Morning Mumble: BHP Billiton (BLT) Production set to increase & South 32's Misnomer

Good Morning,

There's a lot around about BHP Billiton (BLT) this morning. Although some are missing some pertinent elements including BLT's costs. If one cannot produce and sell a product without incurring freight and royalty costs, why are these not included in the cash costs? 

BLT's $16 a tonne is wrongfully considered a pain to the industry. The marginal producers will suffer, that's a given. BLT's total costs are not near $16/t! Without going into details analysis, BLT and RIO's all in cash costs are nearing $35-40/t pending on weather and energy cost movements.  

The commitment to Port Hedland of additional $240M is not to be sniffed at, this isn't included in freight or royalty costs. They have committed to the purchase of additional tugs and a new "tug harbour" to improve the reliability of the port. 

Iron ore will be under further pressure. With most commodities the gap between cost of production and sales price narrows over time. The Chinese are not speculating on Iron Ore, in fact most commodities, this has had a notable effect on commodities prices. 

Although BLT is still increasing to capacity of 290Mtpa and forecast to production of 270Mtpa for 2016. Whether the production increase improves costs (or efficiencies) any more than have already been expressed is another matter. 

Last weeks impact for Onshore US assets $2B and a net loss recorded on the demerger of South32 (Short 32) are now realised. This will be addition to the copper writedowns that appear to be exploration related are not to be sniffed at.

As Rio is slowly being recognised as ex-growth, it may be premature but all the same, BLT is looking like a cash model rather than a growth company. 

The marketing update is worth consideration as there's a glaring significant theme, please not all comparative years and half years. 

Average realised prices(6)	FY14	H1 FY15	H2 FY15	FY15	FY15 vs  FY14	H2 FY15 vs  H2 FY14	H2 FY15 vs H1 FY15
Oil (crude & condensate) (US$/bbl)	102	85	52	68	(33%)	(49%)	(39%)
Natural gas (US$/Mscf)	4.35	4.21	3.29	3.77	(13%)	(33%)	(22%)
US natural gas (US$/Mscf)	4.10	3.89	2.59	3.27	(20%)	(46%)	(33%)
LNG (US$/Mscf)	14.67	13.76	9.40	11.65	(21%)	(36%)	(32%)
Copper (US$/lb)(7)	3.22	2.98	2.61	2.78	(14%)	(16%)	(12%)
Iron ore (US$/wmt, FOB)	103	70	53	61	(41%)	(45%)	(24%)
Hard coking coal (US$/t)	131	110	99	105	(20%)	(18%)	(10%)
Weak coking coal (US$/t)	111	92	85	88	(21%)	(18%)	(8%)
Thermal coal (US$/t)(8)	74	61	56	58	(22%)	(21%)	(8%)
Nickel metal (US$/t)	15,273	16,905	13,688	15,301	0%	(18%)	(19%)

South32 (S32/Short32) quarterly results are today as well, with little mention as BLT have overshadowed their results. This could be a cunning format for hiding crap. 

South 32 were notified by BHP Billiton that non-cash, pre-tax impairments of South32 assets totalling US$1.9 billion were recognised effective 6 May 2015. Largely offsets prior fair value uplift of US$2.1 billion recognised for Australia Manganese and South Africa Manganese. 

A couple of issues here, firstly are S32 not recognising BLT's $2.1B impairment on S32, but more so, if South32 are limiting manganese production because the prices are so dire, then the uplift in valuation should be reversed even more so than the impairment. Perhaps S32 accounts department need to remove their socks before attempting the full year accounts. We'll have to wait until the interims to find the other $200M. 

With all miners rushing to capacity rather than cash efficiency and security of supply, expect significant pressure of caps on commodities. In the absence of some significant casualties, the market is set for lower prices for longer. Oh and the Chinese stimulus...being a risk. 

Something of significance that isn't being widely reported yet, but has started to be unwound after the Government investigation. Speculators would be wise to consider is the unwinding of ETF's back by physical metals in China (Fanya Metal Exchange). This is significant in the REE/REM (Rare Earth Elements/Rare Earth Metals) space, but one should consider 'certain' copper trading houses where some of the investors have had a liquidity issue. 

With an increase in trade disputes on commodities exchanges, at what point does the Chinese Government get involved in these issues. More so with fraudulent trading companies springing up, what are the risks to the market with alleged guaranteed returns on commodities of 50% in a day. 

China had Qingdao issues with Copper financing (ghost financing), that have not only seen a spike in LME / Global warehouse supplies, but more so a reduction in financing for metal trades. Pacorini Metals Asia Pte spike in inventory, across the spectrum of metals is not uncommon globally.

Atb Fraser

Morning Mumble: REM's Desperation & Writedowns lost in the GLEN. Copper Gossip & Spain 2.0.

Good Morning, 

Markets tend to be more confident in the UK as it shrugs of its seasonal affective disorder to start the spring afresh, but not for long! It was yesterday the supreme chartists (exc. Hugo) are now calling for a FTSE 100 retrace to near 4000. To quote Hugo, as it's unusual for him to be consider the FTSE, if there was a retrace it would be circa 5100, nowhere near the 4000 being bandied around. 

REM (Rare Earth Minerals) appear desperate to get above 20% before any such EGM at Bacanora Minerals (BCN). LGO don't have the necessary cash to remove the issue of a vote for the appointment of a Director to the board. The question should be, how much cash do REM have left? No much is the answer…

Having spoken to a few savvy investors in BCN it's unlikely that David Lenigas will achieve the intentions via REM without 20%+ direct holding. All holders should be thanking REM for creating a large illiquid squeeze (do not blame shorters as they were near nil or should have been!) in the stock with the price near doubling. This does not mean they should vote REM or any associates on to the board, far from it in fact.

Glencore's (GLEN) preliminary results 2014 in EMC's view should have taken a huge hit on thermal coal.  The carrying values have warp the overall figures to give a false sense of security for an improvement in the dividend, up 9% today. Viterra saved GLEN from dismal results, debt reductions of circa $5.2b will aided those with myopia and the savings from the incorporation of crap from XTA (Xstrata) are just mystifying. Although when one unwinds the debt, it’s worth noting the sole reduction was down to Las Bambas sale. Had the 'synergies' and CAPEX reductions be substantial enough, the level of debt paid down would have been circa $6.4B and potentially nearer $7b. (Time for a picture, it's dire!) 

The preliminary snapshot sums GLEN up, but doesn't give the whole picture. The market should have been selling into these results. They are dire if you add in coal and the return on shareholder funds, laughable. Roger Bade goes with 4.2% return on shareholder funds. 

Its ironic BLT (BHP Billiton) achieved better than GLEN despite having Short32 to get people's mouths watering. Although, with GLEN's trading division and the level of capital intensity required you'd be a fool to expect the same metrics as Rio/BLT and dare I say it Vale, whom have their own issues.

Roger asks some very good questions about the reasoning or underlying issues within GLEN regarding fees, commissions and pay. Perhaps GLEN was more suited as an unlisted anomaly. Well not for the sellers! It’s very hard to justify a valuation above 265 pence for GLEN, and that's pushing it. So over to the analysts to maintain the status quo with targets of 330-360 pence, obviously not for their own money though!

Analysts are left guessing where GLEN will cut its CAPEX. We'll leave the summary to GLEN, "Responding to the volatile market backdrop, we comprehensively reviewed the appropriate level of capex for 2015. Originally guided to $7.9 billion, we now expect 2015 total industrial capex to be in the $6.5-$6.8 billion range, with reduced spend across the broad portfolio." Coal? Oil? Alternatively OPEX? Marketing? Perhaps more transparency on the marketing fees and 'associated' costs? 

Of course we should end the GLEN commentary on a high note with the largest LMI (Lonmin) short...the in-specie distribution. How has the stock performed since GLEN's in-specie announcement 11 Feb 2015? Those two analysts in RSA (Republic of South Africa) that thought it would be good for liquidity, with a TP or near 240! 

With Mugabe's 91st Celebrations being in the headlines, Mwana Africa (MWA) managed to raise $20M via a bond issue for the smelter restart from ZIM institutionals. One hopes MWA have checked the lead times for the equipment they need in for the smelter reopening in 9 months’ time. 

There's a guaranteed uncertainty coming to the politics of Zimbabwe. It would be sensible to consider this with any investment, irrespective of the benefits of the commodity (namely Nickel). ZANU PF (The Zimbabwe African National Union – Patriotic Front) are in turmoil about who takes over...Even the MDC-T (Movement for Democratic Change) are becoming soft in their old age and wanting to maintain the status quo of ZANU PF, lip-service objections?

Copper gossip via Li in China, Zambia are alleged to be reviewing the overall tax-rate for open-pit mining that has impacted copper production and sentiment on any investments there. After initial discussions with the operators, Zambia are alleged to be reviewing the 20% royalty rate to 12-14%, although ahead of the previous 6% welcomed by the miners. 

Zambia have risked their entire industry in the short-term with the revisions to the Zambian corporate tax and mining royalty regime. With First Quantum's Sentinel mine coming on stream, they have had to revert to their lenders to tweak their covenants. The 12% for Vedanta is still far from positive, and creates risks, despite a recovery in the copper price (currently 2.66/lb)

With Zambia appearing to want to play a hard line on taxation (at least at the moment) Vedanta (VED) is at real risk of being the casualty. Its capital and corporate structure drastically need simplifying/clarifying in order to survive, VED appear have got ahead of itself in the price recovery. 

A few super-yachts cancelled today?

Atb Fraser

Morning Mumble: REM increases its stake, POG's links to PVR and CNA being the new Tesco?

Good Morning, well for most, as there's a dreaded manflu and virus is here!

REM (Rare Earth Minerals) increases strategic holding in Bacanora Minerals to 14.37%. Doesn't bode well for Bacanora, based on past performance. With Graham Edwards having (or potentially) having an interest in 24+% it will be interesting to see how voting goes at the EGM.

The developmentss at Petropavlovsk (POG) are becoming a circus with an update.. So the board believe their proposal is better than Sapinda's that is allegedly at a higher share price than that being underwritten. Surely those underwriting the current proposal don't what the apple cart rocked, with belief that is very high risk of insolvency in the event POG board and bond holders don't get their way. Sapinda should outline their proposal with all necessary paperwork including evidence of funding sooner rather than later.

For those with an interest or following of PVR (Providence Resources), Sapinda are involved in Sequa Petroleum whom are rumoured to be the farm-in partner for PVR (EMC Sequa and share sale) and are currently alleged to be raising the necessary cash to fund this deal. So are POG correct in their analysis about the ability of Sapinda to raise the cash? Over to Sapinda to up the ante or better yet, ante up!

PDL (Petra Diamonds) have come out with very positive results and a paying down a significant proportion of debt in their interim results. The numbers are healthy, in fact higher than what the EMC expected. Having recently been short (EMC) across the sector for the play. We are becoming more positive after PDL's interims so a review is needed as financing is coming back into Antwerp via the Middle East (EMC GEMD + Antwerp Bank.)

Russia is impacting on precious stone sales in 2015, the contraction should have already been felt. PDL believe prices have stabilised. And with a few new lenders in the market, they'll be cautious about over leverage. Israel may just surprise us yet with a new diamond fund, but don’t expect too much price appreciate in the short-term (if any).

There's been some gossip in recent days about Centrica (CNA) acquiring Smart Metering Systems (SMS), could the wires have been crossed? With SMS’s contracts with major energy companies would not necessarily have any added value added in acquiring SMS, more so its likely to be a negative.  

With CNA results out today, one cannot see them making too many acquisitions whilst they slash the dividend. They have announced a small contract with Total Gas & Power Limited (TGP), with the potential for an uplift in the order size. It would certainly fit with Centrica's longer-term plans, but perhaps not SMS and certainly not now! A logical fit would perhaps be Melrose and incorporate SMS within Elster.

No need to comment too much on CNA’s final results. An Oil & Gas + utility company disappointing the market. Revenues up, debt up, profit down, group investment down a whopping 68% with a further 40% cut in E&P capex by 2016, as a result they've 'reset' the dividend. CNA could just be the Tesco of the energy sector...? Over to London to push those close to the margin to spin the Canadian interest in CNA into the rumour mill. 

Atb Fraser

Belated Morning Mumble & PM Bolt On: Shaft'ed (SHFT), AAL something's lacking in the sandwich & AHhhhhhhhh'fren + the Alleged amateur of aim...+the paradigm shift in China's iron ore.

Good Evening, 

With Indaba and a few other items going on it’s been extremely busy week with meetings and teleconferencing from the UK. Today a slide show was emailed around with myself to be "formerly" known as the Amateur of AIM. It’s a pleasure to drink their gin this evening, but restricting the consumption to a few rather than two cases (apology accepted). 

Shaft Sinkers (SHFT) hit the wall with a financing update at 12:32, just a few weeks after a "yoff" (read as person younger than I in a position I'd have loved when I was his age) challenged the EMC analysis of the company and why it hadn't gone bust!?! SHFT is dogged with its inability to share the risks of contracting with the miners, creating an imbalance in returns and something contractors need to learn (mail box for a quote to understand this; its not cheap!). 

SHFT's issues were endemic of commodity prices declining (receding super-cycle), opex/capex cuts, the South African strikes whilst not forgetting the Kazakhstan contacts were totally misunderstood by the market and lack of risk sharing in contracting. It was one of the favoured shorts, kick the dogs. The employees and staff should be ok, it would be wise for investors to note a few key names from the board in their journal for future reference.

Anglo American (AAL) Full Year Results 2014 is/was abysmal. The write-down on Minas-Rio of $3.5 billion is laughable when the company state Minas -Rio is ahead of schedule in October [2014] and expect to bring the project in $400 million below the revised budget. Do the company have a handle on costs at all? Revising costs up, then coming in significantly below the revised budget. Sounds pretty much like a blank cheque. 

The savvy will start questioning whether AAL's net debt target of $12B is realistic in the current environment. With debt set to peak at $15.5 billion (EMC estimates) by end of year, commodities and free cashflow are going to have to significantly improve before one becomes positive on this stock. De Beers should be called Long32 (to mimic BLT's short32/south32) and be divested to support the balance sheet whilst there's value in the market. The market stupidly reacted today, and will ignore the realities. Up near 20% off its lows anyone would be thinking it’s going great guns. 

Afren (AFR) has had a lot of rumours abound today, as per FTML it was proven to be BS, save for the low ball offer that SEPLAT (SEPL) were offering. Afren shot out the gate with little option to maintain but to maintain there's value, with offer talks being terminated. SEPL announcing they had completed extensive due diligence on Afren and made a written proposal to the Board of Afren that provided critical and significant near-term liquidity and value for the stakeholders of Afren. Value for stakeholders...loose term for "not the shareholders"? 

It would appear David Lenigas has started a snowball on Bacanora Minerals (BCN) after the recent request to gain a seat on the board via REM (Rare Earth Minerals). A decent holder said today, they'll reconsider the viability of BCN if David Lenigas gains a seat on the board. Voters would be wise to think where their money is best placed. There's a number of items going on the side lines with BCN and good to follow as the big boys (exc. REM) start to play...its best to leave that one there, however if you're widow(er) or orphan you'd be advised to avoid.

With oil's absolute focus on rig counts it’s a speculators licence to print money as oil was propelled above $60/bbl (Brent) with the Euro-zone giving it a little squirt. Why it's rocketing away is purely down to a bounce with the surplus even allowing for a reduction in production still out gunning demand. The market is rushing to price in a reducing rig count, some "weather issues" (as Malcy eluded to in his blog) creating a better balance. 

The final thought of the weak (scuse the pun) is the iron ore short and the Vale gaining permission to utilise their giant ore carriers to China on Monday. Obviously this has nothing to do with some agreements with Cosco (China Ocean Shipping Group) and the related transactions. 

It’s rare to be able to quote EMC directly, so here's with a little clip from today:

"If China subsidises native production by 30$ a tonne for 125mt it effectively causes over supply and a short to $55/t. The subsidy via development grants will be partially offset by the 700mt at the lower price.  

China have just shorted Rio and BLT by allowing the super ore carriers in on Monday (9th) something Rio et al forgot to mention in their updates! Expect Cosco (China Merchants Energy Shipping state owned), to get further involved in the low cost super/giant carriers the deal with Vale from last year showing they're willing to apply pressure on Australia . The deal with Vale/Brazil has in essence reduced the need for 30% of Australian ore alternatively they [Rio et al] must slash prices.”

We'll leave it there...see you on Monday! 

Atb Fraser

Morning Mumble: The Mammoth (Rio) attempts to please the market and support its own SP

Good Morning,

Rio's full year got shareholders salivating with the headline "Rio Tinto delivers underlying earnings of $9.3 billion and announces a 12 per cent increase in full year dividend and a $2.0 billion share buy-back." The Australian market action was perhaps the best response, flat. 

With a reduction in CAPEX and debt, plus $500m tender and share buyback $1.5 billion will all support the SP and get the analysts chomping at the bit. Rio have been saved by the aluminium improvements compared to last year, EBITDA up near 55% and earnings a respectively handsome 124%, with copper not performing too badly either EBITDA: 33% and underlying earnings, 11%. The recent commodity falls are predominantly outside of the majority of this periods reporting.   

A quick glance at the numbers, it’s wise to remember prices for iron ore have “nearly” halved in the reporting period and copper slipping significantly, with further dips predicted. Rio believe there's around 125 million tonnes of high cost production from China and non-traditional seaborne suppliers to exit the market in 2014, with further exits anticipated in 2015. This is assured as casualties unfold and give up the fight. China may however find a benefit in supporting native production to maintain the status quo of low prices and reduce monopoly.

With write-downs on foreign exchange debt, reducing CAPEX (likely impact on earnings post 2017) and impairments already in the bag, the underlying earnings were set to benefit. Next year may be a different story, with demand under pressure, aluminium and copper (likely to be under-pressure again soon). 

Indonesia's unprocessed export ban has benefited those operating elsewhere (namely Australia and Philippines) and has created an increased demand for alumina and bauxite (but for how long). China has suffered from a surprising lack of stock and turned to Rio et al to fill the void. Any change in Indonesian policy is likely to impact hardest on Rio. In summary, Rio is now the stimulus and dividend play of the market, putting Glencore's (GLEN's) update yesterday to shame. Over to the share buyback to support Rio's SP in the longer term, just like GLEN’s (sarcasm).

With the share buybacks continuing there's no reason for a realistic 3600 pence tp + some hope value, where perhaps the market should be revising the returns downward in light of the obvious happening within commodities. Before holders gets excited about reversal of impairments (write-backs) in Rio, at $1.049 billion (net of tax) of book value for aluminium and bauxite, its worth remembering they've already been written-down near $29-30 billion. A positive in significant cost improvements and high regional market and product premiums, aka Indonesia's loss is Rio's gain but nothing to shout about. 

BCN (Bacanora Minerals) takes the gloves off and announce EGM requisition with the proposal for David Lenigas to join the board. BCN outline the case simply with the search for a technically orientated CEO, which should be sufficient. REM (Rare Earth Minerals) already have representation on the board in the form of Kiran Morzaria, its wise to read the disclosures (and the respective companies’ performance) to consider the pros of any further REM volunteers and employees being strategically placed.

If REM wish to play hard ball with BCN both entities will only be doomed. BCN may wish to throw a spanner in the works and raise some cash and dilute REM. BCN would be wise to contact those valuing decent projects above any association with REM. Lithium is the way forward, but sometimes the assets have more attractions than the associated parties, see: LGO commentary and Victoria Oil & Gas. 

With Brent, WTI, Gold and Copper all taking a breather whilst everyone has a hug in the Ukraine, perhaps next week will bring more volatility. Its nice to see a stale bull in CPR APR Energy reducing his lithium intake as the stock has a change of direction in his fortunes with the Australian Pilbara announcement. Is the company is on the turn? With mutterings of some positive tendering and perhaps even a quick decision coming out of Libya. Over to Aggreko (AGK). 

SuperGroup (SGP) announce that Susanne Given, Chief Operating Officer, has stepped down from the Board as a director with immediate effect and will leave the business in order to explore other opportunities. We'll leave that one for another day...

Atb Fraser

Evening Bolt on: International Mining & Infrastructure Corporation plc (AIM: IMIC) & Tesco (the final update) a double dose of!

International Mining & Infrastructure Corporation plc (IMIC) loan conversion shows the faith in the company, a mere 30% discount to the SP. One hopes you've sense my irony with the mere...the 1 year chart must surely look like the cellar steps! Next stop 10 pence? 

It would be wise to think how the terms are fair and reasonable as Strand Hanson Limited, the Company's Nominated Adviser (NOMAD), consider that the terms of this transaction are fair and reasonable insofar as the shareholders of IMIC are concerned. Its not something I shall be complaining about having rated this as a sell since they acquired Afferro Mining Inc.

Tesco: Buy

One thing that Dave Lewis has just been talking about is the category reset. Basically done one category so far (other than Christmas), which is Home Care. Sounds like they have reduced SKU's by 31% and seen better volumes and lower prices. He then gave the example of toilet paper, where the SKU's were down 44%, but pricing to consumers were down 11%, so volumes well up. Now the manufacturers will have made far more money out of that (or the big players that won) as they have got rid of hi/low pricing, high/low stock levels and so production can be smooth, consistent and ultimately profitable. This will happen in more categories, so big brands should win. Sensible way to go forward, especially when you have c.29% of the market (they have the scale to deliver it).

Shares have had a good run due to no rights issue, many investors were hoping to get some cheap shares on a rights. We certainly can't rule out a rights at some time, but we suspect Tesco will do it from a position of strength, when they have sorted a good chunk of the balance sheet issues out (maybe this time next year). We expect the shares to follow through a little more in the short term, but we must remember that we haven't seen much regarding the profits yet. At some point in February the Group will need to lay out their profits forecasts, all we know is that they will be no more than £1.4bn, we don't know how much less of this number it will be. Write-offs will come through, but underlying profits will need to show the level of investment that Tesco has done to achieve the improving sales performance, we would expect the new Tesco management to throw in as much costs as possible in these historic numbers. Consequently we could see the shares see a small sell-off over the next few days, but fundamentally we still like the medium term story here. Getting the performance back to what it should be will give huge upside in the shares over the next 18 months. We remain a buyer.

Tesco: Buy

We were impressed with the presentation that Tesco has just delivered, not least because it shows a complete change in the culture of how the management are looking at the business. Moving the Head Offices away from their traditional home also signals that the new management team want to be involved far more in the underlying business than they have in the past few years. Here are some of the positives and negatives that we believe came through.

Positives:

One thing that Dave Lewis has just been talking about is the category reset. Basically done one category so far (other than Christmas), which is Home Care. Sounds like they have reduced SKU’s by 31% and seen better volumes and lower prices. He then gave the example of toilet paper, where the SKU’s were down 44%, but pricing to consumers were down 11%, so volumes well up. Now the manufacturers will have made far more money out of that (or the big players that won) as they have got rid of hi/low pricing, high/low stock levels and so production can be smooth, consistent and ultimately profitable. This will happen in more categories, so big brands should win. Sensible way to go forward, especially when you have c.29% of the market and the scale to deliver the potential positives that should come through.

The management has finally realised that you need to get sales growth to deliver shareholder benefits. We were encouraged by how Dave Lewis continually stressed how if they realise internal funds from either cost savings or better execution on the sales line then this would be invested back into price to grow the sales line. Margins therefore will be subdued for the next few years, but if you start gaining significant market share as you use your already strong position to get great prices on brands and own-label, then as time moves on the competition will struggle to invest to keep up. Ultimately this was a simple expression of offering the consumer what they want when they want it, this could make life much tougher for Discounters as they do offer value, but the range is very limited and so maybe they don’t offer consumers always what they want.

The most important comment that was made by Dave Lewis was when explaining the £1.4bn forecast which was put into the market on Dec 9^th. Here he made it clear that this would be the number when you take into account what had been expensed by that date. It was clear that they have therefore funded some Christmas and New Year investments via internally generated funds. The Company wants this to become the key driver in the business, if it does then they will be gaining share and hurting the competition, then many of the other worries regarding cash flow and debt will dissipate pretty quickly.

Finally, regarding debt and the worries over this issue for Tesco, they reminded analysts that they had issued £5bn of debt just after the new CFO arrived in October, so there is no immediate pressure on the balance sheet. We suspect this is why the shares have risen so much on today’s news, but we are still encouraged by all of the other fundamental changes that the  new team has started to make.

Negatives:

Debt is still high, though there is no immediate issue to repay this debt the short term cash outflow (c.£2.3bn) doesn’t make good reading. With lease commitments high, a Pension deficit and underlying debt, they do need to make sure that the underlying business is being run properly so that they can fund the business from that cash flow. Asset sales though can now be done at a time when it suits Tesco rather than the markets.

No final dividend isn’t great either. Here the comments seem to suggest that they will think about paying a dividend once they have the right investment grade, so that doesn’t look great for the short to medium term as it will clearly take time to repair the balance sheet.

We guess there will be some questions as to whether seeing no margin growth and just focussing on what is good for consumers is good for shareholders. Undoubtedly yes. If consumers start to come back to Tesco then cash flow should turn positive quickly, this will allow Tesco to sell assets at better levels, and maybe even have a rights issue on their terms rather than just having one as a necessity to reduce debt. Getting back into this virtuous circle is what investors want and should allow the shares to recover. Tesco has started turning this tanker round. We remain a buyer.

With limited time to highlight items above, thanks to Duncan for some more in depth thoughts.Even

Rare earths and China’s self-correcting folly might be a tad premature with export restriction in the form of permitting rather than quotas I hope to return to this REM, REE and Rare Earths item. 

Tomorrow due to meetings and a few items outstanding it'll be touch and go but it would be rude not to consider the pricing out to 2016 giving an idea what the market thinks for 62% FE. 

Atb Fraser