Morming Mumble: APF's Largo Resources Royalty + ANTO's $25M Whoopsie (small change), Serco Group (D'err), Glen-shrewd, Soco (SIA), DOR, and GKPence + ASOS savvy traders!

Good Morning,

Anglo Pacific (APF) completed on the Narrabri Royalty Acquisition yesterday without updating its shareholders on the Largo Resources (TSX: LGO) refinancing. Just so those TSX: LGO holders are aware of the risks, there is a 20% coupon  bearing down on them via the Canadian $12-Million Convertible Bridge Loan. One hopes there's light at the end of the tunnel and not a train!

EMC was near as damn it on the money with the $CDN12M raised so far and a proposal to raise a further $CDN40M; with the likelihood of a little more cash being put up. Had APF waited and conducted a sensible deal, they would have got more bang for their buck, although historically speaking, it's hard to say when they have timed any purchases well, see share price. 

Antofagasta (ANTO) have resolved the Los Pelambres issue with their cheque book and proposals for desalination for any expansion at Pelambres, plus funding a few items. Rather contradicts ANTO's statements in their first protest announcement about "a small group who do not necessarily represent the valley community." ANTO's statement caused a 'ramping up' not in production, but of protesting, costing ANTO circa 3K tonnes more of lost copper production, circa $25M worth. Whoops!

ANTO didn't think through their statements treating natives that way, especially those with some degree of education and an internet connection! ANTO would be wise to appoint a local representative/diplomat to Les Pelambres to listen to concerns and establish a social fund to assist those directly affected. The desalination plant (the future of most mining ops in Chile) for expansion impacts on costs, with some estimates being near 50 cents a pound on production. One hasn't worked through this yet, but it gives an indication of the struggles. 

We need a fanfare, it appears that Glencore has conducted a decent deal with Russneft (FT), not to be confused with Rosneft, whom they have a crude supply contract (circa 2013) and a prepayment facility of $10B circa 2014. 

What next for GLEN? GLENseft? Contary to the article Russneft only produce 13.9m tons of crude oil or for the old school, multiply that by around 7.1475121 to equate to barrels (pending gravity at 99.35041819M/bbl per annum). 

The deal is very good for GLEN, even allowing for the $900M exchange of debt and current outlook. The benefit being it gives Russneft some breathing space and allows change to be conducted purposefully. One wonders who next for 'West Africa.'

Having been in dialogue with ex-employee of a gold company, I am flabbergasted to learn what lengths companies will go to manipulate assay results and production when they are looking for finance. If the statements eventually prove correct, I'll endeavour to publish in full. No underwriting required, but for those knee-tremblers, do not worry this company has already gone to the wall, the creditors might not be so pleased however.

For those novice shorters out there, where every many and his dog should have been short on Serco Group (SRP), 10 November 2014 since the update on strategy, capital structure and trading at least until January 2015 and certainly into these results for a double up. SRP have managed to get a fully-underwritten rights issue away. At one stage holding SRP shares were long for the recovery and this proved misguided, with further warnings, shorting was the only answer.  

A few more hit the Christmas card list, Soco International (SIA) preliminary results reading a a candidate for contradiction to their update in January. Having risen 20%+ on the back of their last trading update in January, there was little upside to the stock. TGT drilling programme will be scaled back and the flow rates at TGT/H5 being conservative, all has aided to kick the SP. Don't we have Enquest reporting soon? 

With absolutely NO SURPRISE, we have Doriemus Plc (DOR) have conducted a placing. A member of the Horse Hill contingent, but more importantly, one would be wise to read the RNS properly. Over to DOR to explain I've underlined the irony of the part of the statement:

This funding will be used to strengthen the Company's balance sheet and used towards further farm-ins and other potential investments within the UK conventional oil and gas sector, and in accordance with the Company's stated investment strategy."

Donald Strang, the Company's Chairman, commented:

"This new funding will be put towards general working capital, expected 2015 contributions for on-going work on the Horse Hill discovery and for assessing further acquisitions in the UK and European oil and gas sector.

For the candidates in denial of the risks with Gulf Keystone (GKP). They have called a meeting of bondholders, to remove the "Book Equity Ratio ("BER") Put Option of 0.4 in order to strengthen the Company's ability to negotiate with the interested parties regarding the Corporate Actions." 

Now if you were a bondholder...save for something promised in return, what would you do? Would you really buy the stock now or the bonds? The latter certainly has more security over it, perhaps those followers would be wise to follow the trades in the bond rather than the stock from now? Sounds like the low ball, was indeed, very low-ball!

One hopes decorum and limited profanity from a certain party will be kept after selling the last block!:-). Hat tip to the trades pilling into ASOS on the back of BOOHOO yesterday, sadly one can't be everywhere all of the time! 

ITV acquired  Talpa Media (Big Brother creators), that is good for both parties. Were ITV playing poker with Entertainment One (ETO) or looking to acquire both. If the reports/gossips of a deal with Entertainment One were correct, then its unlikely (without more debt) that they could fund any such deal in the near future, one of ETO's size anyway, over to a US Big boy! 

Atb Fraser

Any web-designers with spare time please contact! Having now been let down by three parties, despite paying, I'm after a freebie! 

Morning Mumble: The Drought with ANTO and SQM, Largo + APF and Allied Minds, + IGAS/INEOS

Good Morning,

With a growing discontent in Chile over the drought, the press are awakening to the idea it's not good for Chilean copper production, more so the natives. Yesterday EMC reported on the protests at Antofagasta's (ANTO) Los Pelambres. For those needing to the geographical model, Chile Copper Mines. 

It was asserted that, "The protests were triggered by a small group who do not necessarily represent the valley community and are seeking action by Pelambres and the local government to help alleviate the current drought conditions. Discussions regarding water availability have been proceeding for some time with the intention of establishing a lasting solution." Yet today, almost entirely contradicting that statement is the court ruling against Los Pelambres (ANTO subsidiary) we’re notified of issues regarding the Pupío stream flowing through Los Pelambres. 

The majority of miners in Chile are suffering, those myopic iodine speculators will still be focussed on SQM's iodine production, will be well versed in the problematic history of security of water supply. The sector is not without its issues of corruption and the legal system / prosecutors are starting to pay attention. 

A few families control 50% of all mining interests in Chile (read being perceived to be above the law), with growing resentment from the locals. Not only brought on by a perception of greed but increase belief that profit comes above all else, the 'stream' at Los Pelambres being a prime example.

With various other options available to the miners including a sea water pipeline (at cost) and not necessarily viable at the current prices, it's going to be a difficult situation to manage. The blame is placed firmly at the door of El Niño (a rather large swelling amount of warm water in the eastern tropical Pacific ocean), although the miners get the pain/blame by the locals. 

APF (Anglo Pacific) still do not appear to have updated the market on the Largo Resources (TSX: LGO) refinancing issues. If these end negatively (although unlikely) could have a material impact on the royalty.  Largo emailed out the corporate update last night in respect of its Maracás Menchen Mine and announced the appointment of Mr. Mark A. Smith as its new Chief Executive Officer. 

Basic maths suggests TSX: LGO needs $60M (CDN), with Mark at the helm financing should come easy for those old-timers of Molycorp and more recently NioCorp (Niobium at Elk Creek). Perhaps on the 25 March, Anglo Pacific (APF) will give some indication of their knowledge. Based on their share price performance since, 2011/12 it doesn't bode well.

Shorts were scambling to cover on Allied Minds (ALM) this morning. Those betting on sentiment should be more short-term, with the announcement of BridgeSat costing some profits. BridgeSat intends to develop optical connectivity system that aims to increase the speed, security and efficiency of data transmissions from low Earth orbit (LEO) satellites at a reduced cost compared with traditional radio frequency solutions. 

Igas Energy (IGAS) finally came forward with the long-awaited UK Shale Farm out Agreement with INEOS. The figures aren't bad at all for both parties, the Swiss Chemical Group (INEOS) get to fund some decent acreage with Igas getting some much needed cash, and carry. The market, perhaps, should have reacted better to a deal worth £65M, alas there's no pleasing some people. 

The news is sufficient to find even the negative of investors now reconsidering. The large bets (EMC) causing some drop as they take short-term 30% gains in six weeks, perhaps they might just leave some skin in the game. 

Leggie, Cairn Energy out today! 

Atb Fraser