Morning Mumble: Iofina (IOF), Diamonds, industry issues (stay awake) and another reason for Grexit to FLOW, VAT? KEFI's Placing and the Sherlock award!

Good Morning,

Iofina's (IOF) production update will no doubt be taken positive, the market should be wise to price in inventory levels and sales rather than "just production increases.” IOF has held circa $3-6M (the lower more recently) worth of inventory as a minimum over the past two years, the decline is also in light of the falling Iodine price.  

In the absence of an announcement of increased sales equal to or greater than today's announcement, expect the next set of results/accounts to show a near 30% increase in inventories. If one didn't know better, it smells of a fundraiser. Holders are reminded of the difference between production and sales, especially in a tight market with low prices and demand growth in the industry limited to circa 3.5%. Perhaps a push into the health market, assuming one doesn’t have certain rashes and thyroid issues.

It is International Diamond Week in Israel (well all two days of it) with the President of the World Federation of Diamond Bourses (WFDB) highlighting a few issues. With various concerns coming out of the conference, and positives. The main factors include:

• Over-grading (Rapaport Diamonds Magazine) by some labs that's caused an issue in reselling and confidence by the customer. Wonders will never cease, those ambulances will feel lonely with some legal practitioners diversifying See: lawsuit. 

• Conflicting diamonds, yes its still going on.

• Money-Laundering, something PLUS500 knows all too well about. Diamonds being highly portable, quite how the WFDB members deal with it is another matter. More so financing, with the formation of the Financial Action Task Force (FATF) back 1986 its still not cleaned the industry up. One suspects the absence of "mainstream" financiers as a result of the Antwerp Diamond Bank (ADB) closing, is compelling some dealers turn to the "non-mainstream lenders."

• The banks (of the ones left) want diamond companies that have traditionally been family owned, to adopt a more corporate structure. 

• Something diamond producers were slow to acknowledge was that lenders wanted diamantaires to put up more of their own capital. The 100% lending is long gone with the norm circa 50-70% pending on quality. Something De Beers expected in their new sales contracts (July 2014) and  EMC: July 2014 De Beers further strengthened in the sightholders and Accredited Buyers contracts including a greater transparency in financial reporting.

Over to ABNAmaro to assist the market, but more so find a structure other industry lenders would welcome and support, rather than maintain the opaque nature of the diamond market. Anyone for “Easy Diamonds plc” type venture, surely the market is crying out for such a well-funded entity in light of ADP disappearing and Dubai/UAE only filling some of the void. The bottom certainly looks near for the diamond industry with all their current woes, financing issues, over-grading and limited compliance with a sensible financial structure.

In a discussion about energy efficiency and far from embracing all things green, it was surprising to see FlowGroup’s (FLOW) model destroyed in one fell swoop by the EU. Does this mean the model is viable at all? It would appear that the VAT rate was the cream that meant the boiler would be able to pay for itself in the current lifespan of products?  Installation(read as profits) warning for FLOW.  

One hopes for the company that FLOW can reduce their costs sufficiently to enable the “'Boiler that pays for itself' model. However, the Government might have to step in with some form of subsidy. It’s noted that INSP (Inspirit Energy) have not commented on this, perhaps due to their target market being more commercial and exempt from the 5% means, there’s no material change?

Today is also the day that the EMC Google Alerts system evidences being a worthwhile addition to broker opinion and the Borg. It’s sensible to consider them even in your office. Having converted quite a few “professionals” to adapt from the all-seeing Borg (Bloomberg) by creating their own systems in conjunction with the Borg.

Having not taken a position personally, it’s a massive hat-tip to a small firm down that spotted this in their alerts and the implications ConstructionManager: U court: 5% VAT on energy-savings products is illegal,  FTEuropean court rules against low VAT for energy-saving equipment & Guardian:Households must pay higher VAT on insulation and solar panels, EU rules. The source being Google Alerts, although not quite turning to the dark side, they did manage to prevent significant losses. 

Imagine that, “yes sir, it was thanks to that public access portal (PAP) known as Google we managed to divest all your holding.” Perhaps Flow were tardy in their EU implications update to market with such material and significant public information?

This morning, on the belief that the Government will create direct subsidies (still permitted in the EU) rather than via VAT system, I have caught a knife (or not). It was tempting argument (risk) to buy into FLOW, albeit a small position. Expect an update from the Government due to the significance of this ruling on a growing and rather larger industry.

KEFI Minerals have completed a placing for £2.8M. (EMC:Plate Spinning & Cashflow April 2015). With AUSDrill International taking part in the placing, although small its giving an indication on who is looking to fund the project.  Admittedly AUSDrill have their own woes, AU$400M of debt, declining revenues and available cash of AU$62.7M. AUSDrill’s share price has been a proverbial ski-slope and in the absence of some decent deals, holders will no-doubt be impatient. Kefi will need more cash in due course.

It would be positive if W Resources (WRES) LaParrilla Definition Study actually had put up some pricing assumptions in their announcement. WRES have either cleverly or stupidly prevented any analysis being possible.

If one was to factor in today’s price for Tungsten and Tin ($235/mtu and Tin $14425.00/t), the IRR drops significantly to circa 36-41% (fag packet and quick). The economics simply don’t stack up for the FTM (Fast Track Mine) when for a modest increase of $30M on the initial $16M (total $46) WRES can increase production near 4 fold. Equity requirement would be circa $15-20M.

With WRES keeping the lights on with VAT refunds (€388k is expected in Q3), expect a placing soon. No wonder the price dropped on the news, if one cannot be bothered to inform their holders of pricing assumptions when announcing “good news” don’t expect the holders to get carried away. If WRES (Broker(s)) want to get a decent sized fundraiser to develop the asset they’re going to have to do significantly better than today’s announcement.

An award of sorts goes to Metminco (MNC). They have realised sieving the beaches may have produced better results than their original cut-off grade of 0.15% for copper, even as an open-pit operation. Today’s cut-off grade increase to 0.5% Cu should make the punters realise the woeful inadequacy in even attempting to utilise 0.15% as a cut off. With the Sherlock award going to them for pointing out that operating and capital costs will be significantly lower mining higher grades. Shocking Sherlock.

Sound Oil's initialannouncement read as plug and abandon, today we have confirmation of that.  

Finally, something as promised EMC:Dispatches and Dispatches:Supermarket Wars. Something worth a consideration for those long-only supermarket investors.

Atb Fraser

Morning Mumble: Par Deux, KEFI's Tulu Kapi, Minco (MIO) and SRX

Good Morning once again,

Kefi Minerals (KEFI) came out with update on the progress Definitive Feasibility Study (DFS) and financing. Amazingly, the DFS is starting to look "slightly" different from Nyota's DFS all those years back in December 2012. It will certain be interesting to see how the company has got to all-in-costs (including operating, sustaining capital and closure) of c. US$783/oz (excluding initial investment). Based on what was previously suggested all in costs were circa $900/oz. so the $783/oz will be very surprising! 

We'll await with patience on the full update next month (?). If the headlines are near, it could be a very interesting time for Kefi's Tulu Kapi, unless of course there's a JV which removes a lot of the potential for the long-suffering Kefi holders, although this is believed to be very unlikely, its still a risk as KEFI still need their share circa $50m for their equity contribution. 

From the RNS, as it appears to be copy and paste day!

• After-tax NPV of US$112 million assuming an 8% discount rate and gold price of US$1,250/oz and US$73 million at a gold price of US$1,150/oz
• The targeted funding mix is for up to approximately US$100 million from debt-style financiers (conventional project financiers along with the structured supplements thereto) and the remainder from financing arrangements with project contractors and/or equity from investment institutions at the project or parent level

The draft of the 2015 DFS is now being reviewed by the short-listed secured lenders' independent technical consultants to ensure plans, and substantiation thereof, are aligned with financiers' expectations. The Company's management is also preparing final tender documents for the mining operations and for construction of the process plant and infrastructure. Short-listed project contractors have indicated willingness to participate in project funding.

Continuing on from EMC - Mio Woodstock, was something Roger Bade highlight yesterday. Roger's conducted more work on this but limited time its easier to cover his words yesterday. Interesting the differing view on the returns on Woodstock, which contradict my view of Hongxin Group's (potential/gossiped) interest in the Woodstock asset. 

Minco (MIO) - Reiterated BUY

The shares shot up post their Q1 results as they indicated that a Chinese electrolytic manganese metal producer had initiated technical due diligence at their Woodstock manganese project in New Brunswick, as Minco looks for a partner to develop it.

More academically, at end March they had US$5.43m of cash, while drilling continues at their Buchans base metal project in Canada. A breakdown of the various carrying values of their projects was provided, with Buchans topping the list at $5.921m, Woodstock $3.659m, the Pennines $2.494m, for an overall total of $13.412m. From this portfolio we only carry a valuation of £1m for Buchans, thus illustrating the potential for exploration success throughout their portfolio.

Their June 2014 compliant Preliminary Economic Assessment on Woodstock indicated potential returns way below our criteria for excitement, hence we look forward to be pleasantly surprised if they find an interested Chinese partner.

We still think the main value is to be had in their 2% Curraghinalt royalty and continue to value this at around 50% higher than the current share price.

Get well soon Roger, one hopes the tonsillitis doesn't turn into Ebola! 

Its hoped I can come back to the Sierra Rutile (SRX) announcement for Sembehun Dry Mine scoping study. Without digging through paperwork its hard to establish their assumed market price, but the returns suggest it may be a tad bullish. SRX's pre-feasibility study is due Q3 2015, so plenty of time to get there before the market! One assumes they utilised the consensus pricing from last year that was rather bullish at $1/t+ Edited $1K/t+, when sensibly consensus suggested Rutile's low is around $800/t. More when there is time. 

Although admittedly, the economics for SRX's Gangama Dry Mine even at the $800/t are compelling, at circa £150M market cap SRX "may" just have some prospects good prospects. With the rainy season upon SRX, one hopes the bulk of earth works were completed for the Gangama Project (Sierra Leone rainy season June-November). SRX have Wayne Venter joining from Norilsk Nickel on the 1st August 2015, as chief operating officer. Certainly more potential...than previously. 

SeaEnergy's trading update "may" not be as bad as one first thinks, perhaps a little knife catching! Although SEA's may be a little optimistic of "when the time is right" to divest/flog their Lansdowne Oil & Gas plc (LOGP) might be a long way off! With Providence's Resources (PVR) issues, perhaps a bird in the hand is worth.

Atb Fraser

Disclaimer

Morning Mumble: LMI shorts (via Glencore), Robertson's Jam or is it Marble, W Resources, Kefi and...SAT

Good Morning,

Glencore have put in place a managed sale for Lonmin (LMI) holders having less than 30K LMI shares post GLEN distribution. One cannot imagine how they are going to manage this, are there so many buyers for the stock they have willing gift aiders? Could there be a squeeze? Possibly but all the same the fundamentals have not radically changed to warrant going long. 

What is becoming a bit like a Robertson's Jam Company, with small time deals that really aren't going to give any decent returns to shareholders at the current level, Fox Marble raised £2M placing. It’s an indication that without decent sized orders (market place traction), FOX are unable to turn interest and orders into sensible levels of cash flow and as such shareholders get a return on their funds. EMC: FOX Marble coverage. The stock, despite consistent below par performance seems well supported, for now! Without decent news-flow, this placing could put a cap on the SP.

Kefi Minerals financing update yesterday shows they have not extended the deal with Goldfields (for now) and have raised cash from elsewhere. However, at this price, the wider development funding plan for Tulu Kapi gold might actually be worth a punt to the news. KEFI suggest the financing for the project remains on track for approximately $120 million of development expenditure to be required over an 18-month period commencing in Q4 2015. 

Today, we have the listing of Satellite Solutions Worldwide Group PLC (SAT), with them raising cash much needed cash. One finds it hard to justify any investment in this type of company, save for acquisition and expansion (consolidation of the fractured sector of small operators). 

The concept is positive for those limited with broadband infrastructure, and those whom are will have little choice. Perhaps SAT will diversify into Microwave Broadband with greater penetration, lower costs and better returns. At the current pricing levels costs could be prohibitive and a last resort for some. One to watch in how the management can delivery, it’s not going to be easy! 

In tiddler watch, W Resources (WRES) announce some decent grades intersections in CAA / Portalegre Drilling Campaign that may underpin the SP. The appreciation post the exit from the Bergen facility should have been an opportunity to assist holders in taking some cream of the table, with patience required for the cherry! 

An update for WRES on La Parrilla Mine + tailings would have been viable. It’s ironic some analysts of this tiddler perceive farming out CAA / Portalegre is 'only' an option. No option here, WRES have to do it, too many plates spinning doesn't bode well with limited/restricted cash (the risk).

Those shrewd EasyJet traders positions themselves 4+ weeks ago, have been rewarded today, with an admittance in the half yearly that the French Air Traffic Controllers strike has hit the bottom line. Hat tips all round! 

Atb Fraser

No time for the rig count obsession/increase and drop in oil! 

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

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

Morning Mumble: If Boohoo (BOO) and ASOS (ASC) can do it...B(H)S and oil+shipping (as promised).

Good Morning, 

It wasn't so long ago in a meeting about 'where to invest' in a low oil price environment, I found myself recommending short oil/associated products including washing powders and the like, whilst longing holiday companies and retail leisure.

Next's validation will come shortly on Thursday (Preliminary full year results) with the "beat" being reported as a head of consensus. Perhaps not all blue sky as the market is becoming more active, expect margins after this quarter to go under-pressure again. Simply put, if BOO and ASC can do it, then NEXT should be staggering. 

The debacle of BHS, has no doubt been amusing for the sector pundits, but if the journo's don't have a clue, then we hope those fronting the company do. So whilst at the races, there was speculation from those in the industry that BHS has been acquired by a subsidiary of Iconix China Group and the daughter of Silas Chou, Veronica.

Whether Iconix or the Chou's are the reality behind BHS or not, its speculation based on Silas Chou/Veronica Chou alleged desire for a UK acquisition. For myself, if they're behind big brands, why own department stores? Those of you like I thinking,...who, what, where is Silas Chou, being swiftly told off on Friday, apparently they’re behind the IPO (2011) of Michael Kors and the purchase of Tommy Hilfiger in the late 80's, Karl Lagerfeld and Pepe Jeans. Clear as mud to I, but if I'm honest, not something I will be keeping an eye out for. 

Staying in retail, it looks like Richard Chase is exuding confidence in AO World (AO) stock slotting 5,583,475 shares  at £1.80.  John Roberts (Chief Executive Officer) assures the market John Roberts, Chief Executive Officer, said: "The share sale by Richard Rose follows the expiry of the post-IPO lock-up and will help to further increase liquidity and the number of shares in public hands. Richard remains committed to the Company, both as a shareholder and as its Chairman." 

If one thinks selling 85% (circa) of your stock (a sizeable holding) is commitment and confidence, then this week I shall spend a few hours applying for Chairman type positions of stocks that are stonking shorts. Richard Chase has unknowingly made the Christmas card list of every shorter in AO. 

Kefi, the amazing performing Gold stock, you'll note the sarcasm, gives an update on Tulu Kapi. KEFI are apparently only having to find $20m to obtain $100M in debt financing. They have a number of possible sources currently being assembled, including financing from contractors and equity at the project or parent company level. Over to the International Finance Corporation (IFC) to stump up sum (poor!)! if the equity is at the parent company level, one hopes the current shareholders (including yours truly) do not need a snorkel for the impending dilution! 

Ian was discussing his long in HOC (Hochschild Mining) over the weekend. Having spent so much time away from technology, its apparent he's incapable of differentiating between a long and a short. Today, with silver finding significant support its wise to close any shorts on HOC, not for fear of a change in trend but to lock in significant profits since the Christmas Silver bounce. They're also announcing their annual results on the Wednesday, and they might not be as bad as the market expects. One hopes there all in sustaining costs of circa $17/oz. is much better! The common-sense coverage of HOC via EMC from November 2014.

It would be rude not to consider oil and shipping rates, WTI at $44.26/bbl, and Brent at $54.20/bbl. these prices are likely to impact on shipping rates as speculators exit their floating storage rates. These rates have continued under pressure with Suezmax Tanker Spot Rates into Q1 2015, dropping near 20% from the start of the quarter having peaked at $80K+/day down to $47K/day, Aframax Tanker rates fairing much better at circa $38K/day. LR2 Tankers rates at $26k/day. All classes all (excluding Suezmax) are near 50% above the rates of 2013/2014 and Suezmax up near 100% on 2013/14). 

The industry men describe the current rates as very strong. Based on the oil price being low, with continued strong demand (Asia from Arabia) and stockpiling (surely there can't be much more), and the rates benefiting from the storage speculation (albeit reducing). The market has missed the reduction in Russian export duties (circa 40% lower), where oil producers/exporters delayed shipments to save a few $$. So more oil out of the Black Sea, Mediterranean and Baltic! The weather is impacting on the Turkish straits, delays near 6-8 days. 

With the maintenance schedules coming up at refineries around the globe, this will push higher inventories and impact further on the prices. Will the trend in rates encourage speculation in fleet growth depressing the industry? Oh yes, tanker/shipping rates are likely to come under significant pressure end 2016 into 2017. 

There's been contracts placed on around 49 long-term Very Large Crude Carrier (VLCC) and Ultra Large Crude Carrier (ULCC) in the past two weeks, giving a floor to the rates and removing excess capacity from the market. All boding well for the tanker market rates but limiting the spot market delivery capabilities. 

Afren (AFR) down another 20% today, perhaps holders have smelt the roses? Don't be silly...over to GKP! 

Atb Fraser

Morning Mumble: The Rumour Mill in Afren & Gulf Keystone...positives for KEFI? surely not!

Good Morning,

Afren (AFR), appear not to have updated the market on "the likely" outcome of the bondholders with monies allegedly already being discussed. Speculators would be wise to acknowledge the risks associated with the equity going to 3 pence. 

This morning, Leggie rightly points out it's an identical play to Petropavlovsk Plc (POG), whom Deutsche Bank AG put their head above the parapet with 7%. AFR, was once upon a time a darling of EMC, including most of the supporters, logically it was wise to exit. Is there a lesson here about hedging and leverage? 

Sticking with the rumours, Gulf Keystone (GKP) allegedly have some visitors either heading to or currently on site in Kurdistan. With a Competent Persons Report (CPR) due very soon don't expect too much before this but with GKP about the money at the moment, it would perhaps be wise to watch the volumes. 

Eurocel (ECEL) are coming to the market with conditional listing today and unconditionally on Monday. The IPO with the Dutch and management cashing out circa 50% of their holding, we'll leave it to the pundits to assess the viability of the company. With a valuation of £175M gives an implied yield of 6% assuming no growth. Investors would be wise to look that all the previous year’s performance, not just 2014!

A few analysts had some comical backtracking (belatedly) on Fresnillo (FRES) today. The Financial Results for the Year Ended Dec 2014 are as expected, crap. We do not need rocket scientists to point out the obvious between 2013 and 2014 in terms of silver prices, with a 18% decline in realised prices and nearer 32% if one was to include the last 3 months with the average weight price down, towards $17/oz., at best. 

It’s worth noting, with FRES's expansion and long game, it'll give some comfort to long-only holders to top up/average down. The news is a signal for yours truly to close shorts to reappraise fully, FRES's production costs have dropped which helped to offset the grade declines but could not keep up with the price of silver tanking. With averaged prices significantly lower since the reporting period, FRES need to get a handle on costs. Although it's ironic shareholder funds performed better than GLEN, a whopping 5%. 

What are Bacanora Minerals (BCN) playing at? Holders voted with their feet today for good reason and to show their disapproval sold a minor amount to give the board a clear indication of their views. If the board do not take today's price action as an indicator of shareholder opinion, they would be wise to learn. 

BCN may go strength to strength from here is immaterial to the value the company had yesterday. There would have been no successful outcome on the EGM based on a quick poll of decent holders. Having closed spread bets the profit has been left to run in equity, with a different risk profile as a result of the appointment today. BCN can look forward to some Horse Hill type twitter updates. On a positive, with funding readily available for "key" projects and a CEO not far away from for BCN the outlook is positive for the assets only. 

It’s rare to see anything positive for the shareholders out of KEFI but today they have come out with a decent update.. With some easy finance should be available locally for Jibal Qutman, KEFI would be wise to focus some significant effort on pushing the project into production. 

The key for the stakeholders being the oxidised material where recovery rates likely to be in the 80-90 percentile. Hawiah has some appetising comments where KEFI seem to think they can “identify large base metal (copper, gold and zinc) targets at depth." Could KEFI just be turning a corner and warrant a buy? We'll await further base metal analysis. 

Limited time to cover the significant amount of oil hedging currently underway! 

Atb Fraser

Morning Mumble: Centamin Egypt (CEY) the jinx of AIM...'ALLO 'ALLO Alecto and watch the F(ORM).

Good Morning,

Centamin Egypt (CEY) are slowly becoming the curse of junior AIM wannabe gold miners. First there was Nyota Minerals (NYO) now Alecto Minerals (ALO). One can only assume CEY disliked what they have found within the two Ethiopian licenses, or have perhaps fallen out with the management. 

Although looking back at ALO's  placing rns that was a hugely discounted (circa 40+%), "two gold projects in Ethiopia which are currently subject to a joint venture with Centamin plc." Now had there been no discussions or a potential end to the joint venture with CEY, then I do not believe the wording of "currently" would have been used. Nor in fact the discount that was applied to the placing had CEY been involved. 

Did ALO know about the termination of the JV before or during the placing? Were there discussions about the termination happening whilst the placing was occuring? Over to those holders whom care enough to support this company. Yes, potential upside but not without significant shareholder support and risks. Raising 600KGBP at a 40% discount shows the realities of the situation.

CEY can now strong arm Kefi Minerals, where rumours have been loose but circling for awhile for a take out. Kefi Minerals are "currently" refining the NYO Definitive Feasibility Study (“DFS”/ aka the shambles under NYO), CEY are well positioned to offer funding either via equity or take out in Kefi. 

Knowing a few in Kefi, I suspect they'd not prefer an equity raise at the current SP. With the short 2.0 on Kefi by NYO holders despondent with all things gold like, the price of Kefi has performed exactly as it should. Perhaps KEFI will be the operator of Tulu Kapi for Centamin? This nicely brings us on to...

ORM Mining (ORM) give a Barruecopardo - Financing and Operations update including a loan whilst financing discussions take place of $1.5M. They've managed to find a party to fund the entire stage 1 development of Barruecopardo Tungsten Project (The project). Step forward Oaktree Capital Management, L.P. (Oaktree), "a leading global investment manager". ORM inform their shareholders ORM would be manager of the Project, and receive an ongoing management fee for this service. Ormonde has been assisted with the arrangement of this financing package by Swedbank Norway and Davy Corporate Finance (No doubt a fee payable).

What isn't clear is whether ORM will have any equity left in the project post inking the deal with Oaktree. For shareholders it appears like a near zero cash disposal of their asset for a management fee (as yet undisclosed) and a minuscule equity holding (if any) remaining in the project. 

Due to the significance or lack of in such a deal, one hopes there will be a vote put to shareholders on any such deal. Clarification will be required on what majority holder (namely Oaktree) ends up with in equity terms and what management fee is payable ORM (including the small print). One has to wonder whether there will be anything left for shareholders. 

POG, (Petropavlovsk) notes the statement made by Sapinda Holdings and perhaps there's some jostling?

Limited time, Atb Fraser.

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