Morning Mumble: Robertson's Jam (Fox Marble), Wandisco (WAND) & the panacea for the PGM industry.

Good Morning,

Is it starting to look like a management issue (or perhaps capability issues) with Fox Marble (FOX), after today's operational update? A Lack of orders, issues with machinery, some small orders, some advanced payments and  fire at Prometec SrL, the company responsible for supplying and refurbishing two major pieces of machinery due to be installed at the factory (total write-off). As a plus they were insured. Adding to yet more delays, including 'accessing the higher quality stone.’ At what stage will the company start being proactive? We had EMC: Fox Marble May 2015. 

Having given FOX the benefit of the doubt in December 2014 (EMC), there's little sympathy left for management 8+ months later. Fox Marble, like a few companies on AIM have quality assets, it's just the management erode the value for a number of reasons. FOX may have created an over-expectation in shareholders by their guidance. They certainly haven't delivered and the price will be punished as a result.

For shareholders, they can but hope the management are going to resolve the woes of their existing operations before entering into a joint venture in North America, which should further increase its penetration into the world's largest consumer of polished marble. Time for a management change? Unlikely as the management hold near 25% of the stock, the issue is, whether people will continue to hold is another story. At what stage were all these operational woes including poor sales performance known?

As a plus, there's some jam in there, with visits from their Chinese partner/agent and some politicians, assuming you can be bothered to read the entire RNS. If there wasn't enough in the announcement to attempt dissuade holders from selling, as a last ditch effort, FOX remind the market, as of the 30th June they had €5.6 million in the bank (one hopes not Greek). 

Over to Chris Gilbert, CEO of FOX, to summarise the disaster, "Whilst the first half has been disappointing in terms of sales and we have had some unforeseen operational frustrations, we remain confident in our objective of being a major international supplier of high quality marble. In order to underpin the development of our sales channels we have appointed three additional experienced marble sales staff over the last few months, and we expect that this will also bear fruit as we bring on the production of Illyric White marble from Malesheva 2 and larger volumes from the Sivec quarries in Macedonia." 

Syrah Resources (ASX: SYR) have done the unthinkable and conducted a capital raising (placing). Here's yours truly thinking there cannot be that many mugs out there. Congratulations to SYR and team, they only go and do this on a fully underwritten basis for AU$$211 million (Placement) and Entitlement Offer). This won’t change ones view of the company, Slater and Gordon managed to raise monies.

If one has researched Syrah Resources and the neighbours licensing, it would be wise to start questioning the valuations. Certainly that of Syrah resources, where almost identical operations are valued near 4 fold less (Triton Minerals). Triton Minerals (ASX: TON) has teamed up with AMG Mining AG whom have an interesting history themselves with the debacle that occurred at with Timminco in Canada. 

With a global supply...oops global demand being limited for Graphite currently. Admittedly, one shouldn’t exclude a business on global demand as there “may be” new opportunities. However, the new opportunities do not appear to be presenting to the market. Least we forget Kenmare Resource’s (KMR) venture into Graphite. With Vanadium making a brief recovery and support coming to the price in the market. The prices are now likely to be shattered come 2017/18 when Syrah bring yet more vanadium and graphite into the supply chains. Unless of course there’s a significant change somewhere.

Question for the logistic providers, “why is Nacala port preferred over Pemba?” The port's website is down at Pemba, but should it not be in the frame as a preferred port, compared to Nacala? Immaterial really, when considering the viability of extracting the ore with the current demand, outlook and cycle of commodities. Disappointingly, one has to wait until the trading halt is lifted and the shares resume trading on Thursday, 6 August 2015 (Ex-entitlement).

We had a do at the weekend, where Wandisco (WAND) came up after their sales update and Tom Winnifrith’s short in August views on WAND.  It’s timely, as we introduce the label "JAM" to the EMC to identify companies. Not only the likes of WAND and FOX, but for the entirety of the market as the need arises. As a reiteration, there is no need to change from the view in January EMC: WAND. The lack of cash is the theme and lack of sales/profit. 

From dialogue today (RG H/Tip),...Does Team UK (the markets) not know that Subversion, CVS and Git (and Hadoop) are readily available? In addition to being open source, where some feel WAND do not add additional content to warrant a premium? With one chap coming out with a PT of 14.5 pence, its certainly punchy and one that the market may have to swallow.  

The PGM industry is suffering, as a result of power increases, wage inflation and operational woes, and needs some assistance. We have the answer, or more poignantly, Lonmin (LMI) has the answer. With the market waking up to the realities of LMI, save for a rescue plan from a Chinese entity that themselves are under pressure themselves, the company is due a rerating (downwards).

The panacea for the PGM industry is a large casualty, and LMI fits the bill. Big enough to reduce the over-supply, small enough not to be a significant casualty for the banks. This would also free up electricity capacity, reduce the strangle hold on labour prices but create a deflationary cycle on mining costs in South Africa.

Norilsk Nickel preliminary consolidated production results for the second quarter and the first half of 2015, shows supply increasing into a stagnating market. Norilsk guidance of Palladium (Q performance up 15% q-o-q) targeting 2,580M to 2.610M ounces for the year and 590K-615K (Q2 performance up 6% q-o-q) ounces of Platinum. Just one of many producers ramping up in an attempting to reduce costs to a viable level. 

Any short-term relief is limited with demand and/or speculation being below forecasts. With car and truck (heavy duty) sales coming under pressure from reducing capital investment, Lonmin could just be what the entire PGM industry needs, closure. Removing overnight, a good proportion off the surplus.

In the absence of closure, LMI have their work cut out, with a capital raising required, potentially just to fend off the banks and then there's other woes of cost inflation throughout their entire chain, never mind being in South Africa (RSA) 

Its been pointed out the link off the Indian Times story was inadvertently missed. Hopefully this will be corrected. 

Atb Fraser

Morning Mumble: PLUS Sponsorship. Ageism stifling China and AMC (Amur Minerals) raising? + First Ore @Wolf Minerals + ESKOM 24.78% price increase (Yes 24.78%)

Good Morning,

PLUS's RNS was lacking a number of details, namely a trading update. If the gossip from some alleged recently departed employee is correct, trading has been significantly lower than expected. As always, there is a bias with ex-employees, so it’s wise to factor that in a significant degree of BS. Playtech (PTEC) have ignored the Material Adverse Effects (MAE) and simply bought the stock. So today' there's the sponsorship of Atlético Madrid. One assumes in agreement with PTEC?

Brand recognition in Spain? Give over! It’s wise to a) consider the deal done b) limited upside so why speculate positively c) Look at PTEC's earnings. Something a few funds may be conducting at the moment. PTEC should be towards the top of a funds lists of stocks to consider. The same as Slater and Gordon (ASX: SGH), whom must be near the most shorted stock on ASX! 

With a near 100% increase in shorting activity on the ASX, a weakening currency and issues with commodities. Australia may be entering choppy seas, positively this is good as its the main FX trade. Having performed very well for near two years solid long, but with intra-months/weeks/days shorts. In the absence of a material change those speculators will be looking to GBP1: AUD$2.5. 

The shorter’s preference appears to be consumer staples, industrials/transport and energy sectors, although mining and finance are not exempt. There's been disproportionate increased in retail, industrials and energy stocks for obvious reasons. The mirror trade appears to be in China as well, with a similar pattern emerging, especially in light of the growth/appreciation on the Chinese markets. 

It’s no wonder with the Shanghai Stock Exchange Composite Index (SHCOMP) rising at silly speeds, it has to consolidate at some point. The trend has been commodities, housing, internet of things and then equities (long). It certainly looks like the trend is on negative betting/derivatives on the SCHOMP is now upon it. Where some suggest a more realistic level of 3,500 on the SCHOMP is sustainable, with sensible appreciation, rather than over inflated stocks. 

Although one is wise not to bet against the Chinese Government. Expect to see "services" being listed as the shift from manufacturing, moves to services and support type companies. Certainly in light of the PPP's (Public Private Partnerships). The issues aren't unknown, where a "Weak Corporate Governance" has necessitated change for a number of reasons. Not only to shift "some debt" off a municipals balance sheet but also to improve productivity and create a more logical flow of wealth from corporate parent to civilians. 

China, with its archaic laws and policies relating to promotion and opportunity are stifling creativity. Its beyond sensibility that China still operate a level of promotion that is age related, where if "passed-over", workers may as well spend 20 years getting ready for retirement. In essence if you miss an age related status-attainment scheduled promotion, the opportunity thereafter is very limited. Save for the comrade that gets caught with his hand in the till, its likely there will be no further promotion.

It’s no coincidence that Hu Jintao was considered young at (near 50) when he came to notoriety being elected to the Politburo Standing Committee (PSC) and later taking charge of the Secretariat of the Communist Party of China. At near 50, it raised a few eyebrows. 

China needs to evolve, it will do, certainly with the preferred way forward being PPP's but likewise, expect the herd to follow suit as the roll out gathers speed. Poor Governance and the increase in peaks and troughs within sectors is dire for growth, as short-termism sets in. Not only in construction quality but financial management, where myopia and bonuses will win the day.

Having sold everything in Amur Minerals (AMC) and gone short, its starting to make one wonder who is ascribing a valuation of £120M to AMC. The asset needs a lot of work and does not appear economic at the prices today. 

One has a suspicion that AMC are out with their cap, based on an unrealistic current valuation, with a logistical nightmare upon them as well. Even if they can raise that "not-so-insignificant" amount of cash to develop the project (Kun-Manie PFS). With a commitment to "pre-production evaluation" to the Government by 1 December 2020. Its got more downside risk than anything...you've been warned! 

We have first ore for Wolf Minerals (WLFE). The hard work is paying off, although the share appreciation that was expected is yet to occur. Perhaps in part due to tin and tungsten prices, but also a tightly held stock with limited possibilities, save for production and returns. Dull? Not likely...

Finally, the ESKOM announcements will be unwelcome to most this morning. Worthy of a read SA unites against Eskom tariff hike bid and bringing forward the need for cash for some miners already in the crapper!

Atb Fraser

Morning Mumble: LMI (Lonmin), PGM's via GFMS, Serabi Gold, Tribal Group + Otto and Capital Drilling!

Good Morning,

The share price of Lonmin (LMI) is rather telling that Glencore (GLEN) shareholders do/did not value or rate LMI. We shall keep this simple, in the absence of an improving outlook, reduced costs and CAPEX and OPEX clarity LMI is on a path of dilution (rights issue). With GLEN now ex-dividend as of yesterday, LMI is being punished, opps the correct term is "managed sales."

Perhaps the value of LMI for some funds will be ignored and held until an improvement or corporate action involving the Republic of South Africa (RSA) Government. The thought for the day goes to those analysts thinking the furnaces have "exceptional or one off costs", that shouldn't be factored into longer-term workings. One assumes they're new to the chrome issues within the PGM industry?!?!?!

LMI will not be assisted by GFMS annual survey is out on the poor man's Reuters Eikon that platinum has the potential to test $1K/oz. It’s not beyond the realms of possibility, with LMI needing to "dump" rather than manage the sale of near 200K with a growing differential between supply and demand. 

With the improvements and an expanding market in recycling  of catalysts, limited growth and even with a shortfall in supply PGM's failed to respond. One could be minded to think the speculators are locked in to Jo'burg ETF's at a loss so are unwilling to apply further capital, same for the Chinese and hedgies focusing on bottlenecking.  SO GFMS put the range to $1K/oz. to $1290/oz. 

Someone popped a BRR media discussion on Serabi Gold (SRB) into my box this morning on the back of the Unaudited Financial Results for the First Quarter 2015. SRB's suggestion there's the potential for M&A in the sector are of concern. SRB are another company that should focus on their current assets, get their start-up at Palito running efficiently and prove up their resources, rather than spinning a plate they can ill-afford to diversify on.

There is little margin on the balance sheet for M&A, save for the issue of confetti. Currently the Brazilian Real (BRL) is favouring their cost base in reporting terms, and with the downgrades in banks, the issues in the economy is unlikely to change. The USD/BRL of 1:3 should perhaps be considered the key support/potential floor. 

With the last placing just over a year ago, the FX losses kitchen sinked and ramp up progressing well, SRB is now looking more positive than the past 4 years. A producer (at a profit) and potential to return monies to shareholders over the longer-term, SRB should not be ignored. Likewise their liabilities, if there was a hiccup in their plans or a significant movement in BRL terms could hurt them. 

Tribal Group (TRB) gave an update into the AGM. With timelines going out further, one would be wise not to ascribe too much value in light of a second warning about the timing of and Keith Evan's departing, the warning signs were there! Having missed the previous year’s targets, the terminology is far from positive, but with a new 'man soon to be at the wheel' there's some hope. 

It was interesting to hear some excitement in the Oz about SC55 operated by Otto Energy. Tiddler watch, Red Emperor (RMP) Resources have a 15% working interest (WI) on a capped cost basis USD5.625m. If costs exceed RMP cap they have the right to reduce their WI!

RMP, a small cap with near £5M in cash (and most of it spoken for, if not all), there's no room for failure. As Ian put it a binary bet on the outcome of drilling in Q3. SC55 was originally farmed out to BHP, time will tell whether they were prudent to have walked away. Widows and orphans need not apply! 

For those with a memory of RMP, they used to be a shareholder in Highfield Resources (ASX: HFR) whom recently raised AU$101M. RMP sold all their stock at circa 80 cents a share (only 4 months or so ago). With little sign of the ASX: HFR ending its bull run at the time, RMP's timing was should be considered poor, or should it be worded as desperate for cash? 

Had Aureus Mining (AUE) been able to release a sensible RNS about their Q1 progress and Management Discussion and Analysis (MD&A), there would have been time to speed through it rather than the snakes and ladders approach to RNS’ing! You can read it here. Their IR best shape up, or investors (including small funds simply won't bother!), first pour expect end of the month! 

No time for the gold speculation in Asia/NYSE (also arbitrage), with investors hoovering up physical ETF's, nor WTI/ struggling to maintain it's $60/bbl support and the Brent GAP expanding again. The analyst who reads the papers two days ago after best have a whip round to speed up coverage.

Thought for the weekend, is the worst over for Capital Drilling (CAPD), compared to those leveraged operators! Good piece in LEX PGM Plunge with Alan Livsey and Richard Stovin-Bradford. Missing some very important indicators but all the same thought provoking. 

Atb Fraser

Morning Mumble: What a week, a quick recap!

Good Morning,

What a week, with most pre-election polls being a joke. Having thought that the UK would have ended up with a Labour SNP coalition, the UK should be pleased. A slim majority means that nothing too drastic is likely to happen (yet) but more so, Labour's financial record isn't put to the test again. Expect European issues to be a proverbial echo of will they won't they. 

There is a plus to this election, Ed Balls is out of politics (for now), whether you agree or not, its certainly my Christmas and I suspect one Sharon Shoesmith will be pleased with. So as a thank you for all Ed did whilst in Government and in opposition, Good Bye! (BBC).

Despite the dollar being in good form, the hedge funds and Chinese are betting on their own recovery, for most it'll be a positive. For Weatherly International (WTI), the price has to travel significantly before they're in the money. WTI's trading update is dire, and if they cannot get costs under control this placing will look expensive with cash costs per tonne of $7,763. For old money that's around $3.50/lb ish.

The bet is whether WTI can ramp up and reduce their costs, with guidance slipping back. The market may have some relief after their shining knight (Orion Mine Finance) didn't have them over a barrel and instead anted up (USD) $5.2 million at 2 pence. Why the cost overrun facility wasn't used is another question, perhaps an indicator of things to come! 

Laden with debt and debt payments due from November, what's the odds more cash is needed. WTI should now praying for a large bull run to near $3.75/lb or their costs reducing 20%, both are a challenge, with constrained production its not looking pretty. CEO out, COO in, over to Orion to dictate the show. 

On the 21st May those Glencore (GLEN) holders can look forward to receiving their Lonmin (LMI) stock (AGM approval). With a slight recovery in the price, as the shorts closed, it’s not looking pretty for LMI. With their discussions to reduce costs, it’s all too little too late. Simply put, LMI's figures don't stack up and after the last debacle where muppets gift-aided $817m (09 November 2012). Time now to pass the cap around again, or conduct some drastic cuts. If the latter doesn’t work, at least they’ve got a few more willing muppets in the form of post-Glencore holders. The time is now for more cash psychologically, a fully under-written gift-aider at 85 pence should entice most.

The cuts are 'perhaps' too little too late, those firms that bought into the rights issue had a choice, good money after bad? Will there be a recovery? No doubt, but simply put, the money may just be safer under the mattress! More so, if these cuts can be imposed/implemented without an impact on production then why wasn't it conducted earlier! LMI is one for the list of management to beware of when investing, if their names pop up elsewhere. LMI should be managed as a social enterprise by the Republic of South Africa. As such, they may be able to entice the IMF to waste some monies as well, perhaps even the Chinese version?

On a brighter note, Sirius Minerals (SXX) informed us the special committee date has been set for the 30th June (Put it in your diary now). Still in sector, Highfield Resources has its cap out for $106M to build move forward their Spanish licenses. Muga being central to the licenses in Spain is key, and initial indications are there's been a positive uptake in raising the cash, albeit that has the caveat of "at what price." One ASX trader suggests its a mere 5% discount to close...

Randgold Resources (RRS), Q1 Results were out, it’s very hard to justify the valuation, save for being protectionary on the basis of if one must invest in gold, then perhaps bigger is better?!?! RRS note the supply of gold is slowing (only marginally currently), which may actually assist the price and save some of the higher cost Co's that are just about surviving. 

RRS is a traders dream currently, although as it continues so do the risks of a break out, but not yet. RRS remain silent on acquisitions. A well-placed geologist bumped into some RRS personnel in another African nation...one wonders what they could have been doing there, perhaps their Satellite Navigation went wonky coming from Mali to Côte d’Ivoire?!

Atb Fraser

Morning Mumble (Via Email): Indian Taxation (cost savings), VED+CNE, Polyus Gold (PGIL) not quite what it seems, S'ard Africa and the bets!

Good Morning,

Being dressed very conservatively "autumn warm", with a sense of decency and propriety (as per invite), and with the compulsory braces and hip-flask just in case service slows down, it was rude not to check on the state of the market. Autumn warm? Who writes these things!

Yesterday, Vedanta got slapped with a tax demand. Can Vedanta make a joint claim against India? Unlikely, but it would be wise for VED and Cairn Energy to collaborate and really stick it to the India Tax authorities. They must surely be aware of the damage it is doing to FDI* in India. VED just aren't having a good time of it!

We'll ignore the obvious from Polyus Gold (PGIL) where those with a basic maths qualification can see the obvious in their annual accounts. Afren's coming has happened today, with the term, highly dilutive to existing shareholders summing things up. 

There's rumour's coming up out Republic of South Africa (RSA) that the banks are putting pressure on Lonmin putting the cap around for $500M post Glencore divestment. With common-sense prevailing, Lonmin's Furnaces need some long-term work, their capex expenditure can be pared back to some degree but there's a lot of $ to sink yet. Expect news in due course...Some decent analysts suggest it's as low as $300M. 

The going today is good to soft, having bet the ranch on Road to Riches ridden by Bryan Cooper today. Noel Meade wants the win more than the Grand National, the horse will obviously have the final say. With all the confidence in the world, it’s rude not to back AP McCoy's last attempt, Carlingford Lough as well. 

Atb Fraser

* Foreign Direct Investment

Pm Bolt On: The Whooping great Lonmin and Skyshorts &....Glencore, Aussie Dollar + Oil.

Good evening, 

Exceptionally busy day but moving swiftly on to the realities biting in the PGM sector and digital TV rights sector. It would appear Glencore (GLEN) could not find a company desperate to take on their Lonmin stake bar the currently holders gaining “in specie." Has Ivan lost his touch of being able to do deals?

Lonmin (LMI) and RSA (Republic of South Africa) unless something remarkably changes is unexciting and unlikely to produce decent returns for holders. GLEN's actions have capped any positives LMI would have had, although the shorters will have welcomed the reaction. We will ignore LMI's margins, they don't appear to want to comment above stating they're profitable. 

For those knowing more about LMI, quite why they're spending what they do on their furnaces without introducing ConRoast in its full form is something perhaps the company would like to answer. Does the company need reminding they have grandfather rights in the technology? Bob the Builder would welcome this type of contracting work, build, blow up repair...perhaps Shaft Sinkers should morph itself into blow up repairs?

GLEN's production report was out, avoiding the killing the shares deserved. Spending has been cut from just shy of $8 billion to $6.5, GLEN's positioning in the market with its assets doesn't bode well for the underlying earnings that will be announced in 3 March 2015. Production was far from enough to prevent a drop in earnings, but the market likes the additional cuts, when is GLEN's dividend under review/shelved? 

Those LMI in specie holders looking for a new home, there's always ITV, with a lot of noise coming out from some decent corners of the city about a potential offer. The caveat I'm long in ITV and would welcome a take out by Vodafone or Liberty. Having attempted to test this not one journalist (all 8) known to EMC have been able to validate the chatter. So it comes with a high risk warning. 

GBPAUD (£Vs. AU$), the favoured FX play, with the political issues and rate cuts, commodity prices and general state of the economy, Australia has got its wish on a weaker currency. All those years ago, via Moorad's Shout Table in the Long Room the targets were a little expectant in terms of time frames. Closing the GBPAUD longs and awaiting the next set of indicators post £1VsAU$1.97. 

Australia will be affected by the iron ore 'cost war' with Rio battening down the hatches in Pilbara and giving the signal to the sector, Rio Tinto stops hiring in bid to cut costs, Australian's may be at risk of causing their own increase in unemployment by their determination to allow the excessive supply of iron ore and coal. GLEN's suspension (temporary shutdown) of coal production in Australia was too little too late for the market as their figures of increased production evidenced, over supplying your own market is never wise by circa 8-9mt's minimum. 

Oil (Crude & WTI) continue the realisation of inventories and take a further kicking, the Chinese speculators disappeared as quick as they came, we'll await the press realising the floating storage being below market consensus. WTI trading $49.10/bbl off 1.84% for March contracts and Brent's disparity narrowing at $54.72/bbl off -3.03%, not great for those, including the minnows Trap Oil (TRAP). TRAP came out and gave their holders a royal awakening with a corporate and operational update, one wonders if they were asleep at the wheel as investors.

Hats off to BT.A for playing a very shrewd game and forcing SKY to weaken its competitive edge and overpaying on premier league rights. Unless Sky have bought the rights to a magic show, the end user is going to have to wear some of the costs or the shareholder, its unlikely to be much of the latter. The term unsustainable covers Sky's premier lead bidding very well. Sky needs a few more users to spread the cost...

Who would have thought it, Apple going into First Solar, what next Tesla? Surely gold isn’t weak due to Apple share price appreciation at $1219.10/oz. 

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: De Ef Esse &

Intention to Float - UKLA - DFS Furniture Limited, should thrill those whom want an almost identical sofa as their neighbours. In discussions yesterday its suggested DFS are getting the IPO away (like SCS) as the trend cyclical and towards the peak. Its something that needs a little more work on, but all the same, when the company is surprised by their own performance but with no mention of this within the IPO docks one thinks they're chancing their arm. 

DFS don't do premium brands which excludes a significant number of middle earners. Having just purchased la-z-boy electric recliners for my crib, I'm inclined agree. The shrewd will not be short initially, with a degree of seasonality to the sales and sector will this be akin to longing Majestic  Wine (MJW) through Christmas to sell in January, save for this year. 

There's some deflation happening in RSA (Republic of South Africa) at the moment with Anglo American's (via AmPlats) sale of Bokoni mine in Limpopo. The reported figure is $263 million down from the $385M before Christmas. they'd only have to wait a few months before they could just gift-aid it. AmPlats will no doubt be happy with any taker, Atlatsa Resources (ATL.TO) may be a different story whose price appreciation was last seen during the Jurassic period.

Today's no news award goes to Tate & Lyle, the views from EMC are known, Sugar is in a dire position. The update is more of a bitter after taste (perhaps stevia like). Investors should consider this another shot across the bows for the sugar investors. 

EMC was wise enough to spot the ethanol margins but the market and certain analysts seem to have ignored the swell in bio-fuel inventories. We'll save the face of one individual at a certain brokerage the shame of what he thought of my ethanol mumblings, only two weeks ago with a side thought for banks including ethanol. So TATE's trading update slots perfectly into the category knows as a profits warning, we'll ignore the issues with High-Fructose Corn Syrup (HFCS) for now.

Oil's over to the big boys to speculate and acquire positions, with the majority on the sidelines, the speculation and big bets are pinned on a recovery by December 2016. One is getting the impression the traders are holding their fingers in the air and misreading the wind which is really a draft. CAPEX reductions will not change the supply immediately, demand will. 

With Afren's interest now looking more than likely to assets only, will the bond holders be taking the company? The longer-term view assuming the market is correct will mean the bonds are looking more like a semi-decent bet.

Copper has decided to find parallels with oil hitting $2.5761/lb on little more than physical buying...could the commodities cycle be on the turn or more a blip in the lower lowers and consolidating positions after significant drops.

It was amusing the banter from the long only contingent today with their reviews of Poundland's (PLND's) acquisition of the 99p stores. Yes, perhaps a timely reminder to stick with the original valuation of £4, having sold in November for pretty much what I paid, today they aren't far off my target of £4 which should be reviewed. 

Atb Fraser

Morning Mumble (with apologies): Kirkland Gold (KGI) &...what comes to mind post trading.

Kirkland Lake Gold Concludes Strategic Review Process

So Kirkland Lake Gold (KGI)) have concluded the "Strategic Review" and the conclusion is: While the Company received several expressions of interest, a transaction did not materialize. Well I am no mining analyst merely a trading perspective but lets face it, if you “cannot find a buyer for exceptional value at low cost” there are only so many reasons why:

• The market is suffering a depression and not valuing opportunities.

• There is better out there in terms of assets.

• It was not marketed in a way that parties did not see the benefits.

• The acquirers (potential) wasted the time of the management.

• The asset is not worth anywhere near what shareholders would expect.

• Its going nowhere…

• Another reason?

Admittedly, I haven’t looked at this company for some time so I'm making a number of assumptions about costs. Yes things are improving but I cannot help but wonder if "small scale mining is outdated". 

What has been shown is they are able to reduce their costs, but that's based on a headwind of consistent grades and achieving their forecasts. Something that potentially interested parties do not have a belief they will be achieved or a sale/merger would be ensuing now. 

The stock has travelled up significantly, but for me it's time to face facts after today. KGI is significantly ahead on any potential it has, and most certainly ahead of any likely dividend payouts. So when will the market re-rate? I believe today's RNS on the strategic review will be the start of it, but it will need momentum before this is confirmed. 

EMED, Leggie et al, will be waiting for the market to recognise the value of the final permit . One can hope there leggie, however if you look at the volumes, it looks to me as though parties are selling down those cheap shares “whilst there is support.” The timing of such an announcement didn't assist things either...people looked, thought "this is good news" and then went to the pub!

What surprises me is the obvious shorts appear missed by most. What was difficult to work out with Intu Properties Plc Publication of Prospectus for Rights Issue. Firstly there was Barclays, where to quote one chap, "I'm bloody daft and I'll lose the shirt off my back" when discussing Barclays as a short. 

Now we have INTU Properties with 2 for 7 shares at 180 pence coming to market. It's not rocket science in terms of parties flipping is it? No wonder its underwritten at that price...Well it would appear so, especially as the Rights Issue is so heavily discounted. yes the companies progressing but forget all the fundamentals and just look at the SP, when it was announced it hit £3 ish, so its on-going and guess what it hits today? 282 ish. So is it "based purely on probability going up or down? Common-sense prevails. 

Similarly Royal Sun Alliance have done what? Just a thought, sometimes trading negatively is no more than common sense. Just as I’m typing this, a decent shorter comes out the woodwork GuevouraFund Limited Short-Selling Disclosure has a small position, I assume it’s a hedge but either way will make significantly post Rights Issue. Would you be long? I certainly wouldn't at the moment without a 3 for 8 or similar hedge. i.e. the best of both worlds :-).  

The final thought of the FT Article Glencore closer to iron ore ambition By Katrina Manson in Nouakchott and Javier Blas in Geneva. Common sense prevails here, there’s a startling over-supply growing and as such this does not bode well for this African Project. 

GLEN may well know Africa well, however just look at the issues Rio Tinto and Vale have had in Guinea albeit the transport won’t be as “bad a problem” as Rio and Vale suffered. With the quality of the ore, GLEN are surely looking long beyond the surplus issues? The Glut to market could have significance to all producers as every MT’s surplus must be near 50 cents of Iron Ore? Just a fag packet calculation. Glencore went hard into Coal, Crash, now the same for Iron Ore? Hmmm

All the best, Fraser

As a postscript, I wonder what the issue is with Rurelec's listing? I do wonder if it's easier to sell a bargain basement story at 4p to a market than all in around 10+pence. It will be 2 months post the award whereby Rurelec are left with £10M give or take. Bolivia are likely to be Electioneering soon which won't bode well for prompt payment. 

It's always nice to see a company in the throws of being clubbed by the bank, something that GKP needs within 4 weeks was my estimates (cash). I'm trying to remember my commentary on the report into reserves, but it was something along the lines of "why wouldn't you get a well-known firm to do it." Well it would appear they listened and so did the market.