Morning Mumble: LGO (Leni Oil & Gas), "why" am I holding...(sighs) & Wolf Minerals

LGO's Reserves Clarification, Trinidad was issued yesterday! So not only do they admit to pushing out information that has been previously released on the 22 January 2014 (wouldn't that normally get criticism in certain pages?). We can add this to the need for the placing more recently, that had LGO not pursued their "legal" claim would have avoided any need to conduct a placing.

Its becoming annoying to hold a position in this stock albeit up, as on the one hand the assets are good and that's about all I rate...I await Ian's "transcripts" but suspect I'll be living on the moon full-time by then. We shall of course 'ignore' the need for a placing currently being considered for an 'associated company.....'Alas, today's spudding will remove any 'need' for further clarification on the next 3 deviated wells with this Goudron Drilling Update. Sarcasm is often lost, today my humour is dry.

I'm not sure of the relevance of Hemerdon Tungsten Project Construction Update for Wolf Minerals albeit we can be satisfied with the news some trees have been planted and earth works commenced? What next, Friday's drinking session RNS?

Weir Group pulls out of Metso Corporation Merger which I suspect the Market will be relieved at this news but what next for Weir? Getting on with a nicely hedged company between Oil/Gas Services and Mining..perhaps a suitor for Weir now? They've kindly lifted their skirt, over to Flowserve Corp (NYSE:FLS) and Catapillar as GE is 'too buys elsewhere...

With Anglo Asian Mining (AAZ) news I've elected to close my short with the final audited results for the year ended 31 December 2013 ('FY 2013') confirming the dire position of the company if you include "the working capital loan." The cash costs, albeit not stated as "all in" may benefit the company assuming they can actually start funding themselves with cashflow as this currently is not the case. Is it a buy? I would not be sure, but its certainly about the money unless "another placing is needed" which will be confirmed soon enough either way by the progress of the company. 

This morning I have closed spreadbet positions in Hochschild (HOC), typical to do it then it drops further, I had hoped for 125/128, but need to reduce a few positions and take some profits!

Atb Fraser

Morning Mumble: Wolf Minerals Directors putting more than their toe in the water

Ronnie Beevor buys 250K shares,  John Hopkins acquires 130K shares and  Russell Clark buys 83,333 shares. For those that know the company its common-sense. You'll see the obvious pointed out, for which those whom were waiting to acquire back would be wise to take it as a signal to consider following suit. For those catching the bottom of anything good luck, funded, and progressing with the Hemerdon tungsten and tin project in Devon. It's a matter of time for a rerating, but don't expect too much too soon its likely with limited news until production its one for patience. 

For the bears of Iron Ore, Rio's news about the Simandou Miner Resources (FT Link) will assist their psychology of the tank! However it's 5 years off and its unlikely to change the landscape above and beyond the current forecasts. Albeit for Papua New Guinea it'll assist the economy massively...subject to terms.

Ophir's hopes were dashed today with the shows of rock and liquid indicators (my terminology) Gabon: Affanga Deep Well Result one assumes they're praying for better prospects from Mbeli Block. The Okala-1 well. Time for renewed speculation on Ophir? 

Faroe Petroleum are catching more of their losses back! Ian's still on the money with some oiler speculation there! For me it's a 1 in 4 chance simple as...Pil oil discovery

Enjoy Tuesday the new Monday!

Atb Fraser

Morning Mumble (Very brief): In light of the "recommended" offer for MOG Mediterranean Oil & Gas plc by Rockhopper Exploration plc. & Blur Group (I was right)

Am I missing the obvious? As a holder and long on MOG, I should be ecstatic when quite frankly the recommendation is a disappointing factor in the value potential of MOG. The justifications of the alleged benefit and contingency for success in Malta is a a let down to holders whom bought into the value.

A cheap way to get its hands on some decent acreage. If the board think the best value including an all in of around $1.2 a barrel, then I advise parties to write  down the names and make sure they include the under performing recommendations. With cash around £8m plus perhaps some element from LOG for the defamatory comments, the price per barrel drops to a paltry $0.85 there's a zero there folks...I'll remind parties of MOG's own investor presentation. 

MOG Investor Presentation

My view, which is no doubt wrong to the market is, if one wanted Falklands exposure I'd have kept the stock when it was high instead of selling! I dislike all elements of the Falklands its high cost and for me, one to avoid/short regularly. My last thought on MOG goes to the regulator whom perhaps needs to look at the trades late into the day on MOG!

Finally, to what I was commenting on last night! Albeit I missed out on a further 20+ points that's immaterial to what my trading gut was saying. Blur Group Proposed Placing and Open Offer. What a surprise, this sets the trend for a number of stocks, more importantly disenfranchisement will become wide so I will look to short further post the placing news. 

Atb Fraser

Morning Mumble: (PM Edition) For those following Blur Group (BLUR)

I suspect the Board of Blur Group are perplexed by the lack of support for the stock and will no doubt have a sense of relief as most people were closing out over this week on the stock. For myself, I need more information to be sure fire negative on the stock now so have closed my CFD and spreadbet shorts. Fear not, I shall be returning to it in due course, but my gut says "there's something afoot" but I'm not prepared to follow that conviction.

For long only in BLUR if you haven't sold now, you should be asking yourself why! This is not to gloat but the writing has been on the wall for definitely four months, if not longer. For those interested in yet another top performing short, I'd look at the business model to understand why the majority of analysts got yet another wrong. 

Royal Mail Group (RMG), will there be any support? It appears not currently...

Having read an article about Tangiers which clearly means you bought on a ramp, I'd disagree (edited changed from Disappear). Having now read the article, you'd be a mug to buy in on those figures. Perhaps common-sense is required to be pointed out to everyone (*addition: but it does not remove the high risk / reward punt prospects). What next? Someone advising of some serious issues with a company 'that's currently a darling?' Glass houses and all that!

Have a good weekend!

Atb Fraser

Morning Mumble: Jumpy to say the least...where to start!

Today jumps about a lot as it’s a bit of a review that’s forward looking, its been a funny week, flying by with various meetings and the speculation around certain miners. I had started a piece about the IPO of Bagir Group (BAGR) and the pricing including the reliance on one customer that has now decided to reduce its orders. There was gossip awhile back the client was Marks and Spencer’s which to my view would be the only reason to withhold such information as it’s not exactly positive in light of their sales. We can only wait and see in a few years time (I hope you see my sarcasm) as to whether BAGR's Director Dealings will be found to be prudent. Samuel Vlodinger Non-Executive Director purchased 133,333 @ 22.5p &  Tessa Laws Non-Executive Director purchased 24,390 @ 20.5p. When did BAGR know about a material downside in trading and should this have been pointed out at IPO as the company was only listed on the 15th April and the profit warning/trading statement came only one month later (15th May). 

For those that read my commentary on Amara Group (AMA) you'll note the Director dealings that for once aren't a paltry £10K 'but believing in the value.’ This does confirm to those fixating on the takeover event by Randgold that there's nothing happening 'currently.' Its my view the directors did not have much choice, with the 1st Quarter Results being so grim, they had to appear to align their interests especially with the placing just gone. The positives are they will have circa £27M in cash now, a decrease in cash costs (16%) to US$1,082 per ounce (is that all in? I don’t think so but will have to check), but shareholders should be concerned with the guidance being towards the lower end of the 60-70k company given ($2m short on top end guidance EBITDA). Yaoure is key to AMA and the PEA evidences that...patience is the key, over to Randgold to get its juggernaut into action.

In reviewing posts here I have noticed a number have gone missing, the Chinese Nickel market fiasco (trades) and the market for some reason ignore the fact the Chinese have been funding smelters in Indonesia for some time (If parties got them in an email could they be so kind as to email me them at so I may repost them).  The Chinese Government unsurprisingly didn’t inform the market of its intervention in Nickel and Iron Ore. The plummet was only supported by Asian trading, I suspect saving the bacon of a few over-exposed Chinese traders. The press merely repeated what was news in 2013, namely the deal between Ibris and China’s Yong-Xing Alloy Material Technology Taizhou Co. Ltd which was well ahead of the recent developments, its nothing new, the demand is still a touch above supply on Nickel. However the Chinese Government position was well played and caused a pull back, or cautionary note being taken by the speculators. 

In addition my Tronox review and the impact on Kenmare Resources (KMR) disappeared...From memory the results were a little ahead for Tronox, but nothing spectacular. The main noise coming from Tronox is the pigment market has stabilised. As such there’s going to be “no planned increase in demand” but what I can make out is the stocks and demand have turned, which should bode well over the longer-term. This however in the current climate won’t do well for Kenmare without some improvement in the market over and above stability. What is concerning is, that demand is down around 12% for Tronox and prices down 30%+ with this is mind Kenmare may have had a belated sell off as people were slow to react to the little improvement in the sector, which for Kenmare is always worse…no wonder with a performance history. I’ll hold what little I have as a higher risk exposure but I’d certainly not be running to buy more even at these prices. Tronox Quarterly (PDF via Tronox Site). Remember Tronox is a ‘fully integrated producer’ which saves them some of the significant pain that Kenmare have been experiencing. It does however raise significant questions when you compare the pay between the Tronox Board and Kenmare…perhaps I’m missing something?!?!

One that deserves a re-rating is Central Asia Metals (CAML), this stock I’ve held for some time now, its rare to have a decent asset and a dividend on AIM. With the stamp of approval on the Kounrad copper project in Kazakhstan CAML kick off with expansion plans which are stated as being fully funded from cashflow. Things may be delayed a little with expansion if the price drops to $2.45/lb or below, but with a fully inclusive Kazakhstan cost of $1.13/lb (2012: $0.98/lb) for f/y 2013, things look very rosy. One hopes the Kazakhstan Government don’t think they’ll just take the entire asset and be damned? Or take and sell to a certain larger Kaz miner, all country risks, but the approval process gives some reassurance for the orphans. Until the full expansion plans can be pulled apart, £2/£2.15 is about the money on fair value, so perhaps the market may get ahead of itself.

It would appear the Nickel’s strength and current Indonesian position is forcing companies with crap assets, oops higher cost assets, to attempt to sell them on. There’s a rumour Anglo America (AAL) are very close to a deal to get shot of their Barro Alto nickel operation in Brazil. AAL need to refurbish their furnaces at Barro Alto, that’s been known for a significant amount of time, what most analysts are missing is the fact Anglo’s returns at Barro Alto do not justify any refurbishment programme, some one assumes Vale having smelt blood have agreed a price that reflects the issues. The issue for AAL is the cost of refurbishment and return on capital, and with the dog of years previously, its one Mark Cutifani is guaranteed to get rid of, the write-downs on the asset is unsurprising, what may be is the price that the willing buyer pays! With no other interest save for Vale, its clear its going to be a 'buy one semi-useless furnace and get another for free."

On to more profitable items, Centamin Egypt’s Dividend Policy was announced last week providing significant support to the stock above the crucial 55 pence level, this was followed shortly by the Director purchases. With taxation now likely to be a positive for the Egypt Government including no subsidies, one would assume the “ministers” would be wise to strike out the license issues and pending court case, albeit I suspect they had this in mind with the retrospective legal changes restricting challenges to Government awards/contracts.

There’s some gossip going around about EMED doing a fundraiser at 6 pence, the reliability of the information is with a cautionary note and surprising as they could raise at 8 pence like before. Perhaps the company has realised what happens when they punish shareholders by deeply discounted and well known prior placings. EMED’s board have a lot to change here including improving the confidence of their holders. The asset is good, the economics positive and the Government very receptive of the project/mine. Its surprising with offtake agreements, and forward sales, why EMED would need more than £30M but let the rumours of £100M do the rounds. 

We had Afren announcing these week and took the opportunity to start buying again in the stock. Its numbers were plumb on developments going well, albeit a little behind in timing. With Lekoil and Afren need for the OGO’s development to evidence their spending and discovery, one expects “good news upon full appraisal and step out well.” Afren is an acquisition target, why this has not happened is anyone’s guess…Perhaps a merger with LEKoil and a dividend policy in 2 years time would be more beneficial? The company are certainly putting the capital/cash to the hardest work possible…unlike many that could be mentioned.

As a thought back to higher cost, low realised prices for iron ore producers, with the market being awash with lower grade Iron Ore it’s unsurprising that African Mineral’s results were so dire, and that’s excluding the most recent price drops, the rainy season being May to November for Sierra Leone and the shipping risks that are totally ignored by the market (save for a few shrew individuals) which may be prohibitive to shipments around October.

It’s acknowledged both London Mining and African Minerals have put measures in place to reduce the moisture build up, but one would be wise to keep an eye on anything above 7%. Africa Minerals is being punished by the demand cycle for superior ore, anything below the “ideal” is being discounted significantly and with the recent price move down to $98-100/t it’s likely to have impacted significantly on London Mining and African Minerals revenues. I’m not pricing out London Mining as bust, but in the current cycle of pricing, London Mining has bills to pay…the Board have done well for me over the years (this does not stop me shorting them), and its predominantly the slowness of ramp up in production that will punish London Mining further. African Minerals are full steam ahead, the faster they can get to their 25Mtpa by the end of December the better. For the knife catchers, the buy reiterations will provide some psychological support, but with the “unknown yet known direction of the Iron Ore” it will punish these two without very close eye kept on costs. AMI/LOND were the Muppet shorts of this year/week whereby everything was known the market just had to catch up, time to now close and await the direction. This was also mirrored by my FX play GBPVs.AUD, which lept nicely from 1.7850 to 1.82+.

Whilst typing this, my news feeds have just shown yet another buy for Centamin Egypt, when time allows…In addition there's a working capital loans for AAZ (Anglo Asian Minin ) coming as no surprise whatsoever with a placing likely…one wonders how they’ll repay all their loans if they cannot fund the working capital? Anyone care to enlighten me?

Why: Polymetal Int PLC Acquisition of the Kyzyl gold project, surely one needs to get their house  in order before attempting to make other assets work?

I took a high risk play in Tangiers Petroleum Ltd, its a 20% chance of hitting a better time for the stock, so 5-1 odds for a significantly higher return in the stock. Its not one for those people that like premium bond exposure though. Whilst on the phone to D yesterday, he shrewdly noticed when the market moved! 

Items of discussion are: RGM/RRR (I'm long on Regency Mining and Red Rock Resources and not mad) and closed my shorts on Ocado (OCDO) along with ASOS (ASC), and Supergroup (SGP). Folk will notice the cancellation of the Fat Face listing, one can only speculate why, but suffice  to say, have the Insti's and Mugs finally woken up to being loaded up with over priced stock? I doubt it, just they're aware of paying too much at the start, they don't really care if they pay to much after a few years! Due to my indecision and unknown variables in Pets at Home (PETS), I have closed my short position. Royal Mail Group (RMG) having been out of the money from 577, is nicely back in profit and moving forward. The company has to restrcture, it's an archaic company with a Governmental Ethos. 

For those vying to take glee, I closed my Mothercare (MTC) position today not at a loss, but wiping out some of my profits...Mothercare Plc : Final Results. Still not looking good, debt up, total UK sales down 7.5% but overall worldwide growth. With the focus on the UK, it still does not bode well for MTC unless more significant changes are made but clearly headway has been made in turning the company round. Perhaps Morrison's spinning Kiddiecare out may be prudent if don't quickly?

Quite why New World Resources is still listed beggers belief...

Finally for those looking for positives in Iofina, one would be wise not to look for too long in the SQM (Sociedad Quimica Y Minera) Q1 results but the numpties will look at the share price recovery and think Iodine being 25% of SQM's earnings rather than anything else including  lithium, potassium-related fertilizers 

and industrial chemicals being the reasoning. The market may wake up to this with IOF this afternoon.

Its my Friday! 

Atb Fraser

Note to self: start typing in word rather than "blogger".

Morning Mumble: Any old iron, the tank-a-thon.

Well the Chinese and Asian buyers have been throwing caution to the wind and reducing their positions selling significantly into a headwind that broke the back of Iron Ore Crucial support level of $100.50 (Often missed). Overnight it managed to hold its head above the $98.40 but by nail room only. With $87/t the next bottom if support is not found, one could expect a few kicks in the proverbial for the higher cost producers. One will look to Friday's close to see the 'true' direction but suffice to say, those Chinese traders will be 'toast' at anything below $94.50, will the Chinese Government step in? I suspect so, with leverage running at silly levels. 

With other commodities, Copper, Nickel (the highest p+ve% mover) and zinc all on the move positive one expects some profit taking again on Nickel as it nears the magic $9lb/cire $20K/t. The doom-mongers will be enjoying the predictable element and the impact across the miners more aligned to Iron Ore, Rio and Vale are likely to be punished the most for obvious reasons. For the muppet selection you can't get better timing of shorting Iron Ore miners/commodities than now, unless you're two well-known trading houses with an inability to smell the stark reality of common-sense. One can only wonder why a Co's are long Iron Ore at $111, short nickel $7.30/lb...no one needs hindsight for common-sense, so expect some significant coverage (volatility).

For those able to think on a Monday with such glorious sunshine, with the Chinese National Bureau of Statistics (Digital Look Link) reporting eight of the country's cities seeing a monthly decline in the average commercial house price, compared to the four which saw a fall in March. Does these mean a need for stimulus or realistic returns and consolidation. Main Chinese Bureau Site for those wanting an in-depth read...

Vale being the historic version of reactive in my view, its no surprise they are now closing their Thermal & Coking Coal operations in New South Wales: Vale to shut money-losing Integra coal mine in Australia (Reuters). One wonders if the Asian Consortium will grasp the opportunity to take the asset of their hands whilst its on care and maintenance, or better still cut their losses and await someone more foolhardy? 

Atb Fraser

Morning Mumble: AO (Appliances Online)...

Apologies for the lack of communication at the moment its been full on week trading with short on ASOS, Ocado, PCI, and a few others...I'll come back to in due course but suffice to say my Friday trading ban was broken significantly. Asos is likely to be en par with the long on Nickel for the best trades of this year.

For those that read, you'll remember the commentary Morning Mumble: Appliance Online (AO) what next? A short piece...and the week.  Well guess what happened….Appliance Online (AO) starts selling TV (Home Entertainment). So for those analysts not realising the competition value of Appliance Online perhaps they’re starting to realise the brand building. Steady progress with “more to come”, but I will never own this stock as a long-termer for the simple reason it’s so illiquid it can be so predictable.

My brief thought goes to Morrisons (MRW), with news the Management may have found a backer for a take out at Morrisons (I’m long on MRW on dividend date 191/192/194) purely because I see great potential in the vultures play here, no other reason. Unlike most ‘alleged’ retail analysts, they may know about Heinz or Bramston, but their commentary shows they know nothing about the stockmarket forces or social elements to demand.

Leggie, get that bottle of Hendricks ready haha…Kudos on the coverage on Metro Baltic (MET), it was surprising entering the market for a few paltry buys today that enabled me to close the main part of my longs (tax free). So in essence I’m left with equity and no tax efficient spreadbetting and a few CFD’s. All the same leggie, cheers.

Will endeavour to do a Saturday piece !

Time for a gin...Atb Fraser