters list, major shareholder plus Capital Mkts Day or not.
Re FTSE100- 7k looks like it could well be breached today, depending on the news from across the Pond- its really insignificant for me but the lazy journos need something to fill their papers, apart from tomorrows chips, so expect some cut and pasting to come to the fore if we get an afternoon blue move, as I currently expect.
Cheers. The Leggie
I'll try posting this here, as it doesn't like it in the main commentary, from Wednesday, http://uk.businessinsider.com/chinas-house-price-crisis-creating-a-bailout-bubble-for-property-companies-2015-3?r=US. Now lets hear from those Chinese Property Bulls that stated "there's a recovery and there won't be a need for a bailout!" One is getting very tired of analysts that think they're above recourse after "slatting the amateurs" whom are on the ball!
ReplyDeleteAlso as a side thought, in discussions post the VED (obvious) Capital Markets presentation which is amusing to track the SP as it went on. Save for myself nearly falling asleep, "nothing" has changed....
Li and myself conducted considerable work on the state of Chinese property, the outcome of which is becoming glaringly obvious. Li has now paid his bet of the drop in property prices he felt would recover, the Blue Nun will go down well!
Atb Fraser
Fraser- I hope you take Li off the minimum wage before you fine him a Blue Nun :-)) Seriously though, he does some very fine work in what must be difficult circumstances (my 32 years with HSBC is instructive re Chinese data) so perhaps the Blue Nun should be going the other way...
DeleteCheers. The Leggie
Fraser- Not sure if you have seen the latest news from Kazakhstan which may or may not involve OXS (no doubt you need to turn off Peppa Pig first....) ---
ReplyDeleteJust an update- OXS do have a second asset, which has been forgot in the mists of time.... :-))
They owned the rights to mine at Jerooy in Kazakhstan, another fine upstanding member of the non corrupt world community, back in the mid 90s but they ran into legal issues there and they ended up going to arbitration (sounds familiar). The net result was that on 6/5/08 that announced that they had settled with KazakhGold, the settlement being US$73m in KG shares (since sold) and----
A deferred payment of US$80m if KG ever developed at Jerooy. This was listed as a Contingent Asset in their next set of accounts on 24/9/08, but hasn't been mentioned since....
http://www.investegate.co.uk/oxus-gold-plc--oxs-/rns/re--arbitration/200805060702327199T/
http://www.investegate.co.uk/oxus-gold-plc--oxs-/rns/interim-results/200809241309171960E/
Section 12 of the accounts, towards the bottom.
Now, the years have passed and the Kazakh government have been auctioning off the licence to mine at Jerooy. They have 2 bidders, with a minimum US$100m bid in place and they are- Vostok Geol Dobycha JSC and Aldan Gold GRK JSC and this is where is gets interesting....
Aldan Gold GRK JSC are a fully owned subsidiary of PolyrusGold (LSE listed- PGIL- market cap £5.8bn) and they were previously called....
You guessed it, KazakhGold
so if Aldan Gold win the auction OXS will no doubt be consulting their lawyers.
Cheers. The Leggie
Hi Leggie, I had noticed it on the interfax updates and was aware of the auction process. The question on everyone's thoughts will be, will OXS be paid. I'll perhaps do more on this tomorrow, I've had little time and also had some down time as I didn't want to contaminate a corporate action currently underway. One wonders with a simpler structure of Polyus Gold International Limited in Polyus Gold perhaps they're going shopping as well? One of the best intra trade gold share at the moment, with a "strange" floor.
DeleteInterfax announcement was http://www.interfax.co.uk/news.asp?y=2015&m=3&d=23&pg=5
Interesting whether OXUS will obtain their payment, please note the wording. Whether the auction started at circa $100M is another matter as well, with various debates on value. The cash costs going around of $122/oz, are laughable, if one applied this to the project the last auction of $300M wouldn't have been an issue. Perhaps some investors need a chat.
Having had some NIPT for a trade, I reduced all capital for a cheeky near 1 week return of 30% and let the rest run, as the story may have some more mileage and I suspect a few more NHS announcements, irrespective of legal issues, which may need some cash.
One to watch, especially around their projected Tungsten prices, http://www.investegate.co.uk/thor-mining-plc--thr-/rns/molyhil-tungsten-project-update/201503230700171126I/ THOR point out the obvious, with the "bottom" being called in Tungsten, those in the know will be well aware of the arbitrage of 4 weeks for Tungsten prices between Asia and Europe.
OXUS may not have anything to update on the obvious news until they're aware of their position, which may or may not lead to a payment or perhaps if one is logical, a potential liability.
Cheers for the thoughts.
Atb Fraser
Ps- I have emailed OXS to clarify via an RNS as there are too many unknown unknowns here. So hope to get one in the morning. Lets see.
ReplyDeleteCheers. The Leggie
Evening Leggie, it's been mentioned as a contingent asset through the results since the event as the Final Results 2014, http://www.investegate.co.uk/oxus-gold-plc--oxs-/rns/final-results/201405190700203957H/
DeleteWith $70M stated....
Isn't KazakhGold not Polyus Gold now anyway, so the bidding for the asset becomes incestuous?
28. Contingent asset
In May 2007 the Group disposed of its interests in Kyrgyzstan (the Jerooy project), Turkey and Romania to KazakhGold Group Limited. KazakhGold is contracted to pay additional consideration of up to $80 million conditional upon KazakhGold or a nominee acquiring a licence to mine, or acquiring a Company or entity that has the benefit of a license to mine, the Jerooy deposit and commencing development or production at this site.
No amounts have been recognised in these financial statements for this contingent asset. There have been no changes to this position known to the Company.
Cheers F
Fraser- Thanks for finding the continuation of the asset in their accounts- I must have been looking at interims but didn't see it on the latter returns. Yes- KazakhGold was the old name for PolyrusGold (see above initial note) so despite the auction coming from the Kazakh gov in theory, it does appear that OXS are in an interesting position here, albeit Aldan may back down and let Vostok win the auction, in which case the position is not clear at all- The sale and purchase agreement was v strangely worded as PGIL seem to be much better off if they can get a new group to develop Jerooy by the look of it.
DeleteCheers. The Leggie
Ps- Thanks for the THOR hint- I will do some homework on them- I note that WLFE have had some great news re 24/7 working for at least 6 months at Drakelands- this will have a major impact if they can keep the noise down and the locals (who have been superb to date) on side. I stayed long on NIPT and added a few too- the Illumina patent has failed in the past as it is dubious and v broad so lets hope NIPT have the cash to tough it out. I agree re the contract wins, which could be substantial over the next quarter.