Good Morning,
The share price of Lonmin (LMI) is rather telling that
Glencore (GLEN) shareholders do/did not value or rate LMI. We shall keep this
simple, in the absence of an improving outlook, reduced costs and CAPEX and
OPEX clarity LMI is on a path of dilution (rights issue). With GLEN now
ex-dividend as of yesterday, LMI is being punished, opps the correct term is
"managed sales."
Perhaps the value of LMI for some funds will be ignored and
held until an improvement or corporate action involving the Republic of South
Africa (RSA) Government. The thought for the day goes to those analysts
thinking the furnaces have "exceptional or one off costs", that
shouldn't be factored into longer-term workings. One assumes they're new to the
chrome issues within the PGM industry?!?!?!
LMI will not be assisted by GFMS annual survey is out on the
poor man's Reuters Eikon that platinum has the potential to test $1K/oz. It’s
not beyond the realms of possibility, with LMI needing to "dump"
rather than manage the sale of near 200K with a growing differential between
supply and demand.
With the improvements and an expanding market in recycling
of catalysts, limited growth and even with a shortfall in supply PGM's
failed to respond. One could be minded to think the speculators are locked in
to Jo'burg ETF's at a loss so are unwilling to apply further capital, same for
the Chinese and hedgies focusing on bottlenecking. SO GFMS put the range
to $1K/oz. to $1290/oz.
Someone popped a BRR media discussion on Serabi
Gold (SRB) into my box this morning on the back of the Unaudited Financial Results for the First Quarter 2015. SRB's
suggestion there's the potential for M&A in the sector are of concern. SRB
are another company that should focus on their current assets, get their
start-up at Palito running efficiently and prove up their resources, rather
than spinning a plate they can ill-afford to diversify on.
There is little margin on the balance sheet for M&A,
save for the issue of confetti. Currently the Brazilian Real (BRL) is favouring
their cost base in reporting terms, and with the downgrades in banks, the
issues in the economy is unlikely to change. The USD/BRL of 1:3 should perhaps
be considered the key support/potential floor.
With the last placing just over a year ago, the FX losses
kitchen sinked and ramp up progressing well, SRB is now looking more positive
than the past 4 years. A producer (at a profit) and potential to return monies
to shareholders over the longer-term, SRB should not be ignored. Likewise their
liabilities, if there was a hiccup in their plans or a significant movement in
BRL terms could hurt them.
Tribal Group (TRB) gave an update into the AGM. With timelines going out further,
one would be wise not to ascribe too much value in light of a second warning
about the timing of and Keith Evan's departing, the warning signs were there!
Having missed the previous year’s targets, the terminology is far from
positive, but with a new 'man soon to be at the wheel' there's some hope.
It was interesting to hear some excitement in the Oz
about SC55 operated by Otto Energy. Tiddler watch, Red Emperor (RMP)
Resources have a 15% working interest (WI) on a capped cost basis USD5.625m. If
costs exceed RMP cap they have the right to reduce their WI!
RMP, a small cap with near £5M in cash (and most of it
spoken for, if not all), there's no room for failure. As Ian put it a binary bet on the outcome of drilling in Q3.
SC55 was originally farmed out to BHP, time will tell whether they were prudent
to have walked away. Widows and orphans need not apply!
For those with a memory of RMP, they used to be a shareholder
in Highfield Resources (ASX: HFR) whom recently raised AU$101M. RMP sold all
their stock at circa 80 cents a share (only 4 months or so ago). With little
sign of the ASX: HFR ending its bull run at the time, RMP's timing was should
be considered poor, or should it be worded as desperate for cash?
Had Aureus Mining (AUE) been able to release a sensible RNS
about their Q1 progress and Management Discussion and Analysis (MD&A),
there would have been time to speed through it rather than the snakes and
ladders approach to RNS’ing! You can read it here. Their IR best shape up, or investors (including
small funds simply won't bother!), first pour expect end of the month!
No time for the gold speculation in Asia/NYSE (also arbitrage),
with investors hoovering up physical ETF's, nor WTI/ struggling to maintain
it's $60/bbl support and the Brent GAP expanding again. The analyst who reads
the papers two days ago after best have a whip round to speed up coverage.
Thought for the weekend, is the worst over for Capital
Drilling (CAPD), compared to those leveraged operators! Good piece in LEX
Atb Fraser
Afternoon, for the benefit of a certain mob that will cheer, post taking a hit on CAZA all those months ago (circa 30% ish). Poor timing on the oilers back in September (14). it was a pleasure to take some profits today. With the outlook better than envisage after today's update, the market may (likely) have wrongly priced in total failure. Over to Malcy for appropriate coverage: http://www.malcysblog.com/2015/05/oil-price-sundry-bp-shell-afren-premier-rkh-ithaca-europa-cairn-cape-wood-enquest-caza-iog-panoro-president-range-and-finally/
ReplyDeleteAtb Fraser
Fraser- The end of a long week for me, with boozy lunches the norm banned next week as R goes back to work. And I need a holiday seriously....
ReplyDeleteRe AUE- yes, a bit boring that update today- I cant see anything that wasn't known, the gold is coming and possibly a rerating with it, 119k oz pa of gold will take a year to build up and now Ebola is out of the way, its all down to their mgmt. to deliver smoothly.
Re SXX- nice moves above the 15p level at which moves had faltered recently (probably based on many who added at 7.5p or so doubling their stake- hands up here) so maybe 20p is the next barrier which will bring out the sellers. The approvals should be partially in the price now, with the next big barrier of financing with will involve a major equity issue likely to dominate until the autumn. They need to look at how WLFE did it with their Drakelands project, albeit the numbers need an extra zero- I expect substantial Chinese participation, if not an outright bid in July. Lets see...
Have a great weekend- the first T20 tonight at Trent Bridge so probably freezing my bits off at 10pm when it finishes later.
Cheers. The Leggie
Fraser- Sorry missed off the major move from TPL (Tethys). They were playing Russian roulette with SinoHan, who have walked from their offer to buy 50% of the Kazak assets for $75m and SH now want their deposit of $3.9m back and could get nasty. Macquarie are the key here- just the right appointment by TPL and it pays off today as they get $7.5m via a 2 year convertible plus $2m poss via a major holder and possibly some real money from the initial offeror, who are AGR Energy, owned by the Assaubayev family, who are the local gazillionaires and have a finger in most pots in the country. So some real interest here, TPL up 2p at 7p so far and well worth their hold, albeit not in the hell freezing over portfolio as the shares will yoyo now as the full story and intentions unfold.
ReplyDeleteCheers. The Leggie