Morning Mumble: Hiatuses and...Ken's Mare (KMR) Equity for shareholders? Anglo + De Beers, Glencore and some news about a former Jam Tomorrow Employee Rurelec & Questions for their NOMAD.

Good Morning,

Very busy - although amusingly, there were suggestions we had visited the dark side and started working for a long-only fund! Chance for a recap later this week on the pertinent issues from the 22 November to present, although nothing much has changed, save for news driven events.

Iluka Resources sensibly announced the long-awaited termination of discussions with Kenmare Resources (KMR) - it’s wise for parties to read the RNS. Those followers will be unsurprised by this "news.” 

KMR equity holders have the opportunity to participate in the dreams of the future. So to sugar-coat the dire state of the KMR’s financial position they have announced plans for an investment by State General Reserve Fund (SGRF), a further capital raising, and balance sheet restructuring

Over to KMR (bold, italics and underlining are additions):-

SGRF, a sovereign wealth fund of the Sultanate of Oman, has approved in principle an investment of US$100 million in the firm placing via one of its subsidiaries, subject to and conditional upon, inter alia, agreement of a subscription agreement, agreement of arrangements with the Group's project lenders on the Group's capital structure, procurement of commitments from other shareholders in respect of an additional minimum US$75 million capital, necessary Kenmare shareholder approvals, and finalisation of a prospectus.

Wait….continue reading:

Moma is a world-class asset that encompasses a large, long life ore body. Total invested capital exceeds US$1.2 billion, with the mine producing more than 7% of global TiO2 feedstock supply - being the largest merchant producer of ilmenite globally.

Having invested capital that exceeds $1.2B, and producing 7% of global TiO2 feedstock, it would appear the management are going to hang around to run the next stage of the "KMR turnaround story/saga." This is despite being in charge whilst a transformation of a once multi-million pound company into a small cap with a £12M valuation took place. One has to wonder what the board’s remuneration and bonuses have been over the years in comparison to the returns for shareholders. 

The question that those supporting shareholders should ask is, “are the management right for the future?” If the past is an indicator of the future, prudence would be to have a fresh start with a clean sweep. Those whom played the KMR pub quiz last year on FTML, will no doubt be aware of the dire performance for shareholders.

What’s another $175M in the grand scheme of things? Will the prudential be putting up any ‘wonga’ into the fundraiser? More to the point, is $175M enough?

There remain a number of material matters that need to be agreed to enable Kenmare to deliver the planned capital raising and there can be no certainty at this time that they will be achieved. Kenmare welcomes the indicated support from SGRF and appreciates the support of key shareholders.

We’ll watch from a distance, although if one was short, prudence would suggest closing on the news today. KMR Net Debt must be around $315-332M by EMC estimates.

Continuing with a theme of shareholder value and with some amusement for those following the debacle at LGO Energy. Judging by the latest announcement they’re off to find and/or recognise shareholder value with  a strategic review. 

LGO also update the market on the Trinity Exploration no-deal on the Tabaquite Block by issuing 41,487,776 to Trinity Exploration. Trinity’s statement on Tabaquite Block, Trinidad ends with: 

The decision to cancel the SPA has been considered as part of management's overall assessment of means to better realise the value and future potential of the Tabaquite Block. 

  

We have Glencore (GLEN) updating the market this Thursday. NH and David Sheppard at the FT ran with something a bit more positive, “Glencoreexpects to cut debt ahead of schedule.” - Sensible and common-sense discussion about GLEN's earnings forecasts in the current environment. Pay attention to the terminology used on Thursday, one suspects there may be a few statements coming from the back foot.

Sadly for GLEN's workers Collinsville coal mine in north Queensland, 180 workers are to lose their jobs. Is this an admission of the dire state of the coal industry? It certainly explains why Mick Davis is taking his time with X2 Resources, perhaps to Rio's annoyance. 

In the weekend press we had Anglo American allegedly slashing their dividend (again and again), talk about echoes – news must be thin on the ground! Anglo’s investors’ day tomorrow (08th Dec). We can no doubt look forward to all the positives of a diversified miner and what this offers investors, whilst struggling with depressed pricing.

With Anglo’s subsidiaries either under water in terms of operational costs (Kumba Iron Ore/De Beers), lacking flexibility in CAPEX (Minas Rio) or needing to deleverage the balance sheet. The future doesn't look rosy. Anglo is now realising the hard choices it has to make and the limited flexibility. Quite why they have not pressed the equity raise/capital injection button is anyone’s guess. Surely they'll want to get in there before all the others?

We note that De Beers have sold Kimberley Mines in South Africa to Petra Diamonds and Ekapa Mining for a rather low sum. If one looks at the capital De Beers spent on Kimberly and the plant etc…it gives a rather good indication of the amount pressure to monetise what assets they have/can sell.  An article from May 2015, makes for an interesting read… Engineering News - De Beers inviting bids for life-extending takeover of Kimberley Mines. Was the USD to South African Rand/ZAR near $1:ZAR5 in 2002/3?

For those that have followed a company Rurelec that we consider jam tomorrow, its not often one gets validated in their views so quickly. Over the weekend attention was drawn to the following announcement on Independent Power Corporation PLC.  See the previous commentary here (EMC) when the IPC was "spun out" or Rurelec to allegedly save costs.

Questions:

a)      When did the Independent Power Corporation PLC, Peter Earl and Anglo Kazakh TransAsian Pipeline Corporation Limited commence discussions? We may be able to update on this shortly...

b)      Was this before or after the spin off?

c)       Was the NOMAD consulted on the “spin-off?”

See the original announcement and terminology 19^th June 2015 - Director Change (Peter Earl) leaving & IPC. Then see the replacement, Spinout of Subsidiary. Albeit it’s somewhat immaterial as the horse has already bolted.

Atb Fraser.

Morning Mumble: Anto-fghastly (ANTO) & the markets alleged White Knight (NYSE: FCX) and the magical ingredients, LGO: Why I was wrong to...JKX & SLP, self-harm!

Good Morning,

Today's Q2 Production Report from Antofagasta (ANTO) gives some idea of the woes for the industry. It doesn't look great even allowing for reduction in supplies to market including the recent near 200K/t's drop in guidance from other producers, the Zambian load-shedding (EMC: Yesterday) and ANTO's own guidance revisions downwards to 665,000/t's of copper, as a result of some commissioning issues on the crusher circuit. 

Conveniently ANTO don't give their previous guidance, so here it is. For 2015, it was 710,000 tonnes of copper, 250,000 ounces of gold and 8,000 tonnes of molybdenum. Not only do they have the woes of gold prices being at lows, molybdenum price being at a level it's questionable whether it's a viable to process it, and cooper down 45,000/ts. (EMC: Rio molybdenum (Mo) woes). As a result ANTO's cash costs are on the increase due to the MO price and lower than expected production. One would have thought with the USD: Chilean Peso (CLP) strength, there would have been of greater benefit, but this will perhaps be reflected in Q3. 

Luckily for ANTO, there may be some hope for the copper price thanks to the markets white knight known as Freeport-McMoRan (NYSE: FCX). The market may think FCX's planned production and cost cut backs (FCX Site PDF) will assist the cooper market. But with the absence of a magical ingredients, prices are likely to stay lower and for longer, this time. FCX are unlikely, like Rio or BLT, to give up market share for the sake of the higher cost producers. 

Over to FCX, today announced it has undertaken a comprehensive review of its operating plans in its mining and oil and gas businesses to target significant additional reductions in capital spending and operating and administrative costs in response to weak market conditions for its major products. These plans will also incorporate potential adjustments to mine plans and future copper and molybdenum production volumes to reduce costs and preserve valuable resources for anticipated improved market conditions in the future. The company expects to complete this review promptly and will report its revised plans during the third quarter of 2015. 

James R. Moffett, FCX’s Chairman, Richard C. Adkerson, Vice Chairman and Chief Executive Officer and James C. Flores, Vice Chairman and FM O&G Chief Executive Officer, said, “We are responding aggressively to current market conditions affecting our primary products and to the uncertain global economic outlook. These initiatives are focused on maximizing cash flow in a weak commodity environment and on strengthening the company’s financial position. We appreciate the efforts and dedication of our global organization who are supporting our plans to implement revised operating plans. We have a positive long-term view for our markets, the inherent values in our large asset base and are positioning our company for long-term success.”

The copper and wider commodities market are lacking the magical ingredients Chinese speculation and margin. These have been absent for some time (including shadow financing) and are unlikely to return without some significant stimulus from the Chinese Government. All compounded further by a basic approach to commodity back financing that has been in contraction and limited to a basics approach. 

This brings us to the question of those with copper in inventories and/or in transit priced significantly higher either, that had a muted response to the FCX news (VED/GLEN?). Especially those needing to deleverage some $18B of commodity inventories (across the board) to maintain their credit rating and profile! Perhaps GLEN have signed up for an Experian Credit account to "manage" their credit file?

Continuing the theme from yesterday on load-shedding, it would appear Barrick Gold (NYSE:ABX) have forgotten to update the market on the load shedding issues in Zambia for their Lumwana Operations Reuters. Perhaps Vedanta, Impala and Glencore are also immune or do not feel the need. Then again, perhaps Barrick need to work out the cost impact at a C1 level as they will now be marginal. Expect cost revisions near $2.20/lb (C1) and all in near $2.80/lb (EMC estimates, no plagiarism folks). 

Question of the day, seeing as China Securities Regulatory Commission (CNBC) is investigating companies and individuals selling stocks, what can they sell to cover those margins? Cars? Houses?...Also, which Beijing bank (non-state) has the greatest exposure? The hunt is on!

Sylvania Platinum (SLP) have released 4th Quarter results. Operating in the PGM space they aren't great. They've had some cash back from Ironveld, spent some on share for "employees" of shareholders, and its unlikely any dividend will be made. The potential benefit is the selling of a few assets (or divestment) and maybe a low ball offer. As a holder, one hopes you sense my unfulfilled mind-set to this stock. As a punishment to myself, and a form of self-harm these will not be sold (self-harm). 

Finally, JKX Oil release their half yearly results. Dire, although perhaps some hope from the Interim Award International Arbitration Proceedings, it’s still not a stock for any widows. More a bet on a geopolitical and financial improvement in the sector. 

In other news today, LGO Energy drill another well. Having sold this holding and gone short, there's no rush to buy back any time soon. One would be wise to wait until the result to assess the viability of the company. Perhaps we were guilty of being too keen (EMC:) closing LGO Short too early. LGO have given no update on its financing and one has a suspicion revenues will soon be committed to interest and debt repayment. Profitable for the lender perhaps but shareholders? 

Atb Fraser

Morning Mumble: Was the PM Add of 23/02/15: LGO predictable including the debt ++Plus the de-constructed hopes of the BLT Sandwich

Good Morning,

Many thanks for the enquiries why there has not been comments but it’s simply put, work is very busy with some work for those entities looking to profit from shorters, the white knights. Fear not, there were no cuts or bruises and thank you to certain parties for those mad enough to allow the Ninja known as my daughter tearing up your office whilst in meetings. 

LGO Energy (LGO) had the appointment of a joint broker on 5 January 2015, EMC: LGO Energy. Although not much of a short its always nice to pick on these eventualities that are more certain such as certain entities companies contradict contradicting their "cashflow" forecasts and debt arrangements and whilst raising and raising, and...You get the idea. Today, there is the issue of equity and oil swap arrangement with BNP. Today's news makes it wise to close the shorts on LGO.

The arrangement may be positive for LGO longer term, but if one looks back at the placing etc. There are material risks investors should not ignore including the "revenue per barrel of the Spanish assets all those years ago". LGO is in the same basket as Victoria Oil & Gas (VOG), where the management decisions come with certain risks that can have a material impact on the value of a holding. Although the SP held up better than envisaged with every man and his dog working out the obvious. (Link relevant twice today EMC: JRG + LGO Placing (history repeating itself))

Had Anglo Pacific (APF) been proactive with their investor relations they would have announced to the market that Largo Resources (TSX: LGO) received a non-binding indicative term sheet from its consortium of lenders (Largo link). TSX: LGO are hoping, subject to committee approval, to defer its debt amortization schedule and extend the maturities for its construction debt facility and its export credit facilities for its Maracás Menchen Mine. 

TSX: LGO give an update on the progress and the asset for investors that like layman's terms. The market should now be accustomed to the poor updates as shown with Isua Project in Greenland (EMC: Isua). APF will obviously be busy hunting a transformational top quality coal royalty to be bothered about something they paid $22M only 8/9 months ago. So for those holders unable to gain anything useful you read it above in the Largo link. 

BLT (BHP Billiton), with Andrew Mackenzie (CEO) opening his 2015 Interim Results Presentation by raising his arms to demonstrate how comfortable he is with the results. The market is going to like the interims. South32 (Known here as short32) demerger remains on track to be completed in the first half of the 2015 calendar year. 

Net debt was higher than EMC considered by circa $500M but negligible in the grand scheme of things. Post a few items needed more urgently its maybe wise to revisit BLT. Returns are lousy in % terms of capital applied, but the market ignores such things, so like Rio, over to the bulls to assist the sensible in making decent intraday gains. Copper (circa 11 mins in) within BLT suffered the same woes as most of the industry with energy inc. water and grades being lower. Despite lower prices BLT have done better than expect. Iron Ore update (circa 13 mins in)...too much to cover in such a short time.

Just Retirement Group (JRG) being a trade EMC: JRG + LGO Placing (history repeating itself). Comedy on the OPEC Emergency beliefs at these prices, investors and analysts should not read too much into "news" that contradict what statements have been made in the past. 

Atb Fraser

Morning Mumble: PGM Horse Trading &...and real economics.

Good Morning,

The rocky road of Republic of South Africa (RSA) PGM industry, or soon to be known as the shareholder gift-aid scheme. Aquarius Platinum (AQP) has managed to find a sucker in Northam Platinum (NHM: Johannesburg) for the Everest Mine that's been on care and maintenance since mid-2012. The costs associated with mining, allowing for a weakening Rand(ZAR) and labour disputes settling down, makes the industry untenable at current costs and a surplus in the platinum industry mean prices are going to stay around production costs plus 7% (ish) for the foreseeable future unless something changes. So any leveraged outfit is unlikely to achieve a sensible level of shareholder returns. 

Will it benefit Sylvania Platinum (SLP) J/V at Everest North tailings operation? Unlikely, but the management can of course use some crystal ball gazing to award themselves some more no-cost options to reward them if Everest North does come back online. Its difficult for a platinum company, if they don't invest in platinum they're essentially saying what everyone else knows, there's better returns elsewhere. Until the gap between demand and supply narrows mothballed mines coming back into production will only prolong the pain for the sector. 

Inspirit Energy (INSP) signs letter of intent yesterday and conducts a "micro" placing today. This appears to go in for a seasonal ramping. Having a position and traded this stock according to ramps and news flow. The company needs a decent partner with funding that removes the risks to the current holders. It’s "almost" identical to LGO's Spanish oil news flow all those years ago. Not without risks, but with some potential, one hopes any deal isn't hindered by a JV with a Goliath that has little interest in pushing the market share. We'll ignore the obvious with the Micro-placing terminology, it’s a placing and very small at that...almost implying its crowd funding. One just hopes they don't open a microbrewery! 

With Oil tracking the bi-polar mood of the world economics at the moment, it’s disappointing to see the likes of TUI AG Plc (TUI) hedging so significantly in their 1st Quarter Results. Forget hindsight, when would have TUI have not benefited from a 50% (approx.) hedging and fill the rest from the spot price? Perhaps this amateur is missing something, but a quick gauge over the past 5 years would have meant a net benefit of circa 6-7% on fuel costs.

Copper is hanging on the cliff of appreciation or depreciation, with some gossip in China that the numbers and trade are down further. In contrast financing seems to be improving for leveraged trading (attempted bottom feeding) and restocking taking place contradicting all those bulls the market was artificially low. trading circa $2.5450/lb. Chinese trade data now increasing the odds of Chinese full-on stimulus if they wish to maintain their growth targets, the market awaits the direction or revisions to growth. 

London Property Bets in the FT. EMC commentary on Berkeley Group & Foxtons, the first set of shorts were 5 months ago and now the market is waking up to the realities again where there's a secondary short as the market accepts the facts. 

Zoopla (ZPLA) and Rightmove (RMV) have to do maintain their competitiveness with their fees and advertising. OnTheMarket.com (OTM.com) is the dilution for the sector and a disruptor over the long term for earnings, whether it is a success is immaterial to estate agents whom can negotiate harder, with London normalising, ZPLA and RMV will be under pressure. Expect the denial and ignorance to persist with price appreciation in the market, until OTM.com's marketing and impacts are felt. 

UBS find themselves with the no news award today confirming they've been affected by the CHF both short-term and longer-term. It will impact on their longer term results, unless of course they've employed a magician.  

Atb Fraser

Morning Mumble: January dieting...Associated British Foods, Atlas Iron (wonders would...) and Oil. ALO forgot to tell the market about

Good Morning, with the market taking priority there will be no future apologies for the tardiness of updates nor urgency placed on any messages enquiring what time its going to posted. 

Morning Mumble: The diets begin in earnest... and the FT runs with Oil projects worth billions put on hold. The high impact drilling has always been questioned even at circa $100, quite why Premier Oil (PMO's) entered into Rockhopper’s Sea Lion on the economics is a question not of hindsight but of value for shareholders that shouldn't have been completed at this time. PMO's share price has gone only one way since Sea Lion Farm In, pre-the oil drop. 

PMO's all-in-costs from there trading and operations update will offer safety to a lot of oil investors. With some alleged low risk drilling (Falklands & Indonesia) and debt without the immediate concerns or RBL criteria, PMO is likely to have some potential upside. Personally, save for intra-day it’s difficult to justify any oil holding in the current market until the market has digested the changes. (See TLW). 

Tullow (TLW) today have come out with similar, giving clearer guidance on costs, albeit one would be wise to revisit their year-end accounts and work through the costs (limited time today). Tullow Oil plc - Trading Statement & Operational Update with write-off's of circa $1.2B and potentially more, one will wait to see what Tullow do next with murmurings in the market this morning. Over to Exxon Mobil (XOM) to acquire on the cheap with limited options for shareholders, the time to strike is "near." having cast their eye over this company before with the upside potential even in today's market. Do not expect the update to do much in the market, without some validated gossip of TLW losing its independence. 

With Game Digital (GMD) showing how margins and sales were impacted by Black Friday (Compete or Retreat), Home Retail Groups (HOME) update was with no hope of an improvement in comparison to GMD.

With Associated British Food (ABF) trading update today endorse repeated debates for divesting the food divisions, declining margins (as expected). The Sugar alone EMC Food Prices would impact and the EMC Duncan Fox ABF summing things up nicely. The company's trading outlook promoting (read as selling) the company nicely:

Trading outlook

This year we expect Primark's expansion to continue and Grocery, Ingredients and Agriculture to make further progress in operating profit on the back of their very positive performance last year. With the fall in EU sugar prices and weakness in the world sugar price, we expect a further large reduction in profit from AB Sugar, but this will put much of the effect of the structural changes in EU prices, seen over the last three years, behind us. We expect a decline in adjusted operating profit for the group but the impact on earnings will be mitigated by much lower tax and interest charges. Sterling's strength against most of our major trading currencies will also have a negative effect and we now expect a marginal decline in adjusted earnings per share for the group for the full year.

It will be interesting to see how my view on the not to short from November pans out! With my belief previous news being totally validated. (Disc: Long) Bold is mine. The market is now ignoring the Sugar and Ingredients divisions, so will look solely at the positives of Primark's performance the star in the group and making valuations difficult for traders. Closing on the news for the myopic trading and banking profits (myself). With little upside on the current SP, it’s wise not to carry profits much past the news. Under review for the short, now January 2015 has arrived.

It would of course be rude not to mention Atlas Iron (ASX: AGO), some of the dedicated have correctly spotted the shorting opportunity post-Christmas. As always, comments on AGO will be published if there are no obscenities and relevant. It is with pleasure that two significantly underwater holders decided to short post the Christmas nonsense appreciation, and have actually banked a break-even on their investment. Having held for their near 3 years from AU$3 they have actually broken even on shorts...have they been converted. Kudos! One hopes lessons have been learnt.

With Crude Oil finding support (and copper), it’s no wonder there's some hope for the obvious leveraged candidates. Brent and WTI both trading near par at $47.40/bbl (approx.). So today, the warning was on the door, the flags were waving, LGO Energy (LGO) conducts a placing to raise £1 million raised for Goudron, and Cedros update. Surely not, EMC LGO & Copper Coverage (Fumes) (Diet begins in earnest) seeing the writing on the wall, today I close my short and await the "constant" news flow again. LGO's Nomad and Brokers will obvious assure us no one knew about the placing and it wasn't broadcast far and wide and there was no selling down to fund the placement. Strangely no matter what they say, LGO has yet again performed predictably. Whatever happened to LGO's credit facility? 

Staying with the LGO theme, Alecto Minerals (ALO) placing, congratulations to whomever got this away...judging by past performance. Who'd have thought it with the importance of ALO's Completion of Analysis of Historic Drilling Results at Kerboulé Gold Project, Burkina Faso. Can anyone identify what regulatory news is contained within the 6 January 2015 announcement. The company today announces a placing to maintain working capital (read as sustenance) whilst discussions progress on potential joint ventures. ALO could have saved some RNS costs and updated the market on the Burkina Faso issues both with Government (CNT (no joke) and disturbances stopping operations for the Karma Mine operated by True Gold. Obviously other companies would be wise to update the market accordingly, after all gold is highly portable, such as Avocet (AVM) and Amara Mining (AMA), whom I'm led to believe operate not far away or have licenses near. Centamin Egypt (CEY) really need to bring the cosh out and put ALO out its misery...no premium share based takeover. The shareholders would immediately benefit. 

The final thoughts without reading too much into it the third quarter results of Mothercare (MTC) is why do they have shops? Investors should be considering graphite within the lithium squeeze, no cryptic messages just common-sense. Its always pleasing when investors re-read announcements and come back to reality, ZIOC (ZIOC EMC 30th September 2015 with ZOIC typo). (Disc: no positions short now.) Sirius Minerals (SXX) disappoints today with an update harbour facilities application. Perhaps the company can consider the difference between approvals and applications. This decisions is surprising seeing as there is the potential within the process to modify the application. Impatience will punish...

Atb Fraser.

Morning Mumble: The diets begin in earnest...and that's the Oil & Coal capex & Atlas Iron

Good Morning and a Happy New Year. 

Its with no surprises that oil's "yet again at an all time low" with the doom-mongers being validated for a more realistic view of the world. Save for a supply crisis or correction in Saudi it doesn't bode well. So it's over to those bean counters to remind us of how high the oil price has to be to balance those budgets, it's simply irrelevant at this stage, albeit Algeria. Angola, Iran, Libya, Nigeria and Venezuela would disagree. (Implications for debt?)

To put it simply, there will have to be a budget reconsideration (spending review) in light of the over reliance on oil revenue, which for some was significantly ahead of what the price was 3 months ago anyway. Perhaps other forms of taxation would be a wiser bet in the short to mid-term. Its en par with Australia's reliance or expectation of the Iron Ore price. Speaking of which, having been absent and enjoying the break, it would appear the "told you so brigade are back (Atlas Iron) with every man and his dog being aided by the mass closing of shorts; its near doubled since the Christmas break!

Long may Atlas Iron et al's share price appreciation continue. Unless one is mistaken and still omitting fumes from the Christmas pudding, the over supply of circa 200M tonnes (target end 2017) and 115Mt's (end 2015) has not disappeared. In fact, my fag packet (+some decent research of my own) calculations may need revising near 50% upwards. So for the longs enjoy this belated Indian summer with a few swallows, the worst is not over because it has not come yet so enjoy it whilst it lasts. Market share, economies of scale and quality count, if you're absent in any domain some repositioning will be required. 

By my estimates, Atlas Iron with the recent spate of redundancies and costs savings should be able to drive down there costs a further 11%, plus some oil related benefits on costs should be targeting near $62.50 a tonne as a best case but more than likely $65.40/t, but the all in figure will still be circa $68.60/t to $70/t. These are my estimates so please email me if you can show otherwise. 

What will GLEN (Glencore) think of next for Thermal Coal, Glencore says restarting Australia coal mines shut to fight glut. With the price of thermal coal ahead of the curve compared to iron ore and oil, the expectations may soon change. One would be wise to watch what protectionary measures the Chinese Government introduce for exports and support of native coal producers. There's a massive amount of debt attached to those costly mines producing at a loss. Save for the Chinese seeing the need to allow a few to become casualties of their own economics don't expect the trend to change much. It did provide a welcome relief to the price, what will the reopening do? 

LGO Energy (LGO) Joint Broker one will leave it to those able to read this early in January to make their own opinion on the reasoning for the broker appointment..."We are delighted to team up with FirstEnergy in a year when the Company will be looking to expand its coverage and shareholding base. The LGO Group exited 2014 with over 2,000 barrels of oil per day of net production and we look forward to a busy and exciting year ahead." At some point I hope to be able to work out LGO's cost per barrel, suffice to say with the CAPEX developments/requirements and lower pricing the margins are shrinking. 

As some side thoughts as I ease myself into 2015 with a busy schedule, copper has reacted predictably but may have some new year cheer (fumes) from iron ore. The star performer of commodities for last year had to have been uranium!? With a lot of hope built in to the price re: Japan and back door trading into China one wonders how long it will continue in the absence of the Japanese sorting out their infighting, legal issues and public wider views. The wise should have taken profits...the slide is on.

Little time to tuck in to Purecircle (PURE) trading update, with little information to work on bar the net debt and no inventory levels one wonders how this "high leveraged" model will work at these valuations. 

The final thought goes to the poor service offered by the press for those BHP Billiton (BLT) holders whom have been left wondering why their price is getting a kicking. Its no wonder when iron ore (albeit moderate recovery (circa 6%) is down on its luck but worse, BLT's other main earner Oil is having a rough time of it too. So expect the analysts to come out with some welcome drivel about short32/south32 being a welcome relief in the carnage. 

South32/Short32 aka the spin off has no choice but to get paying a dividend from the word go or it shall be sent to Coventry sharpish. The model will need to appear to prove itself (read as support itself) from the word go, so those taking the brave view to short it from the off, be prepared for those in denial to favour the stock and back it. 

One hopes that Waterlogic's (WTL) offeror (Poseidon Bidco Limited) hasn't had a change of heart...

Atb Fraser

Morning Mumble: Carnage Part 1 Retail, Sugars & Safety in metals...Tate modern...(not so) and Silver WTH

With commodities on the slide the market introduced contempt  for the pricing with recovery in the iron ore producers in Asia and flat in the UK. However, looking at retail, why did Mothercare not snatch their arm/hand body off. The rights issues is a joke, as stated, any holder should have sold on the news...not now! It's cost them dear, the rights issue is a positive for the company, not for the holders. See: Morning Mumble: Iron Ore (From Kumba via Pilbara to Marampa) & LGO's placing...and does Mother Care?! (Poor I know).

Tate & Lyle came in with a lot of known issues all being stacked together, what the market are doing pricing the Co at such a level is beyond me. I have an aggressive target price on TATE of 465 pence. I'd avoid any longs in principle (subject to news changes) until the next warning coming in January. Sucralose might just save TATE, but quality is the key. Something PureCircle might need to look at...Tate still not valuing their Stevia Tasteva (TM) brand with no mention of it. The dividend statements might save them some short-term pain!

Metals has had support come in at last, with some stability across the board save for Iron Ore. Precious metals steady as they go, one would have thought the new trading opportunity would have improved things for gold? The Shanghai Gold Exchange should sort their data out but perhaps that will come over time but volumes were the highest for awhile so I dipped my toe in, the conversion issues to Yuan are very prohibitive, will the exchange last? 

Staying semi-precious with profit being a rarity, what are some silver producers doing with the current price is beyond me! What's the purpose to produce something more expensive than the price achievable! Hochschild’s (HOC) might just have a shock if this continues. Perhaps changing banks and broker to HSBC would assist the price? (please excuse my sarcasm there). Afterall, the writing was on the wall (Morning Mumble: ManFlu (Death Bed) & Pedra Diamonds & the fall of silver?). Rather obvious and not so long ago?

Its best if I let people work out what's going on with Chaarat Gold with NFC and NERIN to prepare DFS for them. Why parties would not be taking profit is beyond me....perhaps I'm myopic! Chinese involvement and cooperation, perhaps there's more profit to be had? Surely there's better out there, Amara? 

Apologies for the brief it has been a manic morning, with Alibaba shorts going brilliantly and in short supply now! Mothercare, FX and gold, I bought some gold at 1217$/oz (Volume is increasing), long that is!

Atb Fraser

Morning Mumble: This Month China On Russia Off = NIckel Wins & Diamonds where's the Dividend!

Well it appears over in Asia the markets they were aligning themselves with China "now" (read as currently) not being as bad as people thought, so in they popped on Chinese stocks, dropped Russian/Ukrainian exposed (belatedly) and ran for metals. Iron Ore even got some support, despite the obvious happening in the Steel Mills. It seems a prudent time not to bail out the Mills on the basis that it will 'naturally' remove any slack and higher polluting operators. 

Nickel is now in speculation mode with momentum over the weekend pushing the price near 5% higher, and benefiting the likes of Vale, Glencore, BLT and even ANGLO will benefit, (Vale being in number two spot to Norilsk Nickel). I've elected to exclude Norilsk on a temporary basis due to the Russian / Ukraine debacle, not just because of the booing at the Eurovision!) The world has gone mad, but I dare say that's a conversation for a differently focussed blog on 'Eurovision' winners. 

Friday enabled me to have a good session with Dr Livingstone (Ian with no Doctorate) about his recent antics and his alleged return to blogging? I've heard it all when one needs a week "to catch up". Alas, Saturday was recovering due to the excesses of the night before, whereby Livingstone did not surface till near 4pm, due to a slight bit of 'jet lag' strangely sounding like a hangover.

What is interesting is BNP have caught on that the basics of supply and demand I discussed some 5-6 months back (and more) in respect of Nickel are now occurring. Often parties are so focus on one they miss the other, which was the reasoning for building various positions in Nickel in the first place. BNP noting that supply is often a greater driver than demand, albeit with demand positive and supply down there's only one train until news of Indonesia 'going' soft in the interim. Surely miners can't just stockpile for 2+years in Indonesia and will have to mothball?

The momentum traders and speculators are finally in Nickel over the weekend with no reason for the run bar speculation. The price rises up to Friday were purely physical demand, which would have historically dropped off a little. Nickel is now a hoarders dream, stash, go long on it and hold it dear, the tighter held, the quicker $30k/t will be made, after running through the 20k/t mark, or 9$/lb for those in older monies. Its 'almost' guaranteed Nickel will test $13'lb and potentially $15'lbs, with some volatility along the way (common-sense). The move on the weekend added $100M to Glen's profits going forward over the weekend on top of the recent gains. One assumes they aren't exposed to too many forward sales agreements between $7-8/lb?

Already one company is running with the bulls, QCG Resources are rushing to the market with an IPO based on their Avebury mine in Tasmania (NIckel). Personally, why China's Minmetals subsidary MMG selling Avebury it beggars belief but kudos to QCG, the stock, if "IPO'd quick enough" should bode well in the current climate. One couldn't have time it better with Indonesia's ban, the Russian issue and demand pushing any likely surplus in the market back to 2018 at the earliest it bodes well for prices and trades. Long Long Long!

Gem Diamonds came out today with a very positive Interim Management Statement. With cashflow and cash at bank improving mainly thanks to the Letšeng dividend. Sadly the market was expecting the magic word 'dividend' which never came forth in the IMS. My figures show GEMD could have afforded 5.5pence a share dividend. This would have certainly provided some "motivation" for the stock. In addition to the likely benefits of Ghaghoo  coming online as they've 'finally' hit Kimberlite in Botswana. One awaits the "joyous news on production ramping up H2 of this year (subject to the Cameroon sand playing ball with their access pit). Ghaghoo’s progress and ‘being on schedule’ was further validation of rewarding holders with a 5p divi! Alas, perhaps the Management will do a ‘special’ announcement.

I have been short on Anglo Pacfic (APF) despite being favoured by an analyst I have respect for who's rather shrewd/open. Having been short since November the company’s Interim management statement  is starting to make me thing the bottom is near. The dividend should provide some assistance, but their over positiveness on Coal made me to think negatively on the company for quite some time, so with closing positions I will bide my time before/if going long. 

Being in the monies on LGO, Leni Oil & Gas, I'm not sure what the additional noise in the RNS today was about bar a drilling update. However one chap has a conspiracy theory that its to get as many announcements out to push the legal debacle out of sight (really?!? Surely not!) The announcement is a positive, but I reiterate I do not hold this stock because of management only the asset(s). LGO's Production and Drilling Update Trinidad. 

Finally, the money printing is going on for the shorters on Blur, the company were so kind to the satans of the stockmarket (us shorters), to give us advance warning to go short. On the 17th April 2014, in Blur's trading update and Notice of Results announced that a "more conservative and prudent approach to revenue recognition." What took the market so long between then and today's announcement for investors to realise, trading update to realise cash would be required and more importantly recognised profits would be lower? Good luck to Singer N+1 in raising the cash required. Convertible loans well in the money? Discounted (even more so) placing? One will await the news before shutting any position..kleenex may be required for those long!...WANDisco continuing its fall, D, you were merely 6 months too early.

Atb Fraser

Morning Mumble: My "King" doom for a horse...& slow market news!

When investing rule one is the "returns" and "potential." However with King I cannot help but wonder will the world wake up one morning and think: perhaps it’s time to read a book on the way to and from work.

In looking at Zynga's not so stellar performance, 1.0 version of the "Gaming Online Entities". Well, let’s put it another way January 30, 2014 - Zynga Announces Fourth Quarter and 2013 Financial Results results are slightly different to King's recent performance on numbers only but I suspect a similar performance profile for their Farmville Offering as Candy Crush. They tried spinning out different games, but the psychology of humans is well known, simplistic app games are fun "for a while." You only have to look at your teenage children, perhaps even you partner to realise Candy won't be sweet forever. I have resisted the temptation to go on pun-overload.

The rate of decline for games is well versed...so if you were to look at Zynga, I cannot help but wonder if the outlook doesn't bode well for online/app gaming as a realistic long-term venture at 'these prices.' The investment case for short-term trend profits bodes well, albeit people argued that for Apple and Samsung earnings, but the difference being something quite massive, parties are able to see, touch and utilise their purchase, it's tangible. It’s not the intangible offering of paying for an arcade styled mental benefit or challenge that, save for the odd addict, generally disappears as a fad or trend. 

The pricing doesn't appear to be so overcooked as Zynga's, Facebook's or Twitter's however in the short-term there will no doubt be some plus as there's plenty of people to sell the story to. So I’m thinking in the short-term (4 months) there may (will) be a material appreciation for the stock but post the ability to sell the story in any great numbers and the comparisons to previous dividend payments becoming reality the price of stock will be lower post the 1st Quarter of listed results. 

This theory is based on there being parties with significant profits on these IPO's and one suspects wanting to realise some gains. Any limits/lock-ins will bode well in the short-term but post which there's going to be a real depreciation in the share price. 

Candy Crush aka King and Zynga are reliant on primary platforms and equipment to function. Facebook, being the social interaction point of millions is indemnified against these risks (including the access point for these games). Candy Crush and Zynga , without a decent roll out of games that are "not reliant" on offering 'free lives' to the original app are doomed to lower returns but currently based on higher expectations. My trading head offers some lemming style longs for brief-periods prior to the reality kicking in post earnings. Let’s see...

Back to reality and normality, the Chinese are now spooked by defaults, China banks begin retreat from risk. It will have an impact on commodity demand again as the oversupply issue "to the market appears resolved with iron ore going back to $110/t for what reason? Well its common-sense that people, banks and bond traders are waking up to the fact that with defaults being real and the perception of guarantees disappearing the market will become real. Higher financing costs for entities (Risk) that really should not have survived in their own right. Consolidation will lead to contraction as savings need to be made to create 'going concerns'. 

It appears that there's rumours of an 'very well paid CEO' departing to attempt to reduce the scandal and distractions affecting a company that's trying to raise funds to produce oil. I can't think who that person is!?! 

The markets is betting on H&T Group (HAT) to benefit from Albemarle & Bonds position. I'd a liken HAT as the DSG to Comet if ABM go fully to the wall. Declining pledge books (across the sector) which is common after a large increase in sector as people realise there is not much left to 'pawn' or sell. The margins are being squeezed on the purchase price as well, which does not bode well for the companies over the longer term, without a reduction in the footprint of stores nationally. Some may benefit with the eventual close of ABM stores that do not meet a viability threshold or are not acquired. 

It’s a mystery why parties thought ABM's demise came about unexpectedly. The odds of a return for shareholders still holding stock (WHY) is likely to be nil. HAT's 2.5% dividend based on yesterday's SP on may present some welcome relief but my concern is these entities do not leverage well for which HAT are focusing on paying down the debt. The issue remains with regulatory pressure on the higher cost lending market is likely to impact on margins further.

Very slow market news wise for directional plays, save for LMI. As one party points to closing operations permanently which would make sense. When will South African's Miners Unions learn that you can't milk the cows nonstop. They do have to graze... Lonmin PLC Update on Protected Strike Action 05th March 2014 was over 3 weeks ago with little change. As such, the cost implications are going to be significantly higher. Russian issues are predictably positive for Palladium, combined with the on-going strikes, is Palladium going to break its 800$/oz. resistance and tick up to a new range? Certainly looks that way, which should benefit Platinum!

The mockery of "analyst" consensus is being exposed again by the revision of Tin Deficits (Reuters) only a near 7 fold increase upwards. Well there's no prizes to think that the price reacted accordingly. 

Finally, Mediterranean Oil & Gas (MOG) Litigation Update suggests that the judgement will be handed down tomorrow on the case Leni Oil & Gas brought against the MOG Subsidiaries. Now based on common-sense, with MOG's announcement so soon after the LGO relinquishment for $1/£1 (whichever it was) surely meant they took legal advice. Its still very odd for the claimants have not issued any news on this? Perhaps it’s on the basis MOG are? Not long to go before the results...

All the best, Fraser