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Views from the Trading Floor - 6th February 2012
Saints & Sinners
Oil & Gas
Gulf keystone (LON:GKP) were very active again today, pushing 7% in trading to 330p. Volumes continue to impress as holders get ready for the updates on Shaikan-5 and Shaikan-6 that are due. The stock printed a new all-time high today of 343.75p, and the stock is now in to new trading territory. The previous resistance and all-time high of 314.25p should now act as a support line, and if the company give any sniff of a positive update from the two wells, who knows where she stops! Nonetheless, a very exciting stock to watch.
Circle Oil (LON:COP) could be an interesting one for the watch list, as looking through the recent update on the 9th of January I found this “Morocco - New 8-Inch Pipeline - The construction phase of the new Sebou (DRJ)-Kenitra pipeline has been successfully completed. The pipeline is now undergoing pressure testing prior to commissioning and the start-up of increased gas delivery to local industry, which is expected to be completed by the end of January.” So the market could be in store for an update on this any day now. Shares have been stuck trading between 25p support and 27p resistance, so any news flow could be a catalyst for with to be tested once again.
Caza Oil & Gas (LON:CAZA) moved another 5% better to 12.75 at the mod price before lunch, on 6 times the recent average daily volume. Shares have been bullish since the recent operational update, and after breaking major resistance at 12.5p this morning, 14p could be the next stop. Previous support at 12.5p could now act as the new support line, should the shares actually close above that 12.5p level.
Aminex (LON:AEX) continued to slip early doors, as investors got the jitters waiting for the operational update that was due at the end of January. Shares were 5% easier at 4.75p, and had traded the same volume as Friday before lunch. Solo Oil (LON:SOLO) who also have an interest in the same asset in Tanzania, were a touch better by lunch at 0.73p mid-price. We have had our eyes firmly glued to the news wires waiting for this update, as I am sure every holder in both names have been.
Another stock investors are waiting for an update from is Sound Oil (LON:SOU). The market is still waiting for the update on its Cataka-1 exploration well that had been delayed by 2 weeks. Shares have been stuck in a tight trading range for the last week or so in anticipation of the update. Strong support is being built up at 1.6p, so any positive news could see a retest of the resistance at 2p. Any negative news would see the 1.6p support tested first, followed by thin support at 1.5p.
I highlighted Volga Gas (LON:VGAS) in Friday’s note, and the possibility of a update at some stage in February. Shares broke resistance at 88p today, but the volume was so thin its hard to take it as a convincing break out. If the shares can close above 88p today, that would be a bullish sign for the chartists among us, with resistance at 93p looking to be the next area of interest.
Antrim Energy (LON:AEY) the Oil & Gas explorer in the North Sea, dropped 17% to 76p today, on almost 6 times the average daily volume. The shares slipped after the company announced it has found 11 feet of gas-bearing sands at its East Fyne Appraisal well after drilling to a depth of 5,020 feet, but noted that the thickness of the sands was at the lower end of expectations and will now plug and abandon the well. Results from the well, located in the eastern part of the Fyne Field in Block 21/28-a in the North Sea, will be incorporated into plans for the Greater Fyne Area, Premier said. It noted that a decision on whether a commercial development is viable for the greater area is expected to be taken by the end of the second quarter of 2012. Support sits between 70p and 73p, so it will be interesting to see if t his one can hold and close above this level today.
Mining
We have been highlighting EMED Mining (LON:EMED) over the last couple of weeks and the stock gained a further 17.5% today on news of a funding package of $30M from Yanggu Xiangguan Copper Co. Ltd. This should be viewed as a significant validation of both the robust economics of the Rio Tinto copper project in Southern Spain and also that EMED was able to provide significant comfort that the historic issues with regards to permitting have been largely overcome. Although the stock has risen by 40% over the last week or so, there still is incredible upside to the current price. The granting of Administrative Standing should lead to a rerating and we would be surprised if the stock didn’t quickly move back into the 20s. We mentioned last week that there may be movement on this ahead of the local elections in Spain next month, especially given the growing press coverage and popular support for the reopening of the mine. Another point to make is the volumes on this one have been increasing over the last few sessions, and today over 9 million shares had changed hands before the end of lunch.
Copper Developments (LON:CDC) jumped 16% to 26p today after apparently being mentioned in the weekend press. Volumes have been steadily increasing over the last few sessions, and the shares finally broke long term resistance at 25p today. If they can close above the 25p level, a test of 28p resistance could be on the cards. The shares did not really take part in the rally of other copper stocks, while the underlying metal was running, so this could also be a bit of catch up at work.
Ferrex (LON:FRX) jumped 21% to 2.5p in trading on 10 times the average daily volume, after the company announced it has received a positive update on its 4,192ha Malelane Iron Ore and its 92,390ha Nayega Manganese Projects. Malelane Iron Ore Project in South Africa--1,731 meters drill program and preliminary metallurgical testwork confirms potential for low capex iron-ore development at Malelane. Maiden inferred resource on track for Q1 2012, with further drilling planned to commence in Q2 2012 aimed at both increasing the resource and upgrading to the Indicated category. Nayega Manganese in Togo--Systematic test pitting has been completed, depths excavated confirm historically reported widths of manganese mineralization. Initial assay results average 14.4% manganese and peak at 28% manganese, consistent with explo ration target grades. Resistance at 2.6p looks set to be tested here, and break above could see a test of resistance at 3p.
ZincOx Resources (LON:ZOX) a stock I have been highlighting for a while as one to watch, jumped another 9% to 78p on decent volume. The company were mentioned in a number of places over the weekend, and the Mail on Sunday’s Midas column said BUY. The brokermandan web site also mentioned the stock, so both views may have added to the bullish story. Whichever way we look at the chart, 85p looks to be the most significant area of resistance to watch for, with 75p looking to act as support.
Red Rock Resources (LON:RRR) pushed 5% better to 3.05p before lunch, after the company announced that Anglo Pacific Group PLC (LON:APF), a company that acquires natural resources royalties, said it has agreed to buy half of the Mount Ida 1.5% gross revenue royalty agreement currently held by Red Rock for $14 million paid in three instalments. Payments will be made in a combination of cash and Anglo Pacific shares to be determined after formal approval. Mount Ida is an iron ore project in Western Australia, owned by Jupiter Mines Ltd. Red Rock has a 5.2% stake in the project and a 1.5% production royalty when the mine is up and running. Currently, the Mount Ida project is estimated to have an inferred magnetite resource of 530 million tons at almost 32% iron ore. The next major resistance area to watch for is 3.4p h ere, with 3p looking to now act as a support line.
Strategic Natural Resources (LON:SNRP) jumped another 10% in trading to 17.5 p on decentvolume, after the company announced the recent statement made by the CEO of the Industrial Development Corporation of South Africa (the "IDC") at the weekend confirming that the IDC would be funding the development of the Company's 74 per cent. owned subsidiary, Elitheni Coal (Pty) Limited and provides the following update. SNR confirms that, whilst it is in discussions with the IDC, these discussions remain on-going and form part of SNR's wider discussions with other parties in relation to finalising its funding needs. Further announcements will be made at the appropriate time. If the stock can break resistance at 18p, then a test of resistance at 20p could be the next area to watch for.
Beowulf (LON:BEM) continued to push higher again today, moving 10% better before lunch to 14.5p. Holders are still waiting for further updates on its temporarily suspended drilling campaign at Kallak North pending receipt of formal approval of its work plan from the Swedish Mining Inspectorate. Long term resistance at 15p looks to be the main point of interest here, with 12.75p looking to act as a support line.
From the trading floor
After a shaky opening of down around 40 points, the FTSE slowly clawed the losses back, and as I type the index is only down 6 points at 5893 (-0.13%) Volumes were a little lighter than usual, trading only 450 million before the US open, but that was no real surprise ahead of the Greek talks recommencing early tomorrow. The FTSE AIM All-Share was 0.41% better just before the American opening bell, on volume of just over a billion shares.
Greece is looking to get talks going once again tomorrow, as it looks for the tranche of funding. Greece needs €130 billion of funds and additional help from private lenders to avoid a debt default. French president Nicolas Sarkozy and German Chancellor Angela Merkel are urging Greek politicians to agree a reform, as time is running out.
After the stunning set of US economic figures on Friday, it was a little calm after the storm today, with only German Factory Orders to keep us going. Expectations were for a drop of 0.4% Year on Year, but the actual number was better than expected, coming in flat at 0.0%. Month on Month Factory Orders were also a lot better than the +1% expected, coming in at +1.7%.
Commodities Corner
Gold – ↓Trading at $1716, down $11 (-0.62%)
Silver – ↓Trading at $33.35, down 33c (-0.92%)
Copper – ↓Trading at $8493, down $103 (-1.21%)
Zinc – ↓ Trading at $2194, down $1 (-0.01%)
WTI Crude – ↓Trading at $97.13 down 55c (-0.83%)
Brent Crude – ↓Trading at $114.56, down 3c (-0.03%)
Natural Gas (HH) – ↓ Trading at $2.52, down 3c (-1.24%)
Any questions please don’t hesitate to contact me at steve.asfour@fox-davies.com
Written by Steven Asfour, Sales Trader at Fox-Davies
