column Proactiveinvestors column RSS feed en Sun, 29 May 2016 23:58:37 +0100 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Have Persimmon built to high?

Strong oil prices, fading concerns about the Greek debt crisis and reducing uncertainty surrounding the EU referendum boosted global equities after several weeks of lacklustre trading.

Banking stocks were supported by an agreement from Greece’s creditors that allowed the eurozone to extend €10.3 billion in rescue loans to keep Athens afloat this summer, raising hopes that the impasse between Germany and the International Monetary Fund can be resolved. Many in the markets, however, remain sceptical about the longer-term outlook for Greece.

Elsewhere in the eurozone, however, the ‘flash’ estimate of the purchasing managers’ composite index dipped to a 16-month low of 52.9 in May from 53.0 in April, confirming expectations that GDP growth in the region is slowing.

Oil prices continued to strengthen, despite the resurgent US dollar, as data from the US Department of Energy revealed that total crude inventories fell far more than expected last week. Brent, the international crude benchmark, traded above $50 a barrel for the first time since early-November 2015.

A strong report on US new home sales in April showed a 16.6% jump last month, well ahead of expectations, while prior months were revised higher. The dollar index was propelled to its highest level in two months, after rallying steadily since a 16-month low at the start of this month, fuelled by speculation that the Federal Reserve could raise interest rates again in June or July.

Last week’s minutes from the Fed’s Open Market Committee meeting in April, left little room for doubt that policymakers were strongly considering a hike, with several members voicing their hawkish comments. The Fed fund futures market reacted by pricing in a more than 30% probability of a rise in June, up from only 4% a week ago and a greater than 50% chance of a move in July.

On a domestic front, morale among British consumers edged up in May as the odds narrowed that Britain would remain within the European Union. Market research firm GfK said its overall consumer sentiment indicator rose as expected to -1 in May from -3 in April, which was the weakest reading since December 2014, yet while optimism about the economy in the year ahead inched higher, it was much weaker than a year earlier.

Sterling touched a four-month high against the Euro, whilst also making substantial gains across all of the major currencies, as the most recent poll showed that the ‘Remain’ camp has a 13 point lead over the ‘Leave’ campaign and is leading with 55% of the votes. Bookmakers are shorting their odds, with a price of 1/7 in favour of Britain staying in the EU. Equity markets are efficient and loathe uncertainty, so as the outcome becomes more certain, investors are attempting to price in the result.

Technical analysis of the FTSE 100 illustrates this week’s strength, although initial resistance at 6280 is capping the gains and according to the overbought stochastic, the rally could be running out of momentum. That said, volumes are low and both the RSI and MACD have some way to run, so a challenge of 6430 appears possible in the near term. Support meanwhile, is seen from the 200-day moving average at 6150 and the recent low of 6030.

In conclusion, it has been a week of improved sentiment, with Greece, the EU referendum and oil prices all bolstering appetite for risk among investors. Looking ahead, the major headwind comes from the market’s perception of a hike in US interest rates. According to policymakers and the strength of recent data, an increase in rates looks almost a foregone conclusion in July, yet that has not been fully priced into markets and could generate some choppy trading over the next six weeks.

A sector that would not benefit from a tightening in interest rates would be the much-hyped housing market, where sellers appear to be able to name their price and sealed-bids have become a common occurrence. The chancellor’s stamp duty surcharge on second-home purchases, designed to cool the market, prompted a short-term frenzy of buying before 1st April deadline, but there could be further restrictions to follow.

Bank of England officials are scrutinising risks stemming from property-market investment, in a further sign the growth of buy-to-let has caught the central bank’s attention. The Financial Policy Committee “will continue to monitor closely recent developments” and “potential threats to financial stability from buy-to-let mortgage lending,” Governor Mark Carney wrote in a letter to Chancellor of the Exchequer George Osborne, dated 26th May, noting Osborne’s “intention to bring forward secondary legislation”,  could further deter investors.

Many UK-listed house builders have recently reported record profits and bumper capital returns to shareholders, yet recent evidence suggests the sector could be nearing a peak. Mortgage lending dropped back sharply in April, with a total of 78,301 loans approved last month, down almost 5,000 from 82,971 in March, while the value of loans also slumped to £10.9 billion from £16.1 billion.

Housebuilders gross profit margins have recovered from lows of about 12% in 2009 to more than 20% today, but as rising house prices, profits and dividends enter their seventh year, it is increasingly clear we are getting late in the current housing cycle.

The demand for building materials has resulted in brick prices rising almost 25%, cement rising almost 17% and plastic doors and windows rising about 10% during the past five years, according to the latest data from the Office of National Statistics. Wage inflation is also at its highest since 2008 as skilled roles such as electricians and plumbers rise sharply, while labourers will also see their pay packet rise through the living wage.

Persimmon (Epic: PSN), the UK’s largest housebuilder, has witnessed average selling prices rise from £160,000 in 2009 to almost £200,000 at the end of last year. Results on 23rd February revealed pre-tax profits jumped by more than a third to £638 million, over four times the £147 million achieved five years ago.

Income investors have also been attracted by promises to return lavish amounts of capital to shareholders and Persimmon increased its dividend to investors on 1st April to 110p per share, significantly higher than the planned payment of 10p per share. The additional windfall means shareholders are now on track to get a cash return of £2.76bn, or £9 a share, by 2021, a 45% increase from the original plan set out in 2012 to pay out £1.9bn by 2021, or £6.20 a share.

Cyclical industries, however, struggle to keep their long-term promises and just because you call something an income stock, it doesn’t change the underlying fundamentals that drive profits and cashflow in the business, a notion that has been witnessed in the mining sector, as pay-outs have been cut back this year.

Due to the recent growth in earnings, Persimmon trade on just 11.2 times, but with expected earnings growth declining to less than 10% next year, it puts the company on a PEG of over 1. Furthermore, Persimmon’s average earnings during the past 10 years are about 65p, which puts them on a cyclically adjusted price earnings of 29 times, making the shares look very expensive.

The chart of Persimmon illustrates the recent move back up towards the all-time high of 2255p experienced earlier this year, before the chancellor announced his intent to cool the buy-to-let market. The oscillators, however, have rolled over in overbought territory and the bearish divergence suggests that momentum is fading. 

At the time of writing the share price is 2121p, which given the euphoria surrounding the sector combined with the evident headwinds it faces, could present a good level for investors to bank profits. Traders may also consider short-selling the shares, with a stop-loss at 2205p, as targets seen at 2015p, 1909p and 1740p.

This report was written by Michael Allen, equity specialist. The writer does not hold a position in Persimmon. The material in this report has come from web-based data sources and Persimmon’s corporate website.

Sat, 28 May 2016 07:00:00 +0100
A summer lull won’t derail positive mining sentiment Fri, 27 May 2016 13:47:00 +0100 Oil price, Cape, President, Sundry, Genel, IOG Oil price
It’s a big weekend in a lot of ways but no greater than in the US where it is Memorial Day on Monday which of course signals the start of the driving season and my chance to wheel out a few stats. Over the weekend the AAA predicts that more than 34m Americans will travel at least 50 miles, 2.1% up from last year and the best year since 2005. I should remind you that this year annual mileage is running at 3.16tn miles or 263bn miles a month.
Next week sees the Opec meeting and the likelihood is that everything will remain the same although as ever the occasional curved ball may be thrown. I see very little chance of the Saudis changing policy particularly with $50 oil and outages all over the place, not to mention domestic demand picking up as we go into the summer. As for Iran they will remind Opec of its commitment to allowing it to go back up to previous export levels, still somewhat higher than current output. The only way of contriving a settlement seen to be positive could be if Iran is already producing flat out, then it could make a political gesture of some sort.
Cape has announced a Gulf Region Master Service Agreement award from GE on a one year basis renewable annually. The contract covers 64 power facilities in the UAE, KSA,Oman, Kuwait, Qatar, Bahrain and Iraq. For Cape it is its first multi country, multi discipline award in the region and covers access and insulation initially hopefully followed by further disciplines in the future.
President Energy
President has announced an Argentina drilling update where at its Puerto Guardian concession production is running at over 500 boe/d twice last years amount. Three more wells are planned by the end of July which should be on stream in the second half of this year. Peter Levine’s IYA Global continues to provide the funding. I wasnt on the recent analysts visit to Argentina but remain positive on President.
Genel has announced that some payments from the KRG have been received for April but I for one am not finding it easy to tell if payments are being made in full, certainly it looks like the backlog of debt is building again…
And IOG has announced results but for them the key this year will be drilling the appraisal well on Skipper which by creative funding has enabled the company to have a 100% WI.
For those of you who do like to hear my interviews I did my first Podcast for Vox Markets this week and the link is below and will also be on the website.
Vox Markets is an exciting new platform for research, prices and chat and I am very happy to be a contributor with the blog and the podcast.

And finally…
After a bit of a paucity of sport in recent days this weekend provides a massive Bank Holiday Blockbuster catering for all tastes. In Paris Muzza plays Karlovic in the French Open and after a stuttering start with two five setters nothing can be taken for granted.
At Chester-le-Street England take on Sri Lanka in the second test match of the summer, as I write England have won the toss and rather surprisingly elected to bat.
Before we head to the Euros it is the last weekend of league footy in Europe, all the playoffs for promotion, the Champions League final tomorrow between Real Madrid and Athletico, England play Australia in a friendly up at Sunderland and Mourinho signs a three year contract with the Red Devils…
Formula 1 has its showpiece event in Monaco, my invite must have been lost in the post, Lewis has a very poor record here whereas Rosberg’s is good. Team McLaren has said that it will be Jensen’s last season as they intend to sign their own test driver Stoffel Vandoorne next year.
Rugby has the Premiership final with Sarries taking on the Chiefs tomorrow and on Sunday England play Wales in a pre-tour of Australia friendly if ever there was such a thing between these sides.
The summer of golf is under way and the BMW PGA Championship title is up for grabs, Danny Willett leads the way overnight.

Fri, 27 May 2016 11:23:00 +0100
Commodities Week in a Minute: A huge thank you, some gold thoughts and GEM Commodities

Diamonds and precious stones

I had my usual paragraph prepared for this publication ready to go.. and then, Boom De Beers drops the news that Bruce Cleaver is to be taking the CEO role as Mr Mellier steps down after five years.

Many will offer a post mortem and (biased) opinions on Mr Mellier’s tenure in their regular missives, typically tinged with a rosy-eyed view to a past that can never return. So today’s appointment, in my view, is a sensible one and probably one that had been anticipated in the industry for a while, but not without its challenges. The industry has changed both from a consumer and a production perspective and as such, I am very keen to hear how DB and the industry plans to continue to adapt accordingly.

Elsewhere, Petra announced that the Cullinan Dream is to be auctioned on 9 June. The 24.18ct fancy intense blue originates from the very impressive 122.52ct blue recovered back in June 2014. Whilst initial estimates of $23m-$29m are certainly not to be sniffed at (PDL retains a 15% interest in the sales proceeds after expenses) one can’t help feeling that after the Oppenheimer blue, the Millennium blue, the failure of the Temple blue et al, buyers may be feeling that the “exceptional” blue stone market might not be quite so exclusive…

Precious metals

So after the wink wink, nod nod of last week from various monetary policy members, Auntie Janet gets tell us what she is thinking later today and I doubts it’s going to be about her plans for the long weekend. Her words will be analysed to the granular level for hints as to whether or not the US can absorb another huge 25bps on what are still near record low interest rates.

Gold vs. ETF holdings – someone know something?

On a five year view… about 2012


So after six straight days of declines bullion managed to eek out a positive day, but what is concerning me more is the divergence between ETF’s (institutional and private investors alike) and the futures market.  The last time we saw investors liquidate long futures at such a pace was back in 2011.
It seems every armchair analyst now looks at the CFTC data and whilst it can help for those not quite aware of the mechanics of an active futures market, it should be noted that the last time we were this negative was in 2011…but the speed of the retrace is a concern. Lower net positions and higher volatility… choppy indeed, but a traders heaven.

Seems lower is the trend for now… unless Janet says it’s not!

Base metals:

I am not going to mention too much here this week, instead I would encourage you to instead read the FT ‘s story by Henry Sanderson on why China Moly have been buying copper assets. Clue, It’s not really the copper…

Bulk commodities:

I feel like a bit of a broken record, but the decline in iron ore prices, following what had to be one of the most ridiculous price recoveries seen, frankly feels correct. The basis of the price rise should have more than just this occasional scribe concerned as it highlights the fragility of a multi-billion Dollar industry, its reliance on spot pricing and the ability to influence prices with no recourse, except for the risk of losing one’s initial investment – but that is for another day.
I have spoken about this before but I will quickly summarise some of the reasons why I fear for the price for at least the rest of the year…
So where are we now? 62% Fe prices are now $50/t again for the first time since February and is now about 35% lower than the heady highs seen a mere few weeks ago.
• Chinese port stocks perilously close to the 100 million tonnes mark (chart below, care of Anitake)
• Despite the short term steel capacity uplift, margins have evaporated once again and the Government remains committed to reducing total steel production capacity (with the loss of c1.8m jobs in the steel/coal industries) under the guise of pollution control, yet we often over-look the fact that peak steel looks to have been reached in 2014.
• Production growth remains on track – 150 - 180mt of additional capacity in the next three to four years, with most being lower cost that many existing operations, think S11D, Roy Hill and Silvergrass etc. Oh, Simandou is happening (100mtpa).
• Anti-dumping policies – Think our man trump, restricting export growth.
• Freight rates have been decimated – Peter Ashworth, where are you?
• And the final one for me, which really keeps me up at night, is the statistic that total accumulated steel output from China is set to rise above 10 billion tonnes, now that is a significant amount of scrap. We already have up to 40% recycling in platinum, what if we approach that for Steel…
But it’s not all bad, iron ore is up >10% year to date…

Company announcements/news/meetings:

Gemfields, Buy (PT: 57p)
Gemfields announced the results of its lower quality auction held in Jaipur this week confirming another auction record, in average $/ct values. Overall revenues were in line but the company is noting that, along with the diamond industry, buyers are not willing to pay a premium for goods as to where significant uncertainty remains on the quality of finished goods. We remain buyers for the long term and reiterate our 57p target price. Last week we had an update from the company, which if I am honest, was bang in line with what we expected.
I have noted some volatility in the Mozambican Metical in recent weeks and it seems to stem from a state backed entity effectively defaulting on making a $178m payment to VTB Bank. The Tuna Bond default situation is worth a read, as is the administrative oversight that meant $1.4bn in debt outstanding wasn’t reported to the IMF until last month…
Expect weakness, from Gemfields perspective, around 30% of costs at their Mozambican operation is labour and paid in Metical. Any currency devaluation will have a small operational benefit.



Fri, 27 May 2016 11:06:00 +0100
Today's Market View Including: Directa Plus plc, Edenville Energy, Metals Exploration, Scotgold Resources, W Resources Directa Plus plc (LON:DCTA) – New AIM listing for producer and supplier of graphene based products
Edenville Energy (LON:EDL) -  Rukwa Coal to Power Project – update
Metals Exploration* (LON:MTL) – 2015 results and update
Scotgold Resources – (LON:SGZ) new director
W Resources (LON:WRES) – 2015 results and projects update

BHP reckon real sPark for copper demand is growth in renewable energy
• We spend allot of time looking into the impact of new energy sources and demand on materials, particularly copper.
• New distributed energy projects from urban wind and solar to large scale offshore wind and larger scale solar instillations will all use copper for transmission which is good for demand and in the case of large scale offshore programs is very good for demand.
• Bloomberg New Energy forecasts renewable sources will account for 2/3rds of an estimated $12.2trillion of investment over the next 25 years.
• The huge and transformational demand driver for copper is likely to be the growth of electric vehicles.  If EVs and PHEVs become the preferred option over hybrids then governments will have to beef up national transmission systems.
• Voters will not take kindly to politicians if they are told they cannot plug in their new EVs and a large scale move to electric vehicles will require either a monumental increase in locally generated power or a massive increase in the capacity of the Grid.
• The only thing holding back the rise of EVs right now is ‘range anxiety’ eg battery performance.  New developments are quite likely to lead to significantly improved batteries over the next few years. 
• A 2x power density increase in lithium batteries will be a significant enhancement and should tip the balance away from gasoline. 
• A 5-10x power density increase could effectively kill off the combustion engine for normal domestic use.  Not to mention the environmental benefits.
• Timing:  we think a 2x increase is coming shortly, whereas a 5-10x increase might take 10 years which gives policymakers time to get some plans into place. 
• Either way the world is going to be using a lot more copper through the transitional process to build the infrastructure for renewables and EVs and we are quite likely to look back in time and say why didn’t we invest so much more in copper.
• The key copper miners for us are Glencore, Rio Tinto, BHP and First Quantum Minerals.  SolGold* and Metminco* are AIM listed copper project companies to note.

Inventory levels in Shanghai fall for copper, aluminium, zinc and tin
• Significant drawdown in Shanghai warehouse stocks indicate growth in demand for metals as China moves to restart new infrastructure projects.
• Copper stocks fell by 36,122t on the week with Aluminium down 24,406t zinc down 17,995t and tin down 994t.

Dow Jones Industrials                         -0.13% at          17,828
Nikkei 225                                            +0.37%  at        16,835
HK Hang Seng                                     +0.88%  at         20,577
Shanghai Composite                           -0.05%  at          2,821
FTSE 350 Mining                                  +0.10%  at        9,038
AIM Basic Resources                           +1.25% at          1,906

Economic News
US - Durable goods orders rose by 3.4% in April 2016 – 85% of the increase was due to a surge in orders for new commercial jets.
• The jets though take 5 years to build.  Auto parts demand increased by 3%. Removing transport related demand, core orders 0.4% higher in April
• and were 4.1% lower over the first 4 months of the year. 
• US Federal Reserve official (Fed. Gov. Jeremy Powell) has stated that gradual interest rate rises are likely but it was important to see strengthening of both growth and jobs growth in the 2nd quarter of 2016 but also wage rises.
Markets and US dollar nervous ahead of data today
• US Corporate profits Q1 preliminary
• US GDP second Q1 estimate
• Speech later today by Federal Reserve Chairperson Janet Yellen

Japan - may now look to now delay the introduction a sales tax rise, from 8% to 10% until next year – this to help a flagging economy.
• A prior rise in 2014 is thought to have moved the country into recession.  The decision on postponement of the rise is expected pre summer.

Taiwan - has cut its growth forecast for the year from 1.47% to 1.06% . The nation has been impacted by China’s growth slowing.
Taiwan saw exports to China slow by 6.8% in April – the apparently exacerbated by China moving to local suppliers for certain products.  

G7 – leaders looking to stimulate demand
• Global leaders meeting in Japan for a G-7 summit have stated that they will use “all policy tools – monetary, fiscal and structural” to strengthen demand and put debt onto a sustainable path. The leaders are grappling with the challenges to create employment growth and manage debt. Japan’s prime minister warned at summit of the risks of a global economic crisis.  
G7 leaders see BREXIT as serious risk to global growth
• G7 leaders meeting in Japan see a vote for Britain to leave the EU as a serious threat to global growth.
• Maybe its because it is very convenient for G7 nations to sell into the UK and EU as a single market
• Or maybe its because leaving the EU would raise trade barriers to UK business selling into the UK
• If we were to ask any of the other G7 nations to give up control of their boarders and allow an unelected group to determine their laws then we suspect they would refuse. Perhaps the answer is to reconfigure the EU into something more acceptable eg Economic Union without loss of sovereignty?

US$1.1182/eur vs 1.1176/eur yesterday.   Yen 109.71/$ vs 109.98.24/$.   SAr 15.522/$ vs 15.615/$.   $1.466/gbp vs 1.466/gbp
0.722/aud vs 0.721/aud.   CNY 6.560/$ vs 6.559/$ –

Commodity News
Precious metals:
Gold US$1,222/oz vs US$1,227/oz yesterday - US interest rate outlook causes gold prices to slip further.
• News that Venezuela has been selling its gold reserves is no surprise but the market may still be absorbing the sales
Gold ETFs 59.3moz unch v 59.3moz yesterday – unch
Platinum US$994/oz vs US$1,002/oz yesterday –
Palladium US$543/oz vs US$541/oz yesterday –
Silver US$16.31/oz vs US$16.38/oz yesterday –
Base metals:   
Copper US$ 4,693/t vs US$4,693/t yesterday -
Aluminium US$ 1,559/t vs US$1,555/t yesterday
Nickel US$ 8,450/t vs US$8,400/t yesterday –
Zinc US$ 1,897/t vs US$1,871/t yesterday
Lead US$ 1,689/t vs US$1,653/t yesterday
Tin US$ 16,200/t vs US$15,750/t yesterday
Oil US$48.9/bbl vs US$50.0/bbl yesterday
Natural Gas US$2.143/mmbtu vs US$1.965/mmbtu yesterday
Uranium US$27.25/lb vs US$27.90/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$47.4/t vs US$46.9/t –
Steel – The EU may place new anti-dumping tariffs on Chinese steel shipments.
• A number of steel associations urged the G7 economies that meet in Japan this week to harden their stance on cheap steel imports from China.
• The US has also put a 450% duty on Chinese corrosion resistant steel as well as 3-92% duties on similar steel from Italy, India, South Korea and Taiwan
Thermal coal (1st year forward cif ARA) US$48.2/t vs US$48.6/t yesterday –

Tungsten - APT European prices stood at $213-225/mtu vs $215-225/mtu

Company News
Directa Plus plc – New AIM listing for producer and supplier of graphene based products
• Directa Plus plc, an Itallian based graphene producer and supplier is listing on AIM today with a market capitalisation of £33.2m.
• The company has raised £12.8m in the market to support its growth strategy.
• The business is based in the Como Science and Technology Park in Lomazzo, Italy.
• “The initial strategy was to create a company that was able to produce sustainable nano-materials at a reasonable price using scaleable production process. The final aim was to focus on specific existing markets and in particular ones where their experience in graphite suggested strong market opportunities for graphene. In June 2006, the Group filed its first patent application for Directa Plus’ super expansion G+ production process. After funding the initial development of its graphene production process through the founder shareholders, in 2009 the Company obtained external funding from Quadrivio Capital. This provided the Company with the additional capital required to further develop its graphene processes. In June 2010, the Group was granted the patent for its super expansion production process by the US patent and trademark office.
• During the last twelve months, collaborations between Directa Plus and its partners to develop commercial products have begun to translate into commercial sales. In October 2015, Vittoria launched its new range of high-performance bicycle tyres and wheels incorporating Directa Plus’ G+ technology. In December 2015, following successful remediation work on contaminated water in Italy and Romania using Directa Plus’ Grafysorber® product, the Group sold three mobile decontamination units for tackling environmental emergencies. In January 2016, at the international sport fair, ISPO, held in Munich, in collaboration with Colmar, the high-end Italian sports and activewear company, a sports clothing collection (comprising ready-to-wear ski jackets for men and women, ski suits, technical underwear and a polo shirt) incorporating Directa Plus’ G+ product was launched. This was the first application of Directa Plus’ graphene nanotechnology in sportswear. Directa Plus has now created a range of graphene products, in powder, paste and liquid form, all under the G+ brand and has supplied more than 2.2 tonnes of graphene-based products in the last 18 months.”

Edenville Energy (EDL LN) 0.0325 pence, Mkt Cap £3.0m -  Rukwa Coal to Power Project – update
• Edenville Energy reports that “Over the past several months we have achieved several key milestones, with the Company, alongside Tanesco,[Tanzania’s Power supply Company]  establishing the framework to move the Rukwa Coal to Power Project forward with the completion of the PCN review process.”
• Discussions with potential power plant developers are underway and site visits by two potentially interested groups are now underway.
• The Company has submitted Environmental Impact Assessment registration applications and briefs for the power plant.
• The Chairman, Rufus Short, is quoted saying “The project has now reached the critical point where the technical, financial and commercial requirements can be completed, in line with the timeframes and conditions set out by the Tanzanian authorities, as we also seek to secure the project finance.”
Conclusion: The Rukwa coal to power project appears to be moving forward, however, with cash at 31st December amounting to around £317,000 and even after the £400,000 funding in March, with the pace of work accelerating, we speculate that the company may need to raise additional funds later this year.

Metals Exploration* (MTL LN) 7.4 pence, Mkt Cap £127.7m – 2015 results and update
• Metals Exploration reports a loss of £2.15m (2014 loss of £4.77m) for 2015. The company completed construction of the RunRunO mine in the Philippines in November, however the impact of Typhoon Lando in October delayed the mine start up as remedial work was required to rectify the damage caused and provide additional protective measures.
• The remedial and additional works received governmental approval  in April and “Ore commissioning and debugging of the processing plant and associated operations commenced post-period end in May 2016.”
• The delays in initial production have necessitated the raising of an additional US$6.2m of equity in March and the company has agreed an “initial rescheduling of capital repayments to funders regarding the Company’s senior debt facility was completed in the period.”  The Company also notes that, despite the setbacks and project slippage resulting from the typhoon, the “lenders remain supportive of the project and recognise its economic fundamentals have not changed”.
• As previously announced, payments of $13m originally due on 1st June, 1st December 2016 and 1st June 2017 have now been increased to $15m with an $8m payment originally due on 1st December 2017 has been increased to $13m while payments of $8m on 1st June 2018 and $7m due on 1st December 2018 remain unchanged. The 31st December 2015 interest payment has been paid in full.
• Following the lifting of the Government’s suspension orders and the start of ore commissioning, more detailed discussions of the long-term debt restructuring have now commenced.
• At 31st December, cash balances amounted to approximately £11m.
Conclusion: Metals Exploration continues to enjoy the support of its main shareholders and lenders as it restarts the commissioning of the RunRunO mine following delays in the wake of typhoon Lando.
*SP Angel act as Broker to Metals Exploration

Scotgold Resources – new director
• Scotgold Resources have announced the appointment of Gabriel Chiappini as a director.
• Mr Chiappini is based in Perth and is an Australian Chartered Accountant with extensive corporate experience in Australia

W Resources (WRES LN) 0.50p, Mkt Cap £19.4m – 2015 results and projects update
• W Resources, the tungsten developer focussed on the Iberian Peninsula,  has reported a loss for 2015 of £606,000, in line with the £641,000 reported for 2014.
• Cash at the year-end amounted to £864,000 following fund raisings totalling £3.8m during 2015. A further £850,000 has been raised since the end of the 2015.
• W Resources has made considerable progress in moving ahead with its wholly owned La Parilla tungsten project in Spain and with the Regua tungsten project in Portugal as well as with its gold projects at Portalegre and Sao Martinho.
• The “fast-track” mine development at La Parilla  is expected to produce a final development plan in mid-2016 and the company continues to target full production of 1300tpa of tungsten concentrates during 2017.
• At Régua, metallurgical results to date have been encouraging and this, combined with process flowsheet updates will enable us to start work on the definition development study."  Further drilling and bulk sampling during the year are adding to the geological understanding, resource potential and metallurgical characteristics of the deposit and the company reports that “Mine development planning is now advanced and on-track for completion during mid-2016. Metallurgical and plant design work for an initial shallow open-pit mine design, as well as a second phase for a larger scale high-grade underground operation are also in progress.”
Conclusion: W Resources continues to set itself an ambitious schedule for production at La Parilla. We look forward to details of the final development plan when they become available.

Fri, 27 May 2016 10:56:00 +0100
Marks dressed down by Deutsche Fri, 27 May 2016 10:20:00 +0100 In the news: Base Resources Base Resources*† (BSE AU/LN) has been asked to make a response to the ASX regarding a sharp move in its share price. The good news is that this price movement has been upwards. In fact, its price has more than doubled over the last few days (see below).


The main driver of this move has been positive sentiment towards the general market for mineral sands. This has been seen in recent announcements from Base’s peer group; sector bellwether Iluka is up some 11% over the last two days of trading. This all mirrors our own understanding that pricing sentiment has improved of late, a fact picked up by our clients who have been making more calls about Base and the mineral sands market than they have for a while. Also, there was a mineral sands conference in China this week that clearly went well.
Obviously, after a share price has been in the doldrums, moves can be more pronounced on improved volume. This has been particularly so in Base’s case, where the financial gearing effect created by its debt magnifies changes in the value of the underlying assets in the share price.
It’s interesting that the UK listing is currently trading at 4.375p, which equates to A$0.088. The shares closed in Australia at A$0.12, so if you can pick up stock in London, you should.

Fri, 27 May 2016 09:43:00 +0100
In the papers: Tata Steel, McDonald’s, Apple The Times
Plan to cut Tata Steel pensions could cost savers £200 billion: The government’s proposal to save Tata Steel U.K. could set a dangerous precedent, ultimately costing millions of pension savers up to £200 billion in lost retirement incomes, experts warned .
Ashley sees lawyers before date with MPs: Mike Ashley has accused MPs of being unfair and said he would take legal advice before deciding whether to appear before them in two weeks’ time.
One-off deal could come back to bite Javid: The blast furnaces of Port Talbot may not have much in common with a rampaging pit bull terrier, but experts in the pensions industry were making just that comparison after the government tabled proposals to help to save Tata Steel U.K..
Businesses who sued RBS ‘were put into turnaround division’: Businesses were at risk of being transferred to Royal Bank of Scotland’s contentious restructuring division simply as a “punishment” for suing the bank, according to allegations made in a closely watched legal case.
Bob Diamond loses his sparkle: Bob Diamond’s African ambitions suffered a setback as his investment vehicle in the continent reported a $2 million loss for the first three months of the year.
North Sea wind farms giant plans to double output with £10 billion float: Dong Energy, the biggest developer of offshore wind farms in British waters, is gearing up for a £10 billion flotation. The Danish state-controlled energy company said that it would sell shares in a price range that would value the company at £8.5 billion to £10.9 billion.
Miner set up by Phil Edmonds indicted over bribery claims: An AIM-listed mining company founded by Phil Edmonds, the former England cricketer, has been indicted over bribery allegations, along with senior political figures in Liberia.
Advisers ‘using privilege as get out of jail card’: The Chairman of the work and pensions committee investigating the collapse of BHS has criticised advisers to the consortium which bought the retail chain for “pulling down the drawbridge”.
Bramson gets a tighter grip on Electra: Ed Bramson has taken the top job at Electra Private Equity in a further sign of the corporate raider’s influence over the long-established investment house.
Drive to build more new homes fails to hit target: Efforts to create new homes have suffered a setback after official figures showed that the number of housing starts in England collapsed in the first three months of the year.
The Independent
McDonald’s French headquarters searched in tax investigation: McDonald’s French headquarters were searched on 18 May as part of an ongoing tax probe, according to police sources.
Bank of England accused of fluffing ‘big call’ on financial regulation: The Bank of England has been accused of getting a “big call” on private bank regulation wrong by the architect of the Government’s post-crisis financial reform drive, Sir John Vickers.
Starbucks CEO says China business could outgrow U.S. as it opens coffee roastery in Shanghai: Starbucks CEO said the company’s China’s business could one day outgrow that of the United States as it opens its first coffee roaster outside of the country.
The Daily Telegraph
Apple mulled Time Warner bid to boost media offering: Tech giant Apple explored the idea of buying Time Warner last year, underlining the iPhone maker’s interest in offering its own content.
HS2 will cost ‘five times more than French line’: The controversial High Speed 2 rail link is five times more expensive than a similar line being built in France, according to a new report which has sparked fresh fears about the investment required for the project.
Rolls-Royce loses out on deal to power new fighter for South Korea: Rolls-Royce is understood to have lost out on a contract to power a new generation of combat jets for the South Korean military.
Profits rise at Tate & Lyle following major restructuring: The Chief Executive of Tate & Lyle said the company was in a “very, very good place”, after it reported a 5% rise in full-year profits, marking a turnaround from a calamitous few years of trading.
Loo roll manufacturer Accrol announces intention to float: A tissue manufacturer that supplies supermarket giants such as Tesco, Aldi and Morrisons is preparing for a £100 million flotation on the junior Aim market next month.
Profits fall at QinetiQ as defence spending slows: Qinetiq, the defence company which advises Nato, the U.S. military and the U.K.’s Ministry of Defence, had its profits hit by a “challenging” market last year, as Government departments continued to cut security spending.
Shoppers brush off Brexit fears with record credit card splurge: British shoppers hit the plastic enthusiastically last month, spending a record £9.6 billion on credit cards in April.
Amazon Executive to take the reins at Debenhams: Debenhams has appointed an Amazon Executive to replace its outgoing Chief Executive as the department store focuses on the growth of its online sales.
Putty in American hands: Sugru to crowdfund in U.S.: Sugru, the maker of a colourful hi-tech adhesive putty that can be used to fix almost anything, will launch its maiden crowdfunding round in the U.S. later this year, after rules banning ordinary Americans from backing start-ups were finally overhauled.
The Guardian
Tata Steel pension Chief backs controversial cuts: Government plans to overhaul the pension scheme behind Tata Steel have been supported by the trustees despite warnings that the move would set a dangerous precedent.
Portuguese-backed consortium close to deal for BHS: A Portuguese-backed consortium is closing in on a deal to rescue BHS and its 11,000 employees.
Philip Green ‘refused to put more than £10 million a year’ in BHS pensions scheme: Sir Philip Green refused to pump in more than £10 million a year to the BHS pensions scheme but took a “caring approach” to members, the former Chairman of the pension trustees has said.
DMGT issues profit warning after double-digit fall in print ads: The Owner of the Daily Mail has issued a warning to investors after reporting a 29% fall in profits, driven by a double-digit decline in print advertising, at its newspaper operation in the six months to the end of March.
Three network to run 24-hour adblocking trial: Mobile provider Three is to run a 24-hour adblocking trial in the U.K. in the first step towards removing ads for all its customers.
Shell says it will limit solar investment until it proves profitable: Shell will avoid investing too heavily in solar or other technologies until they can make financial profits, its Chief Executive has said.
Daily Mail
Bargain basement chain B&M Bargains is making billions from birdseed, batteries and other bric-a-brac: Budget shop chain B&M Bargains posted soaring sales and profits as it continued to eat into the market share of supermarkets.
Australian bank selling share in Thames Water rinsed the firm for millions, saddled it with debt, dodged tax and created a £250 million pensions black hole: Australian bank Macquarie is gearing up to sell its share of Thames Water after squeezing hundreds of millions of pounds out of the company.
Chip designer Imagination Technologies sets out revival plan after confirming former Rolls-Royce Director as its new Boss: A former Rolls-Royce Executive has been confirmed as the new Boss at struggling chip designer Imagination Technologies.
Dividends at big banks to rise as safety net to protect against financial meltdown is slashed: British banks are poised to boost dividends to investors after escaping orders to raise the amount of cash they have to hold in reserve.
U.K. growth confirmed at 0.4% in the first quarter as analysts fret over economy’s reliance on consumers: Economic growth for the first quarter was confirmed at 0.4% by official gross domestic product data that backed up an initial estimate.
ASOS shares fall as co-Founder sells stake in online fashion firm to raise £46 million towards costly divorce settlement: Shares in ASOS fell 1% after a co-Founder of the online fashion firm sold off £46 million worth of shares in the group to help stump up cash for a costly divorce settlement.
Daily Express
Oil hits $50-a-barrel as stockpiles fall: OIL prices gushed to over $50-a-barrel for the first time this year, fuelling hopes for a global economic recovery as the supply glut begins to ease.0
Eurozone rupture: Now Spain threatens to tear EU apart as banks lose €1.4 billion in a day: Panic over the stability of Spanish banks hit fever pitch, exposing yet another rupture in the financial system holding the Eurozone together.
The Scottish Herald
Scottish data science firm announces expansion following six-figure Netherlands contract: A Scottish company that helps speed up medical research has signalled “sUBStantial growth” after winning its ever biggest contract in a deal it says will facilitate biomedical research on an “unprecedented scale.”
Smart Metering Systems Boss says business not for sale as it gears up for domestic meter roll out: Smart Metering Systems Chief Executive Alan Foy has categorically stated the company is not for sale.
Lanarkshire software testing firm doubles profits amid boom in online business: A Lanarkshire software testing firm has doubled profits after capitalising on the dramatic growth in the number of products and services that are delivered over the internet.
Narrow vote for status quo would hit confidence: A healthy majority vote for staying in the EU would mean a bounce in the economy and the clock ticking on an interest rate rise, but a narrow vote to remain would hit confidence, UBS has said.
Pension exit fees to be capped: The Financial Conduct Authority has proposed a one% cap on early exit charges for people transferring old pensions under the new freedoms.
Former Havelock Chief receives £330,000 pay-off: Eric Prescott, the former Chief Executive of Fife furniture and interiors business Havelock Europa, received £330,000 compensation for loss of office when he left the business last year, according to the company’s annual report.
The Scotsman
Sluggish U.K. economy tipped for further slowdown: Britain’s economy is likely to have cooled further this spring after first-quarter GDP growth was confirmed at just 0.4%.
Lord Smith adds marketing veteran to Alliance Trust board: Dundee-based wealth Manager Alliance Trust has named marketing specialist Clare Dobie as a non-Executive Director.
U.K. government makes first ever loss on North Sea oil: The U.K. government has made a loss from oil and gas production for the first time in history.
Farming industry to benefit from innovative project winners: Two highly innovative collaborations have won Interface Food and Drink’s legacy competition, providing funding of £88,000 towards industry–academic projects.
City A.M.
China raises £300 million in London as part of first ever overseas RMB bond: China’s finance ministry issued a three billion yuan (£312 million) international bond, its first ever outside China or Hong Kong.
Panama Papers law firm Mossack Fonseca to close Jersey office: Mossack Fonseca, the law firm at the heart of the Panama Paper’s scandal, was reported to be closing its offices in Jersey.
Sears is exploring options for two businesses, sending its share price higher as revenue continues to fall: The one-time largest U.S. retailer Sears has posted a loss of $471 million (£320 million) or $4.41 a share for its latest quarter. The loss has widened from the $303 million it reported a year earlier and has led the company to explore potential partnerships or other deals for some of its biggest brands.
Abercrombie & Fitch misses expectations as sales sag, sparking share sell off – though the Hollister brand remains flat: News of its 13th quarter-on-quarter sales decline has sparked a sell off of Abercrombie & Fitch stock.
Sophos operating loss position widens despite rising revenues, thanks to IPO costs: Losses at Sophos Group widened during the year to March, the IT security company announced.
U.K.OG shares slump following fundraising round: Shares in U.K. Oil & Gas Investments, the company behind the so-called Gatwick Gusher, slumped after the announcement of a successful fundraising round.
Members of the European Parliament just voted to introduce a bitcoin and cryptocurrency regulator: Members of the European Parliament (MEPs) have called for the creation of a cryptocurrency watchdog to combat money laundering and terrorism.
Tech and engineering firms are flocking to a new tech hub in Silverstone: Silverstone, the home of British motor racing, has been flooded recently with a raft of high-tech engineering businesses – and is now being branded as the Silverstone Technology Cluster.

Fri, 27 May 2016 09:10:00 +0100
Market briefing: US markets closed mostly lower yesterday, as a rally in crude oil prices UK Market Snapshot
UK markets ended mixed yesterday. Mining sector stocks, Antofagasta, Anglo American, BHP Billiton and Glencore rose 1.2%, 1.5%, 1.7% and 1.9%, respectively, amid gains in metals prices. Tate & Lyle advanced 1.6%, after it reported an increase in its pre-tax earnings for the year ended 31 March 2016. On the downside, Daily Mail & General Trust tanked 10.8%, after it lowered its operating margin target for its DMG media division. DCC, Whitbread and Carnival dropped 2.5%, 2.6% and 3.2%, respectively, as they went ex-dividend. Banks, HSBC Holdings, Standard Chartered and Royal Bank of Scotland Group fell 0.1%, 1.0% and 2.9%, respectively. United Utilities Group shed 1.0%, following a significant decline in its full year underlying earnings. Energy firms, Royal Dutch Shell and BP dipped 0.2% and 0.4%, respectively, as crude oil prices slid. The FTSE 100 marginally advanced, to close at 6,265.7, while the FTSE 250 fell 0.2%, to settle at 17,192.8.
US Market Snapshot
US markets closed mostly lower yesterday, as a rally in crude oil prices lost momentum and a decline in materials and financial sector stocks offset gains in utilities and telecom firms. Eastman Chemical, LyondellBasell Industries, Dow Chemical and Freeport-McMoRan shed 1.1%, 1.6%, 1.7% and 2.7%, respectively. Abercrombie & Fitch tanked 15.7%, as its first quarter sales fell short of market expectations. On the brighter side, Dollar Tree rallied 12.8%, after it posted upbeat profit for the first quarter and raised its earnings outlook for 2016. HP climbed 6.9%, following buoyant profit for the second quarter. PVH Corp. rose 4.3%, as it boosted its projected earnings for the full year. The S&P 500 marginally fell, to settle at 2,090.1. The DJIA shed 0.1%, to settle at 17,828.3, while the NASDAQ advanced 0.1%, to close at 4,901.8.
Europe Market Snapshot
Other European markets finished higher yesterday, buoyed by an advance in automobile and mining companies. ArcelorMittal climbed 6.9%, amid speculation that the European Commission could extend its anti-dumping probe on imports of Chinese hot-rolled coil to more countries. Volkswagen and Bayerische Motoren Werke added 0.7% and 2.0%, respectively, while Renault and Peugeot rose 2.7% each. On the contrary, Banco Popular Espanol sank 26.5%, after it disclosed plans to raise €2.5 billion through new share sale. Other lenders, Banco Santander, Bankia and Banco de Sabadell fell 1.9%, 2.4% and 5.0%, respectively. The FTSEurofirst 300 index gained 0.2%, to close at 1,369.6. Among other European markets, the German DAX Xetra 30 rose 0.7%, to close at 10,272.7, while the French CAC-40 advanced 0.7%, to settle at 4,512.6.
Asia Market Snapshot
Markets in Asia are trading mostly higher this morning, ahead of the US Fed Chairwoman, Janet Yellen’s speech, due later today. In Japan, data showed that consumer prices dropped in April, raising hopes that the Bank of Japan could further ease its monetary policy in June. Toshiba has soared 10.1%, following a broker upgrade on the share to ‘Overweight’ from ‘Underweight’. Oil explorers, Japan Petroleum Exploration and Inpex have risen 2.8% and 3.7%, respectively. However, Takata has fallen 6.6%, on the back of news that KKR & Co is in talks with the company for a possible acquisition. In Hong Kong, CNOOC and PetroChina have shed 0.5% and 1.5%, respectively. In South Korea, Hyundai Motor and POSCO have added 0.4% and 0.5%, respectively. The Nikkei 225 index is trading 0.4% higher at 16,846.3. The Hang Seng index is trading 0.3% down at 20,334.3, while the Kospi index is trading 0.3% higher at 1,962.3.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.75% or $0.37 lower at $49.22 per barrel. Yesterday, the contract declined 0.30% or $0.15, to settle at $49.59 per barrel, retreating from $50.0 per barrel mark, as fears regarding global oil supply glut resurfaced.
At 0330GMT today, Gold futures contract is trading 0.07% or $0.80 lower at $1219.60 per ounce. Yesterday, the contract declined 0.28% or $3.40, to settle at $1220.40 per ounce, extending its recent losses, amid prospects of a hike in interest rates by the US Fed.
At 0330GMT today, the EUR is trading 0.07% lower against the USD at $1.1186. Investors will look forward to the US Federal Reserve Chief, Janet Yellen’s speech, due later today. Also, the second estimate of the US GDP for the first quarter will be closely awaited. Yesterday, the EUR strengthened 0.35% versus the USD, to close at $1.1194. On macro front, the US durable goods orders rose more than anticipated for April.
At 0330GMT today, the GBP is trading a tad lower against the USD at $1.4667. Meanwhile, the UK GfK consumer confidence fell less than expected in May. Yesterday, the GBP weakened 0.18% versus the USD, to close at $1.4670, after the UK GDP rose less than expected on an annual basis in the first quarter.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after auction of seven-year notes received strong demand from investors and amid hawkish speeches from two US Federal Reserve officials.  Yesterday, yield on 10-year notes declined 4 basis points to 1.83%, while yield on 2-year notes lost 5 basis points to 0.87%. Meanwhile, 30-year bond yield fell 3 basis points to 2.64%.

Key Economic News
UK Total business investment slid in 1Q 2016
The preliminary total business investment dropped 0.50% on a quarterly basis, in 1Q 2016, in the UK. Total business investment had recorded a drop of 2.00% in the previous quarter.
UK gross fixed capital formation rose less than expected in 1Q 2016
In 1Q 2016, the flash gross fixed capital formation in the UK advanced 0.50% on a QoQ basis, compared to a revised drop of 1.10% in the prior quarter. Market expectation was for gross fixed capital formation to climb 0.90%.
UK consumer confidence recorded an unexpected rise in May
The consumer confidence registered an unexpected rise to a level of -1.00 in the UK, in May, compared to market expectations of a fall to a level of -4.00. The consumer confidence had registered a reading of -3.00 in the prior month.
UK imports advanced less than expected in 1Q 2016
On a QoQ basis, the flash imports advanced 0.80% in the UK, in 1Q 2016, less than market expectations for a rise of 1.00%. In the previous quarter, imports had climbed by a revised 0.90%.
UK exports unexpectedly declined in 1Q 2016
In 1Q 2016, the flash exports in the UK, unexpectedly dropped 0.30% on a QoQ basis, less than market expectations for a rise of 0.10%. Exports had climbed by a revised 0.10% in the prior quarter.
UK index of services rose as expected in March
The index of services advanced 0.60% on a monthly basis in the UK, in March, in line with market expectations. In the December-February 2016 period, the index of services had climbed by a revised 0.80%.
UK GDP rose less than expected in 1Q 2016
In 1Q 2016, on a YoY basis, the second estimate of gross domestic product (GDP) advanced 2.00% in the UK, less than market expectations for a rise of 2.10%. In the previous quarter, GDP had advanced 2.10%. The preliminary figures had recorded an advance of 2.10%.
UK private consumption rose more than expected in 1Q 2016
The flash private consumption in the UK registered a rise of 0.70% in 1Q 2016 on a QoQ basis, compared to a revised advance of 0.60% in the previous quarter. Markets were expecting private consumption to climb 0.50%.
UK total business investment registered a drop in 1Q 2016
The preliminary total business investment dropped 0.40% on an annual basis in the UK, in 1Q 2016. In the previous quarter, total business investment had advanced 3.00%.
UK BBA mortgage approvals fell unexpectedly in April
BBA mortgage approvals recorded an unexpected drop to 40.10 K in the UK, in April, compared to market expectations of an advance to a level of 44.70 K. In the previous month, BBA mortgage approvals had recorded a revised reading of 43.85 K.
UK index of services surprisingly eased in March
The index of services registered an unexpected drop of 0.10% on a MoM basis in the UK, in March, compared to a rise of 0.10% in the previous month. Markets were expecting the index of services to rise 0.20%.
UK government spending rose as expected in 1Q 2016
In 1Q 2016, the flash government spending recorded a rise of 0.40% on a QoQ basis in the UK, compared to a revised advance of 0.30% in the prior quarter. Markets were expecting government spending to advance 0.40%.
UK GDP rose as expected in 1Q 2016
On a quarterly basis, the second estimate of GDP advanced 0.40% in 1Q 2016, in the UK, compared to an advance of 0.60% in the prior quarter. Markets were anticipating GDP to advance 0.40%. The preliminary figures had also recorded a rise of 0.40%.
Italian wage inflation remained unchanged in April
The wage inflation in Italy remained steady at 0.00% in April.
Italian retail sales registered a rise in March
On an annual basis, the non-seasonally adjusted retail sales in Italy rose 2.20% in March. In the previous month, retail sales had risen 2.70%.
Italian annual wage inflation registered a drop in April
In April, the annual wage inflation in Italy eased to 0.60%, compared to a level of 0.80% in the previous month.
Italian retail sales dropped in March
The seasonally adjusted retail sales fell 0.60% on a MoM basis, in March, in Italy. Retail sales had registered a rise of 0.30% in the prior month.
Spanish GDP rose as expected in 1Q 2016
The final GDP advanced 3.40% on a YoY basis in 1Q 2016, in Spain, at par with market expectations. The preliminary figures had also recorded an advance of 3.40%. In the prior quarter, GDP had recorded a rise of 3.50%.
Spanish GDP advanced as expected in 1Q 2016
The final GDP in Spain rose 0.80% in 1Q 2016 on a QoQ basis, meeting market expectations. GDP had registered a similar rise in the previous quarter. The preliminary figures had also indicated a rise of 0.80%.
Swiss industrial production rose in 1Q 2016
On an annual basis, industrial production rose 1.00% in Switzerland, in 1Q 2016. In the previous quarter, industrial production had registered a revised drop of 4.30%.
Fed's Powell stated that rate hike looking appropriate 'fairly soon'
The Federal Reserve Governor, Jerome Powell, indicated that an interest rate hike may be appropriate “fairly soon” if incoming data confirms that the US economy is continuing to grow and labour markets are still tightening. He further stated that the nation’s economy remains on a solid footing and that he views ongoing job growth and evidence of rising wages as being more important than recent weakness in consumer spending and business investment.
US non-defense capital goods shipments (ex aircraft) advanced more than expected in April
The flash non-defense capital goods shipments (ex aircraft) in the US advanced 0.30% in April on a MoM basis, higher than market expectations for a rise of 0.10%. In the previous month, the non-defense capital goods shipments (ex aircraft) had risen 0.50%.
US initial jobless claims declined in the last week
The seasonally adjusted initial jobless claims recorded a drop to 268.00 K in the US, in the week ended 21 May 2016, compared to market expectations of a drop to a level of 275.00 K. Initial jobless claims had registered a level of 278.00 K in the previous week.
US pending home sales rose more than expected in April
In the US, pending home sales advanced 5.10% on a monthly basis in April, compared to a revised advance of 1.60% in the prior month. Markets were anticipating pending home sales to climb 0.70%.
US pending home sales advanced more than expected in April
On a YoY basis, pending home sales in the US recorded a rise of 2.90% in April, compared to a revised rise of 3.20% in the prior month. Markets were anticipating pending home sales to climb 0.20%.
US durable goods orders (ex transportation) rose more than expected in April
On a MoM basis, the flash durable goods orders (ex transportation) recorded a rise of 0.40% in the US, in April, more than market expectations for an advance of 0.30%. Durable goods orders (ex transportation) had dropped 0.20% in the prior month.
US continuing jobless claims recorded an unexpected rise in the last week
In the week ended 14 May 2016, the seasonally adjusted continuing jobless claims recorded an unexpected rise to a level of 2163.00 K in the US, higher than market expectations of a fall to 2142.00 K. Continuing jobless claims had registered a revised reading of 2153.00 K in the previous week.
US durable goods orders advanced more than expected in April
On a MoM basis, the flash durable goods orders registered a rise of 3.40% in the US, in April, compared to an advance of 0.80% in the prior month. Markets were anticipating durable goods orders to advance 0.50%.
US non-defense capital goods orders (ex aircraft) unexpectedly eased in April
In April, on a MoM basis, the flash non-defense capital goods orders (ex aircraft) in the US unexpectedly eased 0.80%, compared to a rise of 0.10% in the previous month. Market expectation was for the non-defense capital goods orders (ex aircraft) to rise 0.30%.
US Kansas City Fed manufacturing activity index declined surprisingly in May
The Kansas City Fed manufacturing activity index dropped unexpectedly to -5.00 in the US, in May, compared to market expectations of an advance to a level of -3.00. The Kansas City Fed manufacturing activity index had registered a level of -4.00 in the prior month.
Japanese Tokyo CPI declined as expected in May
On an annual basis, Tokyo consumer price index (CPI) eased 0.50% in May, in Japan, compared to a fall of 0.40% in the prior month. Markets were anticipating Tokyo CPI to fall 0.50%.
Japanese national CPI fell less than expected in April
On a YoY basis, the national CPI dropped 0.30% in April, in Japan, compared to a drop of 0.10% in the previous month. Markets were expecting the national CPI to drop 0.40%.
Japanese Tokyo CPI excluding fresh food declined more than expected in May
In May, Tokyo CPI excluding fresh food recorded a drop of 0.50% on a YoY basis in Japan, more than market expectations for a drop of 0.40%. Tokyo CPI excluding fresh food had recorded a drop of 0.30% in the prior month.
Japanese Tokyo CPI excluding food and energy advanced less than expected in May
On a YoY basis, in Japan, Tokyo CPI excluding food and energy rose 0.50% in May, less than market expectations for an advance of 0.60%. In the previous month, Tokyo CPI excluding food and energy had risen 0.60%.
Japanese National CPI ex-fresh food declined less than expected in April
On an annual basis, National CPI ex-fresh food registered a drop of 0.30% in Japan, in April, lower than market expectations for a fall of 0.40%. National CPI ex-fresh food had registered a similar fall in the previous month.
Japanese National CPI ex-food, energy advanced as expected in April
National CPI ex-food, energy climbed 0.70% on an annual basis in April, in Japan, in line with market expectations. In the previous month, National CPI ex-food, energy had registered a similar rise.

Fri, 27 May 2016 09:02:00 +0100
VSA Capital Market Movers - Independent Oil & Gas
Independent Oil & Gas (LON:IOG)# has released its FY 2015 results with a total profit for the year of £5.3m (vs a loss of £12.1m in 2014) and a cash position of at the end of the period of £23k. This was better than our expectations due to a full reversal of the 2014 £6.2m impairment provisions against the Skipper field. Following the acquisition of the remaining 50% of the Skipper licence IOG now owns 100% of the licence and increased IOG’s independently verified 2C resources by 13.1mmbbl to 26.2mmbbl.

IOG also secured £5.5m of funding from London Oil & Gas and GE Oil & Gas during the period, additionally IOG secured a further £10m convertible loan facility from London Oil & Gas in March 2016. These loans will fund the drilling of the appraisal well on the Skipper discovery, provide funding for G&A costs and also allow IOG to pursue an acquisition strategy to focus on near term oil and gas developments. Indeed following this financing IOG signed an SPA to acquire the remaining 50% of the Blythe discovery to double its reserves on the asset to 34.3BCF at a low cost equivalent to US$2.31/boe.

The skipper well is now at an advanced stage of preparation and the Skipper licence has been extended to 31 Dec 2106 to allow IOG an extension to work on this.

All in all we are impressed by these set of results, in particular by IOG’s capability to secure funding throughout 2015 and post its year end in an extremely challenging environment which leaves it in a position of strength. IOG’s focus will now be to progress the Skipper appraisal well as it pursues its hub strategy.

Fri, 27 May 2016 08:56:00 +0100
Europe Short-Term Visas Target the Wrong Countries Europe Short-Term Visas Target the Wrong Countries
Here is the opening of this excellent analysis by Leonid Bershidsky for Bloomberg:

The spat between the European Union and Turkey over visa-free travel is heating up. President Recep Tayyip Erdogan of Turkey is demanding the abolition of visas for his citizens, or else he'll renege on a deal that has reduced the flood of refugees to the EU to a trickle. European Commission President Jean-Claude Juncker told Erdogan that won't get him anywhere.
This public fight is futile. Europe could safely cancel visas for Turkey and many other countries: The benefits would far outweigh the costs.
The EU struck its deal with Turkey in March. Erdogan agreed that his country would take back undocumented immigrants who arrive in Europe by the Balkan route, which was used by more than 1 million people last year. In return, he demanded 6 billion euros ($6.7 billion) in aid and an end to short-term Schengen zone visas for Turks by the end of June. The Europeans promised the money and agreed to expedite visa liberalization "provided that all benchmarks have been met."
Erdogan appears to have missed that caveat. On Wednesday, he said the immigrant readmission agreement wouldn't pass the Turkish parliament if visa-free travel wasn't granted. "Turkey is supposed to fulfill criteria? What criteria are these I ask you?" he fumed.
Juncker's reply was prompt and equally sharp. "We do expect that Turkey will stick to its commitments -- and threats are not the best diplomatic instrument you can use," he said. "So one should stop to use them, because they will produce no effect whatsoever."
There are 72 criteria that Turkey is supposed to meet, and further work is needed on only five of them, according to a May 4 document from the European Commission. These are, however, the hardest to implement: They concern anti-corruption legislation, police and judicial cooperation with the EU, personal data protection to EU standards and, most importantly to Erdogan, changes to legislation that now allows him to persecute journalists and academics for "terrorist propaganda."
Erdogan's repression of dissent is deplorable. One might wonder, however, what this has to do with 90-day tourist visas to the EU. After all, if someone needs to escape persecution, the need to get a visa is a serious barrier.

David Fuller's view
I commend the rest of this article to you.  Leonid Bershidsky’s intelligent analysis has certainly influenced my views on the subject. Allowing Turkish citizens to visit Europe without visas, for tourism rather than job seeking, would boost tourist spending.  Also, as educated middleclass Turks see more of the free world, the less likely they will be to favour Erdogan’s undemocratic authoritarian policies back home. 

Germany and the U.S. Have Different Ideas About Energy
Here is the opening of this topical article from Bloomberg:

The share of Germany's electricity generated from renewable sources has tripled during the past decade, to 30.1 percent. That's impressive, especially when compared with what has happened in the U.S.
On the other hand, the percentage of Germany's electricity generated by burning coal isn't all that much lower than it was a decade ago, and is higher than it was in 2010. In the U.S., coal's share has been falling a lot in recent years.
Both countries are going through major shifts in how they keep the lights on, but they're very different shifts. Germany is in the midst of a large-scale, government-driven energy transition toward renewables (the "Energiewende"). The U.S. has also favored renewable energy with tax incentives and other subsidies, but the effort has been modest compared with Germany's. Here, the big news has been rising natural gas production thanks to fracking, plus pressure on utilities from the government and private groups to shut coal-fired power plants.
So which country is doing a better job of shifting its energy mix? It depends on your priorities. The Germans have long been uncomfortable with nuclear power, and in 1998 made plans to phase out its use by 2022. There was some hemming and hawing in subsequent years, but after the 2011 Fukushima reactor accident in Japan, the government recommitted to the 2022 phase-out. Since 1998, nuclear power has gone from supplying 27.5 percent of German electricity to 18.1 percent.

David Fuller's view
The article above does not address critical point regarding average costs of electricity in Germany, the USA and a number of other countries.
However, another article from OVO Energy shows three separate bar graphs for average energy costs in over a dozen countries, based on: “How much does electricity cost”, and “Electricity prices relative to purchasing power”.  On average, electricity prices are almost 200 percent higher in Germany than in the USA.  That is why heavy manufacturing firms have been moving some of the factories out of Germany and other European countries, and moving them to the USA and other nations which have lower energy costs. This will continue to be reflected by comparative GDP for countries over the longer term. 

Saudi Arabia Has a Plan B to Try to Stop Iran Economic Rise
Here is a latter section of this informative article from Bloomberg:

“Oil policy was one of the instruments,” said Mustafa Alani, head of defense and security department at the Gulf Research Center. “The other thing is to counter Iranian investment in the region. Under King Salman it has become a clear-cut policy. There is no hesitation.”
Also last month, Saudi Arabia banned Iran’s Mahan Airline from flying through Saudi airspace. Shipping insurers and brokers have been advising clients since February that ships carrying Iranian crude will not be permitted to enter Saudi or Bahraini waters, according to an April report by Control Risks. It said ships that have been to Iran as one of their last three points of entry must also receive special approval.
Saudi rulers are complementing those efforts with attempts to deepen Iran’s political isolation in the Middle East.
Last month, Jordan recalled its ambassador to Iran shortly after a visit by the Saudi deputy crown prince. Ten days later, it signed an accord that could pave the way for multi-billion-dollar Saudi investments. In February, the kingdom scrapped a $3 billion deal to supply much-needed weapons to the Lebanese military, citing the rising influence of Hezbollah, a militant group backed by Tehran.
The Saudi moves take place against the backdrop of cooler ties with the U.S., in part because of the Iranian nuclear deal. In interviews published by The Atlantic magazine, President Barack Obama said the Saudis must “share” their region with Iran, and was reported describing the U.S. relationship with the kingdom as “complicated.”
The Saudi push is a “patchwork campaign,” Shashank Joshi, a senior research fellow at the Royal United Services Institute in London, said by phone. The Saudis can’t do much to block Iran at the global level, he said, but they’re “applying pressure on Iran wherever they are able to do so, to limit its political and economic influence.”
But one hurdle for the Saudis is that the other Gulf Cooperation Council states, key to the effort, may not be totally on board.
Bahrain was the only other country in the six-member GCC to follow the Saudis in cutting diplomatic ties this year. Kuwait recalled its ambassador to Tehran in January ans the United Arab Emirates reduced its diplomatic representation to the level of charge d’affaires.
The U.A.E has more at stake than the kingdom: Iran was its third largest trading partner in 2015, after India and China.
“We still see pretty substantial disagreements within the GCC,” Joshi said. “Iran is already integrated into the Gulf economic systems, and I don’t think anything Saudi Arabia can do can seriously disentangle that.”

David Fuller's view
We have long had religious wars in the Middle East and now we have oil wars as well.  The region’s two biggest powers – Saudi Arabia and Iran – are at the centre of this conflict, which can too easily rumble on for many more years.  It should remain largely regional, although as we know from 9/11 and the more recent Daesh brutality, this is not always the case. 

Everything You Wanted to Know About Brexit but Were Afraid to Ask
This is my own tongue-in-cheek headline and here is Bloomberg’s title for this compilation of 50 articles: Britain’s Brexit Question.

David Fuller's view
I will try to ensure that this is my last pre-referendum posting on Brexit because I imagine we have all heard enough.  I certainly have, in what I think has been a generally low quality debate among politicians offering opinions on this important subject.
However, I will leave you with Brexit the Movie, kindly forwarded by a subscriber. I found it interesting, informative and even amusing.

The Markets Now
Monday 11th July at the East India Club, 16 St James's Square, London SW1Y 4LH

David Fuller's view
Here is the Brochure.  The seminar room is now half full.
I am looking forward to discussing market opportunities with subscribers and their friends at this post-Brexit seminar, held in the comfort of the East India Club.  David Brown will provide new material of considerable interest to long-term investors.  Iain Little will also have some new material, in addition to his review of interesting investment trusts.
Presentations commence at 5:30pm and usually end around 8:30pm, followed by further conversation and refreshments at East India’s cash bar. 

The Little-Known Alibaba Unit That Prompted an SEC Probe
This article from Bloomberg news may be of interest to subscribers. Here is a section:

One issue for the SEC appears to be how Alibaba accounts for Cainiao’s financial performance. Alibaba includes results from Cainiao using the equity method, which counts profits and losses as a proportion of an investment. Considering Alibaba’s high ownership and control over the logistics business, regulators may be asking whether Alibaba should completely consolidate Cainiao into its results, said Paul Gillis, an accounting professor at Peking University’s Guanghua School of Management.
In 2015, Cainiao posted a net loss of 617 million yuan ($94 million) on sales of almost 3.1 billion yuan, Alibaba said. That year, Alibaba recorded its percentage of the loss on its books, $46 million. At the same time, the e-commerce company reported a $128 million gain on investments in Cainiao and other entities.
The gain, which helped offset the operating losses, was probably due to the higher valuation that Cainiao fetched in its latest funding round, according to Sanford C. Bernstein & Co. In March, Cainiao announced its first round of external fundraising, with financing from investors including Temasek Holdings Pte, GIC Pte and Khazanah Nasional Bhd. That gave the delivery network a valuation of about $7.7 billion, Caixin reported, citing people familiar with the matter

Eoin Treacy's view
The issue is not so much with the size or performance of Alibaba’s logistics subsidiary but rather in the opacity with which the company deals with its shareholders. Alibaba is not alone in this regard. Google’s reorganisation and issuance of C shares and Facebook’s reorganisation to ensure Zuckerberg’s control both exemplify a trend toward less shareholder oversight of management decisions. Against that background Alibaba’s governance issues are non-trivial but arguably they are already in the price.

Email of the day on the value of the Subscriber's Audio
I note the recent compliment paid to the audio commentary and definitely agree.

But, when you are trying to promote your service you offer only the comments of the day

I am a relatively new subscriber and did have a break of a year while I was in Norway and very busy. At that time I had not developed the discipline of listening to the audio. I think that is why I left you.

The real benefit of the service, to me at least, is the informative, level and rational audio. I swing between preferring to hear Eoin to missing David. Both styles are valuable.

I think by not offering limited access to the audio "guests" will not grasp the full scope of the service. I know I didn't when I didn't listen much in the first year. Now it's the most informative part.

Eoin Treacy's view
Welcome back to the Service and I’m delighted you discovered the audios. From our analytics we see that about 70% of subscribers listen to the audios on a reasonably regular basis. Many Australian subscribers tell me they listen to it with breakfast or on the commute to work while subscribers in the UK generally wait until the next morning to listen while in the USA it acts as a market wrap which synthesises the day’s action.

David and I both enjoy the expedience and, dare I say, intimacy of recording the audio. The result is both a shorter production time than writing and a more direct message. I agree we should market the benefits of the various parts of the service better and will endeavour to do so.

Oil Erases Gains After Exceeding $50 for First Time This Year
This article by Mark Shenk for Bloomberg may be of interest to subscribers. Here is a section:
Brent for July settlement decreased 12 cents to $49.62 on the London-based ICE Futures Europe after. The contract earlier climbed as much as 1.6 percent to $50.51. The global benchmark crude was at a 15-cent premium to WTI.

"We’re seeing a steady decline in U.S. production, which is going to continue, and outages around the world," said Bill O’Grady, chief market strategist at Confluence Investment Management in St. Louis, which oversees $4.3 billion. "This doesn’t mean we’re going to continue going higher; a lot may be priced in. It was a lot easier being bullish oil with sub-$40 prices than it is near $50."

U.S. crude production dropped for an 11th week to 8.77 million barrels a day, the Energy Information Administration reported Wednesday. Crude inventories slid by 4.23 million barrels last week, exceeding an expected drop of 2 million. Stockpiles at Cushing, Oklahoma, the delivery point for WTI and the nation’s biggest oil-storage hub, fell by 649,000 barrels.

Eoin Treacy's view
Brent Crude Oil has posted an orderly rebound from its January low and has almost doubled in the process. A progression of higher reaction lows is evident with reactions of between $5 and $6 constituting entry opportunities along the way. A reaction of greater than $7 would be required to question the consistency of the advance. Nevertheless the round $50 area represents a psychological level for many investors so it would not be surprising to see prices pause in this area.

Miner Sees Silver Price Surging Ninefold as Global Gadgets Boom
This article by Natalie Obiko Pearson for Bloomberg may be of interest to subscribers. Here is a section:
While long coveted for use in jewelry, coins and utensils, silver is increasingly in demand for its industrial applications. Last year, about half of global silver consumption came from such use, including mobile phones, flat-panel TVs, solar panels and alloys and solders, according to data compiled by GFMS for the Washington-based Silver Institute.

“Silver is not a precious metal, it’s a strategic metal,” Neumeyer said in an interview in Vancouver, where the company is based. “Silver is the most electrically conductive material on the planet other than gold, and gold is too expensive to use in circuit boards, solar panels, electric cars. As we electrify the planet, we require more and more silver. There’s no substitute for it.”

Industrial demand is set to increase, driven by rising incomes and growing penetration of technology in populous, developing nations, as well as thanks to new uses being found for silver’s anti-bacterial and reflective properties in everything from hospital paints to Band-Aids to windows.
“Over the next 10 or 20 years, more and more people are going to be using these devices, and silver is a very limited commodity,” Neumeyer said. “There’s just not a lot of it around.”

Use of silver, including investment demand, coin sales and what goes into inventories to settle trades, has outstripped annual supply of the metal in every year since 2000, according to data from GFMS, a research unit of Thomson Reuters Corp.

Still, not everyone agrees that the world is headed for a shortage of the metal.

“I would tend to disagree that silver is rarer than thought,” David Lennox, a resource analyst at Fat Prophets in Sydney. “Silver cannot be easily substituted but there’s been no need as it’s in abundance. I’d expect the search for silver would intensify and the search for substitutions would happen long before silver got to” $140 an ounce.

Eoin Treacy's view
The uses for silver in the high technology sector are likely to increase over time but the quantity of silver used in each item is likely to decrease. Production efficiencies and the evolving nanotechnology sector where silver will have a great deal of utility help to explain that view. Therefore to postulate prices are going to $140 any time soon would appear wildly ambitious.

Fri, 27 May 2016 08:46:00 +0100
Northland Capital Partners View on the City: Management Resource Solutions, Edenville Energy, Clontarf Energy, Keras Resources, W Resources Management Resource Solutions (LON:MRS) – CORP: Contract & Trading
Market Cap: £3.2m; Current Price: 9.75p

From yesterday: Significant contract win
 MRS announced the award of a new significant contract win to dismantle and demolish the Lyondell Basel Poly Plant refinery, which is in Clyde, New South Wales, Australia. Management alluded to a 6-9 month project which was outside of the scope of usual activity of the business in the outlook statement at the time of the interim results on 15 March 2016.
 The contract will commence immediately and it is anticipated that the dismantling of the plant will take seven months with a further two months to complete the decommissioning phase of the project. The contract has an initial value of A$6m and under the terms MRS will receive an initial payment of A$0.9m followed by monthly progress payments based on key milestones being met during the project. MRS will be responsible for expenses and liabilities which are incurred whilst executing the Contract.
 Furthermore, current trading for the year remains in line with management expectations and the company is in advanced negotiations on a number of other tenders, where further updates will be made at the appropriate time.

NORTHLAND CAPITAL PARTNERS VIEW: It is a good contract win for MRS which demonstrates the ability to win tenders in areas the business was not previously exposed to. As previously alluded to the acquisition of Bachmann not only provides additional scale to the business but also provides the opportunity to tender for larger more diversified projects as displayed with the plant refinery demo project.

Edenville Energy (LON:EDL) – CORP: Power Project update
Market Cap: £2.9m; Current Price: 0.03p

Power plant developers on site this weekend
 Edenville Energy has established a new Tanzanian subsidiary company, Edenville Power Tanzania (EPTL) to advance the power station project.
 The project concept note for the power plant development has been reviewed and accepted by Tanesco.
 The Environmental Impact Assessment (EIA) registration and Project Brief have been submitted
 The Company is in discussions with several power plant developers that could fund the pre-construction costs, as well as, part of the construction costs. A site visit is taking place with two of the groups
NORTHLAND CAPITAL PARTNERS VIEW: Edenville Energy has made significant progress in advancing the Rukwa Coal to Power Project, located in Tanzania. The next steps for the Company as it moves towards commercialisation is the submission of the EIA and all eyes will be on the financing discussions that appear to be making good progress with an imminent site visit.

Clontarf Energy (LON:CLON) – CORP: FY15 results
Market Cap: £1m; Current Price: 0.2p

LBT decreases to £0.2m
 LBT decreased to £204,537in FY15 from £274,196 in FY14.
 Net debt totalled £632,905 in FY15 up from £393,308 in FY14.
NORTHLAND CAPITAL PARTNERS VIEW: In Ghana, Clontarf has submitted a proposal on an alternative deep water block as a potential resolution the court proceedings on its Tano 2A Block. These applications were lodged in 2016 and are being examined by the authorities. Significant historic work has been completed at the Block including 3D seismic and four wells defining the primary target on this Block is the Turancian reservoir section. Clontarf will commence a detailed analysis of the historic data once the title is granted, signed and ratified.

Keras Resources (LON:KRS) – CORP: First payment received
Market Cap: £15.5m; Current Price: 1.2p

Keras receives first payment from the ore processed at Grants Patch
 Keras Resources has received the first payment for the gold ore processed at the Paddington Mill.
NORTHLAND CAPITAL PARTNERS VIEW: Keras Resources has received the payment is for ore extracted from the Anomaly 22 deposit, located on the Grants Patch Gold Tribute lease area.

W Resources (LON:WRES) – BUY*: FY15 results
Market Cap: £17.8m; Current Price: 0.46p; Target Price: 1p

LBT remains level at £0.6m
 LBT remained level at £0.6m in FY15 from FY16 but below our forecasts of £0.7m.
 Net debt reduced to £0.3m in FY15 compared to £2.1m in FY14 and a significant improvement on our forecasts of £2.8m.
 Forecasts updated, rating and price target maintained.

NORTHLAND CAPITAL PARTNERS VIEW: W Resources made large strides towards the development of the hard rock La Parrilla Tungsten project in 2015 and despite the large amount of work involved the LBT remained relatively low. 2016 will see the completion of the V2 feasibility study for the project and maiden hard rock production for the Company.

Fri, 27 May 2016 08:36:00 +0100
Beaufort Securities Breakfast Alert: United Utilities, Pets at Home, Advanced Oncotherapy, Daily Mail & General Trust, Mariana Resources Markets
The FTSE-100 finished yesterday's session 0.04% higher at 6,265.65, whilst the FTSE AIM All-Share index closed 0.12% better-off at 734.38. In continental Europe, markets ended in the green, led by a rally in commodity shares, as Brent Crude Oil prices touched US$50 per barrel and copper prices improved. Moreover, gains in auto stocks offset losses in banking stocks. Germany's DAX and France's CAC 40 gained 0.7% each.
Wall Street
Wall Street ended broadly unchanged in a thin volume trading session. Energy shares were under pressure after oil prices failed to sustain the peaks achieved during yesterday's trading session. Investors awaited comments from Fed Chair Janet Yellen on possibility of an interest rate hike. The S&P 500 closed flat with the materials sector losing the most and utilities leading the gainers.
Equities are trading higher, as investors await US economic data and comments from Fed Chair Yellen. The Nikkei 225 rose 0.4% on hopes of additional stimulus from the Bank of Japan after a fall in consumer price index in April. The Hang Seng was trading 0.7% higher at 7:00 am.
Yesterday, Brent and WTI oil prices declined 0.3% and 0.2%, respectively. The spread between the two varieties stood at US$0.1 per barrel.

UK consumer confidence improves in May
As per GfK, consumer confidence index rose to -1 in May from -3 in April, the weakest since December 2014, beating the market expectations of a reading of -4. The sentiment is negatively impacted by vote on Brexit on 23 June 2016.

Company news

Advanced Oncotherapy (LON:AVO, 7.50p) - Speculative Buy
Advanced Oncotherapy, the developer of next-generation proton therapy systems for cancer treatment, yesterday announced that it has signed an agreement with a fund advised by Metric Capital Partners LLP, a pan-European private capital fund manager, whereby Metric Capital will invest £24 million in a financing facility to support AVO's provision of vendor financing for the installation of the Group's first LIGHT machine in Harley Street. Funding for this clinic, the London Proton Therapy Centre Limited, will come from AVO and its partners in equal amounts in the form of equity totaling £6 million plus the provision of a vendor loan arranged by Advanced Oncotherapy to LPTC. The Agreement is subject to customary representations and undertakings. AVO will pay a cash interest of 250 basis points per annum above 3 month LIBOR (subject to a minimum LIBOR of 150 basis points) payable quarterly and payment in kind ('PIK') interest of 850 basis points payable at maturity or convertible into ordinary Advanced Oncotherapy shares at 10p per Ordinary Share (subject to customary adjustments for convertible instruments). In addition, the Company has agreed to issue to Metric Capital each year during the life of the Agreement warrants over 14.5 million Ordinary Shares exercisable at 16p per Ordinary Share. The Agreement has a term of 5 years and requires any future equity capital injections to be carried out on terms similar to or better than the conversion rights of the PIK interest described above. Of the £24 million financing, £11 million will be received shortly following signing. The second tranche of £13 million will be available for drawdown on completion of a £25 million cash or capital injection to fund the development of a manufacturing base. Should these milestones not be achieved by the end of March 2017, the initial £11 million tranche will become repayable by September 2017. Metric Capital will have the right to consent to certain reserved matters and the right to appoint a director to the Board of both Advanced Oncotherapy and LPTC and, in certain circumstances ADAM SA, a wholly owned subsidiary of Advanced Oncotherapy.

Our view: This is significant and important news for AVO. Not only does it tell us that a senior institutional lender has taken a very close look at the Group and concluded that LIGHT is viable and that its expect its first installation in Harley Street to rapidly become capable of generating strong cash flow, but also that AVO is both sufficiently confident and advanced in its planning to establish a general provision of vendor financing for its prospective international customers. Such proton beam centre financing routes are already routinely used by first generation suppliers to provide the facilities demanded by hospitals and medical practitioners around the globe, so in this respect this is a natural step forward. Moreover, given that AVO is sticking rigidly to its development schedule, whereby the first commercial sales of LIGHT should begin in 2017 whereafter they are expected ramp up in response to significant demand, this facility is likely to become actively used. As has been explained in numerous research documents, Beaufort's commercial scenario for LIGHT is that the cost, safely, operational and size advantages its brings to the world of proton therapy, will effectively render 'first generation' systems all but obsolete; its development will also very significantly expand the international market for such systems from some US$2.5bn annually right now, to a figure potentially ten-times as large as LIGHT becomes the obvious successor to the similarly-priced but now relatively antiquated X-ray radiation systems that have a global installed base in excess of 20,000 units. In this respect, LIGHT uniquely faces a giant and accelerating global opportunity. Beaufort remains a very enthusiastic supporter of Advanced Oncotherapy and repeats its Speculative Buy recommendation on the shares.

Beaufort Securities acts as corporate broker to Advanced Oncotherapy plc

Daily Mail & General Trust (LON:DMGT, 664.0p) - Buy
Yesterday, Daily Mail & General Trust (DMGT) declared its half-year results for the six months ended 31st March 2016 (H1 2016). During the period, revenues increased 3% to £950m on a reported basis. Operating profit fell 8% to £138m. Pre-tax profit slipped 11% to £129m, leading to an EPS of 27.9p, 11% lower than the H1 2015 levels. Net debt increased by £17m to £719m, while net debt/EBITDA ratio stood at 2.0. On the operational front, the company made acquisitions worth £20m and disposals totalling £112m. The company announced the retirement of Chief Executive Martin Morgan's retirement and appointment of Paul Zwillenberg, effective 1st June 2016. DMGT declared an interim dividend of 6.7p compared with 6.5p in H1 2015, to be paid on 2nd July 2016.

Our view: DMGT delivered satisfactory performance in H1 2016, negatively impacted by the weak print advertising market. The first half results were positively influenced by the Gastech event and a stronger US dollar relative to sterling. The company's B2B business led the growth and generated 76% of the operating profit. Daily Mail continued its portfolio management activity throughout the period. The company acquired stake in many firms including ETSOS, PAR Framework, Exhibition Management Services and LivingSocial. The acquired companies are functioning in diversified fields and are expected to enhance Daily Mail's prospects in terms of offerings and access to a range of customers. In addition, DMGT disposed some of its non-performing segments to improve its margins. We remain concerned about DMGT's print advertising segment. Nonetheless, we are confident about the company's prospects owing to growth in other divisions and continuous initiatives to enhance its portfolio. Therefore, we maintain a Buy rating on the stock.

Mariana Resources (LON:MARL, 3.75p) - Speculative Buy
Yesterday, Mariana Resources provided an update on the ongoing diamond drill program at the high grade Hot Maden project in Turkey. The company confirmed high-grade gold–copper mineralization in the chalcopyrite–pyrite-bearing breccia from 262m downhole in hole HTD-52, 140m downdip of the discovery hole HTD-4 intersection. This new extension lies outside the current mineral resource model. Mariana received exceptional gold–copper assays from exploration drilling in the southern target area, located 400m south of the existing resource area and within the northern extension to the pre-1923 vein mining area.

Our view: The aforementioned exploration and drilling results at the Hot Maden project continue to intersect new gold–copper and zinc mineralisation. The hole HTD-52 has confirmed the presence of deeper resource extension below discovery hole HTD-04 and that holes HTD-51 and HTD-53 have showcased further potential to the south in the new discovery area. Mariana observed multiple high-grade quartz sulphide vein and veinlet zones towards the South. The company plans to target this area for exploration owing to the presence of high-grade mineralisation. We are buoyed by Mariana's exploration results and await further updates. Therefore, we maintain a Speculative Buy rating on the stock.

Pets at Home (LON:PETS, 261.60p) - Buy
Pets at Home, the UK's leading specialist retailer of pet food, pet accessories, veterinary and grooming services, yesterday announced its preliminary results for the 52 weeks ended 24 March 2016 ('FY2016'). During the period, Group revenue advanced +6.7% to £777.8m, comprised of +4.6% increase in merchandise revenue to £696.5m and +29.2% growth in services revenue to £81.3m, against comparable period (FY2015). Like-for-like ('LFL') revenue growth for the Group was +2.2% during the period, comprised of +1.5% and +10.4% LFL growth in merchandise and services, respectively. Gross margin improved by +0.3% to 54.5%, resulting statutory pre-tax profit increased by +3.7% to £90.2m. Consequently, basic earnings per share jumped +11.2% to 15.1p per share. Free cashflow stood at £77.8m and net debt was -£155.8m at the period end. On the operational front, VIP club members jumped by +40.6% to 4.5m, while VIP card swipe rate (as % of revenue) stood at 64%. The Group opened 20 Pets at Home superstores, 6 Barkers stores and 1 Whiskers 'n Paws trial format, 50 veterinary practices and 60 grooming salons, in line with its targets. The Group also acquired 2 specialist veterinary referral centres during the period and additional 2 post the year end. Pets at Home's CEO, Ian Kellett commented "We have enjoyed 25 very successful years as a business and enter our 26th year confident in the future. The pet market has proved over time to be more resilient than general retail, so whilst consumer confidence may be more fragile, we believe our drive to become more specialist and most loved by customers will deliver further progress". The Group proposed a final dividend of 5.5p per share, bringing full year dividend to 7.5p per share, up by +39%.

Our view: Shareholders cheered Pets at Home's strong results for FY2016, which demonstrated good financial and resilient LFL revenue growth. The management's confidence in the Group is well reflected in the +39% hike in full year dividend, representing 50% payout ratio which it intend to maintain for the FY2017. The Group expanded its VIP club members to 4.5 million, of which, 3.3 million of them are active members (those who have used their card in last 12 months), through tailored offers of products and services along with improved club member engagement, which continued to provide support to LFL growth. Looking ahead in FY2017, the Group targets opening a further 15-20 Pets at Home superstores, 45-55 vet practices and 50-60 grooming salons. The management expect gross margins to come under pressure primarily due to direct cost impact of National Living Wage (c.+£2m) and weaker Sterling, given that the Group increasingly sources significant level of purchases in US Dollar. The guidance for capital investment of c.£45m (including exceptional investment of £5m as part of a £8m two year energy saving project) was set, while maintaining 1.5x net debt/EBITDA or 1.75x in case of acquisition/investment. Trading so far in FY2017 remains in line with expectations. The Group's ongoing strategic investments in seamless shopping to enhance its system and website, together with growing loyalty scheme, should support merchandise sales (which enjoys a higher 57% gross margin) in the medium to longer term. Recognising the Group's performance, management confidence and its ongoing investment plans, Beaufort reiterates its Buy rating on the stock.

United Utilities (LON:UU., 955.0p) - Buy
Yesterday, United Utilities declared its results for the year ended 31st March 2016 (FY 2016). During the period, revenues remained broadly flat at £1.7bn. The underlying operating profit fell 9% to £604.1m. Consequently, pre-tax profit decreased by £39m to £408m, leading to an EPS of 47.7p compared with 51.9p in the previous year. Net debt at the end of period stood at £6.3bn. United Utilities accelerated its investment plan, with £799m invested over 2015–16. The company achieved £2.5m net reward on outcome delivery incentives (ODIs). United Utilities has proposed a final dividend of 25.64p, taking the full year dividend to 38.45p, up 2% year-on-year.

Our view: United Utilities delivered good performance in FY 2016 despite new regulated price controls. The company performed well in the operational and environmental areas, benefitting from the systems' thinking operational approach and improved resilience of the network. United Utilities made improvements in several areas including reduction in pollution incidents, achievement of net reward for ODIs and 75% reduction in customer complaints over 2010–15. The company boasts of a robust capital structure with gearing of 61%, within its target of 55–65%. United Utilities has started the 2015–20 investment program on a positive note, with plans to accelerate the program to maintain and improve services for customers and deliver environmental benefits. Moreover, the company retained its world-class rating in the Dow Jones Sustainability Index for the eighth consecutive year, again achieving industry leading performance status in the multi-utility/water sector. United Utilities maintained its dividend policy of targeting an annual growth rate of at least RPI inflation until 2020. In light of the company's progress in FY 2016, we maintain a Buy rating on the stock.

Economic news
US initial jobless claims
The number of Americans that filed their first initial claims for unemployment benefits declined 10,000 to a seasonally adjusted 268,000 for the week ended 21st May, the Labor Department stated yesterday. Economists had forecasted a reading of 275,000. Meanwhile, the four-week moving average of continuing claims rose by 2,750 to 278,500 last week. /p>
US durable goods orders
US durable goods orders increased 3.4% in April, following a revised increase of 1.9% in March, the Commerce Department said yesterday. Excluding orders for transportation equipment, durable goods orders rose 0.4% in April.

Fri, 27 May 2016 08:24:00 +0100
Will Yellen add fuel to the fire? FTSE 100 called to open +5pts at 6270, holding on to its 6245-6280 range - extending it to 2 days - which bodes well in terms of consolidation of the recent rally and the Bulls keeping hold of the reins for a bullish flag breakout to 2016 highs of 6430. It also keeps us on track for completion of the final leg of May’s bullish triple-bottom reversal pattern to 6360. We are still watching for a break to send us one way or the other. Watch levels unchanged: Bullish 6285, Bearish 6240.
The positive opening call comes thanks to a positive Asian session as sentiment improved overnight in the wake of a lacklustre US close. The backtrack in oil below $50 and some nerves ahead of Janet Yellen’s speech may have held US bourses back, but poor prints for Japanese inflation (still deflation actually) and a slowing in Chinese Industrial Profits growth, coupled with G7 comments, may have buoyed optimism about more stimulus.
Japan’s Nikkei higher on the prospect of a delayed sales tax hike and more stimulus after inflation data remained ugly (deflation). A softer US dollar is also helping metals prices and miners, offsetting energy sector weakness from the oil price drop back below $50. Australia’s ASX performing in-line with Japan and China.
US markets were largely flat with the Dow and S&P marginally down and the NASDAQ up a smidge. Energy names engaged in a bit of volatility as the oil price reversed back below the psyche $50 level. Fed governor Powell said he was up for a rate hike pretty soon, yet wasn’t sure about June just yet - more data needed, but at the moment the trend is a positive one after Durable Goods Orders, Initial Jobless Claims and Pending Home Sales beat expectations.
We can stomach a miss on Continuing Jobless Claims, since the US labour market has long proved itself resilient enough for the FOMC. So we’re still ‘rate hike positive,’  which has potential to weigh at least on the US into the weekend, especially if the USD Basket bounces up out of its current area of support at 95. This also likely to hamper commodity prices.
Indeed, Oil has already come back from its trip north of $50 as markets perhaps begin pricing in a forthcoming economic growth-checking bit of action from the US central bank. There’s also the issue of a forthcoming OPEC meeting on 2 June, at which it’s increasingly impossible that any kind of production freeze will be actioned - not only because it’s logically impossible anyway, but because the oil price has rallied  80% from its January lows.
Gold made an 8-week low in Asian trade but has since tentatively regained support at $1220. Still a slave to the USD, technicals and sensitive to US rate hike expectations.
In focus today will likely be Fed Chair Yellen’s speech after the European close, especially after her colleagues (mostly non-voters) were out in force this week swaying expectations about a Summer rate hike. Note, however, Yellen is only receiving an award from Harvard so may well swerve explicit mention of US monetary policy to avoid adding fuel to the fire.
Watch early trading for digestion of Chinese Industrial Production and Japanese inflation readings published overnight and their bearing on PBOC/BoJ policy/stimulus expectations.
In terms of data during the trading day, watch out this afternoon for the second read on US Q1 GDP. Given the sharp slowdown reported in the first estimate (0.5% vs 1.4% in Q4) and consensus hopes for a near doubling (to 0.9%) for the second estimate, this could well have ramifications on US Summer rate hike speculation.
Note expectations for an acceleration in US Personal Consumption growth, backing up that jump in Consumer Confidence we saw two weeks ago and this week’s strong housing reports. GDP inflation data is also seen confirming preliminary estimates while it will be interesting to see whether the Uni of Michigan Consumer Sentiment manages to hold up after the aforementioned jump higher two weeks ago.
As always the US Baker Hughes Rig Count is of interest after the European close for clues about whether US producers (Shale/Frackers) are coming back online thanks to a higher and more viable oil price. Or are we still seeing rigs being mothballed and US production on the wane, helping with the global supply/demand rebalancing?

Fri, 27 May 2016 08:23:00 +0100
In the news: Antrim Energy ANTRIM ENERGY*†
CVE:AEN | C$0.025 | US$3.6m | Speculative Buy
1Q16 Results
Antrim Energy has announced its financial results for the three months to 31 March 2016. The company remained bolstered by a comfortable working capital cushion of US$9.2m at the end of the period, including cash and equivalents of US$9.4m. It also benefits from a debt-free balance sheet and satisfied its North Sea well abandonment obligations in 3Q15. With a market cap of just US$3.6m, the company therefore has an EV of US$(5.8)m. The cashflow used in operations for the period (excluding forex losses) was US$0.3m; in addition to this, the strengthening C$ vs. US$ drove a forex loss of US$0.6m, bringing total operating cashflow to US$(1.0)m. To maintain balance sheet strength the company is continuing to focus on managing the G&A base and implementing cost cutting initiatives where possible.
COMMENT: Corporately, identifying a strategically aligned M&A deal providing current or near-term cashflow remains a priority for Antrim, with the company continuing to review opportunities in the space actively; key criteria for such a transaction would include viability in the ongoing supressed oil and gas environment.
Operationally, Antrim is continuing to seek an extension to the first exploration term on Irish licence FEL 1/13 (due to expire in July 2016) by a further two years, which would be associated with an additional technical work programme. Since the company is to assume a 100% interest in the licence following Kosmos’ withdrawal, it is seeking a farm-in partner to assume operatorship during this extension period, which it hopes would then provide a carry on an initial exploration well on the acreage. Encouragingly, as a barometer for interest in frontier exploration in the region, in February 2016 the first round results for the Ireland 2015 Atlantic Margin Licensing Round were announced: 14 new licensing options were awarded, with successful participants including majors such as ExxonMobil, Eni, BP and Statoil.

100% interest in FEL 1/13, subject to finalisation and government approval of the transfer of Kosmos’ interest — Following Kosmos’ withdrawal from its Irish interests in order to focus more specifically on its African exploration portfolio, Antrim will become operator of the acreage at no additional cost. Kosmos farmed into the licence in 2013, taking over operatorship and carrying the full costs of a 3-D seismic programme, in addition to reimbursing a portion of prior exploration costs incurred by Antrim.
Antrim had previously announced an aggregate summary of unrisked gross best estimate prospective resources for the 17 independent leads evaluated within FEL 1/13 — These were 260MMbbl of oil, 4.7Tcf of gas and 87MMbbl of condensate. The two largest leads (‘C’ and ‘M-3’) represent 43% of the total unrisked property best estimate prospective boe resources: 126MMbbl of oil, 1.9Tcf of gas and 35MMbbl of condensate. Prior to the notice to withdraw, Kosmos had prepared a prospect inventory, highlighting three prospects (two tilted fault blocks and a submarine fan), one of which has yet to be reviewed independently.

Thu, 26 May 2016 13:05:00 +0100
JP Morgan Cazenove taps into Severn Trent's upside potential Thu, 26 May 2016 12:01:00 +0100 Today's Market View Including: Atalaya Mining, Savannah Resources, Tertiary Minerals, Xtract Resources Atalaya Mining (LON:ATYM) – Expansion to 9.5mtpa rate expected to be reached in Q3 2016
Savannah Resources (LON:SAV) – Gravity survey in Oman
Tertiary Minerals* (LON:TYM) – £500,000 placing and interim results
Xtract Resources (XTR LN) – Sale of Manica for US$17.5m

China tightening oversight on commodity futures trading
• China is moving to clamp down on commodity speculation in its futures markets while avowing to open up commodity-derivatives to offshore investors and become a price maker for global market
• We wonder how the authorities might react to rampant speculation by US and other investors

UBS says Small cap mining is the next hot sector
• The Sydney Morning Herald report UBS’s smaller companies fund team in Australia as forecasting Small Cap Mining to be the next hot sector.
• The portfolio manager reckons miners that have managed to make it through the savage downturn following the nation's biggest mining boom are now poised to reap the benefits of their survival skills.  That mining companies have spent the past five years cutting the fat and creating efficiencies and are becoming attractive buying opportunities and that demand for commodities has stabilised.
• "What we've seen over five years or more is a huge increase in efficiency”

Myanmar – pit collapse at illegal mine kills 13 at Jade mine
• We are reminded of the dangers of illegal mining all too often with news of another 13 killed in an illegal mine in Myanmar.
• The pit was several hundred feet deep and remains unstable hampering rescue efforts.
• Last November more than 100 mine workers were buried as they slept as a landslip of mine waste submerged their accommodation followed by another 13 killed in a further landslide in May.

Volvo launches driverless underground truck
• Volvo has launched a driverless truck suitable for underground work developed in joint venture with Boliden.
• The automation should eventually lead to higher utilisation rates, lower capital and working capital costs and better health and safety figures.
• The trucks are still being trialled with a real mine pilot trial in the Autumn. 

Lithium - ETF
• ETFs have proved hugely popular for investors looking for exposure to gold, silver and other metals but speciality metals like Lithium are less easy to acquire.
• Global X offers a Lithium ETF backed by shares in Lithium producing companies with holdings in Rockwood and SQM.

Dow Jones Industrials                         +0.82% at          17,852
Nikkei 225                                            +0.09%  at          16,772
HK Hang Seng                                     +0.14%  at          20,397
Shanghai Composite                           +0.26%  at            2,822
FTSE 350 Mining                                  +2.37%  at           9,162
AIM Basic Resources                           -0.90% at            1,882

Economic News
Oil prices together with a correction in the US dollar index led gains in global equities yesterday with US and European equities trading close to one month highs.
• Brent contract passed the US$50/bbl mark for the first time this year having recorded a 34% increase YTD and 85% gain since lows seen in Jan/16.
• Oil price were buoyed by the American Petroleum Institute report showing US oil stockpiles dropped 5.1mmbbl, while analysts forecast a 3.3mmbbl fall.
• A separate report showed US crude inventories came down by 4.2mmbbl to a total of 537.1mmbbl (EIA).
• US crude production decline for an 11th week to 8.77mmbbl per day marking the lowest level since Sep/14.
• Weaker US currency supported the base and precious metals’ complex:
o Gold is up this morning after hitting a nearly two month low yesterday;
o Copper has briefly crossed the US$4,700 mark this morning and is up 0.9% today.

US – Services industry growth slowed in May registering the lowest reading since Feb/16.
• Markit Services PMI: 51.2 v 52.8 in Apr and 53.0 forecast.
• Markit Composite PMI: 50.8 v 52.4 in Apr.
• Combined with poor manufacturing PMI released earlier this week (50.5 v 50.8 in Apr), the composite index came down to the lowest level in three months.
Date Index Period Actual Expected (Bloomberg) Previous
Monday Markit Manufacturing PMI May 50.5 51.0 50.8
Tuesday New Home Sales Apr 16.6%mom 2.4%mom -1.3%mom
Wednesday Markit Services PMI May 51.2 53 52.8
  Markit Composite PMI May 50.8   52.4
Thursday Weekly Jobless Claims   275k 278k
Durable Goods Orders   0.5%mom 0.4%mom
Durable Goods Orders (Core)   0.3%mom -0.3%mom
  Capital Goods Orders (ex Air)     0.3%mom -0.8%mom
Friday Q1 GDP (2nd reading)   0.9%qoq 0.5%qoq (1st reading)
  Core PCE (2nd reading)     2.1%qoq 2.1%qoq (1st reading)
Source: Bloomberg   

UK – The economy expanded at 0.4%qoq, matching initial estimates.
• Private consumption led growth climbing 0.7%qoq, the fastest pace in almost a year, and offsetting softer exports (-0.3%qoq) and business investment (-0.5%qoq).
• Services industry expanded at 0.6%qoq, while industrial production and construction fell.
• On the YoY the economy climbed 2.0%, revised from an earlier estimate of 2.1%.

France – The government was forced to tap into strategic petrol reserves on the back of continuing protests at the nation’s eight oil refineries amid proposed new labour bill.
• The government is estimated to hold around three months of reserves that could be used if needed.
• Of the 12,000 petrol stations in France, 4,000 were empty on yesterday, up from 300 on Tuesday.
• In addition, to oil refineries strikes are held at nuclear power plants with some unite reported to have been drawn to a halt by the hard-line leftist CGT union supporters.
• Given an open-ended national train and metro strikes scheduled for next week, many fear the Euro 2016 running through Jun 10 and Jul 10 might be affected.
• Union leaders have already stated that “workers come before football”.
• The bill is attempting to loosen the French labour market by easing rules for employee’s dismissal and promote more mobility in the sector.

Australia – Business investment contracted 5.2%qoq in Q1/16 with the gauge having recorded five negative readings in the last six quarters.
• Poor start to the year in private capital expenditures suggests growth will continue to be driven by public and private consumption this year.
• Business investment: -5.2%qoq v 1.8%qoq (revised up from 0.8%qoq) in Q4/15 and -3.5%qoq forecast.
• The currency dipped to 0.7162 around the time of the news release but has recovered since then and is trading around 0.7200.

Kazakhstan – Authorities are planning to gross more than US$6bn for one of the biggest privatizations in the nation’s history as state budget feels the pressure from low commodity prices.
• The programme involves 173 smaller assets and 44 companies of “national scale”, according to the Kazakhstan’s sovereign wealth fund Samruk-Kazyna.
• Seven deals including the sale of KazMunaiGaz National (an oil and gas producer), Kazatomprom (a uranium producer) and Kazakhstan Temir Zholy (a railway monopoly) will be made via IPOs.

US$1.1176/eur vs 1.1144/eur yesterday.   Yen 109.98/$ vs 110.24/$.   SAr 15.615/$ vs 15.650/$.   $1.468/gbp vs 1.464/gbp
0.721/aud vs 0.719/aud.   CNY 6.559/$ vs 6.562/$ –

Commodity News
Precious metals:
Gold US$1,227/oz vs US$1,224/oz yesterday – Venezuela continues to sell down its gold reserves amid collapsing FX oil revenues.
• The nation sold 16% or 1.4moz of its reserves in Q1/16 making it the largest sovereign seller fo the precious metal, according to the IMF.
• This come on top of the 24% reduction in 2015.
Gold ETFs 59.3moz unch v 59.3moz yesterday – unch
Platinum US$1,002/oz vs US$1,002/oz yesterday –
Palladium US$541/oz vs US$536/oz yesterday –
Silver US$16.38/oz vs US$16.26/oz yesterday –
Base metals:   
Copper US$ 4,693/t vs US$4,627/t yesterday -
Aluminium US$ 1,555/t vs US$1,551/t yesterday
Nickel US$ 8,400/t vs US$8,395/t yesterday –
Zinc US$ 1,871/t vs US$1,836/t yesterday
Lead US$ 1,653/t vs US$1,655/t yesterday
Tin US$ 15,750/t vs US$15,655/t yesterday
Oil US$50.0/bbl vs US$49.4/bbl yesterday
Natural Gas US$1.965/mmbtu vs US$1.982/mmbtu yesterday
Uranium US$27.90/lb vs US$28.15/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$46.9/t vs US$48.3/t –
Steel – The EU may place new anti-dumping tariffs on Chinese steel shipments.
• A number of steel associations urged the G7 economies that meet in Japan this week to harden their stance on cheap steel imports from China.
• The US has also put a 450% duty on Chinese corrosion resistant steel as well as 3-92% duties on similar steel from Italy, India, South Korea and Taiwan
Thermal coal (1st year forward cif ARA) US$48.6/t vs US$47.4/t yesterday –

Tungsten - APT European prices stood at $213-225/mtu vs $215-225/mtu

Company News

Atalaya Mining (LON:ATYM) 93.5 pence, Mkt Cap £109.9m – Expansion to 9.5mtpa rate expected to be reached in Q3 2016
• Atalaya Mining reports that “Based upon the considerable progress made during the commissioning of the Expansion, the Company anticipates that production ramp-up to the full rate of 9.5Mtpa will be achieved during Q3 2016, earlier than anticipated. “
• Copper production during the quarter amounted to 4048 tonnes, with March production, described as the “first month of normalised production” since the formal declaration of commercial production on 1st February, amounting to 1,465 tonnes. Production is continuing to build up with 1,373 tonnes produced during the first 20 days of April “before the tailings discharge was provisionally suspended by the Junta de Andalucia.” The suspension has now been lifted.
• Cash costs in the two month of commercial production (February & March) amounted to US$2.20/lb and “the Directors expect these to improve as production progresses from the ramp-up phase through to steady state production of 9.5 Mtpa”
• The company reports that “Total capital costs have been kept under control and are expected to come in below the revised budget of US$164 million for both Phase I and the Expansion. “  Atalya points out that this brings the Rio Tinto project in as “one of the lowest capital intensity projects in the world”, however, as a reopening of a former mine this should be expected compared to greenfields development. Even so, management has delivered a substantial new copper producer moving relatively seamlessly through an expansion programme now expected to come in ahead of schedule in Q3.
• Sales of copper during the ramp up phase since commercial production amounted to 1617 tonnes generating €4.9m net of deductions for offtake and penalties and resulting in a loss for the quarter of €3.1m and an EBITDA loss of €2.5m. Reduction of costs as the ramp-up builds up and elimination of penalty elements in the concentrate is expected to turn these losses around.
• Cash at 31st March amounted to €11.8m.
Conclusion: Atalaya has brought the Rio Tinto operations back to production under budget and ahead of schedule. Production is ramping up and management is predicting a further decline in costs to below the US$2.20/lb achieved during the first two months of commercial production.

Savannah Resources (LON:SAV) 3.3 pence, Mkt Cap £12.8m – Gravity survey in Oman
• Savannah Resources has announced the completion of 3 gravity surveys within its Block 4 and Block 5 licence areas in Oman.
• The results of the survey are expected in June and are likely to further refine the definition of drill targets  within areas already defined by electro-magnetic surveys and limited drilling.
• Meanwhile, the previously announced drilling programme at the Maquail South and Mahab 4 prospects in Block 5 and the Dog’s Bone prospect in Block 4 “is continuing as planned”.
Conclusion: We look forward to the results of the gravity programme and further news from the drilling in due course.

Tertiary Minerals* (LON:TYM) 1.4p, Mkt £2.9m – £500,000 placing and interim results
• Tertiary Minerals reports that it has raised £500,000 through the placing of 50m new shares at 1p/share. The funds are to be used for further work on the MB project in Nevada, including the advancement of the scoping study and economic modelling, additional metallurgical work and permitting as well as work on the appeal over the Storuman Mine Permit in Sweden.
• The company held a cash balance of £287,000 at 31st March suggesting that post- the fundraising, the company should have adequate funding to complete the tasks highlighted above.
• In addition, the company has released its interim report for the six-month period ending 31st March 2016 revealing an operating loss of £220,000 (2015 loss of 223,000)
• The Phase 4 drilling programme (4 holes totalling 1,553m) at MB has now been completed and despite encountering further fluorspar mineralisation, the deposit remains open both at depth and along strike.
• The main intersections reported today include an aggregated interval of 89.91m at an average grade of 12.02% calcium fluorite from a depth of 120.4m in borehole 15TMBRC036 in the western part of the deposit.  The aggregate total included 8 significant fluorspar intersections of which six reported grades above 15% of which the company highlights 31.99m at an average grade of 16.74% from a depth of 150.88m.
• Other intersections, also from the western area included 22.86m at an average grade of 11.47m from a depth of 74.68m in hole 15TMBRC038 and 137.16m at an average grade of 11.54%  from a total of 16 intersections starting from a depth of 53.34m in hole 15TMBRC039 with a single reported interval of 32m grading 15.81% nfrom a depth of 185.93m.
• Conclusion Tertiary Minerals has continued to intersect multiple fluorspar beds in its drilling in the western part of its MB project in Nevada. Although not all of up to 16 individual horizons intersected in recent drilling may ultimately prove to be economic, the company continues to extend the area of known mineralisation and is likely, in due cource, to be able to expand the already defined indicated resource of 6.1mt at an average grade of 10.8%CaF2 and inferred resource of 80.3m tonnes grading 10.7%. The recent fundraising should help to keep the project moving forward.
*SP Angel act as Nomad and broker to Tertiary Minerals

Xtract Resources (LON:XTR) 0.2 pence, Mkt Cap £17.0m – Sale of Manica for US$17.5m
• Xtract Resources has announced that it has reached a conditional agreement to sell its Manica gold project in Mozambique to Nexus Capital and Mineral Technologies Inc for US$17.5m in cash.
• The deposit was acquired with a JORC resource of around 950,000 oz of gold (9.1mt at a grade of 3.1g/t) suggesting that Xtract ids selling the project for around $18.50/oz of resource.
• Xtract acquired the project in June 2015 from the ASX company, Auroch Minerals, for a total of US$12.5m.  The company has been working on a feasibility study to develop the deposit at a rate of around 50,000 oz pa of gold production and the study was expected to “be completed in Q2 2016, with mine construction planned  to commence in Q4 2016 and first production in Q4 2017. Mining of the alluvial gold deposit is planned for Q3 2016.”
• As part of the transaction, Xtract Resources is required too deliver the BFS to the purchaers by 30th June 2016 or face a reduction of US$1m in the purchase price.
• Initial indications are that the capital cost will be around US$35m to develop the mine and this “would be highly likely to result in material dilution for Xtract's shareholders.”
• The additional funds realised by the sale of Manica allow “Xtract to focus on the Chepica mine in Chile” and strengthen the company’s balance sheet
Conclusion: Excluding the post-acquisition expenditure on the feasibility study, Xtract is realising 40% on its investment in Manica in less than a year. It appears that management considered that harvesting a profit now was a better solution than seeking to raise the US$35m of capital to develop the mine and that the funds can be better employed on the less risky development of its Manica mine in Chile.

Thu, 26 May 2016 10:39:00 +0100
Falcon Oil & Gas, Sundry, Amec FW, Savannah- And finally... Oil price
Brent has climbed through $50 this morning and WTI is not far behind it. The big question is, will this encourage producers, particularly in the US to open up their DUC’s and start producing again? Yesterday was all about the inventory stats from the EIA which to a certain extent mirrored the API numbers. Crude drew by 4.2m barrels, well above the 1.67m guess from the boys in short trousers and also drew at Cushing which is also good. In products there was also another unexpected build in gasoline of 2m barrels and again like the API, distillates showed a draw. The market wasnt sure what to make of it, first it wobbled then it firmed, the news from Chevron of further trouble in Nigeria tipped it over the edge and this morning Brent is over the magic $50 level in all its glory.
This is no time to gloat however, fundamentals are still negative and being bailed out by the wild card of recent outages, next week sees the start of the driving season so the gasoline stocks will be under scrutiny and of course there is an Opec meeting on Thursday which I will talk about tomorrow.
Falcon Oil & Gas
First quarter numbers today which are irrelevant as is the change of address card re their Dublin office. Indeed, news that they are in advanced stages of preparation for drilling at Beetaloo  in a 2-4 well possible campaign is good news and this confirmation should stir excitement amongst its shareholders. Falcon are carried through this programme and with no debt and cash of $11.9m have the odds very much on their side. Elsewhere progress is being made in South Africa and this still remains a live and potentially exciting part of the portfolio. One doesnt normally get excited about an AGM but FOG’s one in Calgary on 21st June may be more interesting than most. I hope to be able to bring more news on this soon but the AAPG conference is in town that week and I hear that Origin are presenting on their Beetaloo prospects, watch this space…
The trade press is reporting a decent contract won by Amec FW for FEED work for the Kuwait Oil Company.
And Savannah has reported figures but having being suspended since January the market could rightly assume nothing until this mystery deal is finally announced…
And finally…
The weekend is full of exciting sport but this week has shown a paucity unless you take an interest in the special one’s image. Over in Paris amongst striking refinery workers Muzza is making a meal of his progress by going to five sets with an unheard of local. Given that the pre-tournament publicity was that of plenty of hype for a first win at the Roland Garros he is certainly doing it the hard way…
But finally it was a good day for the Magpies as Rafa has decided to stay, until he doesnt want to that is…

Thu, 26 May 2016 10:37:00 +0100
In the papers: Dixons Carphone, TransferWise, Netflix Newspaper Summary
The Times

Splitting up is hard to do and at £47 million, it’s quite costly too: The Founder of Asos is selling a £47 million stake in the business to fund a divorce settlement.
Dixons Carphone is riding high on retail rollercoaster: The global slowdown in demand for smartphones and computers has not derailed Dixons Carphone, which said that its underlying sales had grown by 5% in the year to April.
Family feud breaks into the open at Aldi: A simmering dispute among the heirs of Germany’s Aldi retail empire burst into the open when Theo Albrecht Jr accused his sister-in-law and her five children of helping themselves to its assets.
Bond is back from Russia with (not a lot of) love: Foreign investors appeared to turn their backs on Russia’s first foray into the international bond markets since sanctions were imposed two years ago, despite Moscow’s claim of overwhelming demand from abroad.
L&G Boss ‘forgot about his £700,000 bonus’: Nigel Wilson has had a bit of a rummage and found £781,000 down the back of his sofa. The Chief Executive of Legal & General admitted that shareholders had been inadvertently misled and his total pay package last year understated.
Market sea change reaches the Baltic Exchange: Another London market looks set to slip into foreign hands after the Baltic Exchange, which sits at the heart of the world shipping industry, entered exclusive takeover talks with the Owner of the Singapore stock market.
Testing times for Tesco with space at premium: While the City was sizing up the new man at Marks & Spencer, there was fresh scrutiny on the only other British retailer to have ever earned more than £1 billion in annual profits.
The Independent
Fresh alarm over ‘fat-finger tax’ on public in wake of HMRC’s digital botch: Accountants have accused the Government of seeking to raise hundreds of millions of pounds from the public in accidental overpayments in the new era of online returns, citing HMRC’s botched handling of a shift to digital tax filings as fresh evidence of the dangers.
McDonald’s ex-CEO says it’s cheaper to hire robots than people on minimum wage: Economists are increasingly concerned over the impact of the “rise of robots” and other technological innovations on employment levels. Now a former McDonald’s CEO has warned that robots will take over the fast food industry because they are cheaper and more efficient than humans.
Aldi to open standalone wine pop-up store in east London: Aldi is to open its first standalone wine store as demand for its wine range soars.
Imperial Tobacco and British American Tobacco linked to child labour in Indonesia: Tobacco companies are not doing enough to prevent child labour in tobacco farming, according to Human Rights Watch.
Greece reaches $11 billion deal with Eurozone creditors: Eurozone Ministers have reached a “breakthrough deal” to ease Greece’s debt burden and extend further bailout loans on Wednesday. Greece’s creditors gave a green light allowing the release of €10.3 billion ($11.5 billion; £7.8 billion) in new loans to ease the country’s €321 billion (£245 billion) of debt, after an 11 hours meeting between 19 Eurozone Ministers in Brussels.
The Daily Telegraph
Sterling could lose position as elite reserve currency if U.K. votes for Brexit, warns S&P: A vote to leave the European Union would threaten sterling’s elite status as an international reserve currency, Standard & Poor’s has warned.
Borrowers making up to 4,000 complaints about PPI every week: Payment protection insurance is triggering up to 4,000 complaints a week to the Financial Ombudsman Service, which said the claims management industry and a possible deadline for PPI compensation continue to stoke complaints.
Paysafe shareholders revolt over Directors’ pay: More than half of online payment company Paysafe’s shareholders have voted against the company Directors’ latest wage package, after its Chief Executive’s salary increased by 47% in a year.
TransferWise raises further £18 million as it targets small business market: TransferWise, the money transfer platform, has raised $26 million (£17.7 million) from Scottish asset manager Baillie Gifford, taking its total funding to date up to $117 million.
Mediclinic to focus on integration following Al Noor merger: The big focus for Mediclinic International this year will be on integrating newly acquired Abu Dhabi-based hospital group Al Noor, Chief Executive Danie Meintjes said as he unveiled the company’s maiden results as a U.K.-listed firm.
Coca-Cola Boss condemns Government sugar tax: The head of Coca-Cola in the U.K. has launched a withering attack on George Osborne’s sugar tax, saying it will not work and will hit the poorest members of society hardest.
Banks are revived as fears over referendum recede: Waning chances of a Brexit vote propelled Britain’s banks to the top of the FTSE 100, as, coupled with the chance of rising U.S. interest rates, financial companies are thought to have a stronger summer to look forward to.
Netflix to face quotas to boost French and Spanish programmes under new EU rules: Netflix and Amazon could be forced to spend more on French and Spanish programmes, after the European Union said at least a fifth of content carried by on-demand services should be made locally.
BHS suppliers crumble amid race for rescue deal: A pair of BHS suppliers have toppled into administration, resulting in 350 job losses, as the pain caused from the collapse of the retailer spreads through the sector. CU.K. Clothing and Courtaulds, makers of the Pretty Polly tights brand, have appointed RSM after the “administration of BHS added to the challenge of operating within a fiercely competitive market for seasonal products”.
The Guardian
Tata Steel is considering retaining U.K. business: Tata Steel is considering keeping its U.K. business, raising hopes that the Port Talbot steelworks and 11,000 jobs can be saved.
Tata Steel U.K. bids submitted ahead of crucial Mumbai meeting: Potential buyers of Tata Steel U.K. have submitted final bids at the start of a crucial week in which the future of the struggling British business is likely to be decided in its Indian parent company’s boardroom.
ExxonMobil tried to censor climate scientists to Congress during Bush era: ExxonMobil moved to squash a well-established congressional lecture series on climate science just nine days after the Presidential inauguration of George W Bush, a former oil Executive, the Guardian has learned.
Microsoft to cut 1,850 jobs at struggling former Nokia smartphone unit: Microsoft is cutting up to 1,850 jobs in its smartphone business just two years after it bought handset maker Nokia in an ill-fated attempt to take on market leaders Apple and Samsung.
Three network to run 24-hour adblocking trial: Mobile provider Three is to run a 24-hour adblocking trial in the U.K. in the first step towards removing ads for all its customers.
A case that will run and run: Duracell and Energizer’s court fight over rabbit mascots: The Duracell and Energizer bunnies are set to fight it out in court, after a judge ruled that a legal tussle over the right to use a rabbit mascot can proceed.
Daily Mail
Devastating report reveals a bribery and fraud crimewave sweeping Britain that is costing City £127 billion a year: A bribery and fraud crimewave is sweeping Britain and is costing the City £127 billion a year, a devastating report has revealed.
Tata playing game of brinkmanship with sale of its U.K. steel businesses as sources suggest it would look to keep plants open itself: Tata appeared to be playing a game of brinkmanship with the sale of its U.K. steel businesses as sources suggested it would look to keep the plants open itself.
Daily Express
Marks and Spencer shares plunge amid pledge to slash clothes prices: High street favourite Marks and Spencer has promised to cut clothes prices in its latest bid to win back customers. But investors took fright at the news with the retailer’s share price suffering a huge hit of more than seven% this morning.
Boost for first-time buyers amid dramatic mortgage rate drop: First-time buyer mortgage rates are at their lowest level in five years helping prospective Owners get on to the property ladder, analysis has shown.
The Scottish Herald
Ayrshire butcher wins deal to supply more than 300 Co-op stores: An Ayrshire-based family butcher business has won an additional £750,000-a-year supply deal with the Co-op.
Lidl bags eight awards for Scotch whisky: Lidl has won eight awards for Scotch whisky at the International Spirits Challenge, a global competition that receives around 1,300 entries a year from nearly 70 countries.
Dixons Carphone raises profits guidance after strong fourth quarter results: Dixons Carphone has shrugged off fears of a high street slowdown after posting a strong set of results for the fourth quarter and raising its profit guidance for the year.
Healthy Epic frustrated by market sentiment: Ediston Property Investment Company (Epic) has reported steady progress in the first half of the year but admitted to frustration at the slide of share prices in the sector.
The Scotsman
Ministers pledge support as Shell axe 475 North Sea oil jobs: Scotland’s oil and gas sector is reeling from yet another hammer blow after Shell announced plans to slash its U.K. workforce by a fifth.
Denholm casts recruitment net wider as fee income grows: Specialist marketing recruitment agency Denholm Associates is eyeing a push into the north of England after booking a solid rise in fee income and rolling out new online tools.
Stephen Hester to join Scottish Gas Owner’s board: The former Chief Executive of Royal Bank of Scotland is to join the board of Scottish Gas parent group Centrica.
Record rent hikes in Edinburgh as Scotland sees 3-year low: Rent rises in Scotland are at a three-year low, although Edinburgh is bucking the trend with record price hikes, according to research.
City A.M.
HSBC to appoint new boardroom pay Chief as current chair Sam Laidlaw set to quit: HSBC is set to appoint a new Boss for its boardroom pay committee as current chair Sam Laidlaw is set to step down from the bank’s board as early as next year.
Sajid Javid to launch proposals that could slash billions of pounds from British Steel pension fund liabilities: In a bid to make Tata Steel more attractive to buyers, the government is set to reveal proposals this week that would potentially cut billions of pounds from the liabilities of British Steel’s £15 billion pension scheme. 
Controversial former Comet Owner plans bid for Fitness First, along with second private equity raising: Opcapita, the buyout vehicle behind the failed turnaround of electrical retailer Comet, is in early stage talks to buy the U.K. operations of global gym chain Fitness First.
Media and entertainment Executives want deals – and they’re targeting the U.K.: U.K. media and entertainment companies are attracting interest from across the world, a new international mergers and acquisitions (M&A) survey has found.
FDA decision delay sends Sarepta Therapeutic’s share price up by 16% at the open: Sarepta Therapeutic’s investors have cheered the news that the U.S. Food and Drug Administration (FDA) will delay its review of one of the firm’s key drugs.
Alibaba reveals it is being investigated by the SEC over its accounting practices: Chinese ecommerce giant Alibaba revealed in its recently filed annual report that it is being investigated by the U.S. Securities and Exchange Commission (SEC) into whether its accountancy practices had violated of federal securities laws.
Ashurst: Oil and gas firms gear up for wave of M&A activity as oil prices stabilise: Oil and gas firms are gearing up for a wave of mergers and acquisitions activity which will sweep across the world this year. The industry expects deal volumes to swell by 50% year-on-year in 2016, rising substantially on a three to five year horizon, according to a report released by City law firm Ashurst.
U.S. crude oil inventories dropped sharply last week, data from the U.S. Energy Information Administration shows: U.S. crude inventories dropped by 4.2 million barrels in the week ending 20 May, a much bigger loss than was previously expected. Traders had been gearing up for a drop of around 1.7 million barrels.

Thu, 26 May 2016 09:02:00 +0100
Market briefing: UK markets closed in positive territory yesterday, led by a rally in financial and commodity sector stocks Market Daily - 26 May 2016
UK Market Snapshot

UK markets closed in positive territory yesterday, led by a rally in financial and commodity sector stocks. Barclays, HSBC Holdings and Royal Bank of Scotland Group climbed 2.4%, 2.8% and 4.4%, respectively, after Greece reached a deal with its creditors to unlock €10.3 billion in bailout funds. Oil firms, Royal Dutch Shell and BP rose 1.8% and 2.3%, respectively, tracking gains in crude oil prices. Serco Group soared 12.4%, as it expected that its underlying trading profit for 2016 would surpass market expectations. On the contrary, Marks & Spencer Group tanked 10.2%, after it reported a significant decline in its pre-tax earnings and issued a profit warning for the current year. Stagecoach Group lost 1.7%, after a leading broker downgraded its rating on the stock to ‘Neutral’ from Overweight’. The FTSE 100 advanced 0.7%, to close at 6,262.9, while the FTSE 250 rose 0.6%, to settle at 17,232.6.
US Market Snapshot
US markets closed in the green yesterday, helped by a rally in energy and materials firms amid a rise in crude oil prices. Southwestern Energy, Chesapeake Energy and Transocean surged 6.8%, 7.4% and 9.7%, respectively. LyondellBasel Industries and Freeport-McMoRan edged 2.8% and 4.9% up, respectively. Hewlett Packard Enterprise jumped 6.8%, after it announced that it would spin off and merge its enterprise services unit with Computer Sciences Corp., up 42.1%, in a deal worth $8.5 billion. Microsoft advanced 1.0%, on the back of news that it would lay off 1,850 jobs at its struggling smartphone unit. On the losing side, Alibaba Group Holding dropped 6.8%, after it revealed that its accounting practices are being probed by the US SEC. The S&P 500 gained 0.7%, to settle at 2,090.5. The DJIA rose 0.8%, to settle at 17,851.5, while the NASDAQ advanced 0.7%, to close at 4,894.9.
Europe Market Snapshot
Other European markets ended higher yesterday, amid gains in crude oil prices and after debt-laden Greece secured a deal with its creditors to unlock fresh funds. Meanwhile, Germany’s Ifo business climate index rose more than expected in May. Banks, Deutsche Bank, CaixaBank, Unione di Banche Italiane and Banco Popular Espanol rose 3.7%, 6.3%, 7.2% and 7.5%, respectively. Energy producers, SUBSea 7, Eni and Repsol advanced 2.8%, 3.5% and 3.7%, respectively, as crude oil prices jumped. Novo Nordisk gained 3.5%, after its new diabetes drug received support from the US Food and Drug Administration’s advisory panel. Peugeot added 2.6%, on the back of news that the French Government was mulling selling part or its entire stake in the company. The FTSEurofirst 300 index gained 1.3%, to close at 1,366.8. Among other European markets, the German DAX Xetra 30 rose 1.5%, to close at 10,205.2, while the French CAC-40 advanced 1.1%, to settle at 4,481.6.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning. In Japan, pharma companies, Takeda Pharmaceutical, Shionogi & Co and Aska Pharmaceutical have gained 2.6%, 3.4% and 5.0%, respectively. Haseko has advanced 5.0%, following a broker upgrade to ‘Buy’ from ‘Outperform’. Energy sector stocks, JX Holdings and Inpex have climbed 1.7% and 3.0%, respectively, as crude oil prices jumped and reached $50.0 per barrel mark. In Hong Kong, airline firms, China Eastern Airlines and China Southern Airlines have slid 2.3% and 3.4%, respectively, amid concerns over higher crude oil prices. In South Korea, POSCO and Lotte Shopping have declined 0.5% and 1.3%, respectively. The Nikkei 225 index is trading 0.3% higher at 16,805.6. The Hang Seng index is trading 0.2% down at 20,326.3, while the Kospi index is trading 0.1% lower at 1,959.3.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.66% or $0.33 higher at $50.07 per barrel, reaching its highest level for the first time in six months. Yesterday, the contract climbed 2.32% or $1.13, to settle at $49.74 per barrel, after the Energy Information Administration disclosed that US crude inventories declined more than expected by 4.2 million barrels to 537.1 million barrels in the week ended 20 May 2016.
At 0330GMT today, Gold futures contract is trading 0.67% or $8.20 higher at $1232.00 per ounce. Yesterday, the contract declined 0.44% or $5.40, to settle at $1223.80 per ounce, slipping to seven-week lows, as growing expectations of a rate hike by the US Federal Reserve weighed on the safe haven metal.
At 0330GMT today, the EUR is trading 0.24% higher against the USD at $1.1182. Investors will look forward to the US durable goods orders data for April, set to release later in the day. Yesterday, the EUR strengthened 0.13% versus the USD, to close at $1.1155, following upbeat data on Germany’s Ifo business climate and current assessment indices for May.
At 0330GMT today, the GBP is trading 0.11% higher against the USD at $1.4713, ahead of the second estimate of the UK GDP growth for the first quarter, due to release in a few hours. Yesterday, the GBP strengthened 0.42% versus the USD, to close at $1.4697, extending its gains from previous session.
Fixed Income
In the US, long term treasury prices fell and pushed yields slightly higher, amid a rally in global equity markets. Yesterday, yield on 10-year notes rose 1 basis point to 1.87%, while yield on 2-year notes remained flat at 0.92%. Meanwhile, 30-year bond yield rose 2 basis points to 2.67%.

Key Economic News
German consumer confidence index rose unexpectedly in June

In June, the consumer confidence index rose unexpectedly to 9.80 in Germany, higher than market expectations of an unchanged reading. The consumer confidence index had recorded a reading of 9.70 in the previous month.
German Ifo business expectations index recorded a rise in May
The Ifo business expectations index in Germany rose to a level of 101.60 in May, compared to a revised reading of 100.50 in the prior month. Market anticipation was for the Ifo business expectations index to advance to a level of 100.80.
German Ifo current assessment index advanced in May
Compared to a reading of 113.20 in the previous month the Ifo current assessment index rose to a level of 114.20 in May, in Germany. Markets were expecting the Ifo current assessment index to rise to 113.30.
German Ifo business climate index rose in May
In May, the Ifo business climate index in Germany recorded a rise to 107.70, compared to market expectations of a rise to 106.80. The Ifo business climate index had registered a reading of 106.60 in the prior month.
Italian trade surplus fell in April
(non-EU countries) trade surplus in Italy fell to €3.60 billion in April, compared to a revised trade surplus of €4.03 billion in the previous month.
Italian industrial sales eased in March
The seasonally adjusted industrial sales registered a drop of 1.60% in Italy on a MoM basis, in March. In the prior month, industrial sales had advanced 0.10%.
Italian industrial orders climbed in March
The non-seasonally adjusted industrial orders rose 0.10% on a YoY basis in Italy, in March. In the prior month, industrial orders had climbed 3.80%.
Italian industrial sales recorded a drop in March
In Italy, the non-seasonally adjusted industrial sales recorded a drop of 3.60% in March on a YoY basis. Industrial sales had recorded a drop of 0.20% in the previous month.
Italian industrial orders recorded a drop in March
The seasonally adjusted industrial orders in Italy eased 3.30% in March on a monthly basis. In the prior month, industrial orders had recorded a rise of 0.70%.
Spanish PPI declined in April
The producer price index (PPI) in Spain eased 6.10% in April on an annual basis. In the previous month, the PPI had registered a revised drop of 5.60%.
Spanish PPI fell in April
In Spain, the PPI fell 0.10% in April on a MoM basis. In the previous month, the PPI had advanced by a revised 0.60%.
Swiss UBS consumption indicator climbed in April
In April, UBS consumption indicator in Switzerland registered a rise to 1.47. UBS consumption indicator had registered a revised reading of 1.40 in the prior month.
Swiss economic expectations index registered a rise in May
The economic expectations index in Switzerland advanced to 17.50 in May. The economic expectations index had recorded a level of 11.50 in the prior month.
US Markit composite PMI dropped in May
In May, the flash Markit composite PMI fell to a level of 50.80 in the US. In the prior month, Markit composite PMI had registered a level of 52.40.
US house price purchase index recorded a rise in 1Q 2016
In the US, the house price purchase index rose 1.30% on a QoQ basis, in 1Q 2016. The house price purchase index had registered a revised rise of 1.50% in the prior quarter.
US housing price index advanced more than expected in March
On a monthly basis, the housing price index in the US climbed 0.70% in March, more than market expectations for an advance of 0.50%. The housing price index had climbed by a revised 0.50% in the prior month.
US mortgage applications advanced in the last week
In the week ended 20 May 2016, on a weekly basis, mortgage applications rose 2.30% in the US. Mortgage applications had recorded a revised drop of 1.00% in the prior week.
US Markit services PMI dropped unexpectedly in May
In May, the preliminary Markit services PMI in the US eased unexpectedly to a level of 51.20, compared to a reading of 52.80 in the prior month. Market anticipation was for Markit services PMI to rise to 53.00.
Bank of Canada left interest rate unchanged at 0.5%
The Bank of Canada (BoC) held benchmark interest rate steady at 0.5%, as widely expected, and indicated that Canada’s first quarter growth appears to be in line with its April forecast. Further, the BoC stated that, the nation’s second quarter growth will be much weaker than predicted because of the devastating Alberta wildfires and indicated that the destruction will cut 1.25 percentage points off the real GDP growth in the second quarter. However, the Canadian economy is expected to rebound in the third quarter as oil production resumes and reconstruction of the areas devastated by the fire begins.
Japanese investors turned net buyers of foreign stocks in the previous week
Japanese investors turned net buyers of ¥182.30 billion worth of foreign stocks in the week ended 20 May 2016, as compared to being net sellers of ¥152.10 billion worth of foreign stocks in the prior week.
Japanese investors remained net buyers of foreign bonds in the previous week
Japanese investors were net buyers of ¥684.00 billion worth of foreign bonds in the week ended 20 May 2016, as compared to being net buyers of a revised ¥1122.70 billion worth of foreign bonds in the previous week.
Foreign investors remained net buyers of Japanese bonds in the previous week
Foreign investors remained net buyers of ¥492.00 billion worth of Japanese bonds in the week ended 20 May 2016, as compared to being net buyers of ¥348.40 billion worth of Japanese bonds in the previous week.
Foreign investors remained net buyers of Japanese stocks in the previous week
Foreign investors remained net buyers of ¥40.40 billion worth of Japanese stocks in the week ended 20 May 2016, as compared to being net buyers of a revised ¥72.50 billion worth of Japanese stocks in the prior week.
Japanese corporate service price index rose as expected in April
On a YoY basis, in April, the corporate service price index rose 0.20% in Japan, in line with market expectations. The corporate service price index had registered a similar rise in the previous month.


Thu, 26 May 2016 08:57:00 +0100
Stocks Gain With Emerging Markets as Fed Seen Pulling Off Hike Stocks Gain With Emerging Markets as Fed Seen Pulling Off Hike
Here is the opening of this topical article from Bloomberg:

Don’t fear the Fed is the new mantra for global markets.
Equities rose to a two-week high amid increasing investor optimism that the world economy can withstand higher interest rates from the Federal Reserve. Gold fell amid a retreat in the dollar, while oil maintained gains after a government report on crude inventories.
U.S. shares looked for consecutive climbs after alternating between gains and losses for seven sessions, European equities jumped and emerging-market stocks rose the most in six weeks. South Korea’s won led currencies higher even as China set the yuan’s reference rate at the weakest level since 2011. Crude pared gains after climbing above $49 a barrel as gold slid for a sixth day. Greek bonds increased, pushing the 10-year yield below 7 percent for the first time since November.
Improving confidence in financial markets is tempering anxiety over the Federal Reserve’s plans to raise U.S. interest rates, potentially as soon as next month. Recent polls show growing support for the U.K. to remain in the European Union, the rally in commodities is damping the risk of deflation, and a measure of economic surprises in the world’s largest economies hit its highest level this year. Still, faith in global growth prospects has been easily shaken, with global equities failing to make any gains in 2016.
“U.S. data is supporting the view that if we don’t see stellar growth, at least we don’t see a recession, and that’s a good thing,” said Michael Woischneck, who oversees about 300 million euros ($335 million) at Lampe Asset Management in Dusseldorf, Germany. “If the Fed has the chance to hike again then it should take this opportunity as the market is very prepared. We also have a deal for Greece that has helped perceptions change in the European market.”

David Fuller's view

We have seen a breakout in optimism this week.  This suggests that investors feel less uncertain.  Behaviourally, when the investor crowd is nervous, negative concerns need to be increasing to sustain pessimism.  However, this week polls have indicated that the risk of Brexit uncertainty is diminishing.  Additionally, mildly more favourable economic data indicates that the risk of US recession and deflation is waning, making a rate hike in June or probably July less worrying.  This mood change may prove to be ephemeral but it has steadied stock markets.

Hold On a Moment: the European Corpse May be Rising From the Slab
Here is a middle section from this encouraging column by Jeremy Warner for The Telegraph:

Yet largely unnoticed amid the cut and thrust of the Brexit debate, something remarkable is happening; the corpse is showing unmistakable signs of life. These may be no more than last gasp death throes, and in any case are far too late, and as yet too small, to have any meaningful effect on Britain’s referendum vote. Nobody is pretending that the Eurozone has solved its problems and is about to rebound into rude economic health.
All the same, something is plainly stirring. In the first quarter of this year, Eurozone growth was markedly higher than both the US and the UK. Job creation too has been substantially better in recent months. That the Eurozone is finally beginning to play catch-up should come as no great surprise to close observers of economic events, for the main reason for this bounce is that belatedly policymakers have begun to apply some of the same therapies as their Anglo-Saxon counterparts. Indeed, the real surprise is that the scale of the recovery has not been greater.
Early on in the banking crisis, both the US Federal Reserve and the Bank of England sought to underpin the financial system with massive asset purchase programmes. These were bold, and substantially untried measures at the time which may still carry a quite destructive long term cost. For instance, they have discouraged people from saving while simultaneously forcing money into higher risk investment, thereby incubating financial instability for the future. Yet they broadly worked in calming the storms and preventing economic calamity.
The European Central Bank, by contrast, held back. German intransigence over anything that looked like a transfer prevented the ECB from acting like a proper central bank and monetising government debt accordingly. As a confederation of separate sovereign nations, the Eurozone seemed incapable of acting to save itself as any sensible single country would. The Eurozone had to get to the very brink of collapse before Germany and its Northern neighbours would relent. Had the ECB been allowed, like its US and UK counterparts, to apply “quantitative easing” at an earlier stage, much of the Eurozone’s existential crisis could have been avoided, or at least would have worked its way out in an entirely different way. The moment Mario Draghi, the ECB president, said he would buy government bonds without limit, the financial crisis, together with the threat of immediate break-up, began to ease.
Since then, the Eurozone recovery has followed almost exactly the same trajectory as the UK and the US. As with these earlier recoveries, growth is heavily focused on household consumption and the industries that service it. Just recently, Draghi announced he was doubling up again on measures to revive the European economy. The past year has also seen the fiscal straightjacket of the Eurozone’s initial response to the government debt crisis progressively loosened. Faced with open rebellion from the likes of Italy and Spain, Brussels has been forced to trim its demands. Fiscal targets have either been extended or abandoned altogether, so much so that this year should be mildly expansionary from a fiscal perspective, for the first time since the crisis began.

David Fuller's view
Any improvement in the economies of EU countries is obviously good news for Europeans and also the global economy.  The credit for this, I maintain, is largely due to the intelligence and persistence of Mario Draghi, against considerable opposition, mainly from Germany.  Draghi, however, only has an 8-year term which expires at the end of October 2019.
A PDF of Jeremy Warner's column is posted in the Subscriber's Area.
(See also: Was Draghi Correct After All? – by Bernard Tan)

Email of the day 1
On the Markets Now in September:
Hello David, I am planning to be in London late September (from Melbourne).
Will you be doing an East India Club session in September by chance?

David Fuller's view
Many thanks for your interest. I would be delighted if you could join us and we are planning to hold a Markets Now seminar in late September.  They are held by general consent on Monday evenings, so would you be able to attend on either Monday 19th or 26th September?

Email of the day 2
On migrants in Europe:
David, don't you think the influx of migrants has stopped the slide in European population and sewn the seeds for solid long term consumption growth? Some businesses in Europe selling to these people must be jumping for joy.

David Fuller's view
Most of the migrants arriving from the Middle East and North Africa, spent their last savings on the journey, so they need to be subsidised.  That will cause some extra spending, providing a small boost for EU economies.  
No doubt some of these mostly young migrants will be highly intelligent and able to create careers for themselves in Europe.  However, the cultural differences are considerable.  Therefore it will be a considerable challenge for European countries and also the migrants, to ensure that they are successfully integrated.  This has not always worked well in the past, as we have seen most notably and recently with Belgium and France.
The current migrant situation is awkward, to put it mildly.  Few countries want to accept a large influx of migrants which they did not invite.  Most developed countries accept at least a small number of immigrants every year, preferably those who they believe will contribute to their national wellbeing.     

My personal portfolio
A trade increased

David Fuller's view
Details and charts are in the Subscriber’s Area. 

The Markets Now
Monday 11th July at the East India Club, 16 St James's Square, London SW1Y 4LH

David Fuller's view
Here is the Brochure.
I am looking forward to discussing market opportunities with subscribers and their friends at this post-Brexit seminar, held in the comfort of the East India Club.  David Brown will provide new material of considerable interest to long-term investors.  Iain Little will also have some new material, in addition to his review of interesting investment trusts.
Presentations commence at 5:30pm and usually end around 8:30pm, followed by further conversation and refreshments at East India’s cash bar. 

ECB credit buying to start small, betting on issue boom
This article from Reuters may be of interest to subscribers. Here is a section:

Investment-grade corporate bonds issued in euros are the latest addition to a growing list of assets the ECB is buying as part of its 1.74 trillion euro effort (1.33 trillion pounds) to boost economic growth in the euro zone via lower borrowing costs.

The difficulty is that the 600 billion euro market for such notes is largely limited to big corporations in France and the Netherlands that already enjoy easy access to credit.

The ECB, however, is hoping its money will eventually trickle down to smaller borrowers across the euro zone for whom funding is still a problem. Since this is likely to take time, the ECB will increase the pace of its purchases only gradually and refrain from setting a monthly target, conversations with seven sources in or near the ECB's decision-making body revealed.

"There could be big fluctuations in buys but if we succeed in inducing issuance, that would naturally smooth out the market," one sources said. Another source said there might be months when purchases will be in the region of just 1 billion euros.

Eoin Treacy's view
A great deal of concern has been expressed at the record debt issuance by the US corporate sector which has been used to fund buybacks, dividend increases and to retire older more expensive debt. However Europe has an altogether different environment. Securitization is not nearly as developed while the corporate bond market is not as liquid as the USA’s. This has meant the ECB has been inhibited in what it can do because the market for the operations it wants to conduct is not large enough to accept the size of interventions envisaged. That represents a greenlight for any bank wishing to set up a securitisation or origination desk in the Eurozone because the ECB will buy just about anything they issue.

U.K.'s Undecideds Moving Against Brexit
This article by Michael McDonough, Jamie Murray and Dan Hanson for Bloomberg may be of interest to subscribers. Here is a section:
The latest developments suggest the gap in the polls has widened not just because voters are abandoning the leave campaign, but because undecided voters are making up their minds against Brexit. As the lead for remain widens, the key uncertainty on the day will be turnout -- recently undecided voters may feel less compelled to show up at the polls.

Eoin Treacy's view
Regardless of how one feels about what is a deeply divisive topic, there is little doubt that markets abhor uncertainty. With a vote to leave the EU representing a threat both to the status quo within and outside the region, the declining prospect of such an eventuality can only be viewed as positive from a short-term market perspective.

U.S. new homes sales hit eight-year high, point to firming economy
This article from Reuters may be of interest to subscribers. Here is a section:

New U.S. single-family home sales recorded their biggest gain in 24 years in April, touching a more than eight-year high as purchases increased broadly, a sign of growing confidence in the economy's prospects.

Tuesday's report from the Commerce Department, which also showed a surge in new home prices to a record high, offered further evidence of a pick-up in economic growth that could allow the Federal Reserve to raise interest rates soon.

"Consumers are taking the leap and buying the biggest of big ticket items of their lives and this speaks to confidence. The Federal Reserve can raise rates at their June meeting without fear the economy is going to slow," said Chris Rupkey, chief economist at MUFG Union Bank in New York.

Eoin Treacy's view
Home affordability has contracted since its peak in 2012 but is not back to where the previous norm was in the decades prior to the housing boom and subsequent bust. The role of ultra-low interest rates in bolstering affordability is seldom discussed and yet it represents a significant influence not least became wage growth did not improve until very recently. 

The S&P/Case-Shiller Composite 10 has rallied by a third since 2012 and homes in desirable locations took out their historic peaks more than a year ago.

Thu, 26 May 2016 08:53:00 +0100
Northland Capital Partners View on the City: Mariana Resources, ImmuPharma, Savannah Resources, TechFinancials Inc, Sunrise Resources Mariana Resources (LON:MARL) – BUY*: Hot Maden update
Market Cap: £43m; Current Price: 3.6p; Target Price: 5.4pp

Assay results from holes HTD-51 to HTD-52
 HTD-52, which lies outside the existing mineral resource estimate and140m down dip of HTD-04, contained 31.5m at 4.4g/t Au and 0.77% Cu from 262m and 18.5m at 2.24% Cu and 18.5m at 2.24% Cu and 0.4g/t Au from 295m.
 In the southern target area, located around 400m south of the existing mineral resource estimate, two holes returned high-gold assay results with; 40.5m at 8.8g/t Au, 0.77% from 158m (HTD-53) 1m at 90.1g/t Au from 163m (HTD-51) and 1m at 22.9g/t Au from 117m (HTD-51).
 No change to forecasts, rating or price target.

NORTHLAND CAPITAL PARTNERS VIEW: The southern area of Hot Maden (Figure 1) is now a significant exploration target for Mariana Resources and its joint venture partner Lidya. The Company has defined multiple narrow ultra-high-grade quartz sulphide veins similar in style to what was previously mined in the 1920’s. The southern area now represents another level of upside beyond the resource expansion drilling located in closer proximity to the existing resource base. Drilling continues both on the southern area and in and around the existing mineral resource area and the Company will provide further updates in due course.

ImmuPharma (LON:IMM): Alto invests 
Market Cap: £34.7m; Current Price: 28.5p

Alto ups its stake
 Yesterday ImmuPharma announced that it received notification by Alto Invest and its subsidiaries confirming its holding in ImmuPharma of 4,870,367 million Ordinary Shares in the capital of the Company, representing 3.99% of the Company's total voting rights, crossing above the 3% threshold.
 Alto Invest is an independent asset management firm regulated by the French financial markets authority and is a specialised investor in European small and mid-cap companies.

NORTHLAND CAPITAL PARTNERS VIEW: Alto’s investment further corroborates our view that ImmuPharma represents a good investment opportunity. The group’s lead drug, a potential treatment for Lupus, currently in a Phase 3 clinical trial, is expected to deliver a pivotal read-out by the end of 2017.

Savannah Resources (LON:SAV) – CORP: Oman update
Market Cap: £13m; Current Price: 3.4p

Completion of gravity surveys
 Savannah Resources has completed gravity surveys over three areas; VTEM 13 (Block4), Ghayth (Block4) and Sarami West (Block 5) that contains 12 VTEM and EM anomalies.
 These areas were previously drill tested in 2015 defining alteration systems that confirmed the potential for VMS mineralisation the results of the gravity surveys will further refine drill targets.
 The two stage 2,930m drill programme continues as planned at the Maqail South and Mahab 4 prospects (Block 5) and Dog’s Bone and Bayda prospects (Block4).

TechFinancials Inc. (LON:TECH) – BUY*: Prelims
Market Cap: £8.2m; Current Price: 12p; Target Price: 27p

Repositioned for growth in FY16 and beyond
 Overall, group results for FY15 were in line with Northland’s (NCP’s) forecasts. Group revenues were US$13.6m (US$13.7m NCP) and Adjusted EBITDA was in line at US$0.6m (US$0.6m NCP). The Board did not recommend the payment of a dividend, again in line with expectations, however expects to pay a dividend in future when the business returns to profits. The balance sheet is in healthy shape with US$3.1m of net cash as at the end of December 2015, ahead of NCP’s US$2.9m.
 The core B2B (software licensing) performed strongly, where revenues were +30% YoY to US$8.6m, on the back of growing the number of active trading licensees by 8 to 56 and new product launches such as simplified Forex. Management continues to launch new trading platforms and products such as the add-on CFD trading platform for stocks and indices, planned in the 2H16. Finally, the opening of the Hong Kong office will aid expansion into the Asia Pacific region.
 B2C (trading platform) revenues and profits were impacted by a tougher regulatory environment in FY15. However, management reacted quickly by repositioning the B2C business. Two new agreements were signed during FY15 with Optionfortune, in order to expand a new B2C binary options trading business focused on the Asia Pacific region and an agreement with IBID to grow an existing B2C binary options trading brand. These changes were implemented in order to return the B2C business back to profitable growth in FY16 and beyond.
 Positive outlook statement from management, where FY16 has started well, and trading in the 1Q16 was in line with market expectations. No changes to our forecasts at this stage, we look for US$20m of revenue and US$1.6m of EBITDA in FY16E.

NORTHLAND CAPITAL PARTNERS VIEW: The Board took remedial action during FY15, in the B2C business in particular, and with the new structures (Optionfortune and IBID) in place the B2C business is repositioned for growth in FY16 and beyond. Furthermore, the core software business (B2B) continues to trade well, where investment into new products (simplified Forex, Mobile & Tablet and an add-on CFD platform) will assist customer retention and further revenue growth from new and existing customers. Finally, the Board continues to focus on its strategy of increasing market share in existing markets, whilst also penetrating new emerging markets with high growth potential. The shares trade on an undemanding 5.4x FY16 EV/EBITDA. We maintain our BUY rating and 27p price target.

Sunrise Resources (LON:SRES) – CORP*: Placing
Market Cap: £0.9m; Current Price: 0.15p

Sunrise Resources raises £300,000
 Sunrise Resources has raised £300,000 through the issue of 250,000,000 shares at 0.12p with a one-for-one warrant at 0.24p.
 Sunrise Non-Executive Director Roger Murphy has subscribed for 16,666,667 shares (£20,000) representing a 1.49% interest in the Company.
 Following admission the Company will have 1,116,204,430 shares in issue.

NORTHLAND CAPITAL PARTNERS VIEW: This placing is positive news for Sunrise Resources giving it the funds to advance the Company’s precious metal interests in Nevada.

Thu, 26 May 2016 08:46:00 +0100
Beaufort Securities Breakfast Alert: Xtract Resources, Eurasia Mining, Savannah Resources, ANGLE, Anglo Pacific Group, HSS Hire, Dixons Carphone Group, Marks & Spencer, Zoopla The markets
The FTSE-100 finished yesterday's session 0.70% higher at 6,262.85, whilst the FTSE AIM All-Share index closed 0.03% higher at 733.50. In continental Europe, markets ended in the green, as international creditors agreed to provide more bailout funds to Greece. Furthermore, an improvement in oil and commodity prices boosted basic resource stocks. Germany's DAX and France's CAC 40 surged 1.5% and 1.1%, respectively.
Wall Street
Wall Street advanced for the second consecutive day, as a decline in crude inventories led to a rally in oil prices. In addition, expectations that the Fed would hike interest rates buoyed investor sentiment. The S&P 500 rose 0.7%, with the energy sector gaining the most.
Equities are trading mixed, as investors remained concerned over an interest rate hike by the Fed and sustenance of the gain in oil prices. The Nikkei 225 increased 0.1%. The Hang Seng was trading 0.1% down at 7:00 am, tracking China's markets.
Yesterday, Brent and WTI oil prices increased 2.3% and 1.9%, respectively. The spread between the two varieties stood at US$0.2 per barrel.

Brexit to cost UK billions in trade: WTO
The World Trade Organization (WTO)'s Director General Roberto Azevedo has warned the UK that an exit from the European Union would cost it billions and the country would be forced to re-negotiate its membership of the WTO. He added these negotiations would be complex and could take years to reach an agreement.

Company news

Xtract Resources (LON:XTR, 0.20p) - Speculative Buy
Xtract Resources, the gold mining and development company, announced today that it has signed an agreement to dispose of its Manica Gold project in Mozambique to Happy Gold Limited, a wholly owned subsidiary of Minerals Technologies International Limited (MTI), for a cash consideration of US$17.5m. The agreement is subject to obtaining the necessary corporate and regulatory approvals and successful completion of due diligence by the purchasers before 31 August 2016. Under terms of the agreement, should Xtract not deliver a Bankable Feasibility Study before 30 June 2016, the purchase consideration will be adjusted downwards by US$1m. In the event that the transaction does not proceed for any reason, Xtract will continue to maintain its ownership of the Manica licence.

Our view: Management cited substantial dilution and additional debt has the main reasons not to proceed with the development of the Manica Gold project. The estimated initial capital expenditure was US$38m plus an additional US$14m for underground development. To this end, the required capital could have resulted in significant dilution to the current market capitalisation. The sale of Manica, at a 40% return on the initial investment, allows Xtract to focus on its producing Chepica mine in Chile while firming up its balance sheet. We understand that the company is also evaluating other potential high return projects. We look forward to more information regarding the company's strategy as well as updates on operational activity at Chepica. In the meantime, we maintain our Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Xtract Resources PLC

Eurasia Mining (LON:EUA, 0.65p) - Speculative Buy
Eurasia Mining yesterday announced it had "executed an agreement" with a Russian contract mining company to develop its alluvial platinum project West Kytlim. The Russian contractor (OOO SK Region-Story) will be responsible for constructing the mine and all the associated pre-production and operating costs. In return it will receive 70% of revenues with Eurasia receiving 30%. Eurasia will be responsible for the geological side, developing new reserves, and appoint the manager of the recovery plant. Eurasia will also be responsible for selling the platinum concentrate to the refinery. Development is due to start in July and we assume first production will be during 3Q16.

Our view: This is an excellent result for Eurasia. It has three projects in Russia, the Monchetundra hard rock platinum project, West Kytlim alluvial platinum and a gold tailings project called Semenovsky. It needed a development solution for West Kytlim and the agreement announced yesterday means the project is fully funded without the need for an equity fundraise. Management can now focus their attention and resources on the development of Monchetundra and Semenovsky. In the meantime, we reiterate our Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Eurasia Mining plc

Savannah Resources (LON:SAV, 3.375p) - Speculative Buy
Savannah Resources, the diversified mining group focused on exploration and development of mineral sands in Mozambique and copper-gold projects in Oman, announced today that it has completed three gravity surveys on Block 4 and 5 properties in the Sultanate of Oman. Savannah owns a 65% shareholding in Al Fairuz Mining, the owner of the Block 5 licence and is earning a 65% shareholding in Al Thuraya LLC, the owner of Block 4, both are highly prospective for copper and gold. The gravity surveys were completed over airborne VTEM (Versatile Time Domain Electromagnetic) and ground electromagnetic anomalies which had previously identified 12 EM conductors. These areas were drill tested in 2015 and returned encouraging alteration systems suggesting proximity to VMS-type mineralisation. The gravity surveys are in addition to the current 2,080m of diamond drill programme focused on the Maqail South and Mahab 4 prospects in Block 5 as well as the Dog's Bone and Bayda prospects in Block 4. Savannah is targeting an increase in the overall resource potential and upgrade the current resource classification. Drilling will also assist in the completion of initial geotechnical and metallurgical test work which will ultimately feed into feasibility studies as the company continues to target production in late-2017.

Our view: We look forward to results from the gravity surveys, expected in June, to further refine potential targets from the three survey areas. Ground based gravity surveys have a successful track record in identifying VMS-type discoveries. We also look forward to results from the current drill programme with the aim to increase the overall resources and resource classification from the current Inferred and Indicated resource estimate of 1.7Mt grading 2.2% Cu. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Savannah Resources Plc

ANGLE (LON:AGL, 68.50p) - Speculative Buy
ANGLE is focused on commercialising its patented Parsortix liquid biopsy system, which has the potential to transform the diagnosis and treatment of cancer by making it possible to harvest intact cancer cells from patient blood for analysis. The Group yesterday made two important announcements: i) That it had placed new shares with both existing plus three new institutional investors raising gross proceeds of £10.2 million at a price of 64.5p/share and: ii) It signed a contract with The University of Manchester, acting in this instance through the Cancer Research UK Manchester Institute, which will allow incorporation of ANGLE's Parsortix system in the Clinical and Experimental Pharmacology group for routine use in clinical trials and for research purposes. Together with the net proceeds of the placing, the Group's cash resources on Admission of the new shares will be approximately £13.1 million. The Directors believe that the new funds will enable ANGLE to build on the growing body of third party evidence on Parsortix performance and, in particular, compelling initial data that key opinion leaders have generated in both prostate and Breast cancers. The net proceeds of the placing will be used for clinical studies to demonstrate the Parsortix system and also for driving sales through adoption in research-use settings. Admission of the placing shares is expected to occur on 31 May 2016.

Our view: Ground-breaking potential in detection of cancer, which is now funded to comprehensively demonstrate Parsotix's utility! Parsortix offers the same clinically relevant information from a patient's blood test, irrespective of its location in the body, that otherwise can only be obtained from an invasive metastatic biopsy. Though extensive development and clinical trials will be required across a wide range of indications before such tests to achieve standard international acceptance by medical and insurance providers, much earlier and elementary testing for cancer detection looks set to become a reality. Significantly in this respect, ANGLE differentiates itself from other medtech companies claiming similar abilities. In recent months, the medical world has become aware of a number of new, innovative, but early stage, non-invasive tests (be they derived from blood, saliva, sweat, antibodies etc.) that are apparently also capable of elementary and accurate detection of cancer. The fact remains, however, that detection in the form of a simple 'most probably yes' or 'most probably no' is, in fact, of only limited use unless the test is also capable of capturing or harvesting the same cancer cells for laboratory analysis. Without this, doctors will remain unable to ascertain key information, including identifying the cancer itself along with the extent to which it is aggressive or benign and therefore how to treat it. As such, ANGLE is the only such detection technology that is capable of offering such analysis and so, in Beaufort's opinion, is much more likely to become the globally recommended standard for hospitals and associated medical institutes. Yesterday's news drove this point home. Not only was the Group able to secure major new funding from professional investors in order to progress clinical studies, but it also confirmed a UK contract which allows for routine clinical and research use, itself a key part of the Group's strategy for commercialisation. The funds now available are expected to be sufficient to cover the next 2 years of planned clinical studies, which will be bolstered further by rising research sales. Assuming all goes to plan, ongoing studies of ovarian cancer should have sufficiently concluded to permit first commercial sales to EU hospitals during 1H'2017. Beyond this, FDA authorisation for metastatic breast cancer is expected to be secured through substantive studies defined by three major US-based centres. Successful conclusion here, potentially offers scope for initial North American commercial sales for MBC later in 2017. Further indications, including ovarian and prostate will seek a similar route with the FDA. Importantly also, ANGLE management is already advanced in its discussions regarding necessary reimbursement codes for medical insurance in the States. Yesterday's news was a further important step for ANGLE and Beaufort retains its Speculative Buy recommendation on the shares.

Anglo Pacific (LON:APF, 73.50p) - Speculative Buy
Yesterday, Anglo Pacific released its trading update for the period between 1st January 2016 and 23rd May 2016. The company's royalty income for Q1 2016 dropped to £1.9m from £2.3m in Q1 2015. Guidance from Kestrel mine remains unchanged, with 30–35% of production expected within the group's land in H1 2016 and 85–90% in H2 2016. Cash and cash equivalents as on 31st March 2016 stood at £3.7m (31st December 2015: £5.7m). Borrowings as of 31st March 2016 amounted to £9.3m as compared with £7.3m on 31st December 2015. Anglo Pacific's equity stake in Berkeley Energia Limited is valued at £10.3m as on 23rd May 2016.

Our view: Anglo Pacific's performance in Q1 2016 was in line with expectations. The company expects the majority of royalty income in H2 2016, as in the previous year. The Narrabri and Kestrel coal mines in Australia are progressing well, with production expected at Kestrel and a full year of income for the Narrabri royalty. Anglo Pacific also received first receipts from its Four Mile uranium royalty during the period. Meanwhile, the company witnessed positive developments at Berkeley, with the market value of royalty around US$10m higher than the carrying value in its balance sheet. We expect Anglo Pacific to deliver as per the expectations in the year, well supported by recovery in coking coal prices. Therefore, we maintain a Speculative Buy rating on the stock.

HSS Hire (LON:HSS, 103.0p) - Hold
Yesterday, HSS Hire released a trading update for the 14 weeks to 2nd April 2016 (Q1 2016). During the period, revenue increased 16.3% y-o-y to £84.3m, gaining from the extra week's trading, which accounted for around 8% of revenue growth. Revenue in core business rose 15.8% to £71.9m, while revenue from specialist business grew 18.1% to £12.4m. Adjusted EBITDA increased 14.3% to £17.6m. Net debt at the end of the period stood at £234.0m (FY 2015: £218.1m). Meanwhile, the company started operations at National Distribution and Engineering Centre (NDEC) in March 2016. Separately, HSS appointed Paul Quested as Chief Financial Officer. He would join the group and become an executive member of the Board with effect from 22nd August 2016.

Our view: HSS recorded a good performance in Q1 2016 with growth across both its business lines. The company's margins improved due to cost reduction actions implemented in 2015. HSS witnessed utilisation improvements across the group, with core utilisation rising 2% to 49% and special utilisation increasing 4% to 76%. The company's new NDEC would aid its extensive branch network and web capabilities. However, HSS's huge debt remains a factor potentially limiting its ability to fully participate in the continuing recovery. Moreover, a Brexit vote on 23rd June 2016 would likely further dampen the company's prospects. Beaufort's 2016E EPS forecast remains toward the upper end of market expectations at 6.7p (followed by 8.5p the following year), but current uncertainties mean that Beaufort has decided to cut its own price target from 100p/share to 90p/share and maintain its recommendation to Hold until improved visibility justifies a further earnings upgrade.

Dixons Carphone (LON:DC., 447.60p) - Buy
Dixons Carphone, the Europe's leading specialist electrical and telecommunications retailer and services company, yesterday released its trading update for 16 weeks ended 30 April 2016 ('Q4 2016'). During the period, the like-for-like ('LFL') revenues for the Group advanced +5%, which comprised by LFL growth of; +4% in UK & Ireland, +9% in Nordics and flat in Southern Europe. The full year LFL revenue growth for UK & Ireland was +6%, driven by encouraging growth in electricals and mobile phone, contributed to Total revenue growth of +2%. Both in Nordics and Southern Europe, full year LFL revenue rose by +4%. This brings full year LFL revenue growth for the Group up +5%. The Group narrowed its full year headline pre-tax profit expectation to £445m-£450m, the top half of previous guidance, while year-end net debt now expected to be below £300m. On the operational front, the Group gained market share across electricals and mobile in the UK & Ireland, Nordics and Greece. The total number of Carphone Warehouse stores-within-a-store with 3-in-1 formats (PC World, Currys and Carphone Warehouse) in the UK & Ireland now stood at 273 and these stores continued to perform well. In Nordics, the Warehousing project at Jönköping is progressing well and the Group has completed integration of the Infocare business. Dixons Carphone will announce its full year results on 29 June 2016.

Our view: Dixons Carphone delivered better than expected result for the Q4 2016, recording strong LFL revenue growth and expanded market share across electricals and mobiles in its key division. A strong performance in the final quarter enabled the Group to narrow its headline pre-tax profit range from £440m-£450m previously announced in Christmas to £445m-£450m, against current consensus analysts' estimate of £446m. This range suggests an increase in pre-tax profit of c.+17% year-on-year. The Group continued to improve its all-important customer satisfaction and price competitiveness rating across all key markets. Recently, on 21 March 2016, the Group announced that it has entered into an agreement to acquire Simplifydigital, the UK's largest broadband, TV and home phone switching business for an undisclosed sum. This acquisition enables it to significantly improve its Services business, where Dixons Carphone provides independent advice and allowing it to become a trusted partner in customers' homes for responsive, accessible, expert and affordable technology support. In view of the Group's encouraging LFL revenue growth, increasing market share, and operational progress, Beaufort maintains its Buy rating on the stock.

Intertek (LON:ITRK, 3,112.0p) - Hold
The Company issued a Trading Statement yesterday and reported revenue, for the period January – April 2016 up 12.7% at actual exchange rates and 10.6% at constant currency, compared to the same period in 2015. Organic revenue growth was 2.3% and 0.5% at actual exchange rates and constant currency respectively. The Group has started the year well with double-digit revenue growth. Other Product related businesses, which contribute over two-thirds of The Group's earnings, delivered good organic growth performance, and the Group's Trade activities reported solid organic growth while market conditions remained challenging in the Resource related businesses.

Our view: The Group are on track to deliver robust full year revenue growth at constant currency and continue to expect to deliver solid organic growth performance in 2016 with Group margins broadly stable year on year. Intertek operates a high margin and strongly cash generative earnings model with a track record of sustainable growth and shareholder value creation. Looking forward, Intertek will continue to see structural growth opportunities in the Total Quality Assurance market as corporations focus on risk management in their increasingly complex operations and supply chains. Despite Intertek's track record we move our recommendation to HOLD because there appears a slowdown in Q4 and with a rating for the full year 2016 is a full 22x earnings.

Marks & Spencer (LON:MKS, 399.40p) - Hold
Yesterday Marks and Spencer reported 'sales performance unsatisfactory' although strong growth in food was reported. The Profit before Tax was marginally above consensus but M&S has taken a £200m exceptional for impairments and M&S PPI mis-selling. The Company is clear on the actions needed to recover and grow Clothing & Home, which is M&S's top priority, but these actions, combined with the difficult trading conditions, will have an adverse effect on profit in the short term.

Group revenue £10.6bn +2.4% £10.4bn +0.8%
Underlying profit before tax £689.6m +4.3% £684.1m +3.5%
Non-underlying items (£200.8m) n/a (£200.8m) n/a
Profit before tax £488.8m -18.5% £483.3m -19.5%
Underlying basic earnings per share 35.0p +5.7% 34.8p +5.1%
Basic earnings per share 24.9p -16.2% 24.6p -17.2%
Free cash flow £539.3m +2.9%   
Net debt £2.14bn -£84.9m   
Dividend per share 18.7p 3.9%   

Our view: Disappointing results will lead to circa 10% reduction in consensus forecasts, but we note the start of the strategic turn round has commenced, although this will take time against 'difficult trading conditions'. International has been disappointing, but Food is doing well and they do have a focus on growing the Food business. However, the core Clothing and Household will take time and we will monitor Marks and Spencer but maintain our Hold stance.

Zoopla Property (LON:ZPLA, 337.80p) - Buy
Yesterday, Zoopla Property declared its results for the half year ended 31st March 2016 (H1 2016). During the period, revenue soared 130% to £96.4m, mainly due to the inclusion of the Comparison Services division. Adjusted EBITDA surged 89% to £40.5m. Consequently, pre-tax profit rose 53% to £28.1m, leading to an EPS of 6.9p as compared with 3.8p in H1 2015. Net debt at the end of period amounted to £83.9m. On the operational front, Zoopla made investments and partnered with UK's property technology start-ups. After the period, the company acquired the Property Software Group for £75m. The group launched a series of national TV adverts for both its Zoopla and uSwitch brands, with the Zoopla campaign being its biggest to date and resulting in record levels of brand awareness. The company has declared an interim dividend of 1.5p, 50% higher than that in H1 2015, to be paid on 24th June 2016.

Our view: Zoopla performed strongly in H1 2016 with record revenues and enhanced margins. The Property Services division performed as per expectations and reported 12 consecutive months of UK Agency partner growth. The number of property listings grew to 854,000, showing a rise in the number of property partners. On the other hand, the Comparison Services segment outperformed expectations, with the uSwitch brand continuing its strong market hold. The energy vertical's growth was driven by a higher volume of switching during winter. Zoopla recorded strong traffic of over 300 million visits to its websites and apps, with more than 68% via mobile. The company continued product innovation and integration with the launch of new tools for both consumers and professionals. In addition, Zoopla's acquisitions and investments would enhance its consumer experience and help build the ultimate home-related lead-generation platform. The company remains committed to shareholders as it announced higher dividends payable. We believe Zoopla is comfortably placed to continue its growth momentum in the second half of the year. Therefore, we maintain a Buy rating on the stock.

Economic news
Germany IFO
The business climate index for Germany rose to 107.7 in May from 106.7 in the previous month, the survey results from IFO institute revealed yesterday. The markets expected a reading of 106.8. Executives' expectation index increased to 101.6 from 100.5 in the previous month.
US MBA mortgage applications
US home mortgage applications, including both refinancing and home purchase, rose 2.3% w-o-w in the week ended 20th May, after a 1.6% decrease in the preceding week, the Mortgage Bankers Association said yesterday.

Thu, 26 May 2016 08:37:00 +0100
Brent conquers $50 FTSE 100 called to open flat at 6265, with overnight trading holding up above the now key 6250 level which gives weight to the argument that the Bulls remain in control. As suggested, the 24-hour sideways shift is likely a pause before continuation of the bullish triple-bottom breakout to 6350. A break above 6280 would kick start the second leg of a 3-day bullish flag pattern to 6430 highs of 2016. Watch levels unchanged: Bullish 6285, Bearish 6240.
The flat opening call comes as Asian bourses struggle to emulate US gains, even with Brent Crude Oil conquering $50 to lock in an 80% rally to 6-month highs and US Crude knocking at the door to boost economic sentiment (welcome inflation on its way?) following a US Stockpile drawdown and growing belief in a supply/demand rebalancing.
Energy-related stocks are understandably benefiting Japan’s Nikkei and the Aussie ASX, although limited by a slightly weaker USD resulting in strength for the Yen and Aussie dollar. Note Financials also holding firm on the prospect of a June US Fed rate hike. Optimism is, however, lacking elsewhere as worries about a slowing China creep back in to send its equities to 2.5-month lows despite the slightly weaker USD helping raw material metals.
US markets tracked oil higher again (Brent Crude breaking above the key $50 level) after the EIA data showed a bigger than expected 4mn barrel drawdown in US inventories. We heard from a slightly dovish Kaplan who said he’d likely not vote for either a June or July rate hike, yet his outlook was still in agreement with the hawks on the number of rate rises this year - about 2. Kashkari, meanwhile, called negative interest rates ‘perverse.’
The Fed’s annual survey on economic wellbeing found that most American households are better off financially than they were last year, yet nearly half said they wouldn’t be able to find $400 for an unexpected emergency. Is now the time to raise their borrowing costs then?
While oil prices continue to tick higher, note that the prospect of an OPEC-led deal to control output looks ‘dead,’ even as Iran approaches pre-sanctions production levels - which it had previously said would make it more at home to participating in discussions. It seems not...
Gold bounced up off $1218 with some potential short covering kicking in as the USD basket turned over. Now off its recovery high which coincides with 17 May falling resistance. With a positive mood remaining in the equities space, it’s only really the  USD that’s driving demand for gold currently, and while Kaplan was a bit dovish, note he wasn’t that dovish which should keep at least some expectations of a June hike alive. Back to $1220 today?
In focus today will be UK Q1 GDP growth expected to be confirmed at 0.4% QoQ and 2.1% YoY, slower than the 0.6% QoQ posted in Q4 but steady over the year. UK BBA Home Loans are seen higher in April supporting a solid housing market even in the run-up to an uncertainty-filled UK referendum on EU membership while comments from the G7 Leaders meeting in Japan may attract market attention.
In the afternoon, those notoriously volatile Durable Goods Orders growth is seen calming in April after a strong March while US Pending Home Sales consensus is looking for a slower April, at odds with those very strong New Home Sales figures we saw on Tuesday. Remember Homes are most people's biggest asset so has an impact on consumer confidence.
After a run of poor US regional manufacturing prints (Empire, Richmond, Philly) the Kansas Fed may add to the fray with a still negative number expected, adding to scepticism about a Summer US Fed rate hike. Note the Fed’s Bullard (an actual FOMC voter, so what he says counts for more) up mid-morning while Powell !) graces the airwaves after the European close (Another voter? That’s two! Listen up folks).

Thu, 26 May 2016 08:36:00 +0100
Beaufort Securities Breakfast Alert: Dekeoil, Big Yellow, De La Rue, Kingfisher, Severn Trent The markets

The FTSE-100 finished yesterday’s session 1.35% higher at 6,219.26, whilst the FTSE AIM All-Share index closed 0.34% better-off at 733.27. In continental Europe, markets ended sharply higher, led by a rally in financial shares and positive GDP data from Germany. Furthermore, a fall in the euro against the dollar led to gains for European exporters. France’s CAC 40 and Germany’s DAX rose 2.5% and 2.2%, respectively.

Wall Street
Wall Street ended in the green as solid housing data suggested that the economy can endure higher interest rates. In addition, improvement in oil prices led to gains for energy stocks. The S&P 500 advanced 1.4%, led by the information technology sector.

Equities are trading higher, taking positive cues from gains in global markets. The Nikkei 225 advanced 1.6%, as exporters received a boost from a stronger dollar, supported by strong data on US home sales. The Hang Seng was trading 2.4% up at 7:00am.

Yesterday, WTI and Brent oil prices increased 1.1% and 0.5%, respectively. The spread between the two varieties stood at US$0.0 per barrel.


Eurozone ministers approve bailout package for Greece

Eurozone’s finance ministers have agreed to extend further bailout loans to Greece in a meeting in Brussels. The ministers agreed to release €10.3bn in bailout money for Greece to avoid bankruptcy. The move comes after the Parliament of Greece approved spending cuts and increased taxes as demanded by creditors.

Company news

DekelOil (LON:DKL, 1.35p) – Speculative Buy
DekelOil yesterday announced it had reached agreement to acquire approximately 30.5% stake in CS DekelOil Siva Limited, the Company’s majority owned joint venture in the producing palm oil project at Ayenouan. The proposed transaction will increase DekelOil’s interest in Ayenouan to 81.5% and is said to be earnings enhancing for Shareholders. By securing a greater proportion of Ayenouan’s growing revenues and cash flows, the acquisition has the potential to accelerate the roll out of the Company’s strategy to build a leading West African palm oil producer. The Acquisition is to be funded via a proposed capital raise of £10.8 million by way of placing of New Ordinary Shares to institutional and other investors at a premium of 1.9% to the closing share price on 23 May 2016. Completion of the Placing and Acquisition are conditional upon, inter alia, passing of Resolution 1 by Shareholders at the General Meeting (scheduled for 16th June), with subsequent Admission of the Placing Shares is expected to occur the following day. The Placing is not underwritten. DekelOil also proposes that all of the Company’s existing ordinary shares are consolidated on a 10 for 1 basis into new ordinary shares, which is expected to become effective on 21 June 2016. Tutalon Investments Limited (a related party of Youval Rasin) will subscribe for 75,471,600 Placing Shares at the Issue Price, meaning that Youval Rasin will control approximately 20.4 per cent. of the Pre-Consolidation Share Capital following the Placing. The Company’s Directors have also irrevocably undertaken to vote in favour of the Resolutions in respect of their own beneficial holdings representing approximately 35.7 per cent. of DekelOil.

Our view: Adding significant value! It would have been a surprise if DekelOil’s ambitious management were not taken the opportunity to add to its 51% interest in the vertically integrated palm oil project at Ayenouan assuming, of course, it could secure a deal on acceptable terms for shareholders. And it’s done exactly that – a premium placing (at 1.325p/share) reflects management confidence in its ability to deliver a value-added transaction which it expects to be earnings enhancing from day one. Indeed, Ayenouan has the potential to be both highly cash generative and profitable for many years to come. In its first full year of operations, the 60 tonnes per hour extraction mill produced 35,000 tonnes of CPO, which generated revenues of €23.4 million and EBITDA of €3.7 million net to DekelOil. With a capacity to produce 70,000 tonnes of palm oil per annum, there is room to double CPO production. Combined with the Company’s recently commissioned kernel crushing plant, which is already producing value-added products, production is on course to significantly increase going forward. Current trading reinforces this optimism, with management announcing last month that ‘crude palm oil production for the quarter ended 31 March 2016 has materially exceeded management’s expectations and has increased significantly in comparison to the corresponding period in 2015’. DekelOil has positioned itself to become highly cash generative and as its ambitions are realised going forward, shareholders can expect to be rewarded by management implementing a formal dividend policy. Beaufort retains its Speculative Buy recommendation on the shares.

Beaufort Securities acts as corporate broker to DekelOil plc

Big Yellow (LON:BYG, 886.50p) – Hold
Yesterday, Big Yellow declared its results for the year ended 31st March 2016. During the period, revenue advanced 20% to £101.4m, with like-for-like (LFL) revenue growth of 10%. Adjusted pre-tax profit surged 24% to £49.0m, resulting in EPS of 31.1p, 15% higher than the previous year. Net debt at the end of the period stood at £295.0m (2015: £277.1m). Cash flow from operating activities increased 31% to £55.5m. Average net achieved rent per sq ft increased 3% to £25.73. Occupancy (LFL stores) rose by 3.5 percentage points to 76.7%. On the operational front, Big Yellow opened two new freehold stores at Enfield and Cambridge. The company acquired four store Lock and Leave portfolio in April 2016 for £21m. Additionally, Big Yellow acquired prime London development sites in King’s Cross and Camberwell. The company has declared a final dividend of 12.8p, taking full-year dividend to 24.9p, which is 15% higher than the previous year.

Our view: Big Yellow delivered strong performance in FY 2016 despite a slowdown in economic activity. The company recorded solid growth in revenue, healthy occupancy rates and better margins than the previous year. Big Yellow continued its investments to increase capacity, acquiring new sites and opening new stores. The company has the largest market share in visits to self-storage company websites in the UK, ranging from 34% to 40%. Big Yellow maintained its dividend policy and increased dividends payable to shareholders. The company remains focused on driving earnings through occupancy growth and targets an occupancy rate of 85% across the portfolio in the coming years. Nonetheless, Big Yellow remains in the growth stage and we would wait and watch its performance in the near future. In view of the company’s strong progress in FY 2016, we upgrade the stock to Hold from Sell.

De La Rue (LON:DLAR, 534.0p) – Hold
Yesterday, De La Rue declared its results for the full year ended 26th March 2016 (FY 2016). During the period, revenue from continuing operations increased 7% y-o-y to £454.5m. Underlying pre-tax profit surged 2% to £58.5m, leading to an EPS of 48.1p, up from 46.1p in the previous year. Underlying operating cash flow, comprising underlying operating profit adjusted for depreciation and the movement in working capital, stood at £100.2m (2015: £85.6m). Net debt decreased by £4.9m to £106.1m. On the operational front, the volume of banknotes increased 9% to 7.1bn and banknote paper rose 6% to 10,000 tonnes. Net average headcount reduced 10% to 3,566. The company completed its reorganisation from a divisional to a functional structure. De La Rue sold its cash processing solutions business to Privet Capital LLP. De La Rue proposed a final dividend of 16.7p, taking full-year dividend to 25.0p, in line with last year.

Our view: De La Rue’s performance in FY 2016 was broadly in line with expectations. The rise in the company’s profit was led by a strong performance from the currency business. De La Rue’s other parts of the business that are identity solutions, which produces passports, and product authentication and traceability services, performed as per expectations. De La Rue has been attempting to reaffirm its market position since 2010 after the Indian government cancelled its then largest contract on quality grounds. In December 2015, the company halved the number of production lines and cut 300 employees as it consolidated operations to stir up the business. De La Rue also faces fierce competition in the market, fuelled by a global banknote surplus. We appreciate De La Rue’s progress in FY 2016. However, the company is still in the rebuilding phase amid challenging market conditions. Therefore, we maintain a Hold rating on the stock.

Kingfisher (LON:KGF, 373.0p) – Hold
Kingfisher, the European home improvement outlet operator, yesterday provided its Q1 trading update to 30 April 2016 (Q1 FY2016). During the period, sales advanced +5.1% to £2.7bn in reported basis, or +2.3% at constant currency basis, while like-for-like (‘LFL’) sales expanded by +3.6% at constant currency basis, against comparable period (Q1 FY2015). Group LFL sales growth of +3.6% was encouraging, driven by the UK & Ireland and Other International (including: Poland, Russia, Spain and New Country Development) division where it saw a growth of +6.2% and +4.7%, respectively, at a constant currency basis. In the UK & Ireland, Screwfix was particularly strong with LFL sales rose +16.2% driven by new and extended ranges, omnichannel capability and 10 new outlets. LFL for B&Q was +3.6% as planned store closure added +1.9%, with strong non-seasonal items improved +7.3%. LFL sales in Poland was +10.8% due to favourable market condition and new ranges, while French market remain weak (LFL +0.2%). On the operational front, as part of the ONE Kingfisher plan, the Group closed 10 B&Q stores and unified all its IT platform. The Group is on track for its FY2016 operational milestones to 1) close c.15% surplus space at B&Q; 2) further closure of 25 B&Q stores; 3) unify IT platform for back office and supply chain; and 4) set up new Offer and Supply Chain Organisation with new unified global functions and roles starting from early June. Kingfisher’s CEO, Véronique Laury commented “We continue to feel confident in our ability to deliver our plan, based on putting customer needs first, supported by the expertise and enthusiasm of our colleagues”.

Our view: No surprises! Kingfisher’s Q1 performance was in line with expectations (consensus analysts’ estimated sales of £2.7bn). The Group’s ONE Kingfisher plan announced in March 2015 to create a unified, unique and leading home improvement offer, while driving digital capability and optimising operational efficiency, is making a good progress and remains ahead of schedule. In January 2016, the Group set a 5 year transformation plan to deliver £500m sustainable annual profit uplift by the period end over and above ‘business as usual’. Considering excellent growth in the Group’s Screwfix business, good progress on ONE Kingfisher plan and management’s confidence displayed through it returning £78m in the Q1 of a c.£600m share buyback programme, we are encouraged by the Group’s progress. Meanwhile, we would like to see further progress in containing costs at B&Q, while adequately responding the changing customer trends. B&Q has performed strongly so far this year, reversed the period of underperformance that began in May 2014. On this basis, while awaiting further positive management initiatives, Beaufort retains its Hold recommendation.

Severn Trent (LON:SVT, 2,265.06p) – Buy
Yesterday, Severn Trent declared its preliminary results for the year ended 31st March 2016 (FY 2016). During the period, revenues decreased 0.8% y-o-y to £1.8bn due to a fall in regulated prices. The company’s underlying profit before interest and tax (PBIT) stood at £522.8m, 3.2% lower than the previous year. While, pre-tax profit surged 4.4% to £313.6m, leading to an EPS of 108.7p compared with 107.2p in the previous year. Return on Regulated Equity (RoRE) stood at 8.4%. Net debt at the end of period stood at £4.8bn. The combined average bills remained flat at £329 per annum. The number of customer complaints has reduced 28% y-o-y. Severn declared a final dividend of 48.40p, bringing the full-year dividend to 80.66p, 5% lower than the previous year.

Our view: Severn Trent performed well in FY 2016 on both financial and operational fronts. The company remained focussed on improving customer satisfaction as it saw a sharp fall in customer complaints and had the lowest combined average bills. Severn Trent remains a market leader in waste water efficiency and delivered good performance on key metrics, such as internal sewer flooding (down 31%). The company has achieved operational excellence and maintained high environmental standards, receiving Environment Agency (EA) 4* rating for the second time in three years. Severn Trent increased its workforce and key contractors through its ODI-linked employee bonus scheme and performance-based incentive contracts. Recently, Severn Trent entered into a joint venture (JV) with United Utilities to form Water Plus. The JV would combine the complementary skills of both companies, across sales, customer service, business strategy and credit management, to deliver an attractive proposition for large and small business customers across England and Scotland. The company plans to make investments to enhance customer experience. We are buoyed by Severn Trent’s progress in FY 2016 and expect it to continue its growth momentum in the current year. Therefore, we maintain a Buy rating on the stock.

Economic news

Germany GDP
German GDP growth expanded 0.7% q-o-q in Q1 2016, following a 0.3% growth in Q4 2015, as per the data published by the Federal Statistics Office. On y-o-y basis, GDP grew 1.6%, from previous quarter’s growth of 1.3%.

Germany ZEW survey
The Centre for European Economic Research/ZEW reported that the German economic sentiment slipped to 6.4 in May from 11.2 in April, as against the market expectation of an increase to 12.0. Meanwhile, the gauge of current situation increased to 53.1 in May from 47.7 in April.

US new home sales
New home sales in the US surged 16.6% m-o-m to a seasonally adjusted annual rate of 619,000 units in April 2016, the Commerce Department said yesterday. The annualised sales figure for March was revised to 531,000 from the previously reported 511,000

Wed, 25 May 2016 14:27:00 +0100
Oil price, IGas, Sundry, Range Resources, Exxon, Woodside, Sound, And finally... Oil prices
The first up day for a while and that was before the API inventory number came out after the close. Trying to pick the bones out of those numbers is more difficult than it first seems, the crude number, showing a draw of 5.1m barrels roughly double expectations, is quite bullish although starting to be affected by the forest fires situation in Canada. There was a draw of 189/- barrels at Cushing which also ticks the box and distillates also drew much more than expected at 2.9m vs guesses of -1m. So the fly in the ointment is the gasoline number, analysts were expecting a draw of 1.3m barrels but the outcome of a build of 3.6m has flummoxed even the brainiest of bears, I suspect a rogue number to be honest especially the week before the Memorial Day holiday and the start of the driving season.
A number of things make it worth commenting on retail prices for petrol or gasoline, depending on where you are. Over this side of the pond there is a general view, fuelled by the tabloid press, that petrol prices go up like a rocket but down like a feather, usually wrong but why let the facts get in the way of a good story eh? So I was looking at the impact of the French refiners strike which may lead to shortages and ultimately good excuses for higher prices. These price increases will for once be totally justified if you look at the stats, since the January low the Brent price is up 74% whilst in the UK petrol prices are up around 6% from the low of 99p a litre. In the US WTI is up 83% since the low and gasoline is only up 15% at $2.30 a gallon. So when the tabloids and the news channels start to complain about the retail price for once they wont have a leg to stand on, those lovely oil companies are doing everyone a favour…
IGas Energy
IGas is the sector’s slow burner at the moment, today’s update shows solid if unspectacular performance whilst keeping costs down and protecting long term revenues. Production is in line with guidance, now 2,500-2,700 boe/d a good deal of which is long hedged to provide cash flow consistency. Opex of $30 a barrel is good and with cash of £22.5m and capex of $10m (confusingly in dollars) is well placed and fully funded for its plans. Those are applications still being submitted in various stages which rather gives the lie to the assertion in the Lex Column this morning that the company has decided ‘not to bother’ with producing shale gas from UK fields. With strong funding, an exciting portfolio and a slow but inexorable and grudging move to more favourable planning results, IGas may be slow burning but at least the lights never went out when things were bad…
Range Resources has appointed a new Chairman, Mr Zhiwei or ‘Kerry’ Gu steps up from being a non-exec to take over. A partner of Dentons, a leading international law firm, will give Range more credence as they continue the process of re-aligning with shareholders and the market.
Exxon holds its AGM today amidst a traditional furore from all quarters. Facing down the environmental protesters is normal but Calpers would like more access and the company have got the Grauniad in a fit of pique at not being allowed into the meeting…
And I notice that Woodside have started seismic operations in the South Porcupine Basin offshore Ireland, this will give smaller participants hope that slowly things are beginning to happen.
Finally, just proving that companies can be both innovative and helpful it is now possible to watch the drilling of Sound’s Tendrara well via a webcam available on their website. I dont think it will be able to spot some give aways such as flaring, that would be asking rather too much!
And finally…
A touch quiet on the sporting front this week but Muzza eventually proceeded against Stepanek in five sets although there was less good news from Konta and Robson.
Just the i’s to dot and the t’s to cross now for the special one as he decides his backroom team and of course what is going to happen to Ryan.

Wed, 25 May 2016 11:18:00 +0100
Today's Market View Including: Anglo Asian Mining, Asiamet Resources, Aurasian Minerals, Eurasia Mining, Graphene NanoChem, Rambler Metals Anglo Asian Mining* (LON:AAZ) – Cash costs cut on stronger production and weaker manat; stronger 2016 outlook reiterated
Asiamet Resources (LON:ARS) – Moving to Resource Definition Drilling at BKM
Aurasian Minerals (LON:AUM) – Option on Serbian gold project
Eurasia Mining (LON:EUA) – Contract mining to start at West Kytlim
Graphene NanoChem (LON:GRPH) – commercial application of PlatSurF oilfield addative
Rambler Metals (LON:RMM) – Third Quarter Production increases

Lithium – Breathable lithium Air batteries offer 5-10x power density in next five years
• The development is all down to a new catalyst called dimethylphenazine developed by a team at UT Dallas along with researchers at Seoul National University
• Nissan which is to build its next generation of battery modules and electric vehicles in Sunderland, UK announced earlier this week expectations to more than double the range of its electric vehicles within 10 years.
• In the meantime new figures show that China tripled lithium-ion battery production last year with >$400m invested in the lithium battery sector already this year.
• China is reported to have produced some 5.6bn li-ion cells last year with a capacity of around 15.7GWh.

Equity markets are trading higher this morning following strong performance in the US and Asia.
• US stocks climbed led by gains in financial and tech names with S&P500 up 1.4% posting the best one-day run since Mar 11. Nasdaq and Dow were up 2.0% and 1.2% respectively.
• US$ index is slightly off this morning but continuing to trade around the strongest level since Mar/16.
• Gold prices are off this morning (-0.4%/-US$4.6/oz) trading at US$1,224/oz extending the losing streak dragged by the strengthening US$.
• Oil prices are up this morning on the back of the API numbers showing a 5.1mmbbl drop in US stockpiles last week.
• Crude climbed 1.3% today and is currently trading at US$49.2/bbl, closing the gap with this year’s highest reading of US$49.3/bbl recorded last week.

China manufacturing sector acquiring technology
• China is seen buying technology and not just resources these days as the nation moves to shift its focus towards value added production.
• China overtook the US in the first four months of this year in terms of technology acquisitions at US$65.7bn spent with a 45% market share of global technology M&A
• The US by comparison, spent US$45.6bn on deals representing 31% of the technology M&A market

Vale – to cancel HK listing
• Bloomberg report that Vale, the world’s largest iron ore producer is going to cancel trading in its HK listed depository receipts
• Just 1.8m of Vale’s depository receipts traded over the last year vs 7.38bn equivalent ADRs listed in the US and 1.87bn shares in the Brazil listed stock

Dow Jones Industrials                         +1.22% at          17,706
Nikkei 225                                            +1.57%  at          16,757
HK Hang Seng                                     +2.71%  at          20,368
Shanghai Composite                           -0.23%  at            2,815
FTSE 350 Mining                                  +1.22%  at           8,929
AIM Basic Resources                           -0.43% at            1,900

Economic News
US – Markit services and composite PMIs are due later today with estimates for a non-manufacturing sector to grow stronger in May offsetting some negative effects of the industrial segment.
• On Monday, manufacturing PMI came in at the lowest level in years (50.5 v 50.8 in Apr and 51.0 forecast) on slowing orders and falling exports.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Monday Markit Manufacturing PMI May 50.5 51.0 50.8
Tuesday New Home Sales Apr 16.6%mom 2.4%mom -1.3%mom
Wednesday Markit Services PMI May  53 52.8
  Markit Composite PMI May     52.4
Thursday Weekly Jobless Claims   275k 278k
Durable Goods Orders   0.5%mom 0.4%mom
Durable Goods Orders (Core)  0.3%mom -0.3%mom
  Capital Goods Orders (ex Air)   0.3%mom -0.8%mom
Friday Q1 GDP (2nd reading)   0.9%qoq 0.5%qoq (1st reading)
  Core PCE (2nd reading)     2.1%qoq 2.1%qoq (1st reading)
Source: Bloomberg   

China – The PBoC lowered the reference renminbi rate to the lowest since Mar/11 as the greenback strengthened due to a revision in the Fed rate hike expectations.

Germany – A set of economic data show an improved consumer and business sentiment through May-Jun.
• GfK Consumer Sentiment: 9.8 in Jun and 9.7 in May and forecast.
• Consumer confidence has been on a rising trend since the start of the year helped by low interest rates and increasing wages.
• Private consumption together with business investments were main drivers of GDP growth through Q1/16 (0.7%qoq/1.3%yoy).
• The economy expanded the most in two years through Q1/16.
• IFO Business Current Assessment: 114.2 in May v 113.2 in Apr and 113.3 forecast.
• IFO Business Expectations: 101.6 in May and 100.5 in Apr and 100.8 forecast.

Russia – The government placed US$1.75bn of Eurobonds marking the return to international debt markets despite US and EU sanctions remaining in place.
• Bonds yield 4.75% with a 10-year maturity.
• The placement was oversubscribed with US$7bn bids recorded and more than 70% of issue placed with foreign investors.
• The government may potentially place additional US$11.25bn of Eurobonds by the end of 2016.

Greece – Creditors reached an agreement required for the release of €10.3bn of aid funds to Greece starting from €7.3bn due next month.
• Funds would mark the first cash  injection since the end of 2015 and is expected to see Athens through Oct.
• Debt restructuring has been postponed until the end of the bailout programme is set to expire in 2018.
• Importantly, the decision allows Germany to negotiate concrete debt relief options post elections due in 2017.

US$1.1144/eur vs 1.1187/eur yesterday.   Yen 110.24/$ vs 109.57/$.   SAr 15.650/$ vs 15.740/$.   $1.464/gbp vs 1.459/gbp
0.719/aud vs 0.716/aud.   CNY 6.562/$ vs 6.555/$ –

Commodity News
Precious metals:
Gold US$1,224/oz vs US$1,244/oz yesterday – Azerbaijan has recorded a significant increase in gold reserves on the back of increased exploration activity and upgrades to the drilling rigs base, Minister of Ecology and Natural Resources said in a local interview.
Gold ETFs 59.3moz unch v 59.4moz yesterday – small slippage since big jump in ETF holdings on Monday
Platinum US$1,002/oz vs US$1,008/oz yesterday –
Palladium US$536/oz vs US$547/oz yesterday –
Silver US$16.26/oz vs US$16.30/oz yesterday –
Base metals:   
Copper US$ 4,627/t vs US$4,586/t yesterday -
Aluminium US$ 1,551/t vs US$1,555/t yesterday
Nickel US$ 8,395/t vs US$8,365/t yesterday –
Zinc US$ 1,836/t vs US$1,824/t yesterday
Lead US$ 1,655/t vs US$1,644/t yesterday
Tin US$ 15,655/t vs US$15,795/t yesterday
Oil US$49.4/bbl vs US$48.0/bbl yesterday
Natural Gas US$1.982/mmbtu vs US$2.070/mmbtu yesterday
Uranium US$28.15/lb vs US$28.50/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$48.3/t vs US$47.8/t – The iron ore trading on China’s Dalian Commodity Exchange fell 2.5% today to a 10-month low of US$53.4/t.
Thermal coal (1st year forward cif ARA) US$47.4/t vs US$46.7/t yesterday – China thermal coal imports fall 18.8% yoy to 7.11mt in April (Platts)
Steel - prices in China continue to fall with October delivery prices falling by >6%.

Tungsten - APT European prices stood at $213-225/mtu vs $215-225/mtu

Company News

Anglo Asian Mining* (LON:AAZ) 10.8p, Mkt Cap £11.5m – Cash costs cut on stronger production and weaker manat; stronger 2016 outlook reiterated
• Record gold production of 72.0koz (2014: 60.3koz) posted in 2015.
• Gold sales (post  12.75% PSA) amounted to 63.9koz (2014: 50.6koz) at an average gold price of US$1,161/oz (2014: US$1,267/oz).
• Group revenues totalled US$78.1m (2014: US$68.0m) benefiting from the sale of gold/silver dore bars as well as SART and flotation concentrates.
• Operating cash costs (C1) totalled US$724/oz (2014: US$971/oz) on the back of stronger gold production and the currency depreciation.
• EBIT came in at –US$3.2m (2014: -US$8.9m) as higher DA charge, a US$6.8m fall in inventories and a US$3.3m decline in capitalised waste stripping costs contributed to a 9.7% increase in cost of sales (US$75.2m v US$68.5m in 2014).
• EBITDA climbed 85% to US$18.7m (2014:US$10.1m).
• The Company posted a positive FCF of US$3.4m (2014: -US$6.9m) despite spending US$14.3m in capex (2014: US$16.3m).
• The capex breakdown includes US$6.6m on waste stripping, US$3.0m tailings dam works, US$3.2m on flotation plant and US$0.9m on Gadir mine development.
• Given US$10m in debt repayment completed through the year under the ATB loan, the Company refinanced some of its liabilities with net debt coming down slightly to US$49.0m (2014: US$52.4m).
• Gold and copper production targets for 2016 reiterated at 72-77koz and 1.7-2.1kt (2015: 1.0kt), respectively.
• 2016 outlook remains positive as the Company is expected to benefit from flotation plant copper concentrate sales and a weaker national currency.
• The latter is estimated to generate US$13m in cost savings through 2016 based on the USDAZN 1.5 exchange rate (1.49 current spot).
Conclusion: While the 48% manat depreciation against the US$ last year has been a massive tailwind for the Group’s financial performance, the management has also worked on the sustainability of the business by adding a small underground operation to the portfolio (Gadir) and the commissioning of the new floatation circuit at Gedabek. Strong 2016 production outlook will need to be accompanied by an improvement in operating margins as current 24% EBITDA margins are running low given debt repayments schedule of the Group. We are looking forward to Company updates on the production and costs side of Azerbaijan operations.
*SP Angel act as Nomad and Broker to Anglo Asian Mining

Asiamet Resources (LON:ARS) 2.325 pence, Mkt Cap £13.4m – Moving to Resource Definition Drilling at BKM
• Asiamet Resources reports that, following the positive outcome to the Preliminary Economic Assessment (PEA) of its Beruang Kanan Main copper discovery in Central Kalimantan, it is now proceeding with resource definition drilling as part of a Feasibility Study.
• The drilling, which is expected to  amount to approximately 9000 metres in 110 diamond drill holes, is aimed at upgrading “the majority of the current Inferred Resource of 49.7 million tonnes grading 0.6% Cu …  to the Measured and Indicated Resource categories. Indicated resources at BKM currently contain 231m lbs in 15.0M tonnes grading 0.7% Cu at a 0.2% reporting cut.”
• The company intends to report results from the drilling as they become available and to be able to generate an updated resource estimate by the end of Q3 2016.
• In addition to the resource drilling and environmental and permitting work, the company is planning geotechnical drilling which should help to define the open-pit design parameters and large diameter core drilling to provide material for a programme of metallurgical testing.
Conclusion: Asiamet is moving systematically towards a feasibility study on the BKM deposit in Indonesia. The infill drilling programme should generate a resource upgrade as inferred resources are moved into indicated or measured. We look forward to drilling results as they become available

Aurasian Minerals (LON:AUM) 0.65pence , Mkt Cap £3.0m – Option on Serbian gold project
• Aurasian Minerals reports that it has agreed an option to acquire an 80% interest in the Gokcinica gold project in southern Serbia from the Rockstone Group.
• The agreement relates to two adjacent permits with a total area of 110 sq km located in an area of historic mining some 5 km north of the town of Josaniska Banja.
• Historic work in the area and recent exploration by “a major copper company” points to the possibility of “porphyry and epithermal style mineralisation as well as deeper level replacement base metal and gold deposits”.
• Previous mapping, soil geochemistry and drilling over a 6km long section of the licences by Euromax during the period 2006-2008 “intersected multiple gossan and massive sulphide intervals, one of which reported 12.4 metres at 1.5% copper, 1.4% lead, 0.8% zinc, 62 g/t silver and 1.6g/t gold. This program also defined a 3km by 2km magmatic complex at the southern end of the trend which remains undrilled.”
• The agreement with Rockstone comprises an initial €10,000 payment and the issue of 2m Aurasian shares within a 30 days period. In addition, Aurasian will pay a finder’s fee of €20,000 and 5 million shares to an un-named party. Following the initial payments, Aurasian can earn a 51% interest by completing a minimum of US$500,000 of exploration , including at least 1000m of reverse circulation or diamond drilling plus mapping, trenching sampling and geophysics / geochemistry as appropriate within 2 years.
• The agreement allows for Aurasian to increase its holding to 70% of the Gokcinica project by completing a pre-feasibility study within 5 years. An 80% interest accrues if Aurasian completes a Bankable Feasibiilty Study “within the time frame of the exploration permits, their renewals or conversion to a mining permit.”

Eurasia Mining (LON:EUA) 0.6p, mkt cap £7.8m – Contract mining to start at West Kytlim
(West Kytlim 70% SKRS, 30% Eurasia by sales)
• Eurasia Mining has signed a deal with SKRS ‘OOO SK Region-Story for the mining of the West Kytlim alluvial platinum property in Russia.
• The agreement gives 70% of all sales to SKRS leaving Eurasia with 30% which looks like a good deal for Eurasia on the surface.
• SKRS will do all the work involved with the mining and processing while Eurasia’s local subsidiary ‘KK/Eurasia’ will be responsible for continuing exploration work and the conversion of resources to reserves.
• KK/Euraisa will also appoint the processing laboratory manager on site who will be responsible for the precious metal recoveries.
Conclusion:  It’s great to see Eurasia are finally moving into site construction with a contractor in place.  Let’s hope it doesn’t take 20 years to develop the next one.

Graphene NanoChem (LON:GRPH) 14.25, mkt cap £16.6 – commercial application of PlatSurF oilfield addative
Graphene NanoChem plc is a nanotechnology commercialisation company that designs, formulates, manufactures and markets a range of nano-enhanced solutions, from chemicals to performance materials with improved performance characteristics, focusing on the oil and gas sector.
• The company today announces that following successful field trials it has received a firm commitment for the deployment of PlatSurF, its oilfield recovery additive in a two year 16-18 well drilling programme in Myanmar.
• The first purchase orders are valued at US$198,864 for use in four wells
• The company published an interesting abstract on the application of nano-graphene in improving drilling fluids performance last December
• “Graphene enhanced lubricant improve the low end rheology of the 13.5 lb/gal HTHP WBM in the range of 200% without affecting the Plastic Viscosity and Yield Point readings, which is good to improve the hole cleaning and weighting materials suspension capabilities. API Fluids Loss is improved with the addition of the graphene enhanced lubricant, this could be the synergization between the nano graphene materials with the fluids loss control polymers”
• Debt restructuring:  The group recently completed a restructuring of around £16m its debt which was held under a short term arrangement with MDV into a longer term deal with a two year repayment moratorium and repayment obligations mapped against the growth plan of the group.  The company also agreed to principal to repay £12m of long term debt held with Bank Pembangunan Malaysia Behad and Bank Rakyat, through the proposed disposal of non-cores assets with initial discussions said to be going well in a statement on 11 April.  The debt bears an effective interest rate of 8%pa. 
• It is interesting that such a small company is holding so much debt.
• The company has not yet reported its 2015 accounts.  Profits fell to a loss of £0.2m for the six months to end June 2015 as sales fell to £7.0m from £20.4m a year earlier.
• The company listed in 2013 and is headquartered in Malaysia.

Rambler Metals (lon:RMM) 3.75 pence, Mkt Cap £5.7m – Third Quarter Production increases
• Rambler Metals reports third quarter production for the 3 months ending 30th April of 4,530 tonnes of copper concentrate (1222 tonnes of contained copper) “representing  a 25 per cent increase over Q2/16 and a 14 per cent increase over Q3/15 results.”
• The increase is ascribed to “increases in mine and mill production, with ore from the massive sulphide zones blended with increasing amounts of Lower Footwall Zone (“LFZ”) ore “.
• Copper recovery for the quarter remained stable at 96.3% (previous quarter - Q2: 96.4%) while precious metals recoveries dipped slightly to 68.0% (Q2: 75.3%) for gold and 70.7% (Q2: 75.3%) for silver
• The company is confident that it remains on track to achieve forecast guidance for the full year of treating 235-250,000 tonnes of ore to produce 17-21,000 tonnes of concentrate containing 4,500-6,000 tonnes of copper, 5500-6000 oz of gold and 42-57,000 oz of silver.
• As the company moves ahead with its longer term plan to move to 1250tpd production capacity, “a new ball mill will be installed in parallel with the existing circuit.” We estimate that the current quarter mill throughput of 56,695 tonnes averaged 630tpd so the installation of the new mill will represent a doubling of the company’s processing capacity.
Conclusion: Rambler Metals is building up its production capacity and throughput in line with the long term development plan. Production guidance remains intact.

Wed, 25 May 2016 11:03:00 +0100
M&S: Brokers give low marks and see few sparks Wed, 25 May 2016 10:36:00 +0100 In the news: Veridyne Power FROM THE BROKING DESK
We are marketing Veridyne Power*** in Australia next week and in London over the week starting 6 June. Veridyne is a private company that is developing a tubular-based Solid Oxide Fuel Cell (SOFC) technology for industrial use. Its design is unique, with thermal stress advantages that have limited SOFC use in previous guises. Fuel cells have been known about for around 100 years and are a proven technology. Great advances have been made during NASA’s space programme, in which many of Veridyne’s technology partners are involved. Veridyne’s ‘tubular design’ offers greater reliability and field life performance over the existing ‘planer design’, but its cost was previously prohibitive to large, commercial-scale implementation. Veridyne’s IP-protected design uses a ceramic chemistry developed over ten years by the University of Queensland’s research department. Ceramic tubes, advanced manufacturing techniques and proprietary IP and designs are expected to reduce capex costs to US$1,000-1,200/kWe vs. competitors’ US$8,000-22,000/kWe, with significantly reduced opex and the proven increased reliability of tubular design.

SOFCs run at very high temperatures. This gives them noticeably higher electrical efficiencies and fuel flexibility. An overall energy conversion efficiency of 80% (including secondary heat recovery) equates to a 50%+ fuel saving, while at the same time virtually eliminating NOx and SOx emissions and reducing CO2 emissions by 50-75%.

There is a captive global market for coal-fired plant conversion. Over 500 coal-fired thermoelectric power stations in Europe and the US are scheduled for closure due to non-compliance with forthcoming emissions legislation. In developing markets such as China and India a switch from coal-fired power generation in the near-to-medium term is highly unlikely; this has had devastating consequences, leading to strong calls for governments to clean up the environment. With carbon capture having proved to be too expensive with minimal payback and the high potential for rolling black-outs due to the lack of marginal power supply, Veridyne’s proposal is that retrofitting existing power plants with all their existing infrastructure and grid connectivity will be cheaper than shutdowns and will reduce emissions enormously, while being paid for by 50% fuel savings. In other words, environmentally-sustainable energy with economic benefits.

Veridyne also sees significant potential in the waste-to-energy market. Landfill and sewage are an increasing issue across the developed world, and local authorities are under pressure to deal with waste effectively. By combining with available processes to produce syngas from waste, Veridyne’s containerised unit will offer an efficient and clean method to generate significantly more electricity from landfill sites than combustion engines or steam turbines.

Wed, 25 May 2016 09:59:00 +0100
SP Angel Morning Oil & Gas: Igas Energy, Urals Energy Headlines

 In Brief
 Igas Energy (LON:IGAS – 19p) – Trading Update
 Independent Resources (IRG LN – 0.07p) – Credit Where it’s Due
 Trinity Exploration and Production (TRIN LN – 3.01p) – Carnage Ahead
 Urals Energy (LON:UEN – 2.13p) – Confidence Returns

In Brief
• Igas Energy (LON:IGAS – 19p) – Trading Update: Following the convulsions of the last 12 months, today’s trading update paints a promising tableau of the Company’s potential. However, we remain concerned by the high opex number and believe that this could be a sign of trouble ahead, especially against a dwindling resource, if it isn’t addressed head on. In this respect, however, we believe this is offset to some extent by the new production that is yet to come in to the hopper. All in all, we believe that today’s update, while underlining the potential in the future portfolio, will generate headwinds for the Company in the near to medium term.
• Independent Resources (IRG LN – 0.07p) – Credit Where it’s Due: Today’s news should ease a lot of the headwinds that have been buffeting the Company recently, as nothing is as destructive to value as creditors seeking satisfaction for their outstanding amounts. So against this backdrop it is to management’s credit that they have addressed it in a manner that even in the issue of shares creates value to the equity holder (issuance above market). All that remains for the Company now is to address the issues in Egypt, start to sweat those assets and generate free cash flow.
• Trinity Exploration and Production (LON:TRIN – 3.01p) – Carnage Ahead: That the management team have started the process of rebuilding the Company, which will require creditor support, is to its credit, as we can imagine the pressure that the team are operating under. What we can’t understand, however, is how in this market, with the issues that the Company is facing, how the it incurs ~$10mm of G and A expenses, which excludes ~$8mm of depreciation and amortisation. On that basis, there is a significant round of cost cutting coming, or a frustrated creditor will pull the plug. Either way there is carnage for somebody.
• Urals Energy (LON:UEN – 2.13p) – Confidence Returns: While only limited in scope and tied to volumes already lifted and in the tank, what today’s announcement of a [pre-finance facility underlines is the confidence that is returning to the Company’s management team. Those with a long memory will recall that Urals was one of the first companies to suffer at the hands of its creditors when it couldn’t develop its Dulisma field sufficiently quickly to meet its obligations. In that respect the Company escaped lightly as Sibir Bank only perfected the security over that asset and was able to dispose of it in to a rising market. So for management to take this step underlines the confidence within the Company. While we are sure that the Company will remain guarded against excessive leverage, we are happy to see that the management has returned to the market in this way, as a well-managed debt programme adds to any company’s efficient funding solution.

Wed, 25 May 2016 09:01:00 +0100
In the papers: Deutsche Bank, Google, Tesco The Times
Moody’s doesn’t rate Deutsche Bank plan: The pressure on Deutsche Bank’s British Chief Executive grew after one of the top ratings agencies cut the German lender’s credit standing and warned that his chances of delivering an ambitious turnaround plan were becoming more remote.
Clydesdale Bank concentrates on cuts as PPI bill rises by £450 million: The newly independent Clydesdale Bank has been hit with a fresh £450 million charge for mis-selling payment protection insurance.
Conflict of interest row over Shell’s new auditor: Royal Dutch Shell was facing fresh pressure over the handling of its controversial £35 billion takeover of BG Group after some of the oil group’s biggest shareholders criticised the appointment of a new auditor with close ties to BG.
Small business loses out as big banks play safe over risk: Smaller financial services businesses have been among the biggest victims of so-called “de-risking” by large lenders, which have dropped customers amid pressure from regulators to prevent money laundering.
Thames taps into familiar source for its next Chief: Another former Boss of BT’s monopoly infrastructure provider has been hired to lead one of the country’s top water suppliers.
Trouble in store for high street in June: Sales on the high street are set to slide in June as shoppers cut back spending before the European Union referendum.
The Independent
Google Paris headquarters raided as part of tax payment probe: Google’s Paris headquarters have been raided as part of an ongoing tax probe.
EDF Chief says Hinkley Point decision could come before summer at the earliest: The Chief Executive of French energy giant EDF said the company “can’t afford to keep the U.K. waiting” and hinted a decision regarding the Hinkley Point C nuclear project in Britain could be reached before the summer. 
Spotify revenues rise to £1.95 billion in ‘best year ever’ - but profit remains elusive: Spotify has heralded its “best year ever” after reporting revenue of almost €2 billion last year, even as losses widened.
The Daily Telegraph
Portuguese suitor makes last-minute bid for BHS: A Portuguese-backed consortium is in pole position to save BHS after Matalan Founder John Hargreaves and Select Fashions Cafer Mahiroglu retreated from the bid battle.
Greek crisis talks return as negotiators face off over debt relief demands: Greece edged closer to securing a lifeline from its European creditors on Tuesday, as finance Ministers met for another round of lengthy crisis talks.
Toyota and Uber join forces in ride-sharing deal: Toyota and Uber will join forces to create a “strategic partnership”, which will include an investment by the Japanese motor company, in what is the latest in a string of high-profile deals between car makers and ride-sharing services.
Severn Trent doubles profit as it drives efficiency overhaul: Midlands water company Severn Trent has more than doubled its pretax profit after driving forward a radical overhaul of its management and spending.
Monsanto rejects $62 billion Bayer bid, but remains open to talks: U.S. agricultural business Monsanto rejected a $62 billion takeover offer from German drugs and crops giant Bayer as it believes the current proposal is “incomplete and financially inadequate”, but said it is willing to engage in further negotiations.
Lotto revamp fails to boost revenues from Camelot draws: A controversial overhaul of the National Lottery has reversed a sales decline in the flagship Lotto game but failed to stop overall revenues generated by Camelot U.K.’s draw-based games from falling.
Tesco boosted by hints of progress on its turnaround: Tesco led the London market higher after an upbeat assessment of its turnaround plans from analyst at Bernstein.
Mortgage bills could rise even if Bank cuts interest rates on Brexit vote, Carney warns: Interest rates may have to rise in the face of a slowing economy if Britain votes to leave the EU, according to the Governor of the Bank of England.
The Questor Column:
Keller order book should deliver: Construction and ground work specialist Keller is enjoying steady trading in its U.S. business, but the downturn down under is hitting the Australian operations and leading to mixed results, sending shares 4.6% lower. The orders are still coming in and that left management confident of reaching targets for the full year. Keller generates the majority of its revenues from installing foundations and drilling pilings for buildings such as the Olympic Stadium, flood defences in the U.K. and major onshore oil and gas projects. The biggest encouragement came from an acceleration of order intake, which left the order book 15% higher at the end of April when compared to a year earlier. We picked Keller as one of our tips of the year because the shares already priced in much of the bad news when they fell sharply from £11 last last year. Now trading on around 10 times forecast earnings and offering a prospective dividend yield of 3% they look decent long-term value. Keller at 925p -45p. Questor says “Buy”.
Cranswick shares look a little overcooked: Cranswick, the FTSE 250-listed sausage maker, enjoyed an 11% jump in full-year profits as the expansion into the chicken market accelerates. The food supply company is enjoying rapid growth in sales to Asia, but Questor is concerned the valuation is looking a little overcooked. There is much to like in the annual results for Cranswick. The company increased profits during the year by diversifying from pig meat into cooked chicken. Full-year pretax profits increased 11% to £58.7 million, on revenue up 6.6% to £1.07 billion during the year ended March. Following the Benson deal the company then invested in improving the food production lines to increase capacity. Cranswick invested a total of £34 million in its facilities last year, £9 million of which was to double output in the chicken business. Sales of poultry increased by 24% last year as a result of this increased capacity. The interesting thing for investors is that nearly all this expansion is self-funded by the company’s ability to generate cash. Cranswick is suffering a bit as pig prices fell about 15% during the year to 114p per kilo, and this reduces the value of the pig herd. On the plus side the cheaper meat drives better sales with fresh pork volumes up 9% during the year. The 25% premium to the wider FTSE 250 looks too rich for a company predicting 10% earnings per share growth in the year ahead. We fear too many investors are piling in because of its excellent track record, rather than the underlying fundamentals, and we can’t recommend buying at these prices. Cranswick unchanged at £23.28. Questor says “Hold”.
The Guardian
Eurozone unlocks €10.3 billion bailout loan for Greece: European officials have agreed to unlock €10.3 billion in bailout money for Greece as the International Monetary Fund made a significant climbdown in its demand for upfront debt relief for the recession-hit country.
IFS warns Brexit would extend austerity for two more years: Britain’s leading tax and spending thinktank, the Institute for Fiscal Studies, has warned that leaving the European Union would force Ministers to extend austerity measures by up to two years to achieve a budget surplus.
British property market has peaked, estate agency Boss says: The Boss of one of Britain’s biggest estate agent chains appears to have called the top of the property market, saying there has been a big slump in demand from buyers after the nation has “reached the limit” on house prices.
Bank of England governor rejects accusations of bias over EU referendum: Bank of England governor Mark Carney has hit back at critics of Threadneedle Street’s warnings over Brexit, arguing that voters wanted to weigh up the economic risks of a vote to leave the European Union.
Daily Mail
Welsh brothers make £18 million after Halfords buys the bike shop they started with a £15,000 loan: Two brothers have made £18.4 million by selling two bike businesses they started by borrowing £15,000 from their parents to Halfords.
British Boss who used to run Alexander McQueen hired to smarten up Versace for a market float: Versace has hired a British fashion Boss to help it smarten up for a stock market listing.
New Nationwide Boss warns on harsh mortgage competition but profits jump again to hit £1.34billion: Nationwide has warned that profits will come under pressure in the near future as competition from rivals in the mortgage market heats up.
Daily Express
Bank Boss Carney accused of conspiring with George Osborne for EU ‘propaganda’: Bank of England Boss Mark Carney was accused of conspiring with George Osborne to produce Brexit “propaganda”, when he appeared before the MP Treasury Select Committee.
Britain’s huge £1.6trillion debt swells higher as Osborne fails to get a grip on borrowing: Britain’s debt jumped to £1.596 trillion in April, as George Osborne already looks set to blow his economy promises for the year ahead.
Signs of another housing crash: London rent prices drop hitting landlords: Rents in London fell in April taking landlord returns to almost the lowest level in the country, in yet another sign the market could be heading for a shock crash.
Ryanair ready for a fare war: Ryanair has fuelled expectations of a European fares war as it forecast a sharp drop in prices to fill its planes.
The Scottish Herald
Aberdeen hotel occupancy fall slowing: The year-on-year decline in occupancy rates in Aberdeen’s hotel sector slowed to its weakest pace in more than 12 months in April, a key survey has revealed, fuelling hopes the market might be stabilising.
Holiday feedback sites could boost economy by billions: Websites such as Tripadvisor could provide a huge boost to the Scottish economy as consumers become more reliant on peer-to-peer feedback.
$100 billion beer merger gets green light: EU antitrust regulators have approved Anheuser-Busch InBev’s $100 billion-plus takeover of SABMiller. The deal is conditional on the sale of SABMiller’s European beer business.
Kingfisher beats expectations with first quarter sales growth: B&Q Owner Kingfisher grew like-for-like sales by 3.6% to £2.7 billion in the first quarter, driven by strong growth at trade outlet Screwfix.
Bond repayment hole could mark the end for Xcite Energy: Xcite Energy is continuing negotiations with bondholders as the oil appraisal and development company aims to renegotiate terms ahead of bond maturity on June 30.
Wood Group lands new Statoil agreement: Wood Group has been awarded an evergreen master services agreement by Statoil to support the life cycles of its offshore and onshore facilities.
SLI reshuffles as Jackson departs: Andrew Jackson, head of wholesale and listed real estate funds at Standard Life Investments, is leaving after 25 years to pursue other interests.
The Scotsman
Facebook acquires Edinburgh audio start-up Two Big Ears: An Edinburgh-based start-up that specialises in virtual reality (VR) audio has been bought by social networking giant Facebook.
Tennent’s Owner targets China in latest overseas push: The Owner of Scotland’s best-selling lager has unveiled its latest bid to grow overseas sales by announcing a tie-up aimed at the Chinese market.
Aegon ends U.K. annuity work with £3 billion sale to L&G: Life and pensions group Aegon U.K. has sold its £3 billion U.K. annuity portfolio to Legal & General in a deal which completes its withdrawal from the sector.
Tamdhu distiller secures £60 million funding deal with banks: Ian Macleod Distillers, behind the Glengoyne, Tamdhu and Isle of Skye whiskies, has secured a £60 million lending package secured against its whisky stocks as it targets continued growth.
BGF invests £135 million in Scots firms in five years: More than £135 million has been invested in Scottish businesses by the Business Growth Fund (BGF) since it was launched five years ago.
Air link offers opportunities with booming Qatar: Qatar’s profile has been at its highest since the country was awarded the 2022 World Cup.
Glasgow firm creates stir with whisky cocktail: A Glasgow-based drinks business is looking to shake up the market with the launch of its Scotch whisky cocktail.
City A.M.
UniCredit CEO Federico Ghizzoni resigns amid shake-up of Italy’s biggest bank: UniCredit Chief Executive Federico Ghizzoni resigned after admitting the bank needs a new Boss.
Bank customers missing out on financial advice as mobile channel fails to drive engagement: Banks are failing to provide customers with enough financial advice, a new survey has shown.
PwC warns energy utility firms over rising levels of bad debt: Energy utilities companies have been slapped with a stark warning over the impact of rising levels of bad debt.
Old Mutual nearing U.S. sale to pave way for U.K. business flotation: Old Mutual is close to selling its U.S. asset management business, paving the way for an initial public offering (IPO) of its U.K. wealth management arm.
U.S. private equity firm in early talks over stake in Formula One: U.S. private equity firm Silver Lake is in early-stage talks with CVC Capital Partners over a stake in Formula One (F1) motor racing.
Storage company Big Yellow hikes its dividend after a year of surging profits: The self-storage company Big Yellow boasted strong profits after expanding its property portfolio this year.
Aldi taps into U.K. craft beer market in £600 million deal with 18 new offerings: Cut-price supermarket Aldi has launched a £600 million initiative to tap into the U.K.’s burgeoning craft beer industry.
Surge in buy-to-let loans dries up pipeline for lender Paragon: Specialist buy-to-let mortgage lender Paragon has recorded a 84.6% increase in loans in the first six months of 2016, to £823.6 million.

Wed, 25 May 2016 08:44:00 +0100
Market briefing: US markets ended in the green yesterday, following a rally in financial and technology sector stocks UK Market Snapshot
UK markets finished higher yesterday, with the FTSE 100 index closing at its highest level since 29 April 2016, amid a recovery in crude oil prices. Financial sector firms, Aviva, St James’s Place, Royal Bank of Scotland Group and Legal & General Group rose 3.9%, 4.7%, 4.8% and 5.1%, respectively, after a new poll result indicated that most of the people would vote to remain in the EU at next month’s referendum. Kingfisher climbed 3.5%, after it posted a rise in its like-for-like sales in the first three months of its financial year. Imperial Brands advanced 3.0%, following a broker upgrade on the stock to ‘Overweight’ from ‘Equal weight’. On the contrary, precious metal miners, Randgold Resources and Fresnillo declined 3.2% and 3.3%, respectively, tracking loss in gold prices. The FTSE 100 advanced 1.3%, to close at 6,219.3, while the FTSE 250 rose 0.6%, to settle at 17,135.7.
US Market Snapshot
US markets ended in the green yesterday, following a rally in financial and technology sector stocks. Alphabet, Intel and Microsoft rose 2.2%, 2.8% and 3.1%, respectively. Citigroup and JPMorgan Chase climbed 1.7% each, while MetLife and Prudential Financial gained 1.9% and 2.0%, respectively, amid expectations of higher interest rates. Toll Brothers soared 8.7%, after its second quarter results exceeded market expectations. Peers, Lennar, DR Horton and PulteGroup advanced 3.9%, 4.2% and 5.1%, respectively, on positive April US new home sales figures. However, Best Buy plummeted 7.4%, after it projected lower than expected earnings for the second quarter. The S&P 500 gained 1.4%, to settle at 2,076.1. The DJIA rose 1.2%, to settle at 17,706.1, while the NASDAQ advanced 2.0%, to close at 4,861.1.
Europe Market Snapshot
Other European markets closed stronger yesterday. Banks, Deutsche Bank, Societe Generale and Banca Monte dei Paschi di Siena climbed 3.0%, 5.4% and 10.5%, respectively. SEB rallied 9.0%, after it agreed to buy WMF from KKR & Co in a deal worth €1.6 billion. Bayer edged 4.0% up, on the news that Monsanto rejected its takeover offer, citing its too low, but remained open to more negotiations. Bayerische Motoren Werke, Volkswagen and HeidelbergCement gained 2.6%, 2.8% and 2.9%, respectively, as export-oriented shares benefitted from a stronger US Dollar. On the losing side, Galenica plunged 6.7%, after the pharmacy network stated that it would divide into separate firms by the end of 2017. The FTSEurofirst 300 index gained 2.3%, to close at 1,349.7. Among other European markets, the German DAX Xetra 30 rose 2.2%, to close at 10,057.3, while the French CAC-40 advanced 2.5%, to settle at 4,431.5.
Asia Market Snapshot
Markets in Asia are trading higher this morning, following an overnight rally on Wall Street. In Japan, Sony has jumped 6.4%, as investors concentrated on its long-term prospects in emerging products, ignoring the downbeat annual earnings outlook from the company. Asahi Group Holdings has gained 4.3%, after a broker upgraded its rating on the stock to ‘Buy’ from ‘Neutral’. Toyota Motor has added 1.7%, after it disclosed plans of making an investment in Uber Technologies. In Hong Kong, oil majors, China Petroleum & Chemical and PetroChina have climbed 4.1% and 4.3%, respectively, on higher crude oil prices. In South Korea, Samsung Electronics and Hyundai Motor have edged 1.7% and 2.3% up, respectively. The Nikkei 225 index is trading 1.8% higher at 16,795.7. The Hang Seng index is trading 2.6% up at 20,347.1, while the Kospi index is trading 1.3% higher at 1,962.3.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 1.21% or $0.59 higher at $49.20 per barrel, ahead of the EIA weekly oil inventory data, scheduled to be released later today. Yesterday, the contract climbed 0.54% or $0.26, to settle at $48.61 per barrel, after the API stated that US crude supplies declined more than expected by 5.1 million barrels during the week ended 20 May 2016.
At 0330GMT today, Gold futures contract is trading 0.21% or $2.60 higher at $1231.80 per ounce. Yesterday, the contract declined 1.78% or $22.30, to settle at $1229.20 per ounce, after upbeat US housing market data raised chances of a June rate hike by the Fed.
At 0330GMT today, the EUR is trading 0.09% higher against the USD at $1.1151, ahead of German GfK consumer confidence data for June, due to release in a few hours. Market participants will also closely monitor the release of Germany’s IFO survey data for May, also set to release later today. Yesterday, the EUR weakened 0.70% versus the USD, to close at $1.1141, as weak Eurozone & German ZEW surveys highlighted a dent in the economic sentiment. The US Dollar gained ground as rate hike expectations rose following better than expected report on the US new home sales.
At 0330GMT today, the GBP is trading 0.20% lower against the USD at $1.4606. Investors will await the release of the US services PMI figures for May, schedule to release later in the day. Yesterday, the GBP strengthened 1.05% versus the USD, to close at $1.4636, after a fresh poll showed increased support to stay in the European Union, thus easing Brexit concerns.
Fixed Income
In the US, long term treasury prices fell and pushed yields higher, amid a surge in the US new home sales in April and a broad rally in global equity markets. Yesterday, yield on 10-year notes rose 2 basis points to 1.86%, while yield on 2-year notes gained 1 basis point to 0.92%. Meanwhile, 30-year bond yield rose 2 basis points to 2.65%.

Key Economic News
UK CBI distributive trade survey's retail sales balance climbed in May

In the UK, the CBI distributive trade survey's retail sales balance climbed to 7.00% in May, lower than market expectations of a rise to 8.00%. In the prior month, the CBI distributive trade survey's retail sales balance had recorded a level of 13.00%.
UK public sector net borrowing unexpectedly showed deficit in April
In the UK, the public sector net borrowing has unexpectedly reported a deficit £6.60 billion in April, as compared to a revised deficit of £6.10 billion in the prior month. Markets were expecting public sector net borrowing to report a deficit of £5.80 billion.
UK public sector net borrowing unexpectedly reported deficit in April
The public sector net borrowing (excluding temporary effects of financial interventions) has unexpectedly reported a deficit £7.20 billion in April, in the UK, following a revised deficit of £6.70 billion in the prior month. Markets were expecting public sector net borrowing to show a deficit of £6.40 billion.
UK public sector net cash requirement recorded a surplus in April
In the UK, in April, public finances (public sector net cash requirement) has posted a surplus £2.40 billion, following a revised deficit of £17.80 billion in the prior month.
Euro-zone economic sentiment index fell in May
The economic sentiment index in the Euro-zone recorded a drop to 16.80 in May. The economic sentiment index had registered a reading of 21.50 in the previous month.
German GDP rose as expected in 1Q 2016
The seasonally adjusted final gross domestic product (GDP) in Germany registered a rise of 0.70% in 1Q 2016 on a quarterly basis, meeting market expectations. In the previous quarter, GDP had recorded a rise of 0.30%. The preliminary figures had also recorded an advance of 0.70%.
German economic sentiment index registered a surprise drop in May
In May, the economic sentiment index recorded an unexpected drop to 6.40 in Germany, compared to market expectations of an advance to a level of 12.00. The economic sentiment index had registered a reading of 11.20 in the previous month.
German current situation index climbed in May
The current situation index rose to a level of 53.10 in May, in Germany, higher than market expectations of a rise to a level of 49.00. The current situation index had recorded a reading of 47.70 in the previous month.
German private consumption advanced less than expected in 1Q 2016
Private consumption recorded a rise of 0.40% on a QoQ basis in 1Q 2016, in Germany, compared to a revised similar rise in the previous quarter. Markets were anticipating private consumption to climb 0.60%.
German domestic demand advanced less than expected in 1Q 2016
In 1Q 2016, on a quarterly basis, domestic demand in Germany rose 0.80%, less than market expectations for an advance of 0.90%. Domestic demand had registered a revised rise of 0.90% in the previous quarter.
German GDP rose as expected in 1Q 2016
On an annual basis, the working day adjusted final GDP climbed 1.60% in Germany, in 1Q 2016, in line with market expectations. In the prior quarter, GDP had registered a rise of 1.30%. The preliminary figures had also recorded a rise of 1.60%.
German construction investment rose more than expected in 1Q 2016
In Germany, construction investment recorded a rise of 2.30% on a quarterly basis in 1Q 2016, more than market expectations for an advance of 1.50%. Construction investment had risen by a revised 2.00% in the prior quarter.
German capital investment rose more than expected in 1Q 2016
In Germany, capital investment rose 1.80% on a quarterly basis in 1Q 2016, compared to a revised rise of 1.40% in the prior quarter. Markets were expecting capital investment to advance 1.40%.
German government spending advanced less than expected in 1Q 2016
Government spending registered a rise of 0.50% in Germany on a QoQ basis in 1Q 2016, lower than market expectations for a rise of 0.80%. Government spending had recorded a revised rise of 0.90% in the prior quarter.
German imports advanced more than expected in 1Q 2016
On a quarterly basis, in Germany, imports climbed 1.40% in 1Q 2016, higher than market expectations for an advance of 1.00%. Imports had registered a rise of 0.50% in the previous quarter.
German GDP advanced as expected in 1Q 2016
On a YoY basis in 1Q 2016, the non-seasonally adjusted final GDP advanced 1.30% in Germany, meeting market expectations. In the previous quarter, GDP had registered a rise of 2.10%. The preliminary figures had also indicated an advance of 1.30%.
German exports rose more than expected in 1Q 2016
In 1Q 2016, on a QoQ basis, exports climbed 1.00% in Germany, higher than market expectations for a rise of 0.50%. Exports had recorded a drop of 0.60% in the previous quarter.
French industrial business climate index rose surprisingly in May
The industrial business climate index rose unexpectedly to a level of 102.00 in May, in France, compared to market expectations of a steady reading. The industrial business climate index had recorded a reading of 101.00 in the previous month.
Swiss trade surplus widened in April
Trade surplus in Switzerland rose to CHF2.50 billion in April, from a revised trade surplus of CHF2.18 billion in the previous month.
Swiss imports registered a drop in April
In April, on a MoM basis, imports recorded a drop of 3.10% in Switzerland. In the previous month, imports had registered a revised rise of 8.60%.
Swiss exports rose in April
Exports rose 0.30% in Switzerland on a monthly basis, in April. Exports had fallen by a revised 0.50% in the previous month.
US new home sales unexpectedly rose in April
New home sales unexpectedly advanced by 16.60%, on monthly basis, to a level of 619.00 K in April, in the US, compared to a revised level of 531.00 K in the prior month. Market expectation was for new home sales to drop to 523.00 K.
US Richmond Fed manufacturing index fell in May
Compared to a reading of 14.00 in the previous month the Richmond Fed manufacturing index dropped to -1.00 in May, in the US. Markets were anticipating the Richmond Fed manufacturing index to ease to 8.00.
Chinese leading economic index climbed in April
The leading economic index rose 0.10% on a monthly basis in China, in April. The leading economic index had registered a revised rise of 0.30% in the previous month.

Wed, 25 May 2016 08:40:00 +0100
Saudi Arabian New Oil Plan Makes OPEC Redundant Saudi Arabian New Oil Plan Makes OPEC Redundant
Here is the opening of this informative article from Bloomberg:

Saudi Arabia, one of the founders of OPEC, is sounding the group’s death knell.
The world’s biggest crude exporter has already undermined OPEC’s traditional role of managing supply, instead choosing to boost output to snatch market share from higher-cost producers, particularly U.S. shale drillers, and crashing prices in the process.
Now, under the economic plan known as Vision 2030 promoted by the king’s powerful son, Deputy Crown Prince Mohammed bin Salman, the government is signaling it wants to wean the kingdom’s economy off oil revenue, lessening the need to manage prices. Moreover, the planned privatization of Saudi Arabian Oil Co. will make the nation the only member of the Organization of Petroleum Exporting Countries without full ownership of its national oil company.
“The main take-away from Saudi Vision 2030 is that there’s just no role for OPEC,” Seth Kleinman, head of European energy research at Citigroup Inc. in London, said by phone on May 16. “Or, you can have an OPEC without Saudi Arabia, which just isn’t much of an OPEC.”
The first change of oil ministers in more than 20 years may also recast the country’s relationship with OPEC. The group’s 13 members, which contribute about 40 percent of the world’s supply, gather in Vienna on June 2.
King Salman on May 7 replaced Ali al-Naimi, the most influential voice in OPEC and the architect of current Saudi oil policy. While there’s likely to be considerable continuity, his replacement, Khalid Al-Falih, is an ally of Prince Mohammed, who scuppered a plan al-Naimi had supported for capping production. When producers considered freezing output to curb a global glut in April, the young royal’s view that no deal was possible without Iran prevailed, and talks collapsed.
“We don’t care about oil prices,” Prince Mohammed said in an April 25 interview in Riyadh. “$30 or $70, they are all the same to us. We have our own programs that don’t need high oil prices.” Benchmark Brent crude was trading at $48.11 a barrel on Tuesday at 11:23 a.m. in London.

David Fuller's view
OPEC will not be missed.  Cartels are power arrangements for maximising profits at everyone else’s expense.
Oil prices will remain volatile but the current surplus of supply will prevent the strong recovery that some commentators have forecast.  Even as the global economy eventually recovers and the record amounts of crude in storage are gradually reduced by consumption, the advance of technology has enabled more conventional oil to be produced than was imaginable less than a decade ago.  Supplies may be finite but there are also vast quantities of shale oil, largely untouched.  
Meanwhile, technology will continue to hasten declines in costs for renewable forms of energy, led by solar.  Most countries now have the capacity to lower their energy costs.  However, energy prices paid by business and consumers will vary considerably among nations, subject to their willingness to utilise all forms of available energy, plus their individual taxation policies on these vital resources.   
(See also: OPEC Brings Oil Price War Home in Pursuit of Asia Cash - Oct 20, 2015)

Massive Bailout Needed in China, Banking Analyst Chu Says
Here is the opening of this interesting article from Bloomberg:

Charlene Chu, a banking analyst who made her name warning of the risks from China’s credit binge, said a bailout in the trillions of dollars is needed to tackle the bad-debt burden dragging down the nation’s economy.
Speaking eight days after a Communist Party newspaper highlighted dangers from the build-up of debt, Chu, a partner at Autonomous Research, said she was yet to be convinced the government is serious about deleveraging and eliminating industry overcapacity.
She also argued that lenders’ off-balance-sheet portfolios of wealth-management products are the biggest immediate threat to the nation’s financial system, with similarities to Western bank exposures in 2008 that helped to trigger a global meltdown.
The former Fitch Ratings analyst uses a top-down approach to calculating China’s bad-debt levels as the credit to gross domestic product ratio worsens, requiring more credit to generate each unit of GDP.
While Chu is on the bearish side of the debate about the outlook for China, she’s not alone. In a report on Monday, Societe Generale SA analysts said that Chinese banks may ultimately face 8 trillion yuan ($1.2 trillion) in losses and a bailout from the government, citing the scale of soured credit within state-owned enterprises.
Interviewed in Hong Kong last week, Chu estimated as much as 22 percent of all China’s outstanding credit may be nonperforming by the end of this year, compared with an official bad-loan number for banks in March of 1.75 percent.

David Fuller's view
Anyone interested in China will want to read the Q & A interview with Charlene Chu, which comprises about two thirds of this article.  Her views are certainly credible and other China specialists have expressed similar views in recent years.  A relevant question is: can China grow its way out of this problem without widespread disruption?

Monsanto Rejects $62 Billion Bayer Offer, Open to Further Talks

Here is the opening of this report from Bloomberg on the latest information regarding this takeover attempt:
Monsanto Co. rejected a $62 billion takeover offer from Bayer AG as too low, while saying it remains open to further deal talks, putting pressure on the German company to raise a bid that has already sent its stock tumbling.
“We believe in the substantial benefits an integrated strategy could provide to growers and broader society, and we have long respected Bayer’s business,” Monsanto Chief Executive Officer Hugh Grant said in a statement Tuesday.
“However, the current proposal significantly undervalues our company and also does not adequately address or provide reassurance for some of the potential financing and regulatory execution risks related to the acquisition," he said.
Bayer will likely come back with a higher bid, Jonas Oxgaard, an analyst with Sanford C. Bernstein & Co. in New York, said Tuesday in a note, adding that an offer below $135 per share would be “challenging” for Monsanto to agree to.
Buying Monsanto would create the world’s biggest supplier of farm chemicals and seeds. Monsanto is the largest seed supplier and a pioneer of genetically modified crops, which two decades on from their introduction have come to account for the majority of corn and soybeans grown in the U.S. Monsanto also sells seeds in foreign markets including Latin America and India.

David Fuller's view
This is clearly a friendly reply by Monsanto, suggesting that it would welcome the merger takeover at a higher price.
This item continues in the Subscriber’s Area.

The Markets Now
Monday 11th July at the East India Club, 16 St James's Square, London SW1Y 4LH

David Fuller's view
Here is the current Brochure.

I am looking forward to discussing market opportunities with subscribers and their friends at this post-Brexit seminar, held in the comfort of the East India Club.  David Brown will provide new material of considerable interest to long-term investors.  Iain Little will also have some new material, in addition to his review of interesting investment trusts.
Presentations commence at 5:30pm and usually end around 8:30pm, followed by further conversation and refreshments at East India’s cash bar.   

Email of the day on secular bull markets
I was just listening to your big picture round-up from last Friday.

You mentioned a point that I have heard a number of variations on over the last year, from Fuller Money ..... and that is that we (I think you are taking of US shares) are near the beginning of a major secular bull market (in US shares).

I think the argument you made in last Friday's big picture round-up went something along the lines of:

That US shares have had a long period (16 years) of ranging after the peak in 2000 ....... and that  this is roughly the length of time that US shares ranged sideways in the period from the late 1960s until 1982 ....... when US share commenced it last major secular bull market.

Like you, I am very happy to acknowledge that I do not know the future.

BUT this is what makes me wary of your view that US share might be near the beginning of a major secular bull market:-

The Shiller cyclically adjusted P/E for US shares is above 25 .... which is an extremely high valuation. I am not aware of any example in history, where there have been good real returns for shares over the following 20 years. Shiller's research would suggest the next 20 year share returns would be more like something closer to 0%pa real.

The historically large debt bubbles in the West (but USA in particular) also warns of bad times ahead for investors. Most debt bubbles are followed by economic depression. I am aware of only 1 debt bubble where this has not occurred, namely Japan post 1989 ...... but the 19 years following 1989, delivered horrible returns for Japanese shares and property.

So you are saying I think, "This time is different".  As you know, these are some of the most dangerous words for investors. For US shares to embark on a major secular bull market, would be truly unique in history - at least from what I have found in my very long-term market research.

Your thoughts please?

Eoin Treacy's view
Thanks for this question which in my opinion is of fundamental importance for investors. As you point out, we believe major breakouts from long-term ranges are generally a signal something has changed in how supply and demand are interacting. Provided the breakout is to the upside, this can lead to a new long-term or secular bull market. The possibility of a new secular bull market on Wall Street has been a persistent topic of conversation at this service since we observed large companies with global businesses (Autonomies) breaking out of long-term bases as early as 2011. We are already four years into a secular bull market. .

Hedge funds are betting big against Australian banks
This article by Vera Sprothe for the Wall Street Journal appeared in the Australian and may be of interest to subscribers. Here is a section:
Many have failed to call correctly an end to an Australian housing price boom that has led to some of the country’s sleepiest towns becoming less affordable than New York. One investment manager’s experience underscores the high stakes involved. In 2010, Jeremy Grantham, co-founder of Boston-based hedge fund GMO and famous for predicting bubbles, found traction among short sellers when he said Australia’s property market was a bubble ready to burst. Instead, housing prices continued to climb.

This year, investors shorting Commonwealth Bank, the nation’s largest lender, would have made a profit, as the stock has plunged as much as 18 per cent since January 1. However, the shares have started rebounding in recent days. If they continue to rise, short sellers would be at risk of losses when they buy back the stock and return it to the original investor at a higher price.

The banks are benefiting from expectations the Australian central bank will further cut its benchmark rate this year from a record-low 1.75 per cent. This has helped to allay market concerns about intensifying mortgage distress among Australian households, which are among the most indebted in the world. Home loans account for the majority of Australian bank assets.

“It’s a tough trade,” Andrew Macken, a fund manager at Montgomery Global Investment Management in Sydney, said. “Australia’s major banks don’t make good shorts. Even if their profit prospects may look weaker than in the past, they’re still some of the most profitable in the world, competition is limited and they enjoy an implicit government guarantee.”

Eoin Treacy's view
Is there a bubble developing in Sydney and Melbourne housing? Very probably. Is it at risk of popping? With the RBA cutting rates at least there is a monetary tailwind to support prices. What about the banks?

European Shares Rise as Euro Falls, Investors Weigh Fed Talk
This article by Alan Soughley and Sofia Horta e Costa for Bloomberg may be of interest to subscribers. Here is a section
European stocks jumped the most in six weeks as the euro slid and investors assessed the implications of a possible Federal Reserve interest rate increase as early as June.
The Stoxx 600 added 2.2 percent to 344.12 at the close of trading. All industry groups climbed, with insurers and banks leading. The euro has dropped close to a two-month low against the dollar amid an increasing probability of higher borrowing costs in the U.S. this year, favoring European companies that export overseas. The region’s firms generate about half their sales abroad, more than the U.S. and Japan, according to Morgan Stanley.

Federal Reserve Bank of Philadelphia President Patrick Harker said late yesterday that he could see two to three rate increases in 2016 and that if the U.S. economy shows sufficient strength, a June raise would be appropriate. San Francisco Fed President John Williams earlier said two to three hikes this year are “about right.”

“A rise in the dollar would be a big help for European stocks,” said Heinz-Gerd Sonnenschein, a strategist at Deutsche Postbank AG in Bonn, Germany. “People are testing whether the market has found a bottom, and there’s plenty of money sitting on the sidelines. Maybe investors are finally ready to get back in. I wouldn’t say we’re in a bullish market, but we’ve had pretty calm, sideways trading this month even with another Fed rate hike looking more likely.”

Eoin Treacy's view
The Eurozone has enough to worry about with having to deal with a strong currency so the Dollar’s resurgence is welcome news. This is especially true since European shares experienced a much deeper reaction than their US counterparts and have been in need of a catalyst to reignite investor interest.

Wed, 25 May 2016 08:36:00 +0100
Northland Capital Partners View on the City: Edenville Energy, Petrel Resources Edenville Energy (LON:EDL) – CORP*: Change of Advisor
Market Cap: £2.5m; Current Price: 0.02p

Appoints Northland Capital as Nomad
 Edenville Energy has appointed Northland Capital Partners as Nominated Adviser.

NORTHLAND CAPITAL PARTNERS VIEW: Edenville Energy owns the Rukwa Coal to Power Project, located in southwest Tanzania. The Company already has a mining licence in place and is preparing to commence the extraction of a bulk sample during Q216. This will allow it to design a suitable coal wash plant and provide the power plant engineering team a greater understanding of the coal characteristics for basing the power plant design on. The remaining bankable feasibility work for the mine is also to commence in Q216 alongside the scaling up of the power plant prefeasibility study to 300MW from 120MW by Q316.

Petrel Resources (LON:PET) – CORP: Porcupine Basin update
Market Cap: £4.2m; Current Price: 4.25p

Seismic surveys expected to commence shortly
 Petrel and its partners have received environmental approvals from the Department of Communications, Climate Change and Natural Resources on the 04/05/16.
 Woodside Petroleum, the operator, appointed leading contractor PGS to complete 3D surveys at both Granuaile and Bréanann targets, located in the South Porcupine Basin. The survey vessels are now mobilising to the Granuaile survey area and work is expected to commence at Bréanann in around 40 days.

NORTHLAND CAPITAL PARTNERS VIEW: Positive development for Petrel Resources with its interest in two significant Porcupine Basin plays being moved forward by partner Woodside Petroleum. During the 2015 Bid Round for Irish offshore licences there were 17 companies making 43 applications highlighting the recent uptick in interest in the area.

Wed, 25 May 2016 08:33:00 +0100
Oil gives bulls the horn FTSE 100 called to open +50pts at 6270, having rallied overnight to build on yesterday’s 6220 breakout from the May sideways channel to post fresh 3-week highs. The breakout offers the distinct possibility that we see a repeat of the March/April triple bottom which completed around 6350 and even went on to deliver 2016 highs at 6430. After such a sharp move higher (+2.8% from yesterday’s lows), beware the risk of a short-term pull-back for digestion. Watch levels: Bullish 6285, Bearish 6240.
A positive opening call comes after Asian bourses rallied overnight following a strong US finish with a jump in oil prices thanks to a US API stockpile drawdown helping bolster bullish sentiment. Energy stocks thus leading the way followed by financials and technology (Nasdaq +2%). It would appear that markets have either resigned themselves to another US rate hike this summer or are taking comments from the army of non-voting Fed hawks with a hefty pinch of sceptical sodium chloride.
Japan’s Nikkei and the Australia’s ASX are being helped by a buoyant Energy sector and a flat Yen and Aussie dollar despite the influential US dollar basket pushing north through 95.5, stifling metals prices to result in mixed raw material performance. China stocks flat after the PBOC fixed the renminbi currency at its weakest since 2011 to counter current dollar strength (they will of course say otherwise) while Hong Kong's Hang Seng powers on via Energy sector strength.
US bourses crawled upwards, tracking European equities and oil higher with risk sectors financials and tech leading gains. A banging New Home Sales print also helped stateside bourses. Again we’re seeing the Fed extolling the virtues of the strong US labour market to make the case for raising rates in June. Note St. Louis Fed’s Bullard (an actual  voting member) saying June is not ‘set in stone’ though - after a couple of weeks of hawkish chit-chat, is it time for the doves to have their say again?
Following yesterday’s API stockpile data, crude oil traders are betting on official EIA government data to show a drawdown in US inventories, this compounding existing supply outages to keep the price supported. Note Brent ($49.3) now trading slightly below WTI ($49.4).
Gold continues to decline (plumbing 7-week lows) on a firmer USD and with a very much risk-on mood pervading markets through yesterday and today. If both continue, we can expect a break below $1220 and further downside to $1210 and perhaps even $1200.
In focus today will be a host of ECB speakers trying to steal the limelight from Fed peers, although given the region’s growth and inflation travails they are nowhere near being able to vie for any type of hawkishness. Germany’s IFO Business Surveys will be of interest in light of mixed reads from yesterday’s ZEW surveys and the nation’s importance within the wider Eurozone region. Only marginal improvements expected.
Fed speakers are still hogging the newswires, albeit still only the non-voters, with Harker up again mid-afternoon, before Kashkari around the European close and Kaplan mid-evening. Note potential for their comments to move the dollar and/or US rate hike expectations. Just when you thought things had calmed, with fears about a June hike receding. Or is it now being accepted/priced in?
Afternoon data includes US House Prices seen posting another batch of solid growth in March, bolstering the impressively strong April New Home Sales figures we saw yesterday. Thereafter, US PMI Services is seen remaining solidly in growth.
No change expected for Canadian interest rates but US Oil Inventories could help the price of barrel to hit $50 should we get a drawdown in-line with last night’s API stocks drop. Note, however, that EIA data failed to mirror the API drawdown posted last week with a surprise EIA stock-build denting sentiment.

Wed, 25 May 2016 08:32:00 +0100
VSA Capital Market Movers - Asiamet Resources, Petra Diamonds Asiamet Resources (LON:ARS)

Asiamet Resources (LON:ARS) announces today the start of feasibility studies upon the Beruang Kanan copper project, BKM deposit, on the island of Kalimantan. A 9,000m infill drill program consisting of 110 drill holes is planned to increase the confidence level and quality of compliant resources to reserves. Pit slope stability will be determined from this data for planned open pit mining. Detailed metallurgical studies will be completed toward final milling and recovery design.

ARS also improved the cash position of the company with a refund of approximately US$1m received from the Indonesian government for VAT charged against services and goods for the years 2006, 2007, 2013, and 2014.

We’re glad to see the work now officially underway to bring the BKM deposit to final production design and are pleased with the top up  of cash from the Indonesian government to assist in that effort.

We retain our SPEC BUY recommendation and 6.2p price target.

Petra Diamonds (LON:PDL)

Petra Diamonds (LON:PDL) has confirmed the date of the auction sale of the Cullinan Dream blue diamond as the 9th of June by Christie’s auction house at Rockefeller Centre, New York, NY, USA.  It is a fancy intense blue, apparently the very best quality in blue, of rectangular mixed cut, mounted in a platinum ring, and weighs just over 24 carats. The pre-auction sale estimate for the stone is US$23m to US$29m.

Wed, 25 May 2016 08:18:00 +0100
Today's Market View Including: Anglo American, Keras Resources, Ormonde Mining, Ortac Resources, Rio Tinto, Transense Technologies, Petropavlovsk Anglo American (LON:AAL) – De Beers sees stability in rough diamond sales
Keras Resources (LON:KRS) – Pre-payment agreement with Norton Gold Fields
Ormonde Mining* (LON:ORM) – Drilling at Barruecopardo  shows depth potential
Ortac Resources* (LON:OTC) – President visits Ortac’s Kremnica gold mine in Slovakia
Rio Tinto (LON:RIO) – Exploration man to lead Technology and Innovation Group at Rio Tinto
Transense Technologies (LON:TRT)
Petropavlovsk* (LON:POG) – Speculation over potential for takeover lifts shares

Dow Jones Industrials                         -0.05% at          17,493
Nikkei 225                                            -0.94%  at          16,499
HK Hang Seng                                     +0.11%  at          19,830
Shanghai Composite                           -0.77%  at            2,822
FTSE 350 Mining                                  +1.56%  at           8,931
AIM Basic Resources                           +0.26% at            1,908

Economic News
The US$ currency strength leads oil and gold lower on increasing expectations for a Fed rate hike in Jun.
• The US dollar is up 0.3% this morning trading close to the highest level in nearly two months.
• The next FOMC is planned for Jun 14-15.
• Bloomberg estimates the probability of the rate increase in the next meeting at 32%, up 4pp from the start of last week before the release of the latest FOMC meeting minutes.
• James Bullard, the Saint Louis Fed president and a voting member of the FOMC, said the Brexit referendum scheduled for Jun 23 is unlikely to affect the timing of the next tightening policy move.

China – The Finance Ministry is issuing CNY 3bn (US$458m) of renminbi-denominated bonds in London.
• The expansion of the renminbi-denominated assets in offshore markets has been pursued by the government to boost international use of its currency.
• Moscow and Beijing have also discussed the possibility of the renminbi-denominated bond issue this year.

Germany – Respondents to the economic sentiment survey were less optimistic in May than compared to market forecasts and the previous month’s readings, according to the ZEW Institute.
• ZEW Economic Sentiment: 6.4 v 11.2 in Apr.
• The reading above 0 indicates optimisms; below indicates pessimism.

UK – The currency is up 0.4% against the greenback following the release of the Telegraph poll results regarding the EU membership vote scheduled for Jun 23.
• The Bremain camp posted a 13pp lead over Brexit supporters.
• The remain campaign is currently leading polls with 55% versus 42% in favour of the exit from the EU.

Italy – The IMF estimates the economy to reach pre-crisis levels only by the mid-2020 suggesting Italy is set for a nearly decade long period of stagnation.
• Over shorter forecast period, the IMF estimates the economy to grow only 1.25% over 2017-18, marginally better than 1.1% expected for this year.
• Weak growth rates mean deleveraging will be slow with the outstanding debt levels currently at 132.7% of GDP and some €360bn in non-performing loans.

Austria – Norbert Hofer, a far right nationalist president candidate, lost to Alexander Van der Bellen, a Green politician, who ran as independent and won 50.3% of the vote.
• A tight result highlights a rising influence of rightwing, nationalist and populist movements in Europe.

US$1.1187/eur vs 1.1207/eur yesterday.   Yen 109.57/$ vs 109.61/$.   SAr 15.740/$ vs 15.596/$.   $1.459/gbp vs 1.455/gbp
0.716/aud vs 0.722/aud.   CNY 6.555/$ vs 6.553/$ –

Commodity News
Precious metals:
Gold US$1,244/oz vs US$1,250/oz yesterday – Azerbaijan has recorded a significant increase in gold reserves on the back of increased exploration activity and upgrades to the drilling rigs base, Minister of Ecology and Natural Resources said in a local interview.
Gold ETFs 59.4moz unch v 58.7moz yesterday – BIG jump in Gold ETF holdings potentially on concerns raised over China debt and on maybe also on bets against Fed rate tightening. Eg US dollar weakness if the Fed fails to tighten rates
Platinum US$1,008/oz vs US$1,017/oz yesterday –
Palladium US$547/oz vs US$553/oz yesterday –
Silver US$16.30/oz vs US$16.37/oz yesterday –
Base metals:   
Copper US$ 4,586/t vs US$4,559/t yesterday -
Aluminium US$ 1,555/t vs US$1,536/t yesterday
Nickel US$ 8,365/t vs US$8,385/t yesterday –
Zinc US$ 1,824/t vs US$1,838/t yesterday
Lead US$ 1,644/t vs US$1,650/t yesterday
Tin US$ 15,795/t vs US$16,080/t yesterday
Oil US$48.0/bbl vs US$48.3/bbl yesterday
Natural Gas US$2.070/mmbtu vs US$2.117/mmbtu yesterday
Uranium US$28.50/lb vs US$28.65/lb yesterday
Iron ore 62% Fe spot (cfr Tianjin) US$47.8/t vs US$50.8/t – The iron ore trading on China’s Dalian Commodity Exchange fell 2.5% today to a 10-month low of US$53.4/t.
Thermal coal (1st year forward cif ARA) US$46.7/t vs US$47.2/t yesterday –
Steel - prices in China continue to fall with October delivery prices falling by >6%.

Tungsten - APT European prices stood at $213-225/mtu vs $215-225/mtu

Company News
Anglo American (LON:AAL) 609 pence, Mkt Cap £7,856m – De Beers sees stability in rough diamond sales
• Anglo American reports that the 4th rough diamond sale of 2016 has, provisionally, realised US$630m “compared with $666 million value of the third sales cycle of 2016”.
• Although, as in previous announcements, the volume of the sales has not been released and therefore it is not possible to deduce a per carat value, the De Beers Chief Executive, Phillipe Mellier, is quoted  saying “As normal seasonal trends return to the market, we are encouraged by the continued stability of demand for rough diamonds shown in the fourth sales cycle of 2016.”

Keras Resources (LON:KRS) 1.25p, Mkt Cap 16.8m – Pre-payment agreement with Norton Gold Fields
• Keras Resources announces that it has reached agreement with Norton Gold Fields on pre-payment terms for gold ore delivered to the Paddington mill in W Australia.
• The agreement means that Keras will receive 80% of the value of ore delivered when assays are received from the Paddington plant with the balance settled within 42 days. “Final reconciled production will be reported quarterly”.
• The acceleration of payments “within a short period of time from ore delivery will be a significant boost to Keras’s cash flow.”
• The Company reports that payment for the first batch of ore delivered “is currently being processed. Due to the unavailability of the sample plant, pre-payment for the second batch is anticipated to occur in the first 2 weeks of June.”

Ormonde Mining* (LON:ORM) 1.35 pence, Mkt Cap £ 6.4m – Drilling at Barruecopardo  shows depth potential
• Ormonde Mining reports the results of a 2000m, five hole, drilling programme “confirming extensions to the mineralisation at depth beneath the main central part of the planned 9 year open pit” and also “following up a potentially expanded zone of mineralisation under the shallow northern end of the planned open pit …”
• The results include a 23m wide intersection at an average grade of 0.26% tungsten trioxide from a depth of 172m followed by a further 5m long intersection at an average grade of 1.95% from 404m, both in hole BAR 83 as well as 25m at 0.21% from 334m in hole BAR 85 and 6m at 2.59% from 2536m in hole BAR 86.
• “Drilling in the Northern area (BAR83, BAR84, and BAR87), below the shallow end of the currently defined open pit confirmed that this part of the resource is more complex, with multiple schist blocks present within the granite being intersected during drilling. Further drill testing is warranted to follow up on the original results from the 2012 drilling, but such work will not be immediately prioritised.”
• The results support the concept of extending the life of the Barruecopardo mine beyond the currently planned open pit into a phase 2 underground operation.
• The company has also taken the opportunity to provide an update on the project timetable for the development of the Barruecopardo mine which received mining permits late in 2014. In February this year, Ormonde Mining reported that there had been an administrative appeal relating to “an element of the compulsory land acquisition process”.
• Although the company’s actions have been exonerated “at the initial administrative level of this appeal process, … Project timelines remain likely to be impacted”.
Conclusion: The intersection of high grade tungsten mineralisation at depth below the pit development at Barruecopardo provides long-term potential to extend beyond the initial 9 year open pit into longer term underground mining.
*SP Angel acts as Broker to Ormonde Mining

Ortac Resources* (LON:OTC) 0.026p, mkt cap £1.5m – President visits Ortac’s Kremnica gold mine in Slovakia
• Press reports show pictures of the President of Slovakia visiting the historic Andrej adit in the Kremnica gold mine.
• The visit, part of a tour of the town of Kremnica including time visiting the Kremnica gold mint, probably the oldest operating gold mint in Europe.
Conclusion:  We look forward to potential Presidential support for the gold mine and the jobs and prosperity the mine would create within the Kremnica community
*SP Angel acts as Nomad and broker to Ortac Resources

Rio Tinto (LON:RIO) 1980 pence, Mkt Cap £36.4bn – Exploration man to lead Technology and Innovation Group at Rio Tinto

Transense Technologies (LON:TRT) 1.27 pence, Mkt Cap £5.5m
• Stephen McIntosh has been appointed as the acting Group executive to run the Technology and Innovation group within Rio Tinto.
• We don’t normally comment on this sort of management change but in this case we feel this is a very important position within one of the world’s top resource producers.
• The reason it’s so important is that we reckon Rio Tinto stands to gain hugely over the next few years from new technological advances being applied to the mining industry.
• Sometimes technological innovation is easy to implement and sometimes it’s much more challenging – our advice, for what it is worth, is to keep it all as simple as possible and to implement in manageable stages.
• McIntosh was most recently head of exploration leading a 450-strong global team operating across 20 countries so he should know how to manage a project or two and we look forward to Stephen’s application of new technology in exploration uncovering some new rare world-class discoveries.
• More importantly hope Stephen will continue to promote the use of new technology in driving efficiency improvements in Rio’s operating mines.
• For example, Transense Technologies, (TRT LN), based in the UK which supplies Translogik sensors for tyre management for mining trucks and other vehicles.  The sensors come with the added benefit of highlighting problems before they happen enabling miners to get more from their mining fleets and their mines.  A flat tyre on a 200t dump truck is not an easy fix in the middle of a mine.  Transense sensors transmit real time information about the tyre temperature and pressures and location to the driver and to a central control room to ensure the fleet keeps moving.
• It is these sorts of innovations which can save millions in costs and improve utilisation and mine operating rates and we hope Stephen will focus as much on these sorts of operational gains as on the discovery of the next generation of world-class resources.

Petropavlovsk* (LON:POG) 8.1p, Mkt Cap 266m – Speculation over potential for takeover lifts shares
• Petropavlovsk shares have gained from speculation in the Russian press over the potential for a deal or hostile takeover by Renova, a company controlled by ‘Victor Vekselberg’ who is reported to hold 21.45% of POGs stock.
• POGs recently agreed to buy Amur Zoloto for a total value of US$160m with US$144m to be paid in shares 30.3% of POG stock (1,434m at 6.89p) and US$16m of assumed net debt.
• The deal is expected to complete this summer but might potentially prompt a takeover before consummated
Conclusion:  The company is playing down the significance of the speculation but is apparently open to more M&A ideas and potential.  We suspect management are wary of a potential hostile bid by Renova and we wonder if part of the reason for paying for offering so much stock to Amur Zoloto is to make hostile action more unlikely.
*SPAngel analysts have visited the Pioneer, Malomir and Albyn gold mines in Russia

Tue, 24 May 2016 10:49:00 +0100
Merlin’s potential is intact, says UBS Tue, 24 May 2016 10:10:00 +0100 SP Angel Morning Oil & Gas: Exillon Energy, San Leon Energy, Sound Energy, Xcite Energy Headlines
 Comment: What is clear from the North Yorkshire County Council’s decision, is that common sense is now finally starting assert itself again, and industry is at least being given the chance to assess the shale series. What is needed now is a coordinated national plan that allows the planning process to be removed as one of the barriers to progress and a risk adjustment that needs to be made in assessing the value of such an investment.

 In Brief:
 Exillon Energy (LON:EXI – 67p) – April Production Report
 San Leon Energy (LON:SLE – SUSP) – OML 18 Update
 Sound Energy (LON:SOU – 17p) – Time For The Final Pieces
 Xcite Energy (LON:XEL – 12p) – Why? What? How?

Comment - Local and National Interests Put First
It is rare that government actually does something that is right for the wider population against a vocal, populist minority that isn't beyond lying, deceiving and using celebrity to get their way. It is even rarer that it is local government, which is why today is a significant milestone for not only for the wider United Kingdom, but the UK oil and gas industry too.
The approval of fracking at Third Energy’s site at Kirby Misperton in Ryedale (Yorkshire) by the local council (North Yorkshire County Council) is a significant milestone as it is the first time that the local population has spoken out for a national interest. It is important to remember that fracking when done properly has no lasting effect (other than a brief period of intense activity) on the surface environment, but can a significant effect on the potential to create jobs, the local economy and can help to shore up the UK's wider energy security.
Of course this all assumes that the shale series is a suitable candidate for fracking, which it may not turn out to be. This uncertainty is underlined by the length of time that it has taken the US shale industry to mature, and how long other shale series, such as those in Morocco and Poland, have taken to make any sort of headway.
What is clear from the North Yorkshire County Council’s decision, is that common sense is now finally starting assert itself again, and industry is at least being given the chance to assess the shale series. What is needed now is a coordinated national plan that allows the planning process to be removed as one of the barriers to progress and a risk adjustment that needs to be made in assessing the value of such an investment.

In Brief
• Exillon Energy (LON:EXI – 67p) – April Production Report: Today's production update points towards the restoration of an upward trend, which to be frank is expected given the seasonal effects on production in these areas. We believe that the Company needs to start to become more transparent on its development plan, how it intends to develop its fields. We have often said that in the winter in these fields you either drill to raise production, or you build pads so you can raise production through the rest of the year, or a combination of the two. We would like to see greater clarity on which one the Company is undertaking.
• San Leon Energy (LON:SLE – SUSP) – OML 18 Update: Today the Company discloses that it has secured 5.75% economic interest in OML 18. The Company now needs to continue to make significant progress in a short space of time in order to complete the acquisition of the SunTrust share, which will bring the net economic interest to 9.72% (5.40% working interest).
• Sound Energy (LON:SOU – 17p) – Time For The Final Pieces: It seems churlish to say, but not that long ago it was difficult to see where Sound was going or what strategy it was pursuing. Over the last 24 months, the Company has gained a greater focus and in so doing gained traction. The last 12 months has seen this accelerate appreciably, and with the activity in the next 12 months, we believe that it is safe to say that this period will mark the end of the transition phase and see the start of the Company's new future path. The Company's investors should be pleased with the way that management has transformed the outlook. While James Parsons has been the catalyst and driver for this change, he now needs to start to look to strengthen his executive team with a CFO who can support his vision and start to lift some of the workload so he can focus on what he is best at. We believe that wi th a suitable CFO, the Company will really be in a strong position to accelerate its growth further.
• Xcite Energy (LON:XEL – 12p) – Why? What? How?: It's hard to know what to say about the results any more, as it is clear that the Company is heading towards creditor control or a dilutive equity raising. While this is the way of life at times, what galls more is that the management team have been complicit in arriving at this point, probably driving the Company towards a singular outcome that suits its needs, and not properly addressing the environment in which they operate, or adapting the plan to those changes. It's all well and good management having religion about an asset, sometimes it's what's needed to get a project off the ground, but there also needs to be a dose of reality and detachment associated with it too, so it can be properly assessed. The questions now are: (i) why if the asset is commercial at these oil prices, as it is moving towards funding, why hasn't it been pro gressed? (ii) what can the management team do to preserve the equity holders interests? On this point it was ridiculous to take debt in the first place given the stage of development they were at; and (iii) how much more time can investors afford to give this management to drift? Questions that need to be asked by investors, and quickly.

Tue, 24 May 2016 09:18:00 +0100
In the news: Fraccing in North Yorkshire North Yorkshire is — again — blissfully ignoring those pressure groups that are against, well, everything. Having permitted a socking great big polyhalite mine within the boundaries of the North Yorkshire National Park, the good and true men and women of Northallerton County Council have voted seven to four in favour of an application by Third Energy to frac in the county at pretty little Kirby Misperton in Ryedale. The press are putting this “landmark ruling” on their front pages, and you can see why; this story could run and run. Crafty old Third Energy is going to frac the site in November or December, when the weather will be cold and wet, thus deterring all the trust fund-backed public school kids from like, you know, literally turning up and, like, chaining themselves to plant and equipment and stuff, which would literally, like, be cool.
What has escaped most people is that Third Energy has been successfully producing gas in North Yorkshire for over 20 years. Who knew that Yorkshire was already so active in energy? Once fraccing starts, Yorkshire could be energy self-sufficient. We won’t be frightened of Vladimir Putin then, will we? Oh, no. With more Olympic gold medallists than any other county, our own polyhalite to grow our own crops and our own gas and electricity, we cannot only Brexit in confidence, but maybe also declare independence from Westminster as well. That’ll learn ’em.
This is great news, but, as is customary, the critics are making their voices heard. Apart from the anti-fraccing protesters who somehow conclude that oil and gas are evil, locals have highlighted the effect on traffic in the area. This is a fair point, but the traffic on the A64 is a nightmare anyway, especially going in and out of York. Kyle Boote of the Helmsley Brewing Company is also worried that it will ruin the image of the local real ale. Kyle really is clearly a glass half-empty kind of person. With all that local, organic, natural gas being produced in the area, he can branch out into producing craft lager. Winners all around!

Tue, 24 May 2016 08:46:00 +0100