PM Bolt-On: Largo Resources (TSX: LGO), as Anglo Pacific (APF) only may inform the market sometime later!

Largo has received counter-signed term sheet from its lenders for debt restructuring and extension on export credit facility. With the debt woes being "almost" dealt with, so TSX: LGO have deferred their debt amortization schedule and extended the maturities for the majority of their construction debt facility, and its export credit facilities. It bodes well for cashflow and the ability to repay the debts longer term, even in these depressed prices. Over to APF to gain some traction off the potential royalties...Atb Fraser

Morning Mumble: The Banks Nightmare another $50M for KMR and...SXX (another victory), ZPLA into price comparison and Cliff's unnatural Disaster (Australia)

Good Morning,

Iluka Resources (ASX: ILU) have cleverly bided their time, with an update from Kenmare on "possible" acquisition. Holders of Kenmare (KMR), if you're a long-term holder might need to rethink your investment strategy, have been granted a lifeline not only from the banks but Iluka. Although the "pre-conditions" may yet be pushed lower than the 0.016 Iluka share for every Kenmare share. 

The board do go some way to explain the rational, "The Board of Kenmare has reviewed the proposal carefully and has considered Kenmare's financial position, prevailing market conditions and the terms of the debt amendment announced today. Having taken independent advice and subject to its fiduciary duties, the Board of Kenmare believes that it is in Kenmare's shareholders' and other stakeholders' interests for Kenmare to continue to work with Iluka towards satisfaction of the pre-conditions to Iluka's proposal. 

Apparently it’s in KMR's shareholders, stakeholders and banks interests to continue discussions, this may be so, but put simply, they have no other choice. They owe the banks a significant amount, the company model, in a real world wouldn't have survived (EMC view) and whether the asset is strategic or not to supply, it's simply been jam tomorrow. The interim management statement reiterates how crap their market is, but there's hope, the Chinese producers are scaling back or ceasing production. 

The positive being Iluka is a well-run company with a significant understanding of their market place and operations, those out of the money could do worse than to look longer-term, albeit on the rise cash is king! 

Their finances are summed up from their annual report, Iluka have KMR by the short and curlies!

Finance 

A consequence of the low ilmenite prices being experienced is that the Company has needed to engage with its lenders to further restructure its debt obligations. Since the February 2014 Amendment described in the 2013 Annual Report, there have been further discussions since mid-2014 aimed at providing the Company with a stable platform both during this period of market weakness and for the future. Despite good intent on all parts, the complicated nature of the present debt structure has made progress slow.  Nonetheless, I am pleased to say that we have agreed a debt restructuring.
The key terms of the debt restructuring include:

• The provision by the lenders of US$50 million in additional standby funding.

• Extension of debt maturities.

• Removal of most fixed amortisation requirements to be replaced with a cash sweep leaving a minimum balance of US$30 million in the Group.

• A requirement for deleveraging in the medium term. 

• A lender-approved Non-Executive Director appointed to Kenmare's Board.

Sirius Minerals (SXX) have yet more cheers, with a positive decision has been made on its planning application for its materials handling facility (MHF). It would have been nice had SXX published the proposed terms whether contractual or implied regarding the Section 106 Agreement. Admittedly this may all still be up for negotiation. 

For those unaware of such S106 regulations, it’s not uncommon to have restrictive measures applied. Some have already been proposed such as underground operations, the finer detail may relate to costs/payments for infrastructure changes and potentially some more meaningful arrangements such as a 'trust fund' for local charities to assist them with their activities (plus various other measures, but the idea is simple) i.e. a Youth Club needing a new roof. 

Zoopla, (ZPLA) had an acquisition. One could be forgiven for thinking it's an overseas brand or similar. Nope, it's Uswitch.com, that utility comparison site. If the gossip is correct Uswitch.com have been seeking a buyer for some time with little interest, with the possibility of a listing. Now they have a white knight in the form of Zoopla giving them a nicely timed exit. 

ZPLA appear desperate, with their market share slowly being eroded by competition. There is also the question of the implications from mis-selling, Has Ofgem just created the next energy mis-selling scandal? What are Uswitch.com's liabilities? This is in contrast to Labours paper on  Better Choices: Better Deals Consumers Powering Growth. This will be one to watch with interest...

It was amusing to receive some oddly timed abuse on Pure Wafer (PUR) yesterday, apparently the muppet contingent are bathing in their glory of the stock having rallied since their interim results. Always more than willing to take criticism but surely it would wise to read the commentary correctly first. EMC selling all PUR on director sale April 2014. When a director sells, it's wise to take note. 

Amusement in the iron ore markets with the Cliffs Natural Resources chief executive Lourenco Goncalves (NYSE: CLF) sparing no punches in his summary of the Australian iron ore market. One assumes Cliffs are not looking for a buyer for those assets!

Atb Fraser

N.B. Another lesson for AIM investors when your main shareholder controls the entire company. Optare PLC are to cancel trading on AIM. Anyone surprised? 

PM Bolt-On: French Sweet-tooth, Real Good Food.

Good Afternoon, 

Following on from EMC steel to sugar, Real Good Food (RGD) has a buyer for  sugar producer interested in Napier Brown. The proposed sale to Tereos Group (the French Cooperative sugar producer) is a positive for RGD. 

RGD will be moving on with emphasis on the positively trending markets such as cake decoration, food ingredients and premium bakery. British Sugar have certainly missed an opportunity, although quite where the legal issues end is another question. Is the claim and associated potential awards transferred with the sale or retained (possibly in part) by RGD? 

Being integrated with a sugar producer is the only way for Napier Brown to survive, as the sugar beet quotas are ending in two years (2017). Napier's best bet is with the cooperative model of Tereos, one hopes that RGD have put in some anti-competitive contractual terms to avoid Whitworths competing in RGD's key areas and offerings. With near zero debt/modest net cash, RGD's market reaction is justified now the debt has been shed, and the future looking sweet. One to watch...

Atb Fraser

Morning Mumble: Afren (AFR), Gulf Keystone (GKP) and...Wolf Minerals.

Good Morning,

A number of rumours (with BS Caveat) circulating, only as a result of the rebound in oil, the main one being that Afren has found a buyer. Having been a supporter of Afren pre-debacle and even post to a degree, it's quite simply beyond the realms of any possibility that someone would be interested in the company, save for a deal with bondholders. 

Its alleged Gulf Keystone has a very interested interesting party on a joint venture. With limited information its been suggested that they party wants a 50% interest in the Sheikh Adi block, with an element of cash + carry. GKP are far from out of the woods, but all the same, their placing had significant interest and contrary to certain parties, still has interest. 

Wolf Minerals (WLFE) really need to get some decent IR (Investor Relations) in. They stand to be punished for tardiness with slow and absent information. Today, as if by magic after the EMC commented on (EMC WLFE 24 April 2015) the outdated guidance, there is an updated presentation. 

If certain Wolf Minerals employees are a reader, I'm free Tuesday's 9-12 if they need a complete overhaul of their IR, whereby information is timely and specific to the events in the market. In essence, keeping the market informed efficiently, rather than reactively! WLFE is a prime example of where the asset and management are good, the IR is ermm...limited and reactive. 

Next (NXT) came out to with a trading statement that was in-line with guidance, and a significant amount of revisions by analysts in the sector upping their price expectations, circa 7700, the Next LO contingent can feel pleased! 

Goldman Sachs really need to get with the programme, as their analysis really relies on where the price is, rather than where it will be. Quite how much of the growth in Next Directory is via the "new" Label concept. Remembering that the Label is for sale of third party branded products at lower margins.

Next will be thankful of the warmer weather and launch of their 'New-In' Brochure for the summer season, whether this continues is another matter. Perhaps, like most retail, save for "shoe companies", they had an added benefit of an early summer feel. One hopes that the UK summer has not just left us! 

NXT have given the green light on anther special dividend due of 60 pence on 3 August 2015( if registered before close of business on 10 July). Shares will trade ex-dividend from 9 July, and with the benefit of a floor at 6827 (current buyback limit and no doubt under review), Next are likely to be range bound, 7880 - 7100 bottom. 

Atb Fraser.

Morning Mumble: Talvivaara (TALV) do holders have a case? The Hedge Fund's speculation, AQP soon to be RIP?

Good Morning, 

Talvivaara investigate their own disclosures between 2011-2013, where it is alleged the market wasn't informed of significant changes in production volumes and the impact on the forecasts. 

Readers of FTML will know TALV was a favoured short for a considerable time. Apart from the obvious, what more did investors need in assessing what a crap investment is? Even at significantly higher Nickel prices, TALV could not make money. Simply put, "its technological model" is/wasn't suited to an environment of prices any less than twice the current market (EMC view). (Source regarding investigations: Taloussanomat). 

The Hedge Funds have spotted what the EMC realised with an iron ore price spike, when two small buyers were in the market, with the physical (almost immediate delivery) being in short supply. Its common, when prices tank for companies to slow the immediate supply to market, in the hope prices pick up or a premium, as such the speculators are going to make those in need pay. Even the "tin" market (Indonesian woes) may benefit by the categorical absence of decent supply. So with commodity traders betting on a short-term appreciation, expect some decent, yet predictable volatility. 

Fortescue Metals Group (ASX: FMG) refinancing, was the kick-start the stock needed to recover some of its losses. Albeit the profit-taking is now in full flow, damn those traders. FMG's refinancing on a simple level was needed, but was far from cheap, or was it acknowledging the risks of things to come. So with some breathing space and the Chinese determined not to let the native producers go to wall, the swallows are departing quickly!

Aquarius Platinum (AQP) Financial and Production Results to 31 March 2015, which should have been labelled Q3 production, but AQP would be wise to stick to a non-standardised update format. Simply, the results are crap, in the absence of a turnaround in the PGM (Platinum Group Metals) sector, the company is destined for more pain. Well, not exactly, the shareholders are. 

Obviously with AQP, you can scrape the barrel by looking at the cost improvements in a "hard environment, ounces down on the previous quarter and labour costs set to rise. With a telescope to a hope of future price appreciation, AQP isn't looking pretty. Of course there's some benefits to trading, illiquid, moves on little volume, but not without risks. 

It’s hard to justify a value above the cash in AQP. How certain parties managed to get other jobs post AQP makes one wonder! In the absence of a recovery in PGM prices, don't expect anything other than pain, save for the asset sales made today. 

Allied Minds (ALM) annual results were out, which need a significant amount of time for this techno-limited mind to work through! Having banked profit at 600 and the cheeky short, there's no concern regarding any holding, the wise should have also taken some profit!

Finally, Oil has woken up to the inventory reporting, wonders will never cease. Sirius Minerals suffering the usual sell on the news...Kier Group's (KIE) rights issue to buy Mouchel will not do the SP any favours post completion of the deal.

Atb Fraser

Morning Mumble: Any Old Iron, Chinese Housing, Petra Diamonds (Really...), Wolf Minerals (Pricing update please) and VED, SXX

Good Morning,

As a decent analyst described the iron ore appreciation, as a "the Australian iron ore dead cat has a tin of cream." You'd be hard pushed to disagree. There's an element of physical restocking pushing the price up currently with the minnows left to have the price dictated by the seller, but the overall theme remains the same, oversupply, lower demand. 

The Chinese data, reduction in RRR (reserve requirement ratio for those that complain of the alleged extensive use of acronyms here, get real) is an attempt to offset the capital flight and what the EMC has commented on many a time, the "rolling over of distressed loans and/or alleged financial products." The recent improvement in the Chinese unemployment rate is a farce, forget any conspiracy, it would appear that China have cleverly added a significant number to the migrant worker lists, a staggering 310M now, previously circa 293-298m.

In discussions with Li, he mentioned a "new" survey based approach to unemployment, for which he's finding out more details. Albeit the EMC thinks new may be stretching a long-time policy. From memory, it’s based on taxation, disclosure and bank deposits but only for those that are registered for unemployment benefits and are a 'permanent' resident. It’s wise to wait for more details. What is telling is the contradiction between the official headline rate, which decreased to 4.05% and the survey figure which is nearer 5.1%. 

Li's view, having family classified as migrant workers is, the figure is a lot larger, with the gap (read as break) between jobs for migrant workers is growing. They are managing to live on their lower income. Enough for now, but its clear there's a pattern emerging that will have a further impact on the main expectations of growth.

More importantly, to give people a wider view of normalisation and pricing expectations (read as performance), from the National Bureau of Statistics of China. Advance payments totalled 626.0 billion yuan, a staggering decreased 8.4 percent. The entire sector needs to level out, with limited reason to take a risk on any new housing or commercial property, whilst the sector declines at a rate of knots. 

The merged graphs make for a compelling comparison, with some strength being shown in commercial/retail property, residential is still in significant decline (click on image to enlarge). One would be wise to look at the advance payments (link), totalling 626.0 billion yuan, a decreased 8.4 percent, and now without some sentiment change set in trend. 

Petra Diamonds (PDL) bond issue for the Cullinan plant isn't good news for shareholders, whose return on their shareholder funds has been dire. Despite what's said in the conference call, contradicting a lot of previous assertions including those one only 8 days ago and in the results regarding CAPEX. 

The lack of discussion or disclosure, with 'everything' being hunky-dory previously leaves a bitter taste. It suggests to the EMC that shareholders returns (EMC PDL 16 April 2015) are likely to be worse than previous reports. It’s wise, when the market is surprised, like many a company before them, despite the terminology allegedly being positives, is often not. 

The basis for the funding is large stones are currently crushed in the plant, despite them finding a ‘world record’. Albeit PDL do state ‘when it isn’t not configured correctly.’ Admittedly there will be savings via efficiencies including OPEX, Security and maintenance.  It’s inferred that it will save “up to 15 ZAR per tonne”, current costs have been up to 90ZAR per tonne. We'll see, but don't get excited about seeing any returns shortly, more so a further dent in the bottom line!

Wolf Minerals (WLFE), it might be prudent to revisit their pricing expectations and remind the market re: TIN and Tungsten prices. With an expected production near 1k/tpa of tin at $20K/T, new guidance will be required. From memory, their projections were based on $20K/t, better than the current price. Perhaps WLFE are thankfully they're currently not producing! 

The All in Sustaining Costs (AISC) per MTU should have improved as result of 24/7 operations rather than the 5.5 working week that was previously modelled. WLFE's guidance/expectations of a recovery in the Tungsten price from January 2015, is somewhat absent, current pricing is around US$257.5/mtu, admittedly in a recovery mode, but below WLFE's current expectations of nearer $300/mtu. 

No time to cover the Vedanta (VED) update or the poor performance of Sirius Minerals (SXX) post approval update.

Atb Fraser

Apologies for the poor layout, grammar and readability, very limited time so rushed out in a matter of minutes.  

Morning Mumble: Victoria Oil & Gas (another EMC Amendment to their RNS) & Iron Ore (on my Christmas list), any old iron (Fortescue Metals Group)

Good Morning,

Continuing on from my theme in March, EMC: VOG March 2015, today Victoria Oil & Gas update the market on Logbaba Power Station Online. Excuse the sarcasm, but if the power output has increased then surely ones production has also. VOG are in danger of achieving what they say, this is a rare event, as long-term followers should know well.

The EMC does not change the view that the management are the risk to any VOG holding, the asset and developments are good, the power generation means VOG should have a utility premium applied, subject of course to geo-political and management discounts. Today confirms, average gas production since the 50MW has been online is 14.5mmscf/d with a daily peak of 15.3mmscf/d, all good for the bottom line. With that in mind, a review is required, expect a re-rating. 

The market belated realised that BLT (EMC yesterday) were slowing production growth, so with the closure of shorts globally, the prices motored near 5-6%. However, overnight we've had Vale, doing the exact opposite, with a record quarter! Vale's Q1 figures, N4WS expansion plans are likely to have an impact and make up the shortfall that BLT had aided the market with. 

With limited time, analysts may be wise to consider issue that producers even in China are assessing the viability of expanding production/operations to compete at these prices. Certainly, Rio, BLT and Vale's positions are not assured, viable yes. The issue the market has, or should have, is the closures of mines are not happening quick enough to reduce supply. Perhaps the forecasts will need revisiting on price. 

Staying in sector, Fortescue Metals Group (ASX: FMG) have finalised the 'refinancing', where every man, woman and Wonga loan specialist jumped on the bandwagon. Quite clearly showing FMG's management have panicked, with an interest offering of 9.75% per annum, uplifted from the original (USD) $1.5B offering to $2.3B. When there is such an increase, save for income hunters realising the benefits, questions should be raised about the pricing. 

Over to FMG, “We’ve seen strong demand from the market which will result in repayment of our 2017 and 2018 debt in full, refinancing of US$450m of our 2019 debt and an additional US$350m to further strengthen our balance sheet.” They only achieved such an uplift because of a mispricing on the interest rate, admittedly it removes a few obstacles, but all the same, the % is laughable, admittedly it gives FMG fresh 'hope,' One suspects they board would be wise not to beg for production cuts from the majors again...any time soon.

Sirius Minerals (SXX) should be congratulated for requesting the suspension of their stock. Those naughty traders whom planned to travel up had all their plans thwarted at the last minute. One hopes they obtain refunds on their accommodation!

On the Anglo Pacific (APF) news front, APF have only gone and given some guidance on Kestrel. EMC's view this should be shortly after Rio's rather than two days later. Its positive, APF estimate that Rio Tinto will mine between 60% and 65% of total production within Anglo Pacific's royalty lands during 2016. Being a buyer of APF (not without risks), the amount of investments and financing sunk into royalties, one would have liked to see APF be more proactive about their investments. This is the third time now!

Little time to summarise the Gemfields (GEM), (not Gem Diamonds as one confused analyst got today), the auction results were crap, albeit allegedly at a profit even at $4 a carat. We'll avoid sugar-coating, so it’s wise to read the auction results. One has a suspicion there's plenty of 'lower' quality stones heading to eBay at a large premium. Those cheapskates should set up alerts now! 

What GEM are doing utilising a decent grading system to enable bidders to have confidence (or not) as has been evidenced from the previous auctions. Expect some positives in the short-term, especially after a few analysts were on a jolly to visit operations. 

With a positive Montepuez maiden resource due in H2 (need to check), it’s likely to enable a clarity on the valuation of the company. With limited debt ($20M last time it was checked for Kagem), cash at the bank, there's a lot worse out there. With an improvement in sector financing and a sensible approach to improving production, GEM are benefiting, out-performing the sector near 40%, contrary to the view of EMC. One has to wonder whether the 'share options" granted 7 days ago is taking the proverbial somewhat. 

Atb Fraser

Morning Mumble: What BHP Billiton finally admits, Iofina (The placing is afoot?) and...KEFI +SXX holders incompetence. (Edited from BLT to BHP)

Good Morning,

BHP Billiton (BLT) come out with their 'half decent' 9 months review to 31st March 2015. All the figures are bang in line, even the rig count down from 25 to 17. Interestingly, BLT have elected to slow the growth to 290 MT at a lower cost. Some sensible actions by BLT whom now admit they are tapering back their growth (in the short-term). 

With Short32 (South32) coming to market, they confirm the pricing of the five year A$1.0 billion note issue under its Australian Medium Term Note Program. Interest payable by South32 is a 'not so bad' 3%, maturer in March 2020. Overall, BLT is nothing to get excited about with the current commodity cycle and their respective prices. If one was looking very long-term, BLT could just be the sensible play over time. 

Expect a push or placing from Iofina by finnCap whom were appointed today, suspicions of the latter would be warranted the latter. With various muppets keeping an eye on SQM and the corruption issues, one would be wise to ignore the noise and look at the price of Iodine including the reduction in shale activity. More recently IOF's  production update confirmed what was known. 

With a reduction in water flow the obvious doesn't need pointing out. Obviously there's some hope pinned on the water permit (No. 40S 30066181), so expect some volatility up to the 6th June 2015, plus the usual over-expectation. Having had ones money both and then down, one will stop short of calling Iofina the 'Grand Old Duke of York.' With the change in NOMAD/Broker, IOF have a risk of a placing, when were those repayments due? 2017? 

Kefi (KEFI) announced the independently updated Ore Reserve. Without going in to too fine a detail, one would be wise to check KEFI's price assumptions. Kefi's price assumption of $1250 isn't that great when you look at the returns. Its viable, but why not model at a discount to the current rate to show viability? Well, we know the answer, at near $1k/oz the returns are near zero, admittedly the $1K/oz. base case is unlikely but 'even' so there's simply better projects out there. 

Kefi suggest an all in cash cost of near $913/oz (although I haven't double checked this), there's little room for error and an IRR of a paltry 22.7%. based on a gold price of a not so unachievable $1250/oz (4% above today). Once board costs etc...are factored in, plus financing and interest payments...there's value to be had but just don't get too excited as production is 2017 H2! 

KEFI could perhaps achieve more by selling the asset, although admittedly they can't keep spin those plates without cashflow. Perhaps Centamin Egypt (CEY) are willing participants? Unlikely now...Do EMED still hold KEFI stock? 

If readers remember Phorm, today's placing news is expected, with a lights on placing. Mirabaud has done well to get this away and surely must be their last access to funding for the company? Oh well, good money after bad. 

There was some sell-off on Sirius Minerals (SXX) this morning, by a few incompetents that read the latest update. For some strange reason, thought York Potash's production would be sooner than the Ministry of Transport (MoT) approvals.The Harbour facilities update is another positive in the SXX movement. Perhaps a quick email to Pearson (PSON) in light of their American online education wores asking for an e-ducation. The subject could be basic reading for those totally unrealistic about first production dates.  

Atb Fraser

PM Bolt On: Parkmead and Chariot Oil & Gas + GKP.

Good Evening, 

With limited time, a little gossip from 'mill' that's been doing the rounds after Woodside (ASX: WPL) passed on operatorship and 25% increase on Chariot Oil & Gas's (CHAR) Rabat Deep. This may just not be the disappointment that at first glance you would be justified in thinking. CHAR's now looking like an exceptional candidate for a take-out and not a la Just Eat. 

Some similar gossip for Parkmead (PMG), but then if there wasn't gossip the market wouldn't justify its position. Over to Woodside to reconsider on CHAR. Separately, with the likelihood of some news on Gulf Keystone (GKP), expect some volatility. The Capital Group Companies, are sitting on their hands at present, shrewd or foolish?

Atb Fraser. 

Caveats of common-sense apply. 

Morning Mumble: (Brief) 'Gossip', Sirius Minerals & Highland, Rio makes me want to turn bullish on Anglo Pacific

Good Morning,

This has to be very brief, apologies.

There's some speculation doing the rounds validated (for once) in part by what other analysts (decent ones) have noticed regarding Allana Potash (TSX: AAA) who's currently had a bid from ICL Chemicals (owners of Cleveland Potash down the road from SXX's). 

The 'word' is that ICL Chemical are likely to see a higher bid for Allana Potash from China Communications Construction Company (CCCC), or CCCC is on the hunt for other 'assets.'  CCCC have the cash to develop, admittedly their alleged MOU terms with AAA was ssuspect, but CCCC are now scoping out other prospects, as well as considering a higher 'outright' offer for AAA. 

The break-fee payable to ICL if AAA changes their mind is paltry (around £3m BGP) means will more than likely become competitive. ICL have the option to pull out, and go after Highland Resources (ASX: HFR) if CCCC come in with a higher bid. The curve ball being if CCCC are 'really' in the mood there's a possibility of them taking SXX private before approvals. Something shareholders, pending the size of any offer, would perhaps welcome? The later is a little stretched but not impossible. 

Rio's Q1 results are better than expected, allowing for derailment that impacted the iron ore numbers, copper, bauxite and believe it or not, coking coal came in half decent. Higher first quarter coal production was primarily driven by improved production rates at Kestrel South following the longwall ramp-up, increased semi-soft production at Mount Thorley and Warkworth and higher thermal production at Hail Creek. With Rio/Kestrel moving into APF's royalty area, and today's update guidance at Narrabri, APF is certainly looking more favourable. 

Kenmare (KMR)/ Sierra Rutile (SRX) a should take note of Rio's update on their Titanium dioxide (TiO2) production that was 17 per cent lower than in the first quarter of 2014 as production continued to be optimised to align with market demand. SRX do give an update on their Gangama Dry Mine Project. Simply put, the pricicing assumptions being somewhat north of the current price, and the remodelling leave a questionable funding gap. Time will tell, but do not be surprised if there's an equity raising, despite assurance of financing in place and support from Pala Investments. By my maths circa $9-13M.

Atb Fraser

Morning Mumble: Ken's Mare, Petrofac and any old tin!

It would appear in the rush to the train today this wasn't "published".

Good Morning,

The unfortunate position of Kenmare has be exacerbated by issues in South Africa with an update this morning. Petrochemical firm Sasol have also pulled all their South African employees out of Mozambique. Sasol's Inhambane natural gas connections might have to be put on hold for some time if the feuding continues. 

It appears to be an issue stemming from the South African Zulu King, Goodwill Zwelithini. His words, whether taken out of context or not, caused an outbreak of violence and looting. Goodwill, (whether lacking or not, poor I know) has alleged to have said that foreigners cause the crime and they must “take their bags and go." The question being, can KMR continue operations in the absence of these 62 workers, and what impact this has on their Iluka and refinancing discussions. Iluka should really just bypass the KMR and offer the banks par for the debt, surely a better deal?

Petrofac's SP is destined for some short-term weakness with yet another 'warning', It brings in to question, in the current climate, the fixed cost contract base. Petrofac are slowly falling to the whoes of being a contractor, although not without some positives it's a stock simply put, with a few warnings under it's belt its not for the faint hearted. Having risen to strongly in the last 3+ months, its wise to cut and run! Simply put, if the management have no handle on the costs, there's a likelihood of more and more warnings. Time will tell.

Last Friday was amusing to say the least, having only a few days earlier been discussing why tin isn't worth much over $15,000/t on a good day, lo and behold, it motors south by near 10%. The biggest move in some time, 5-6 years. Simply put, its wise when your position is not that strong to keep quiet scale back production and allow the market to rebalance. 

Indonesia's ability to manage the commodity cycle is borderline laughable, decided instead to publicly state, they aren't selling below $17,000 a tonne. The Indonesian tin producers shot themselves in the foot causing a brilliant sell off. Tin has dropped 20+% in the last year and almost halved since March 2011. 

With oversupply in the market and limited hope for a surge in Chinese manufacturing, the market is awash with it, the Indonesian demands are unlikely to be met. More so, if you're a producer, and you're withholding the sale of a commodity, the market is going to react entirely how it should. 

You should be wary of believing PT Timah's or their tin association assertions of stockpiling until $17k/t is achieved. They have no choice but to keep on selling up to their quotas if they're producing; some even ignore this and sell illegally (another story). About half of Indonesia's tin producers should be on care and maintenance and the rest are likely to be running at 50% capacity, if they're complying with their quotas.

The Indonesians are their own worse enemy, not only did they flood the market very predictably before the April quota's. They are now attempting to hold the market to ransom with pricing expectations 20% above the currently levels. When a market is awash with a commodity, statements about shutting supply, are pointless.

If the 'word' on the street is correct (more to the beach) in Sungai Liat, Bangka Belitung. Indonesian tin producers actually need the price nearer $20k/t for tin to remain viable. So in the short-term there's more pain likely. With the Chinese woes and reducing demand for solder in electrical manufacturing, Burma (Myanmar) are slowly destroying the price (for now). 

Back tomorrow, 

Atb Fraser

Morning Mumble: Sirius Minerals (SXX), Hargreaves Services (HSP) and Petra Diamonds (PDL)

Good Morning,

Apologies for not responding to emails, work and mornings are the essential hours. The luxuries of putting people in a coma have been limited, plus travel not helping. 

Sirius Minerals (SXX) recent share price moves have been validated as Redcar and Cleveland Borough Council (RCBC) the planning office has recommended approval for 23 April 2015. Current reports of approval are premature as the meeting is next week. Roger Bade yet again being the only one to notice the difference between recommendation for approval and approval. SXX could just be a success story for AIM investors, caveats apply and yes my position is bias, but not without acknowledging the risks. As such, 50% of SXX was taken off the table, with the remainder being left there for the longer term. 

It’s the day to close Dec-Jan short positions in Hargreaves Services (HSP), and hopefully have time to review later in the month. EMC sentiment remains the same, albeit one is wise to acknowledge debt is being paid down and there is the potential for returns post any disposals. The conviction of why anyone would hold such a stock (EMC Sept 2014) is validated, coal, bulk transportation, it's not a case of being out of favour, it's simply a case of low margins and a dire market.  

Octopus Investments Nominees Limited have seen the light in HSP and judging by the volumes, others have cut their losses, now cleared, there may be some light. With that in mind, its best to bank further profits, as it appears Schroders are back in the market, there's a risk of upside. 

Petra Diamonds (PDL) give a trading update. Readers will be aware it’s not a favoured diamond producer. PDL ignored the issues with Antwerp Bank financing hole back in January (EMC: Antwerp Diamond Bank ADB) and today those issues became a telling reality or perhaps acknowledged openly. Simply put in a strained market, if you've not got quality, you're prices (read as revenues) will and have been impacted. 

PDL have reduced production guidance modestly, the matured mining areas will have an impact but this should not be forever. Although PDL now note the woes of ADB absence. The issues will not go away in the short term with a strong dollar and potential liquidity squeezes. It will be offset by growth in the Chinese diamond market and Dubai and Russian banks entering the sector boding well for positive speculation. Today's weakness could just be a buyers opportunity, the conference call was almost a verbatim repeat of the trading update, save for the Q&A.

Diamond inventories are higher because of March tender timing and as a result lower debtors. Liquidity and net debt has been positively reduced, cash up, debt down and available headroom. Concerns about lower grades towards 2019 are valid, apparently the new ore is "extremely well understood" and PDL are confident of limited dilution in the fresh ore. Declines are unlikely to be seen to the same levels in the current grade of ore. The drop in prices seen up Christmas of a 9% decline has not continued (positively), and apparently has stabilised with green shoots of financing being seen.

CAPEX spend is in line with guidance, any hopes the benefits of oil price are unlikely.  With fuel costs lower one would assume this should have improved bottom line albeit as production is so heavily weighted towards labour, power is a small proportion of the operating costs. Timing of tender on inventories and strong finish to the year are crucial and PDL are well aware of this!

Odds are there's likely to be a strong finish to the year, but not without risks of Alrosa and De Beers mismanaging their supplies to market (oops and Rio). Not one for those ignoring the risks, as protests become more widespread PDL by location may be insulated (to a degree). The weakness will present a buying opportunity for those incapable of calculation a return on shareholder funds. 

The more recent bets on Madagascar Oil (MOIL) over the last 4 months or so have finally paid off, albeit it might be wise to derisk on the news! Hat tip Leggie, their Tsimiroro Development Plan has finally been approved, at long last!

Oil was rather self-fulfilling with contracts needing a certain level...and guess where it closed. 

Atb Fraser 

Morning Mumble: Sirius Minerals (pointing out the obvious) and...Iron Ore + Are ORM getting FORM?

Good Morning, 

Not connected with the title, we'll side step the busy schedule yesterday that resulted in a faux pas by yours truly. When discussing another company that was appropriately labelled crap, its wise to consider people’s connection or association with said crap (or more so, do homework beforehand). After that momentary silence, perhaps realism on their part, things did improve. 

Sirius Minerals (SXX) appears to have more leaks that Horse Hill, readers of the Whitby Gazette will be aware of the local news of 'likely approval.' On top of that, Roger bade informs us that the "North York Moors National Park (NYMNPA) Director of Planning recommending for approval North Yorkshire Council’s proposed park and ride scheme near Whitby; 180 of the spaces are dedicated for York Potash. Now you can’t have a park and ride for a mine without having that mine as well, can you?" 

With the obvious needs of the capital requirements of a mine, SXX has the benefit of a stable geopolitical environment, and save for any elected party member getting a bee in the bonnet. SXX is not a case of rubber stamping, but procedural meddling. SXX has a high chance of a positive outcome for the company and perhaps the equity holders. 

The market would be wise not to be over-expectant on SXX's timelines, but more importantly, having been a buyer, its wise to acknowledge the risk of potential dilution. This is one of a few companies where there's a willing cooperation and acknowledgement of dilution. Equityholders should be open to dilution, SXX, subject to the low risk possibility that would be highly damaging to any value if the mining application was refused, has the potential of a great future.

Obviously there is a risk of a 'nearby mine' meddling in the process, one that shouldn't be ignore. The board of Cleveland Potash would be wise to consider they live in a glass house. If the aged memory is correct Shaft Sinkers had the contract for Cleveland Potash, how things change. 

With things hotting up in Columbia, Red Rocks sale of Columbian gold mine, should be a welcome reduction in security costs at a local level. One cannot help but wonder what the risks are of default of payments are by Colombia Milling Limited (CML). The company isn't so diverse or large enough to be enticing for a balanced investment. Its one that falls into the very high/blind punt areas of investments. The company may have assets, however as most are feeling, save for lithium and a few rare earth minerals being flavour of the year, there's a continual pressure on funding. 

Yesterday, a chap spent significant time looking at the costs of production for AIM companies, there's commodity price expectations (and subsequent) returns that are simply unrealistic in the short-to-mid-term. We'll save naming and shaming for the time being and wait for a better opportunity, however readers will be aware of EMC views on specific companies. 

Iron Ore allegedly bounced on stockpiles reducing. Its rare to entirely disagree with news, but what utter hogwash, Iron ore rallies on China inventory fall. Stocks are still high in China, the reaction was the result of two entities buying in the market as a result of their supply agreements coming to an end suddenly. 

The market would be wise to check assertions from time to time, including the EMC. So from Li, (many thanks) this morning. “China's ports are still holding high levels of iron ore, even [with] steel mill[s] restocking. Inventories [continue] to remain high. Market orders are slowing near [as quick] as the supply is reducing from the market. With demand in China continuing to slow iron ore [is] piled up at Chinese ports” 

Connemara Mining obtained five new prospecting licenses that are apparently on trend with other operators in the area. Fundraiser anyone? Not a stock that's been covered, but with rises like this, the company would be wise to jump on sentiment and get some cash as the coffers as they must be near dry! In the absence of some decent news and lack of borrow, CON won't be covered any time soon. 

For the vanadium followers, Evraz's equity value in Highveld Steel and Vanadium may need revisiting. This does not bode well for Kenmare (KMR) or Sierra Rutile's (SRX) outlook, are Highveld one of the distressed sellers in the market? 

Whatever is happening at Ormonde Mining (ORM) is anyone's guess. Almonty Industries Inc (TSX-V : AII) do not appear to have engaged in the process or perhaps they are keeping their powder dry. ORM update on the Barruecopardo Project Financing, with absolutely no information contained within it. Simply put, in the absence of Almonty coming up with some of the goods, Oaktree will acquire an asset for a song, ORM will retain some 'sort' of management fee, and equity-holders are at risk of having little if any value. 

Over to ORM, "Very significant progress has been made during the exclusivity period, and the parties are expected to be in a position to finalise agreements shortly. A further announcement will be made in due course." Very significant? Well that would be open to interpretation, how this is considered material news in the absence of specifics is of "concern". Does the NOMAD consider the omission of the material facts of progress satisfactory?  

Limited time for Anglo Asian Mining's (AAZ) update, with positives across the board, increased production (floatation plant due online Q3 (possibly Q4), running down inventories (sales exceeding production) and production in line. The disappointment is there's no guidance on cash costs, leaving one to throw a dart at costs.

It would have been nice to have some guidance on all in cash costs as a result of material movements in energy costs (fuel) and heap leaching costs coming down near 20% in the six months. Quick calculations suggest AAZ's costs should be around $945/oz, although this has a significant margin for error, circa 10%. With the repayment of debt going as planned, AAZ can ill-afford any hiccups, with around $0.5M cash at hand there's little margin for error.

Atb Fraser

Morning Mumble: Vedanta (VED) confusion, Blurred Vision by EMC, and Applied Graphene (no news).

Good Morning,

A timely downgrade by Standard and Poor for Vedanta (VED), its likely after today the ratings agencies will have to revisit their work. VED's have had some decent results and record production Zinc, Copper, There's some positives with record production in Aluminium, Copper, Zinc and allegedly pig iron. 

Its best not to attempt beating around the bush with VED. There's a wave of issues excluding the obvious commodity price woes. VED inform the market that "the Mines and Minerals (Development and Regulation) Amendment Act, 2015" is likely to double the existing royalty rates reducing margins for VED's operations in Bauxite, Iron Ore and Zinc.  

Perhaps VED would like to update the market on the Pig Iron woes in Goa, (Sesa Sterlite). Contrary to the Q4 production report, VED may have to close their pig iron operations by the 25th April if the e-auction issues go unresolved. The limited availability of iron ore will have a knock on effect on VED's coking operations. So VED are strong arming the Government by informing the Dept of Mines and Geology that they 'may' not be able to supply the grid with circa 16MW of electricity. Slightly contradictory to VED's assertions that progress is being made (See: Times India article 9 April 2015). 

A damn good piece researched by Neil Chenoweth was emailed to me the other day, with an interactive explanation of the movements and taxation benefits in layman's terms. Tax office pursues BHP Billiton and Rio Tinto over Singapore tax shelter. Rio Tinto and Bhp Billiton may just have to review their taxation and operation arrangements, the question for investors should be "what's the downside!?"

Having put some time into Blur Group (EMC: BLUR) and finding no reason to go long or short, the writing is now on the walls. Blur today confirm in their 2014 trading update, they appear incapable of turning things round. Worse, Blur apparently need the assistance of KPMG to determine "that a number of older projects started between late 2013 and early 2014, which have experienced delays, have shown a lower likelihood of completion." 

Why KPMG need to be consulted on the likelihood of completion of projects is beyond me. BLUR as a result of today will be battered further. Having previously shorted this company, this weekend is a good time to review and test theory that BLUR's value is circa 2 pence. Statements like today erode any trust left in a stock. 

There's been some speculation about Applied Graphene over recent days, simply put a) the shorts are out b) there's a buyer in the market and c) there's limited stock available. Anything else is unknown. 

Atb Fraser

Morning Mumble: Anglo American's (AAL) woes, Patagonia Gold (PGD) and yet more SRX Jam

Good Morning,

Anglo American (AAL) have a growing discontent, with the strikes being declared by Anglo as wildcat. Despite them allegedly not going through the proper channels Anglo are speaking 'with the powers at be.' The starting rate of 6000 Rand a month, is the bone of contention, well the tip of the iceberg. Post any resolution, we can expect the time served miners to strike because their premium for experience and skills is now under-represented in their pay-packets. 

AAL, will of course open dialogue to discuss the miners woes, having recently agreed wage deals in June 2014, its unlikely there will be a deviation from the deal agreed. BHP Billiton (BLT) and Rio Tinto (RIO), although not as connected with the South Africa issues (excluding Short32), on the coal face and mine pits in Australia there's also a disharmony. With strikes unlikely at the moment in Australia, longer term BLT and RIO are at risk of being held to ransom by their employees. 

BLT have recently recommended to the Productivity Commission to limit industrial action to specific events, allegedly on safety grounds. The Unions of the contractors and workers are starting to feel their corporate parent isn't behaving appropriately.

Patagonia Gold (PGD) announced results today, unlike most with an unrealistic expectation of a profit. PGD have made a decent headway in covering their costs, when all things are considered, this could just be the start of the turn for PGD. It’s rare to get excited about potential, but PGD might just be a favoured minnow of a gold play. The caveat being, it depends on how much money they sink into proving up the 'currently' uneconomic proposed heap leach at Cap-Oeste. Simply put, in the absence of a significant increase in the oxide resources, any proposals are not viable a gold prices below $2,100/oz. and sub $24/oz. silver. 

It was a pleasure to be part of the thundering troop (poor I know) of Horse Hill today for a not so untidy profit in a few hours and out again. With continued news to come, surely there won't be further fundraisers. Please don't forget the sarcasm, but more importantly, is there a leak yet again! We won't comment either on the 5% divestment made by a certain mining company either, where the timing was poor to insulting. 

Had there been time yesterday it was intended to comment on Tech Metals Research which is turning into the place to go for Rare Earth Metals commentary. Some good analysis and a decent place to start, one broker could do well to spend some continual professional development time on the internet rather than getting his metals so confused. 

Little time to cover Sierra Rutile (SRX)'s Q1 results in-depth. With some positive hedging in fuel costs, but one must take the opportunity to remind the market, it's essential for a company (especially SRX) to sell the products they produce, please note their costs (as eluded to by EMC). It's pointless producing a produce/ore without sales. 

The TiO2 market is in the crapper as SRX states, any improvements are likely to be, "tempered by forced sales from certain distressed TiO2 feedstock producers that continue to undermine price improvements." It’s prudent at this stage to reiterate the view of EMC's from March. Until any decent recovery in TiO2 (Titanium dioxide to you), there is no reason whatsoever to hold SRX. If one was to be forced to throw a dart, it's difficult to find any value about 10.75 pence and that could just be too generous. 

Atb Fraser

Morning Mumble: BG Group finally succumbs to one of three suitors, is there another offer?

Good Morning, 

BG Group, the favoured long oil and gas play of the goliaths, has finally accepted a cash and share offer, albeit this wasn't the rumoured Exxon but Royal Dutch Shell (RDSA). The deal, at today's prices, will make any interested party think twice before making an offer. 

The offer is rich 'enough' allowing for the blend of assets, Egypt and Australia plus deep water opportunity and increasing market share in LNG. BG's cashflow for the future justifies the premium and will not be ignored by the big fish!  

RDSA now becomes the real bet and favoured over BP et al (save for M&A there but unlikely with litigation on-going). One cannot see any shareholder rejecting this offer. Its borderline rich and only a fool would consider voting this down.

Its one M&A action where it may just be worth holding the stock until the paint is dry, as two companies with plenty dry powder may just see future value above and beyond 1350 pence (383 pence cash and 0.4454 Shell B Shares). At the price, any offer is very unlikely, but...never say never. So entirely contradictory of the above, all stock was sold today!  A greater believer in taking the money now, rather than the hope! 

Staying in sector, with the gossip Gulf Keystone (GKP) just about to be 'part of a deal', with company being very tight-lipped, Malcy's assertions look to be bang on the money.  Some interesting moves to wash away the Easter fat!

We had Centamin Egypt (CEY) Q1 production report, without many concerns and bang on the money. CEY at some point need to change. With a suggestion of grades improving towards the end of this year and guidance back to 450K ounces per annum, there should be some improvement in broker opinion. The outlook, although marred by litigation and failed joint ventures has not done the company much good. Perhaps it’s time for a change of management at CEY. With no indication of costs, one assumes CEY have improved on the previous quarter/half by circa 6%. 

The iron ore producers had a mini-celebration with a common-sense assumption up to 15mpta of iron ore have disappeared off the market. For those following the saga, EMC had not appreciated that had Atlas got South West Creek up and running the cash costs would have been a not too shady, $42/t. Something that isn't that enticing in the current market but longer-term for bondholders there's some 'hope.' 

Sirius Minerals (SXX) announced the results of their potato crop trials last week (8th April), the benefits to 'key crops is not to be ignored nor are the capital requirements. SXX will be viable, although one should consider not going all in, more so buying over time. 

With some friends around Hatton Garden commenting on the news crews in the locality reporting on the heist, it’s nice to see a  Forensic Chemist wanting to apply to be a Jason Statham extra for the impending film. A few pounds lost might improve your chances Adrian! One can look forward to hearing about what was left behind, if its like previous robberies, laundered cash, guns and odd narcotic will be the flavour of the day! One hopes they had adequate insurance and expect some knock on benefits as dealers and jewellers restock. 

Atb Fraser 

Morning Mumble: Atlas Iron (limited)

Good Morning, 

Despite the obvious being ignored by 'some', Atlas Iron shares have been suspended. Simply put, Atlas's bondholders are now sifting through the pieces in order to attempt to recover some of their monies. In the absence of an unlikely sale, a willing investor (possibly Chinese) and some sympathetic bondholders, there's almost zero equity left in the company for shareholders. 

If parties (Australian readers) are unsure of the process, one would be wise to read up on Afren, African Minerals et al for the outcome that has been obvious for a significant lengths of time. Put quite simply, Atlas Iron produce / mine iron ore, the price is in the crapper, with a reduction in fuel costs giving a glimmer of hope. Atlas Iron have suffered via detrimental (but obvious) currency depreciation against the dollar, the iron ore price falling a further 25%+ and now the headwind is untenable.

The management and company to their credit have done their best with what they had. Although if one was to use the phrase a presentation phrase I coined awhile back, Atlas had entered the Formula One championships, in a Ford Fiesta. We'll ignore the analyst's comments inferring the EMC (*and Li) did not know what we're talking about, and stick with the facts.

Any royalty or taxation reduction proposed by Australia are unlikely to be able to save the shareholders, perhaps bond holders, but shareholders are now wiped out. One envisages Atlas being a long-term care and maintenance/mothball until such time as prices recover (consistently above $60/t).

Amara Mining 2014 full year results were out today. Contrary to some coverage, they were not in line with expectations, spending circa £1M more than guidance, although immaterial to the grand scheme of things. Yaoure is the only way forward, with the Pre-feasibility Study (PFS) due May/June (*from memory this is a delay), one expects some rubber stamping and no surprises. Randgold best get their finger out, or they could find themselves missing out!

Kefi, keeps spinning those plates, update at hawiah Saudi Arabia. One wonders if they would be better off focusing on Tulu Kapi and conduct the bare minimum of works on other licenses unless incentivised by another 'well-wisher' (read as funder).

Oil 'steady' as she goes, with some short-term recovery and narrow of the WTI / Brent spread (gap). It would be rude not to acknowledge some decent work by Goldman Sachs on the long-term outlook for Oil, lower for longer, although their price expectations are like darts in the dark!

Atb Fraser

PM Bolt On: Happy Easter, The Snap on (S)AGA Rangemaster (AGA) + Atlas Iron Watch, the new low.

Good Evening,

Some may be pleased to know EMC will be offline until after Easter, safe for two items (potentially). Ian has this golden opportunity to become active, although looking at his social diary, I suspect Ibuprofen and Paracetamol will be a key component of breakfast.

Following the (S)AGA Rangemaster (AGA) from FTML, with today's SP it’s wise to bank profits on all shorts. With near 30% downside in the SP from my previous target, it’s wiser to be a little more conservative and bank. Do not fear, the softness may be short-lived. 

AGA are currently pushing their marketing in China and have formerly launched their AGATC and Redfyre brands. With any likely benefit in brand in China potentially improving performance benefiting and support in the stock with "hope value" (speculation.)

Performance in the UK, with access to easier credit, should be around 2.5% better. A new launch for North America with the AGA Marvel range (the Northland acquisition circa 2003) this autumn, will assist the company plus China and Europe in QE. With a decent potential momentum on all continents, one is turning morning positive on AGA. 

Without knee-jerking to a long, it’s certainly under review, with some decent news flow (potentially positive) across the entire range (poor pun). AGA have had some well-timed launches across all regions, the future could just be warmer for AGA than the previous 12 months, with a disappointment in the market performance for those holding long. Patience could just be rewarded.

Atlas Iron (ASX: AGO), touched a new low overnight, at circa AU$0.12, bouncing back, reality? 

Happy Easter, a break if you're avoiding Easter or merely just enjoy the bank holidays. 

Atb Fraser

P.S. Stay tuned a well-versed commentary in due course with a contrarian view on a stock.

Morning Mumble: From Steel to Sugar, the Unbelievable + EVR the FX benefaction &...RCG + British Sugar (The David and Goliath of Sugar spats)

Good Morning,

Iran with no news = tank (poor pun I know). Those bulls being torched don't appear to grasp the simplicity of the statement. We'll keep it simple, just for those large traders in NY, having had 3 opportunities to close their burnt positions, are now doing so at a greater losses. If oil inventories and production are up, and demand lower, then the price will fall. Perhaps the market should have kept an eye on the 'well-count' rather than rig count.  Mental note, when applying for positions in large trading houses, in the hobbies put down "not know when to quit." What's $812M between friends.

Sticking with the theme of unbelievable, Evraz update the market today with a proposed tender offer of $375m. Does this company have no debt covenants? Would it not be cheaper to buy their debt? Within EVR's annual financial report investors would be wise to focus in on the 'slight' differential between 2013 and 14 in "equity attributable to equity holders of the parent entity" (that item otherwise known as shareholder funds), with a modest decline of $3,447B from $5,463B (2013) to $2,016B (2014), these figures include non-controlling interests. 

Evraz (EVR) net debt was reduced 11% to US$5.8 billion, which looked to be on the conversion and repurchase of debt in market. As with Kingfisher (KGF), never bet against buybacks in an appreciating market. EVR is mystifying save for the FX benefits of costs, so off like a rocket this morning. EVR's recovery since the height of the Ukrainian crisis has been legendary. With the market being pumped to sell at 10% premium to 187.70 pence, one can't help but wonder where the SP will hit soon, 206? Perhaps even the cap. 

As if the market needed reminding of the woes of British Sugar (ABF), along comes Real Good Food (RGD), with an award for reminding the market of the distressed nature of the global sugar industry. RGD have not only accused British Sugar of market abuse in respect of supplies to Napier Brown, back in 1988 and again 2014, but Napier Brown is now up for sale. Does a buyer want a business that is alleged to be impaired by its key supplier. Perhaps a sale would be wiser post any legal action/settlement between the warring parties?

With an interest in Pork Semi Meaty Riblets (Sternum Part On) (its not so appealing in the UK is it!) and all other food stuffs. One will remember that Napier Brown was proven correct in alleging that British Sugar had abused their dominant market position in 1988. This action resulted in a paltry fine of €3M (Euro) imposed on British Sugar. EU Commission Decision 18 July 1988 Napier Brown - British Sugar. One would be wise to read 'remedies' page 18, item 83. Its likely British Sugar (ABF) will have to make certain provisions, including the potential for a 10% fine of turnover. ABF's  British Sugar last reported turnover was £742m. 

Any actions bought by Napier Brown are not going to assist their bottom line, with debt increasing, any sale is unlikely to realise a true value. Purely on the basis of its long-standing and problematic history with British Sugar (their key supplier). The irony being, the offering could be more valuable to British Sugar than any other entity. All the proceeds are likely to go towards paying down the debt, near £36.3m (Net debt) at the last interims. Over to British Sugar to buy Napier Brown, which could perhaps be cheaper than any fine! 

ASOS (ASC) interim results are out, with no change in view from earlier this month, the market was welcoming the improvement in customer numbers (passing the 9M mark) and more importantly, active customers on the increase.  

ASC cash declined just over £9m in 4 months to £64.9m from 31 August 2014: £74.3m, admittedly up 76% on the comparative half, from £36,914m. Yet again, we see a deterioration in margins,  with retail gross margins down 270bps. The market will focus on the active numbers, local pricing (zonal pricing aka local currency pricing avoiding the customer taking the risk of FX movements) and group revenues being up near 14%. 

One has to wonder with the push in "the label" directory from NEXT, how competitive the UK market will become. Today's news was an opportunity to close longs and await a market reality, the market might realise sooner or later margins have been impacted by the introduction of zonal pricing, albeit with double digit revenue improvements. 

Atb Fraser