Good Morning
CIC Gold Group
Limited whom allegedly has prominent Chinese gold miners and international mine
developers as backers intends
to list. It will be certainly an interesting story to follow with various
entities struggling on AIM or giving dire returns there's hope for CIC, or is
there?
The story doesn't start with CIC Gold but with CIC
Capital. CIC Capital notoriously went from sub 1 pence to 10 pence on
the back of very little and then subsequently suspended/delisted in 2014. Of
course, the current holders are 'looking' for growth.
If one is contacted by VSA or similar regarding the IPO, it
would be wise to ask what DD has been completed on this company including whom
the “prominent Chinese gold miners and international mine developers are
involved." If one has the time, the prospectus is here. It would be wise to look at the number of shares (the issuance of) and why they have been issued to
CIC Capital.
Rurelec's debacle is not over yet. Today there is a wave of
announcements, some that shareholders should perhaps consider more positive, one
that is not is the "gifting" of IPC to Peter Earl by Rurelec as he departs. I think RUR have rephrased "spinning-out."
RUR purchased
IPC for £16,560,483.87 including the two Siemens Westinghouse 701 DU
turbines that were subsequently sold for £1.2M leaving some £15.3M valuation
for IPC. How IPC, can "spin out" (changed as I was typing) to
"remove in excess of £500,000 worth of overheads out of the Rurelec
Group" is questionable. If all the assets and liabilities have been
transferred into Rurelec. One assumes they're factoring in Mr Earl's £230K
remuneration commitments?
What is laughable is, IPC was meant to "accelerate
Rurelec's organic growth and increase Rurelec's global footprint." IPC
& Rurelec share the same offices, on the 17th Floor, Millbank
Tower London. Were their separate staff being transferred out, name Peter Earl
and associates? In essence the savings are not savings to RUR in the true sense
of the word, without clarity on what "savings are being made). We'll ignore the director loans to a subsidiary but these under Related
Party Transactions in final results out today.
Should the "independent directors" not check with the NOMAD whether this transaction (Spin-Out) is fair to shareholders?
In fact, having acquired IPC to increase their footprint, the "nominal
sum" payment is laughable, based on potential goodwill and positioning in the market.
IPC, as a company has a brand value (including goodwill) over
and above the assets. However, having been a shareholder in RUR previously and
sold out after the dire issue of the International Arbitration and
subsequent misunderstanding of Third Party Litigation Funding. It would be wise
to reconsider any position if the company cannot protect what assets it had
left (or has).
Should you consider Peter Earl a net seller in the stock
now? Having been in consideration of the Jam Tomorrow Award, this may prove
very unfair. Perhaps RUR are now being upgraded for consideration of the "destroyer of any value
for shareholders award." In gifting / spinning out IPC at a nominal sum! The company would
be hard pushed to justify the sale (now spin), when in IPC's own website
words, http://www.indpow.co.uk/,
"Independent Power Corporation PLC is one of the
United Kingdom's leading power developers and power plant operators. Founded in
1995, IPC has developed, owned or operated 7,000 MW of thermal and hydro power
generation facilities in North America, Latin America, South Africa, Asia and
Europe." [Within Source
of website ]. This was subsequently changed to,
IPC has owned, operated or developed over 4,000MW of
thermal and hydropower generation facilities in Latin American, North America,
South Africa and Europe. (Current)
IPC's brand/business/company even as a shell should be marketed for sale.
Having taken profits and dividends in both Juridica (JIL)
and Burford (BUR) today's portfolio update was negative on the bottom line.
Measured in NAV, JIL is valued after today around $150M (ish) without checking.
Consequently, the stock correctly repriced the stock 88 pence.
With some volatility in JIL at the moment, it’s hard to
justify any share appreciation based on the NAV. As a result, a disappointing
17% return over near 3 years on this investment, allowing for today's sale with
no further holding. Better than most bank returns but disappointing. Time will
tell whether its wisdom to hold Burford (BUR), performing better over the 3
years with a better blend of small dividend and share appreciation (50%)
ish.
The iron ore price gave the proverbial kicking to the
producers. Sensibly the drop away from the ceiling set by the Chinese (EMC: Mundane Iron Ore Spot Price) is now a reality. With some
hedgies banking significant profits. This was a common-sense trade, especially
in light of the reduced imports that fell 8% in May to just under 18MT’s
for 62% fines but the price has temporarily.
There’s a lack of speculation in the physical spot prices /
supply / immediate delivery including that on the DCE (Dalian Commodity
Exchange). Closing positions on Copper and Iron Ore on the basis they are
currently linked. Copper, with the dollar's weakness and potential restock has
a greater degree of risk in the short, than Iron Ore. Iron's critical level of
support circa $60/t (62% fines) and 65% fines now sub $70 and looking for
support. Seven days previously at $74/t (6% decline in a week).
With steel prices softening in China due to lower demand,
iron ore is logically following suit. The belated restocking, was a convenient
necessity for all concerned push prices up off the lows. The lack of sustained
demand will have the speculators looking to any further declines in the ports
inventories just keeping its head above 80m/t's. As a result, in line with the
dropping iron ore price, the SP in Rio, BLT, Vale and FMG have all
followed.
A question for the majority of Energy Resources of
Australia (ASX: ERA), in light of all the news on Ranger 3 Deeps project – further update and Rio's
inclination to avoid funding much further. What reason is there to hold the
stock further? Denial?
Save for some Knight in Shining Armour, of Chinese
lineage perhaps? Rio and ERA have appraised the feasibility of expansion and
simply, in the current outlook, it’s non-viable. This does not bode well for
the other producers if an established entity cannot find economic reasoning to
extend LOM (Life of Mine) and justify investment. One hopes if they are also
Atlas Iron holders (ASX: AGO) they can keep merge this disapproval in a joint
email to save time!
The market is mystifying at times, on the one hand its
prices in any risk (proactive) and likewise, it reactively points out the
obvious. Today selling the remainder of Anglo Pacific (APF) and closing spread
bet positions. It would be easy to think I've lost my marbles after a decent
recovery and better outlook. Well simply, if the Coal Settlement Contracts are as announced it doesn't
bode well for Kestrel. Rightly as Roger Bade points out, "it's not good
news for APF".
APF are diversified, but one cannot help to
wonder if there's a swelling in supply. How this bodes for US
exporters/producers is another question or Mitsubishi Corp, whose share
price has seen a decent recovery of late, near 25% gains in a year. Admittedly
significantly more diversified than APF from Banking, Food, Machinery,
Chemicals & the all-important energy. For those trading the related stocks
TYO (Tokyo Stock Exchange) one would be wise to consider the
implications.
Finally, Minco (MIO) announce further drilling results. It adds nothing really exceptional
at this stage to the value of Bachans, due to depth and narrowness of veins. As
tight as 85cms in depth) and as narrow as 50cms in width. Back to that old
chestnut of strategic speculation by the Chinese and potential JV/total sale.
Buchan's may need a revaluation in due course, after more drilling.
Atb Fraser
Hi Fraser- Quite busy for a Friday.
ReplyDeleteRe RUR- yes, 4 RNSs first thing (is that a record??) and they raise more questions than give answers. The IPC spin off is being sold on the basis of the assets being retained and the £500k drop in annual costs, but he is being retained with IPC too as a consultant so what will this cost the group - my guess is close to £500k pa but perhaps Im being cynical here. The NAV is apparently 10.1p but this is mainly loans to subsidiaries and asset valuations, which depend on sales in some cases (Chile) and their valuation of the retained assets, which have been a bit off in the past. The debt is mainly off their balance sheet otherwise they would have a v low NAV. They also get a $12.1m bridge so IPSA may eventually get their money for their turbines (£3.2m o/s) so they are the real winners today plus their other patient debtors. Peter Earl is still in charge at IPSA so they could be closer to IPC soon. The deals are still being promised, much delayed but still coming apparently from unnamed parties. One day they may all come in but the jam tomorrow approach is still in evidence. All in all, a curates egg and still very much a restructure in progress. It is only when this works through that it will be possible to get a real NAV. I wouldn't short it as it has fallen so low but I can say its a buy given the unanswered questions that continue.
Re JIL- their earnings are always going to be lumpy and that $30m shortfall re the big case hits my numbers here too. I have fair value at 94p, so they look a little oversold to me, but they were £1.12 before the news so 91p now looks like a bit of a panic has ensued. I have loads of cash here (don't tell Rachael) so I may dabble with JIL later, if the down trend continues. They have mentioned that bumper case (5009-S) which could bring in more than their entire market cap (£100m or so) and that comes to trial in 10/15 so that could be huge for them later in the year.
Cheers. The Leggie