Monday, 22 June 2015

Morning Mumble: Gemfields' results lacking sparkling, Allied Minds, Tullow. Savannah Resources, Thorntons and BCN, with SRX (one hopes not the new AMI).

Good Morning,

Brief today as have a number of meetings then a school trip!

Gemfields's Singapore auction closed yesterday with an average of $617.42 per carat down a near 10% on the December 14 higher quality stones auction ($688.64/carat). In the absence of a decent marketing push, the decline in number of lots and sales revenue from these higher quality stones is going to continue. Not only were the lots sold a paltry 61% of those offered (46), but also was the price achieved. Over to GEM to find a way forward.

For those that didn't top slice, sell or trade Allied Minds (ALM), today brings news of their joint venture, ABLS (Allied-Bristol Life Sciences, LLC) acquiring licenses from Harvard. ABLS is a jointly owned entity between Allied Minds and Bristol-Myers Squibb Co.
Tullow Oil (TLW) have got off a little lighter tax bill than the Ugandan Government had hoped for. Both parties have agreed to a full and final figure of $250M, near $273M below what was claimed at $473M. TLW also have got an instalment plan put in place. After consideration of the $142 million already paid TLW have a mere $36M ($108 million in total).
Providence Resources (PVR), yet again gives news that is pretty much academic in the absence of the lack of a farm out for Barryroe. The Technical Update, Newgrange Prospect, although "good news" isn't what the market is looking for. In the absence of such a deal for Barryroe, one has to wonder how long Tony O' Reilly's position remains acceptable to the shareholders. 

Surely there are not rumblings of disgruntled and 'impatient' shareholders at PVR. Or worse, has the soon to be partner realised PVR are over a barrel and hard ball is being played out.

Savannah Resources (SAV), appears to being pushed in the press, with a deal where SAV can earn up to 51% Mutamba/Jangamo with the formation of Joint Venture with Rio Tinto of all companies. There's a number of woes here, firstly investors would be wise to consider the woes of this deal. Why Rio would want to be a minority partner in any business it conducts raises significant questions about Heavy Mineral Sands. This is guaranteed to be revisited in due course, expect a fund raising in due course on the back of the "significance." 

Ormonde Mining (ORM) will be grateful of the Oaktree financing as their final results out last Wednesday, show they had around 200K ish left in the kitty. Had investors paid attention to the EMC (EMC: ORM February 2015) they'd have saved themselves near 40% and some 70% longer-term. After today's update, one would be wise to consider how the financing assists with working capital requirements, same as SAV, this will be revisited. 

Shareholders in Thornton's (THT) have been saved, with an offer from Ferrero at 145 pence. In the absence of additional interest, it’s wise to take the cash and run, especially those in more recently over the past 3 months. Hat-tip Richard S and CwC for some decent research there, have conducted none of it myself it was a pleasure free-loading for once, although very small! 

Its noted that a certain small brokerage should get more commendation for their work especially after 3 kills in near as many days! Perhaps Charles Stanley can save themselves considerable time reviewing their targets and just put 145 pence! 

With a chance of Director at Bacanora Minerals (BCN), maybe the company forgot to thank him for his services? Of significance is the change at Sierra Rutile (SRX) whom has appointed a chap associated previously with African Minerals. A brave appointment in light of SRX's recent share price recovery. 

Atb Fraser

1 comment:

  1. Hi Fraser- general lazy mark up today re Greece- the can gets another 6 months before someone has to face the facts it appears. Fudge is the name of the game in high level finance it seems.

    Re GEM- yes, $10m or so lower than I expected here today, with the two big stones sold and no price given for these either, it seems the rest of the ruby market is a little depressed or as GEM put it "in need of education". Very subtle GEM, train those thickos and get more sold next time. Still 86% sold by price and the cost of prod is very low so they can give some more to local projects. Perhaps the market needs a bigger gap before the next ruby auction? Lets see. Still happy to hold long (from mid 20s) as they are well run and have a nice business model here. Gem prices will move but the trend should still be upwards over the v long term I use to assess.

    Re SAV- the mkt likes it, the big name (RIO) helps but I agree in part with Fraser that this is more RIO throwing off a few licences as they have lost interest in heavy mineral sands so the work will now be for SAV to carry out and earn in. This will be reflected in due course and the share price will adjust, they will need to raise cash to scope and define the prospects which are large so anyone for a v cheeky placing from SAV in the next few days??? It would be a good time for them to strike. Again, lets see.

    Re THT- the management here has been a horror story in the main, stumbling from one period of overstocking to the next, often having Tesco sell their eggs through their stores for less than the Thorntons next door, crazy business model- as an ex senior employee said to me years ago, THT felt like "lions led by donkeys". So the mgmt. are put out to pasture hopefully, Ferrero will bring in some brains and the Neanderthals will have to go.

    Cheers. The Leggie

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