Weekend: A quick run through...'onest guv' (Coffee) - Sirius Minerals (SXX), Vale, BHP Billiton (BLT) - Dividend Cuts, Anglo American (AAL) , Kaz Minerals, Drax (DRX), Clarkson (CKN), Royal Mail (RMG) SunEdison (SUNE) & Finally JMAT

Good Afternoon,

Another manic week with various bits of news coming out - a speedy run through of what can be remembered:

Sirius Minerals (SXX) - It would be laughable if it wasn't true - from memory Israel Chemical (NYSE: ICL) via Cleveland Potash Boulby Mine raised concerns/objections regarding the application or process for SXX's York Potash polyhalite mine. 

ICL inform the market of the refocusing at the Boulby Mine and will mine polyhalite. With some amusement, ICL have trademarked a brand called Polysulphate – amazingly derived from polyhalite. ICL is listed NYSE and with limited upside, what reasons are their to hold the stock.

Vale / BHP - The trade was the debt at Samarco owned by Vale and BHP Billiton (BLT) - They have been compelled to undertake further emergency tailings dam work. The damage and overall cost implications are unknown although perhaps affordable, the market now should price in a real cut to BLT's dividend. The price has risks...even for Vale, whose leverage is phenomenal but the price is now about right. How will one sleep at night not being short Vale?

South32 (Short32/S32) – updated the market. The same however cannot be said for Anglo American (AAL). AAL own 40% of the venture where they have yet to notify their shareholders of Samancor manganese joint venture issues.  Anglo deem it appropriate to update on the changes to their senior management and ignore the woes of their 40% stake in SamancorCR. 

From South32, the joint venture's South African mines will remain closed until the completion of the ongoing strategic review. Production was suspended following a fatality at the Mamatwan mine on 2 November 2015. 

SunEdison (NYSE: SUNE) - The idea of SUNE being a car-wreck was pooh-poohed when we raised the question "why was SUNE valued near the same as Solarcity?” Our view was that there was limited equity value left for shareholders in SunEdison. In contrast others believed in the solar expansion of the world. 

The markets may be right about solar longer-term, but not with SUNE - they expanded fast, attempted to hold on to projects rather than sell them and have significant leveraged. It's an all too familiar story of elastic expansion that may not snap, but is likely to be a shadow of its former self. 

Despite some inference we had lost the plot in June, July and August, we were vilified by the price action on Friday where SUNE's ability to access capital and outlook has finally been realised. The price still is unappealing but there's no reason to hold the stock unless a white knight can be found. We know it's not Blackstone, they came out and said they weren't considering it on Wednesday (Reuters). 

SUNE's second quarter results released in August only confirmed what the market should have acknowledged debt vs earnings and over-expansion is a recipe for...What are the implications for the yieldco's? Another over-expansion similar to the Chinese co's of yesteryear. 

Barrick Gold (NYSE: ABX) continues to flogs four mines to continue reducing debt. It makes one wonder why they bothered in the first place - See Mining.com Barrick Gold. Their need for cash is keeping the short-interest happy in Acacia Mining (ACA) - from memory ABX still have 64% in ACA and with the significant overhang, would you be a buyer?

Lucara Diamonds in Canada (TSX: LUC) - not only found 1111 Carat Diamond where the share price was muted but then LUC recovered two more diamonds including a 813CT stone. We missed the price action due to travels but what took the market so long to react positively?! Certain traders...tut tut. 

Anglo Pacific (APF) - companies apparently have efficient with their IR - last weekend we had reports in the press that Rio Tinto were threatening to close their Kestrel operationsdown if they did not get approval for Kestrel. APF, by the silence, obviously do not consider the ground water issues in Australia significant enough to update the market on the future prospects of Kestrel. Perhaps the market will be honoured of an update within the Q3's due 26th November 2015 this week coming. 

Kaz Minerals (KAZ) - luckily for them they have a Chinese contractor whom appears to be very flexible. KAZ have been granted a reprieve with some can kicking of liabilities by Non Ferrous China (NFC). Over to KAZ, (bold and italics are additions):

Under the revised terms, $300 million of construction costs which were scheduled to be paid in 2016 and 2017 will be settled in the first half of 2018. There is no change to the overall amount payable to NFC or the project budget of $2.3 billion. Aktogay remains on track to commence production from oxide ore in 2015 and production from sulphide ore in 2017.

Oleg Novachuk, Chief Executive, said: "The deferral of $300 million to 2018 provides KAZ Minerals with additional liquidity during the construction and ramp up of Bozshakol and Aktogay. This agreement also demonstrates the strength of our relationship with NFC and continues our strong track record of securing support from our partners in China for these strategically important copper projects."

We maybe have a different understanding of the term additional liquidity to others, however the directors think it's a positive - John Mackenzie bought 5000 shares, Andrew Southam purchased 99,238 shares and Simon Heale (and connected parties) purchased 77655 shares. Perhaps they feel the purchases will be beneficial and a sign of a recovery in their company - hmm What additional liquidity is there?!?!

Coal - The UK Government came out with all coal power stations Technica - coal power plants to close 2025. This doesn't bode well for the industry as a whole nor prices where similar policies are impacted on global prices. Mick Davis / X2 might just be better suited to other projects, but one suspects they smell a bargain on some Australian assets. 

Are Drax (DRX) viable? With risks associated with their subsidies and the general outlook to biomass. Having met with a few private companies recently involved with ports, the outlook certainly isn't encouraging with some owners looking to sell. Implications for HSP (Hargreaves Services), albeit it should be cash generative even allowing for RedCar Steel closures. What is the read across to Associated British Ports and Clarkson's (CKN) etc....etc...

Cliffs Natural Resources (NYSE: CLF) - continued with their views on dumping in the US by China as well as announcing they are temporarily idling iron ore pellet production at its Northshore Mining operation in Minnesota by Dec. 1, 2015. Another company where this is no reason to hold the stock until anti-dumping measures are enforced. One suspects there's others issues at stake so it's going to take longer than the companies under pressure hope for. 

Royal Mail (RMG) - came out with better than expected results. The sector outlook remains competitive and consider RMG, in the absence of significant change, to be a dinosaur. The industry, like most sectors,  is cannibalising their own margins in the search for dominance. Not specifically aimed mail and courier companies - but there appears to be a thirst for expanding into space at the cost of all. See DX Group (DX.) trading update and UK Mail (UKM) half yearly report whom both showed the competitive nature of the market.

Johnson Matthey (JMAT) – Interim results were undoubtedly better with the added bonus of further savings (£30M). The news from JMAT’s Emission Control Technologies division (ECT) was waited for. There have been few/little indicators of how well the diesel market was performing after the current VW issues (whom just increased the number of cars with emission woes).  Our belief that the diesel demand would fall has so far proven incorrect with Europe doing well – more so it appears to be expanding.

There has been continued commentary around NOx emissions from diesel vehicles and speculation as to whether diesel's share of production in Europe may decline.  The proportion of diesel vehicles produced in Western Europe was stable at 51% in our first half (H1 2014/15 50%).

We did not properly consider that lower PGM prices would be so beneficial to the working capital levels.  Nor the true read across from the NOx issues that are a hot topic as a result of VW’s actions. JMAT, like Umicore (EBR: UMI), informs us that 6B + NOx requires additional catalyst technology and increases sales per vehicle for Johnson Matthey by around 20%.

JMAT's Dividends will be hugged in a shrinking market. (bold italics addition) - An interim dividend of 19.5 pence per ordinary share has been proposed by the board which will be paid on 2nd February 2016 to shareholders on the register at the close of business on 8th January 2016.  

The estimated amount to be paid is £39.6 million and has not been recognised in these accounts. The board is also recommending a special dividend to shareholders of 150.0 pence per ordinary share which will be paid on 2nd February 2016. JMAT could have utilised the sale proceeds better, one would hope they’re in the process of one or two acquisitions before the 2nd February.

Have a good weekend, Atb Fraser

PM Bolt-On; VW the unknown (bleugh), Chinese PMI Data + SOE defaults + Copper.

Good Evening,

VW rose - judging by the number of analysts pinning the name to €126-€130 a share, it would appear the world and his dog bought into it. Save for here, where undoubtedly there's trading opportunities, but the end game has yet to play out. We'll close the VW item on some teasers for those willing to burn the midnight oil:

1. What is the cost of a fix per unit, based on 85% recall uptake? We have taken this apart today and come back with various figures from the low side of $450, to the average of $1,500 per unit (remedy).
2. With the press statement and Notice of Violation outline some of the issues. Worth consideration is the Air Resource Board compliance letter. In discussions today with a very helpful lawyer, it was suggested that a mass refund process is unlikely.
3. The law affords most vehicles manufacturers the opportunity to rectify the issues. The sticking point is, not only have VW had the opportunity, but they in essence they obtained an invalid certificate of compliance (COC) by installing the defeat device. What are the implications for breaching the TREAD Act?
4.  Assuming item 2 is correct, there will be a valuation gap that will have to be honoured between the cars previous value and that of today, plus compensation.  If item 2 is incorrect, then it’s a fire sale of a significant number of models.

It’ll be prudent to revisit the VW issues as it evolves.

The Caixin Flash China General Manufacturing PMI™  - below the revised consensus. Despite being conservative on the figures with revisions, the outlook does not look great. 

Its prudent to acknowledge the impact of the WW2 celebrations and athletics, but this was allowed for in most consensus. There was even an attempt to over-shadow the woes with China’s order for 300 beoing planes and a factory.  The PMI is worth a read, and in part, validates the hard work put in to keep ahead.

We have a sense of déjà vu, with China National Erzhong Group defaulting, albeit briefly. The levels of wastage in China have been commented on here for a number of years here, making up for near 40-45% of GDP (this is declining rapidly) - contrary to those Chinese bulls. The situation is now unravelling, not only due to inflation but a liquidity event in the making.

China are going to be compelled to make a significant adjustment to their Reserve-Requirement Ratios (RRR) by a whopping 200 bps. Although this may be conducted with some form of sensibility and over a period of 6 months. Its clear that the Chinese are now starting to tamper with their figures to avoid any suggestion things the economy is stalling (Who’d have thought it!?).

Li suggests those with an interest in China, should look at the number of failed SOE (State Owned Enterprises) and their subsidiaries that have either attempted to uncouple themselves from the state or list part of their operations in Shanghai or Hong Kong. Erzhong did just this.

Erzhong is a prime example why one should avoid the alleged investment case for the majority of SOE’s. We’ve had sub-prime, interest rate rigging, auto emissions, all we need now is some form of litigation on the back of alleged SOE sales pitches implying viability. 

There’s a raft of debt issued or that was rolled over circa 2012, with repayments becoming due. Whether enticing investors into SOE’s is wise for China is another story, unless of course there’s two sets of books.

With a quick glance at the miners suggesting some were breathing a sigh of relief, there’s a number of technical indicators that Rio et al are struggling to hold on to. It would be rude to forget copper and Glencore, or as one chap called it Glenron.

With copper teetering around $5000/t (+1%), $2.29/lb it’s struggling to find support. If we believe the producers the demand and supply mix isn’t as bad as the price would suggest. In that case, with 266K/pa production cuts (assumed), why hasn’t the price sustained a recovery? That would be…

Caterpillar (NYSE: CAT) have a realisation that the rig count and mining woes aren't necessarily a good thing for earnings. Especially as JCB fired the starter pistol on the outlook.

The paired trade for midday - short Umicore (EBR: UMI) and long Johnson Matthey (JMAT) (EMC: JMAT & Umicore). To finish, some wild card (high BS rating gossip) of Intu Properties - allegedly there's some fund or other sniffing. Really? Good luck with that one. The market does love a bit of gossip. 

Atb Fraser

PM Bolt-On: One for the train! SXX (limited) & Johnson Matthey (JMAT) absent of depth, amateurish and lacking substance, but all the same.

Good Evening,

After a lot of communication regarding Sirius Minerals (SXX), to save replying to everything. 

There's two cases for SXX, one that the longer-term holders whom do not feel the need to trade and can see the value over 5+ years and those short-termers with a differing view. 

Without reading too much into the news today, there's no reason to change ones view. SXX was a case of sell on the approval news on the 1st July. The directorate change and market move update should be welcomed by the longer-term holders. One suspects its getting very near a price where there's a reason to buy. 

With an impending Main Market listing on the London Stock Exchange, this should support SXX's value in raising near £550-700M (pending which way you turn the can). With the strength of the U$D as well, its likely any international investors may be pleased with such an investment.

In the absence of some significant corporate action or fundraising news, SXX with be mothballed, although one may have some purchases near lower prices. It would be very disappointing if this stock couldn't benefit from the potash position and being viable well below the potash current market price. 

Johnson Matthew (JMAT) had Q1 trading update last Wednesday, with the woes of the industry being evidenced by the results. The EMC: JMAT Coverage has been criticised for being absent of depth, amateurish and lacking substance. Those views may be correct, but what has been covered has validated the viewpoint not to hold the stock long and/or short. (See results). 

			Q1	Q1		%
			2015/16	2014/15	%	at constant
			£ million	£ million	change	rates
Sales excluding precious metals (sales)
Emission Control Technologies			478	444	+8	+6
Process Technologies			130	119	+9	+8
Precious Metal Products			85	101	-15	-16
Fine Chemicals			78	78	-	-4
New Businesses			38	18	+107	+126
Eliminations			(12)	(11)
Group sales			797	749	+6	+5
Underlying operating profit1			103.6	103.6	-	-1
Underlying profit before tax1			94.0	95.0	-1	-3

¹ before amortisation of acquired intangibles, major impairment and restructuring charges, profit or loss on disposal of businesses.

JMAT may be the world's largest auto catalysts maker, but having rested on its laurels and not acquired into key markets, it’s lacking diversity.  In revenue terms the drop in profits is more significant that the sector gave credit for. Not only is JMAT impacted by multiple foreign currencies but the decline in PGM prices. This may change sooner than people think, pending on the outcome of Lonmin (LMI) and its backers. (Risk Event)

The question for investing in the bull case for JMAT is whether they are likely to benefit from the European regulation on emissions. Yes undoubtedly, but this is slowing more so and a much more progressive company called Umicore (EBR: UMI) is winning space.

UMI is cutting into JMAT’s competitiveness (Margins). The cycles on Heavy Duty Diesels (HDD) have peaked and the Chinese woes are creating more risks. With Europe’s HDD market in contraction its going to create further pressure. Fleet ages are suggesting an extension on ownership and renewal cycles of near 12-15%, but only a 1% up on 2009 figures. Perhaps truck recovery and parts are the way forward? GKN?

UMI have been able to benefit from location, reduced FX woes and the Euro 6 catalyst production both for passenger cars and heavy duty diesel applications. UMI are expanding into JMAT’s bread and butter environment that is also declining/under pressure. This should be a concern for any JMAT holder, a cash return is simply an acknowledgement the business will be purely cyclical based on demand on its undiversified offerings.

JMAT’s bull case is the cash return, dividend and longer-term performance, but in the absence of one large acquisition, they face being an also ran to the progressive UMI.  So with cash in the bank from  Gold and Silver Refining Business for £118 million and another £256 million for the Research Chemicals Business (Alfa Aesar) by the end of the year. JMAT will have £374M available plus borrowings to go on the acquisition trial.  

It would perhaps be sensible to expand, as catalysts are at risk from ‘alleged’ greener eco-models laden with batteries. The weakness in current events and risks being ascribed to the macro environment will assist JMAT. They are in a position to leverage and warrant a premium to their stock. The caveat being, any small scale acquisition (unless in numbers) will question why JMAT sold its Gold and Silver Refining and Research Chemicals businesses.  

Punished for lacking diversity in technology, metals prices and outlook but economic uncertainty. Time for a management change? No change in position until news. Although, UMI are likely to be under-pressure as well, but one for another time. 

Atb Fraser

Morning Mumble: Pressure Technologies (Another profit warning), Vedanta and the "continuation of the paradigmatic shift for Iron Ore."

Good Morning,

Pressure Technologies (PRES) gave an update on trading and notification of interim results. It’s dire, with a material deterioration in the immediate prospects for the Group's Precision Machined Components and Engineered Products divisions. Worse, the Alternative Energy Division has now been completed but the division has experienced delays in securing new orders which will impact its performance in the current year. EMC: PRES December 14 (in addition see PRES Labels). 

With limited liabilities and cash at circa £5m the company is not going to go bust immediately, but in the absence of orders across the entire company the prospects are not looking good. After their update in February, things have clearly got worse. Valued at around £30M and a tightly held stock, there's likely to be limited support in the short-term, save for some speculative buying (knife catching). Simply put, any improvement in their divisions will be hit or miss. 

No doubt the technical analysers will be looking at the gap between 270 and 211 overnight, however the price appears to be overvalued as a result of today's announcement. The company has great potential for holders, simply not at this price with too many unknown risks, and that includes the businesses inability to forecast future revenue in light of the oil tumble. PRES is a well-run company, with an unfortunate set of events working against it, it will be overly punished. 

Today, Vedanta's (VED)'s update is an example why VED's structure is so difficult (perhaps even complex) that it needs to transfer equity between subsidiaries in order to enable "cash" to target the required resource. VED's structure appears to have limited tax benefits, so one would be wise to ask why exactly is the structure so complex. (See below: Vedanta). In simple terms it’s a corporate dinosaur with little in the way of synergies between entities. Today's actions appears to be "robbing Peter to pay Paul."

The "paradigmatic shift in iron ore" is likely to be played out very soon. With gossip a joint Baosteel and CITIC Group (China International Trust and Investment Corporation) "are likely to gain full FIRB (Foreign Investment Review Board) approval" for a direct investment in FMG. Expect some nationalistic issues about Chinese investments to be negative for Australia (close the stable door after the horse has bolted). 

China's selection of 'favourites' in the iron ore sector is a shrewd move. Not only does it weaken BLT/RIO's hold on price (if there was any left), and place a long-term low cost (ish) supply in their hands, it maintains a significant diversity in the market. As evidenced by the backtracking by the China's on view on the Valemaxes fleet with the recent deal with the Chinese. A complete backtrack on the part of the Chinese. (See: Aquila Resources BaoSteel deal)

Johnson Matthey's (JMAT) results are better than envisaged, but still overvalued. JMAT has been a technical short off 3475 for near 6 months. Irrespective, the revenues are down circa 10% (allegedly as expected) which contradicts the sell-off this morning. 

Stripping out the sale of the gold and silver refining business, profit was a head at £422.8M (£406.6M), near 4% on the previous year. With such a "positive year" despite a reduction in expenditure net debt was up £265.2 million to £994.4 million (net debt to £1,037.6 million if you include pension deficit and bonds). 

The divi-will support the share price, although 2% is supported only in part by the sale of refining business. Debt on the increase there are a lot of assumptions on the positive outlook that contradict the wider vehicle market including trucks including fleet age cycles. 

With the HDD (for those layman's: Heavy Duty Design) trucks being in a positive renewal cycle, JMAT will benefit as the older fleets are being replaced especially in America with economic 'recovery.' Remember, fleet renewal cycles are being run for longer, will JMAT  be impacted as the fleet renewal cycle peaks to the current level but in the short-term will benefit. 

Can growth keep pace with the increased age of heavy duty trucks in the longer term is another matter. Perhaps the answer is a reduced seasonality which will assist manufacturers in planning. This of course is contrast to the average age of cars declining by 12.5% over a 14 year period. No change in the view that there will be limited growth and the potential for adverse currency movements. So banking profits on a technical basis, it’s wise to review the position. 

Atb Fraser

Disclaimer

Morning Mumble: Wafers...treading on thin ice &

Good Morning,

Hanergy Thin Film Power Group will be in the press a lot over coming months be it a squeeze or drop. The FT runs with Breakneck growth of Hanergy raises question. It’s a different twist on the repeat in the solar cycle for China. There's been significant consolidation, but do the earnings and receivables having a similar whiff about them. It’s a tightly held stock with the founder holding circa 70% of the stock, 5% out on loan, there could be a difficulty covering any short positions in a further squeeze.  

The article does not go into the trading elements on the market, Hanergy's (HNGSF) price has appreciated by a significant short squeeze. A stock which most traders have been waiting on the side lines to about turn and ride down circa 80%. 

For those not short-selling of any form HNGSF is one for the packs, its already at a pivotal point and the shorters have (please note past tense) clambered over themselves to obtain stock. This stock is worth no more than 1.30HKD on a good day and the FT will no doubt be reporting in due course about its share price movements in more detail. 

The accounts are not the only issue with HNGSF. Would HNGSF like to clarify what development grants are within the accounts including any Government payments? HNGSF's position may also be fuelled by the closure of positions that had been previously rolled over in the Chinese brokers now under review and suspended from taking new clients? Of course the China Securities Regulatory Commission (CSRC) inspections will find no issues at all...but with Shanghai and Shenzhen holding around $175B of leverages shorts it does not bode well if the industry got a regulatory slap. 

HNGSF as a listed solar companies is unusual, due to its HKEx  listing. You do not have to be too shrewd to find a way on to the train. Normally OTC stock via NYSE, or alternative derivatives but its globally available via even the most basic retail spread-betting portals. 

One illiquid delayed trade that has been been good for long until the trend now being at significant risk is the CSOP CES China A80 ETF (SEHK). Fairly simple product and one that mirrors Chinese Pref A Equities. With Chinese industrial profits falling, the market is falling back/stagnating until further stimulus is announced. 

In the land of the AIM, it’s amusing to see the markets pricing in so backward with Mosman Oil and Gas (MSMN). For those readers now aware of MSMN, (EMC: Up the creek), if you know a long holder, it might be wise to lock their drinks cabinet and submit them for drug testing. Is there any reason why this stock is above 2 pence? If you are wishing to email about MSMN please don't the sympathy departed in December 2014. 

We have another, Bagir Group (BAGR) (EMC Bagir Group May 2014 Sarcasm) today with their trading update , which comes with no surprises. Ever since the IPO the warnings have come out, the revisions downwards and the company I suspect will at best break-even. Listing at 56 pence, there's not much further for them to go. (Disc: no position now). There should be some serious questions asked about the timing of the BAGR listing and when they knew about the material downturn in trading so shortly after listing, from memory 1 month after listing a warning was out.

The disparity between Brent and WTI is not without sense, with various opinions going round about $50/bbl being the new ceiling or floor. If $50/bbl is the new floor, how is WTI trading at $45.47/bbl and Brent $49.06/bbl. 

Iron ore really starting to put the boot in on the listened smaller entities, those with higher leverage FMG (Fortescue Metals Group) and Atlas Iron (AGO: ASX). Whilst it was with some hilarity someone attempted to point out why AGO's a buy based on dividend yield. If there is one? Christmas was your exit, you've missed the boat!

JMAT (Johnson Matthey) today give the Q3 trading statement. The refinery additives and diagnostic division is going to come under further pressure being reliant on the petrochemical industry. The industry is currently sick as a dock and expenditure being scaled back, why would JMAT be exempt?

The outlook for the car and haulage industry varies but the majors guiding to a decline in production of circa 1% and as a result a drop in earnings, stagnation is likely for JMAT at best until the cycle changes. The technology premium for JMAT should be under review. Emission Control Technologies the kingpin of the company is reliant on on industries peaking or little growth. There seems to be an echo of EMC just getting it write (scuse the pun) EMC JMAT above its money and under pressure. One could argue there’s no viable benefit in holding JMAT until oil is 40% up…JMAT still missing their AAL (Anglo American) fees! 

Little time for the other items...

Atb Fraser

Thank you for the well-wishers for my daughter, she's not playing again today and didn't sleep well. Being off on business soon I hope she recovers from the lurgies. 

Morning Mumble: Pathfinder Minerals (PFP), Fox Marble (FOX), Greggs (would be rude not too) & WRES (tide turning)

Good morning, a hectic weekend and myself finding myself in the Christmas spirit, yes I'm officially long Christmas. 

Pathfinder Minerals Update Re. Mozambique Court Proceedings brought some Christmas cheer to the holders of the litigation fuelled PFP. The market has rightly ascribed a value to PFP's claims and the outlook is better after today than had previously been priced in. Over to General Veloso and Diogo Cavaco to decide the next move. One assumes now that ownership is not in dispute the remedy is closer than most parties envisaged. Obviously there's more to do it in terms of legal representations. The supreme court paperwork based on the information in the public domain makes for a common-sense outcome, this does not mean that shall happen but its certainly looking more than likely. 

Fox Marble Holdings Sales Agency Agreement came out today, with sales agency agreement with Zhong Shengdestone Co, ("ZSC") headquartered in Beijing, China. It bodes well for Fox Marble, but an exclusivity agreement does not for Fox, this should have been a regional agreement over any Country licence. We'll ignore the fact should a customer become the agent as there's pros and cons to this type of agreement but exclusivity like certain issues Baxi faced with British Gas a few years back, did not turn out as planned. This is something to consider if/when INSP (Inspirit Energy) if the gossip is to be believed. 

We'll await further sales agreement updates before going negative, but suffice to say the company's positives are being limited by this type of agreement. Upside yes, but now being limited, exclusivity with the quality of stone should have been with some form of financial payment to FOX to motivate the partner. The minimum order of 10K tonnes is...erm...paltry.  

Gregg's (GRG) came out today with yet again better than expected results in their trading update today. Expect some reviews and upgrades, the comparison year should not be read as like for like based on the previous years figures being below par. Its not wise to attempt to go negative with the company performing better than market expectations, so yet again the patient are waiting for the turn (negative). The GRG model appears to be well received by their customers including the face lifts and product offerings. Was I wrong to call the results in September a fluke? My view not, but the market and the company have clearly told me otherwise today. With my eye more so on the weather and retail, its under review  with this type of model / business likely to benefit from falling oil prices (more money in the customers profit). 

Johnson Matthey sold its Gold and Silver Refining Business for £118 million to Asahi Holdings Inc. JMAT has yet to suffer on the same scale as the likes of most refiners / commodity operators due to the value the market is placing on its chemical and technological applications. Why JMAT are flogging the refining business with returns of Circa 25% which is above what JMAT's other parts of the business provide gives an indication on the outlook for Gold. It's a good return in the current climate for gold. Being valued at Circa £6.8B JMATs above its money, expect it to give up some of the recent gains, in light of commodities and pricing including some pressure on JMAT's margins. JMAT's previous half year results for the six months gives an indication of the pressure they're under until the cycle in commodities (and commodity based tech) improves.  

Today's no news award goes to Kefi Minerals (KEFI) as they announce that the total Mineral Resource at Jibal Qutman is approximately 30% greater than previous estimates (whoopee?). With the current gold price and recovery of around 80% on this low grade project its really a question of why they're bothering with it (at the moment). The focus is on the ex-Nyota Minerals Tulu Kapi, perhaps Kefi should reduce the number of spinning plates post honouring the new 4 license commitments to minimal exploration. The noise will be about Tulu Kapi through to June/July 2015. Should I be turning bullish, unlikely...

W Resources Plc (WRES) turns the Power On at La Parrilla Mine Connects to Spanish Grid. This might go some way to stop the rot in the SP. Investors seem to be blind to the declining tungsten prices, led 4 weeks ahead by China (yes it has got that predictable). The funding arrangement with Bergen Global Opportunity Fund, LP did not help matters but now with a further reduction in costs, assuming this doesn't make its way to boardroom remuneration the company is starting to tick a few boxes. 

The punt is on the ramp up in production and the utilisation of funding to scale the ops, currently targeting around 25t/pm looks more than likely with Production rates at La Parrilla increased significantly. WRES state they're achieving target rates of around 1 tonne per day on a number of days during the second half of November following the installation and successful commissioning of new feed systems in early November. Strong interest has been expressed from a number of customers for 2015 supply contracts and deliveries continue to our European customers. 

Limited time, Atb Fraser