column Proactiveinvestors column RSS feed en Wed, 24 Aug 2016 07:42:03 +0100 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Today's Market View - Fortescue, Rio Tinto, Vast Resources Fortescue (ASX:FMG)– potential for Fortescue bonds to rise to investment grade status
Rio Tinto (LON:RIO) - 50th anniversary of Rio Tinto’s first iron ore shipment from W Australia to Japan
Vast Resources (LON:VAST) – Improvements at both Pickstone Peerless and Manaila

Volatility returns to FTSE100 miners as majors stage dramatic recovery after yesterday’s route
• The major mining stocks are recovering strongly from yesterday’s route shaking off the negative effect of a stronger US dollar
• Eurozone PMI data may be supporting the rally alongside yield hunters and investors looking for US growth and more general economic recovery may be driving new demand for these stocks
• The return of such volatility reminds us a little of 2008 though we are not in the same sort of liquidity crisis and the swings are not so severe
Stronger US dollar continues to weigh on metal prices
• A stronger US dollar driven by renewed Fed comments on the potential to raise interest rates.
• The market rates the chance of a US rate rise in September at just 12% with greater potential for a rise in March 2017.

Funniest jokes from Edinburgh Fringe Festival
• No1. "My dad suggested I register for a donor card, he's a man after my own heart." - (Masai Graham)
• No2. "Why is it old people say 'there's no place like home', yet when you put them in one...". (Stuart Mitchell)
• No3.  "I've been happily married for four years - out of a total of 10" – (Mark Watson)

Dow Jones Industrials  -0.12% at 18,529 
Nikkei 225   -0.61% at 16,497
HK Hang Seng          0% at 22,999 
Shanghai Composite   +0.16% at   3,090 
FTSE 350 Mining   +2.08% at 11,940
AIM Basic Resources   +1.86% at   2,510

Euro Stoxx 600 index is up 0.8% led by financial stocks and miners with oil companies underperforming on lower Brent prices.
The US$ index is off slightly and continues to trade in a 1% range over the last five days as investors are looking for clues on the pace of future monetary policy tightening.
Metal prices are little changed this morning.
Brent continued to decline on increased supply in Iraq and Nigeria concerns.
Chinese iron ore futures climbed 2% today following steel prices higher as mills bid the commodity higher amid improved profit margins.

Solar power attracted the lowest ever price in Chile during the latest set of auctions this week, Bloomberg reports.
• A 120MW plant contracted to supply power at $29/MWh compared to $38 for wind power, $47 for natural gas fired facilities, $57 for coal, $60 for hydroelectricity and $66 for geothermal.
• The contract beats deals recorded in Dubai and Mexico this year for a supply of solar power at $30/MWh and $35.5/MWh rates, respectively.
• The plant is set for completion in 2019 and to be located in the Atacama desert of northern Chile (Tarapaca region), one of  the sunniest and driest places on Earth.
• Solarpack Corp operates four solar parks in Chile today with a total generating capacity of 37MW supplying the copper Collahuasi mine among other parties.

US – Economic data:
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday Markit Manufacturing PMI Aug  52.6 52.9
  New Home Sales Jul (%mom)   -2.0 3.5
Wednesday Existing Home Sales Jul (%mom)   -1.26 1.09
Thursday Jobless Claims   265 262
Durbale Goods Orders Jul (%mom)  3.5 -3.9
Durbale Goods Orders (ex Transport) Jul (%mom)  0.5 -0.4
Capital Goods Orders (ex Air) Jul (%mom)  0.2 0.4
Markit Services PMI Aug  51.8 51.4
  Markit Composite Aug     51.8
Friday GDP (Second reading) Q2 (%qoq)  1.1 1.2
  Core PCE (Second reading) Q2 (%qoq)   1.7 1.7
Source: Bloomberg    

Japan – The manufacturing sector remained in the contraction territory in Aug, although the rate of losses slowed to the weakest in the last six months.
• One of the highlights of the report is a faster decline in final goods’ prices.
• “Relatively weak client demand alongside a strong yen prompted firms to cut their selling prices at the sharpest rate since Oct/12 as part of efforts to attract new business,” Markit said.

Eurozone PMI – Private sector growth hit the strongest rate in seven months suggesting the economy is on a way to post a 0.3%qoq/1.2%yoy growth in Q3/16 “with no signs of the recovery being derailed by ‘Brexit’ uncertainty”, according to Markit.
• France takes the spotlight with the private sector growth reported to have accelerated at fastest rate in ten months in Aug.
• Better than forecast numbers from France have been driven by strong gains in the services sector compensating for continuing poor performance in the manufacturing sector.
• France Manufacturing PMI: 48.5 v 48.6 in Jul and 48.8 forecast.
• France Services PMI: 52.0 v 50.5 in Jul and 50.5 forecast.
• On a less positive note, the report highlighted the rate of growth in new orders remained marginal and was slightly weaker than in Jul.
• “The trend in incoming new business remains muted while firms indicated a return to job shedding in the latest month, suggesting that the recovery remains stuck in the slow lane,” the report said.
• In Germany, growth slowed to the weakest in 15 months with both manufacturing and services dub-indices posting a decline in Aug.
• Germany Manufacturing PMI: 53.6 v 53.8 in Jul and 53.6 forecast.
Germany Services PMI: 53.3 v 54.4 in Jul and 54.4 forecast.
• “The long standing theme of solid economic growth in Germany continued in Aug and based on the survey data available for the third quarter so far, we should expect further steady GDP growth. It is unlikely that the 0.7%qoq (Q1/16) pace form the beginning of the year will be repeated, however,” Markit said.

Australia – Consumer confidence gained last week driven by the RBA to cut benchmark rates earlier this month.

Philippines – A Philippines Senator said the ore export ban is at least six years away from coming into force.
• “The industry is not that developed,” the head of environment and natural resources committee said.
• Domestic processing “is something we should look forward to in the future.”

UK - Second hand car sales rise 8% yoy to hit new record in H1
• The Society of Motor Manufacturers and Traders report an 8% increase yoy in second hand car sales to >4m vehicles
• The figures are interesting as the sales numbers are ahead of economic activity and other consumer confidence indicators.
• There may be an element of second hand sales catching up after falling through the 2008 financial crisis when government’s stimulated new car sales through scrappage schemes and other incentives.
• Better fuel consumption and reliability may also help while consumers are also looking forward to buying a new range of Electric Vehicles in future years once battery capacity and reliability improves.
• We suspect the automotive industry is in for an interesting time as manufacturers bring in new ranges of Hybrid and pure EVs.

US$1.1331/eur vs 1.1296/eur yesterday.   Yen 100.16/$ vs 100.73/$.   SAr 13.504/$ vs 13.597/$.   $1.318/gbp vs $1.312/gbp.   
0.764/aud vs 0.762/aud.   CNY 6.643/$ vs 6.656/$ unch.

Commodity News
Precious metals:
Gold US$1,340/oz vs US$1,334/oz yesterday –
     Gold ETFs 65.3moz unch vs 65.2moz yesterday –
Platinum US$1,106/oz vs US$1,110/oz yesterday
Palladium US$696/oz vs US$708/oz yesterday
Silver US$19.05/oz vs US$19.00/oz yesterday      

Base metals:   
Copper US$ 4,739/t vs US$4,749/t yesterday –
Aluminium US$ 1,662/t vs US$1,661/t yesterday
Nickel US$ 10,255/t vs US$10,205/t yesterday – Metal Bulletin report that historic low Shanghai premiums for nickel will hit imports through the rest of 2016
Zinc US$ 2,294/t vs US$2,283/t yesterday
Lead US$ 1,854/t vs US$1,873/t yesterday
Tin US$ 18,460/t vs US$18,500/t yesterday –

Oil US$48.7/bbl vs US$49.9/bbl yesterday
Natural Gas US$2.656/mmbtu vs US$2.630/mmbtu yesterday
Uranium US$25.75/lb vs US$25.75/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$59.7/t vs US$59.5/t – Restocking by steel mills raise Dalian futures prices to new two-year high
• Better demand, rising prices and higher margins at China’s steel mills are reported to be leading to the restocking of iron ore inventories in China.  Port stocks have risen to 109mt from 107mt a week ago and around 82mt a year ago.

Steel rebar 25mm US$404.8/t vs US$400.1/t – January rebar prices rise 0.7% to $389/t
• China ordered steel mills over four provinces and Shnaghai to cut production from Aug 23 to Sep 9to improve air quality for G20 Summit held on Sep4-5 in Hangzhou.
• The order is estimated to affect 1.1-3.3mt or less than 0.5% of total annual production.

Thermal coal (1st year forward cif ARA) US$57.0/t vs US$55.4/t yesterday –

Coking Coal – Premium ‘spot’ coking coal prices have risen >60% since February with contract prices following at a lesser pace
• Premium prices are now around $115-130/t in China vs contract prices rising at around 13% to $92/t
• Prices are being driven by new demand from Chinese steel mills and restocking as also seen with iron ore.

Tungsten - APT European prices vs $185-200/mtu unch vs $190-200/mtu –

Lithium batteries -  MIT technology review
• Solid Energy Systems, a spin out from MIT to start sales of its new smaller smartphone battery early next year.
• The company intends on selling batteries for Electric Vehicles in 2018.
• Management claim their batteries offer the same capacity as conventional batteries at half the weight .

Lithium recycling - Fungus able to recycle lithium
• A new study claims that three strains of fungus are able to extract lithium from used batteries and electronic waste.
• The fungi generate organic acids which effectively leach metals out of crushed battery cathodes.
• Extraction rates of up to 85% have been observed for lithium and 48% for cobalt due to the generation of oxalic and citric acid produced by the Fungi.

Electric Vehicles – Optimal Solar cell / battery combination developed for EV charging
• Researchers reckon they have developed an optimal Solar Cell / battery combination for charging EVs.
• The team from Case Western Reserve University used four perovskite solar cells in series to directly photo-charge lithium batteries with a 7.8% efficiency which they reckon is the most efficient configuration reported to date.
• Perovskite cells are able to convert a broader spectrum of sunlight to electricity than more common silicon cells.
• The real trick will be to consistently mass produce the cells to reliably work in the real world environment, which is where the difficulty comes in. 
• The ‘Immortus’ electric car which is covered in high power solar cells already has an unlimited range on a sunny day so long as you don’t drive it in the shade.

Company News
Fortescue (ASX:FMG) – potential for Fortescue bonds to rise to investment grade status
• You’ve got to give them credit.  Fortescue have worked with their assets to lower production costs to such an extent such that rising iron ore prices could now allow the company’s ‘junk’ grade bonds to rise again to investment grade paper.
• Fortescue has cut its debt by $2.9bn to $5.2bn in a year and the CEO reckons the bonds are already in the investment grade category on a number of metrics.
• The bonds are rated at BB –ve by S&P, BB+ by Fitch and Ba3 by Moody’s.

Rio Tinto (LON:RIO) - 50th anniversary of Rio Tinto’s first iron ore shipment from W Australia to Japan
• Yesterday was the 50th anniversary of Rio Tinto’s first iron ore shipment from W Australia to Japan – first shipment was sent on MV Houn Maru from port of Dampier to Yawata Iron and Steel Company. 
• Rio Tinto says “Ahead of this milestone, thousands of Australian contractors and suppliers laid almost 300 kilometres of railway, moved 12 million cubic metres of earth and rock and installed 300,000 tonnes of plant and equipment.
• The company also built the towns of Dampier and Tom Price, and dredged a port to accept the largest ore carriers of the day.”
• “Over the past 50 years Rio Tinto has invested more than $37 billion to grow our Pilbara operations. We now employ 12,000 people who operate our network of mines, rail and ports, and sell our iron ore to customers all around the world.”

Vast Resources (LON:VAST) 0.3 pence, mkt Cap £9.8m – Improvements at both Pickstone Peerless and Manaila
• Vast Resources has reported improved quarterly production at its 50% owned Pickstone Peerless gold mine in Zimbabwe and operational improvements to the 50.1% owned Manaila (MPM) polymetallic mine in northern Romania, although these improvements have yet to flow through to increased production.
• At Pickstone-Peerless, where Vast Resources poured its first gold in September 2015, the plant is now operating at steady state production consistently treating around 20,000 tonnes per month. As a result, gold production increased by 62% to 4,542oz during the quarter bringing production for the first half of 2016 to 7350 oz. Although the company has not disclosed the grade of the ore treated or the recovery rates, cash costs are reported to have fallen by 24% during the quarter to $695/oz bringing the average for the first half to $778/oz.
• The company comments that it will require modifications to its processing plant in order to treat sulphide ore when the existing oxide resource is depleted although there is also a “Potential development of a satellite open pit mine at the nearby Giant Mine (“GGM”) which has a JORC-compliant inferred resource of 500,000 oz of gold.”
• At Manaila in Romania, although the plant was able to process 33% more ore during the quarter (29,830 tonnes compared to 22,510 tonnes in Q1), a combination of mechanical breakdowns, the treating of a high pyrite content ore which reduced recovery rates and “experimentation with reagents and the process flow sheet to produce separate copper and zinc concentrates” caused an overall reduction of 12% in the metal  concentrate production to 727 tonnes. The company also discloses that concentrate grades were lower suggesting that there will be a double impact on revenues.
• We note that the fine tuning of the plant at Manaila has cost some production efficiencies in the current quarter but is clearly aimed at longer term sustainable improvements – an optimist might conclude that the first hints of these gains may be manifested in the reported 3% decrease in operating cost per tonne milled to $33/tonne, which is to some extent masked by the impact of lower recovery rates delivering a 45% rise “to US$1341 per tonne of concentrate produced.”
• The company has previously announced the granting of a prospecting licence over the Faneata tailings dam at the Baita Blai polymetallic mine. Vast Resources is planning a limited, “825m auger exploration programme to  upgrade the mineralised tailings dam to LORC compliant Mineral Resource”. The work, which will also provide sample material for metallurgical testing is expected to “commence when the expected MPM revenue stream is achieved.”
Conclusion: The Zimbabwe gold operations appear to be performing well, but progress with the rehabilitation of the Romanian polymetallic assets seems to be taking longer and, perhaps proving more difficult, than hoped. There are, however, indications of some positive outcomes and we look forward to further progress reports in the coming months.

Tue, 23 Aug 2016 10:46:00 +0100
Brokers: Persimmon’s first half ahead of expectations Tue, 23 Aug 2016 10:37:00 +0100 AIM Breakfast: Electric Word, Harvest Minerals, Jersey Oil & Gas, Rare Earth Minerals, Telit Communications, Circle Property, ITM Power, Orosur Mining, Vast Resources, Tlou Energy What’s cooking in the IPO kitchen?
LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m
Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap
Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September

Breakfast buffet

Electric Word (LON:ELE) 3.13p £12.8m
The specialist information business with divisions operating in the Sport and Education sectors has reported H1 May 2016 interims during which time it disposed its 70% stake in iGaming Business Ltd for gross cash consideration of £14.5m leaving £11.5m net cash. Results from continuing operations showed flat revenues of £3.3m and adjusted EBITA losses of £992k. The company is seeking ways to add scale as the Sports and Education businesses are not sufficient to support central costs and overheads.

Harvest Minerals (LON:HMI) 17.75p £16.7m
Arapua Fertiliser Project Update:  positive results for the latest agronomic and metallurgical testwork conducted at the Maximus prospect, part of its Arapua Fertiliser Project in Brazil. All results were well within the required specifications. Notably, no toxic elements are present. Excellent solubility levels. The significance of this work, is in part, the option to be able to produce and products with different grades in order to service different market sectors as commercial production develops.

Rare Earth Minerals (LON:REM) 0.87p £64.5m
Rare Earth’s 15.5% investee company, Macarthur Minerals has applied for an additional exploration licence in the Pilbara region of Western Australia, to extend the contiguous area to 367 square kilometres. The Company now has Total tenement acreage under application in the Pilbara region of 1,449 square kilometres, in addition to its Yalgoo, Edah Hill, Ravensthorpe, Sulphur Springs, Whim Creek interests in Western Australia and Nevada Stonewall interests in the United States of America.

Circle Property (LON:CRC) 148p £41.88m
Maiden results for the four months to March 2016 from the specialist regional UK property investment, development and management company. In the period from incorporation, profit before tax £1.1m, which reflects basic earnings per share of 3.8p. Maiden divi of 2.4p paid in May. NAV/Share was £1.53 at the period end. Post Brexit the company now sees a gradual resumption of normal working with occupiers continuing to sign leases and investors competing to buy buildings with a living yield

ITM Power (LON:ITM) 23p £49.9m
The energy storage and clean fuel company announced a fuel contract to supply hydrogen at £10/kg with Commercial Group, a pioneer in hydrogen fuelled fleet logistics. The contract covers fuel dispensed across ITM Power's hydrogen refuelling network, including the station recently opened in London. ITM Power currently has £16.19m of projects under contract and a further £1.79m of contracts in the final stages of negotiation, making a total of £17.98m.  FYApr17E forecasts project £3.7m sales and a £3.4m loss before Tax.

Orosur Mining (LON:OMI) 17.75p £17.56m
A director share purchase from the South American focused gold producer, developer and explorer, with non-exec Pablo Marcet picking up one million shares at CA$0.315 or 18.8p. He owns 1.23% of the company.

Tlou Energy (LON:TLOU) 7p £14.39m
The AIM and ASX listed company focused on delivering power in Botswana and Southern Africa through the development of coal bed methane has renewed a Co-operation Agreement with General Electric International and IK Holdings for the delivery of a proposed gas to power solution for Botswana, supporting a new 50MW power generation facility for which Tlou has been approved   to negotiate gas supply, construction and operation.

Vast Resources (LON:VAST) 0.325p £10.2m
The mining company with operations in Romania and Zimbabwe has updated for the quarter to June 2016. 62% increase in gold production to 4,542 ounces at Pickstone. Manaila increase in ore but decrease in concentrate produced. Further testwork being implemented. Exploration drilling underway at Baita Plai. Funding update includes a repayment to Darwin Capital. Latest placing on 11 August raising £365k at 0.285p.

Telit Communications (LON:TCM) 247.75p £284.69m
The global enabler of the Internet of Things (IoT), announces a new portfolio of LTE IoT modules. The portfolio includes four LTE Cat M1 modules for the American market and one LTE Cat NB1 module for the European market. The modules begin sampling later this year with commercial availability expected in early 2017, in alignment with the current service launch timelines of American operators.   The shares are on 13.7 x current year earnings with a 2.3% yield.

Jersey Oil & Gas (LON:JOG) 37p £3.1m
The independent upstream oil and gas company ‎focused on the UK Continental Shelf region of the North Sea, announced that alongside its co-venturer, CIECO Exploration, has agreed a farmout  of 70% of certain North Sea blocks to Statoil. Total up-front cash consideration of US$2 million, of which US$1.2 million will be payable to Jersey Oil & Gas. Statoil will fund all costs up to US$25 million in respect of the first exploration well to be drilled on the P.2170 Licence.



Tue, 23 Aug 2016 08:32:00 +0100
Far Limited/Cairn Briefly this morning I notice that things are moving on apace in Senegal with an announcement by Far. They have increased their contingent resource number by 14% to 641m barrels and say that the field ‘has the credentials to support a potential development. It seems that whatever the operator does in terms of numbers other partners or potential partners leapfrog them although to be fair to Cairn they should remain conservative.
Far also announce that regarding the pre-empt situation ConocoPhillips has ‘failed to comply’ and thus pre-emption has not yet commenced. With regard to this point i’m sure that our legal friends will now be getting involved but this is by no means over and Woodside are not yet owners of that stake. The market has been buzzing with stories as to who might partner Far should they attempt to pre-empt, rumours which will now become even more interesting. This really is a ‘watch this space’ situation if ever there was one…

Tue, 23 Aug 2016 08:24:00 +0100
In the papers: Caledonia Investments, NBC, Pfizer The Times
Caravan parks sale on blocks thanks to staycation boom: Caledonia Investments is said to have shelved plans to sell one of Britain’s biggest caravan park operators as the tourism industry predicts a post-Brexit boom in staycations.
NBC’s $12 billion Olympics bet up in the air: America may have topped the Olympics medals table, but when it comes to TV ratings the U.S. broadcaster NBC lost in Rio with prime-time viewership down by 17% compared with the London 2012 Games (Alexandra Frean writes).
Students hit by decline in summer jobs: The days of students pulling pints, stacking shelves or working behind tills during the holidays are vanishing, according to a report which warns that summer jobs are in a “long-term decline”.
Supermarket price war would kill profits: Sugar crunches underfoot in the baking aisle and crates of empty boxes clutter the shop floor, but Aldi in Brighton is teeming with customers on a Friday afternoon.
Oil falls as hopes of output freeze fade: Oil prices dropped back beneath $50 a barrel as signs of increasing production took the heat out of last week’s rally.
China takes control of North Sea oil drilling: China has become the largest crude oil operator in the North Sea despite boasting that it uses deep-water oilrigs as strategic weapons.
Swedish PM warns May tax cuts would complicate Brexit talks: Senior Conservatives reacted with anger after a European leader warned Theresa May that handing a tax cut to businesses would make Brexit negotiations “more difficult”.
The Independent
Pfizer to buy cancer drug maker Medivation for $14 billion: Pfizer announced it will acquire cancer drug company Medivation in a deal worth nearly $14 billion (£10.6 billion).
Brexit: Infrastructure spending falls by 20% after EU referendum: Spending on infrastructure in the U.K. has declined sharply since the country voted to leave the EU, new figures have shown.
House prices to fall in 2017 as Brexit uncertainty takes hold: A weaker economy caused by the uncertainty following U.K.’s vote to leave the EU is likely to push house prices down next year, Britain’s largest estate agent has predicted.
The Daily Telegraph
Damac’s new tower in Nine Elms to be built in £200 million deal with Lendlease: Dubai-based property developer Damac has signed a £200 million deal with Lendlease to build its new tower in London, signalling a vote of confidence in the post-Brexit newbuild market.
‘Last resort’ power plan scrapped as businesses decline to cut their usage: Plans to help keep the lights on this winter by paying big businesses to cut their power usage during weekday evenings have been scrapped after National Grid failed to find enough willing participants.
Egdon boosts stake in North Yorkshire gas field with shale potential: Egdon Resources has increased its stake in a gas exploration and production licence near Redcar in North Yorkshire, where it sees the potential for future shale drilling.
Team GB’s flashing shoes from Olympics closing ceremony set to give British design company a leg up: The public could soon be wearing Team GB athletes’ flashing shoes after the company that produces them was swamped with Expressions of interest.
China caught in ‘dead money’ trap as central bank pleads for fiscal stimulus: China is at mounting risk of a Japanese-style “liquidity trap” as monetary policy loses traction and the economy approaches credit exhaustion, forcing a shift towards Keynesian fiscal stimulus.
HSBC thinks Theresa May will go on a £50 billion spending splurge: The government could borrow an extra £50 billion to go on an infrastructure spending spree in a bid to pep up the economy, economists at HSBC believe.
The Guardian
Passengers could be charged £25 for failed claims against airlines: Passengers of easyJet and British Airways, and the U.K.’s biggest package holiday operators, could be charged £25 if they make a complaint about delays, cancellations or lost baggage that is subsequently not upheld.
More than 1.5 million U.K. households in extreme debt, says TUC report: About 1.6 million U.K. households are living in extreme debt, according to a report by the TUC, which says official figures underestimate the intense burden of repayment on many families and individuals.
Calls for more pension advice after study raises concerns over future plans: More than half of people who have taken money out under pension freedoms have not planned for future care costs, a new study shows.
Top fund Manager Neil Woodford scraps staff bonuses: One of the U.K.’s most respected fund Manager is to scrap bonuses at his firm, in a challenge to the conventional City wisdom that bonuses are essential to motivate staff.
VW supplier clash stops output at six plants: Volkswagen has been thrown into another crisis after a dispute with a supplier forced it to halt production at six plants and cut the hours of nearly 28,000 workers.
Daily Mail
China closes in on megadeal takeover of Swiss seeds and pesticides giant Syngenta: China has moved a step closer to its biggest overseas takeover after regulators in the U.S. cleared its proposed acquisition of a Swiss seeds and pesticides giant.
We’ll be sending tourists into orbit by 2021, claims Boss of Manchester-based firm: A British space travel company will send a manned rocket into space within the next five years, according to its Boss.
Last 35 BHS stores to close this week after 88 years on the High Street: BHS’s 88-year run on the High Street will come to an end this week when the final stores close their doors.
Overseas tourists splashing out in U.K. and more Britons opting to holiday at home fuels spending boom: Tourists are flocking to the U.K. to take advantage of the weak pound – fuelling a spending boom.
Daily Express
Almost two thirds of savers who raided pension funds have no plans for care: Pension savers are plundering their retirement pots without planning ahead for the cost of any care they might need in old age.
Cut company tax and talks will be ‘more difficult’, May warned: European leaders have threatened to make Britain’s exit from the EU more difficult if Theresa May’s Government cuts corporation tax.
Top London home values to crash by up to 6% this year, say experts: House prices in London’s wealthiest areas are set to tumble by 6% this year, as the market finally runs out of steam after years of astronomical growth, according to one estate agent.
The Scottish Herald
French tyre giant invests in Dundee plant despite Brexit vote: The Boss of the giant Michelin tyre plant in Dundee has said its French Owners have provided reassurance they value the operation and ‘voted with their feet’ by approving a £15 million investment following the Brexit vote.
Inverarity brings long-standing rival Calder on board: Scottish drinks wholesaler Inverarity Morton has appointed former long-standing rival Brian Calder to its board.
Craft growth is in the can for Harviestoun: Harviestoun Brewery has secured listings in scores of Tesco and Sainsbury’s stores in Scotland for canned versions of its award-winning beers after doubling its production capacity and introducing new brewing formats at its Clackmannanshire base.
Highland firm to bring ultra-fast internet to Glasgow businesses: Highlands internet service provider HighNet has teamed up with fibre network provider CityFibre in a bid to transform Glasgow into a so-called Gigabit City like Aberdeen and Edinburgh.
AA to offer mortgages to members: The AA is pushing into the mortgage market by offering a range of products to its members.
Baillie Gifford hires Assure for forensic IT insight: Baillie Gifford has appointed Edinburgh-based APM Assure to give the investment house greater forensic insight and control of its IT systems.
RBS facing action over restructuring unit this year: A group representing more than 140 small businesses has declared its intention to launch a £1 billion legal action against Royal Bank of Scotland over alleged mistreatment by its Global Restructuring Group before the end of the year.
The Scotsman
Accessories brand Nu Blvck eyes £15,000 funding: A fashion accessories brand set up by two young Scottish entrepreneurs earlier this year is looking to raise at least £15,000 by early September to progress its e-commerce platform and business model.
Gender salary gap widens for 12 years after first child born: Women who have children earn a third less than male counterparts by the time their offspring have started high school, a report has revealed.
Contactless card transactions top 2015 in first half of year: A growing number of shoppers are using contactless cards for payments – with the value of contactless transactions this year already topping the level seen in the whole of 2015.
City A.M.
Bank of America escapes $1.3 billion fine after court declines to go back on decision: Bank of America has dodged a $1.3 billion (£990 million) fine, after a U.S. court decided to drop the issue.
Sadiq Khan’s plans to build affordable homes on TfL land have been thrown into doubt by questions over the sales process: Sadiq Khan’s hopes of forcing developers to build up affordable homes on former Transport for London property have been put in doubt by requirements on getting value for money on land deals.
Wonga to get a new U.K. Boss: Payday lender Wonga is due to get a new U.K. top dog. Former Travelex Executive Tommy Jordan is set to head up the business’ U.K. operations, replacing Tara Kneafsey.
Baltic Exchange to keep London HQ as it agrees terms of Singapore takeover: The Singapore Exchange has agreed the terms of its takeover of the City of London-based Baltic Exchange.
E-cigarette tax should be zero: IEA think tank: Excise taxes for e-cigarettes and other healthier alternatives should be set to zero, according to the influential Institute of Economic Affairs think tank.
Steve Wynn opens doors on new Macau resort: Casino tycoon Steve Wynn has opened the doors of his latest resort in Macau. Wynn Palace, which is located in Cotai, cost $4.2 billion (£3.2 billion), boasts an eight-acre Performance Lake and fountain show and houses an art collection that was collated over a six-year period and is worth over $125 million.
U.K. jobs rebuffed Brexit woes in July, finds Robert Walters: The U.K. jobs market warmed up throughout July, as employers got back into action following the Brexit vote, research from one specialist recruitment consultancy has found.
Panama’s banking system grows by more than $4 billion in first half of 2016, but profits drop thanks to new red tape: Panama’s government has revealed assets held by its banking system had grown by over $4 billion (£3.1 billion) in the first half of the year alone, as the country continues to work towards more transparency in its financial services sector.
TalkSport Owner reports falling profits ahead of takeover by Rupert Murdoch’s News Corp: Wireless Group, which has agreed a deal to be sold to Rupert Murdoch’s News Corporation, has reported falling profits in the first half of 2016.
Rents on high-end homes have gone down in the aftermath of the Brexit vote and the stamp duty tax hike: Lettings in the high-end of London’s property market have been “subdued” in the second quarter of the year due to both a fall in demand and an increase in supply.

Tue, 23 Aug 2016 08:21:00 +0100
Market briefing: UK markets finished lower yesterday, led by losses in mining and energy sector stocks UK Market Snapshot
UK markets finished lower yesterday, led by losses in mining and energy sector stocks. Precious metal miners, Randgold Resources and Fresnillo declined 4.0% and 5.9%, respectively, as metals prices declined across the board. Other miners, Glencore, Antofagasta and Anglo American slid 2.2%, 3.5% and 4.0%, respectively. Oil majors, BP and Royal Dutch Shell shed 1.5% and 1.8%, respectively, on lower crude oil prices. On the brighter side, housebuilders, Berkeley Group Holdings, Barratt Developments and Taylor Wimpey advanced 2.5%, 2.8% and 3.5%, respectively. Travis Perkins gained 1.7%, after a leading broker reiterated its ‘Buy’ rating on the stock. British American Tobacco and Hikma Pharmaceuticals edged up 0.3% and 1.1%, respectively. Royal Bank of Scotland Group rose 0.4%, reversing its earlier losses. The FTSE 100 declined 0.4%, to close at 6,828.5, while the FTSE 250 marginally fell, to settle at 17,872.1.
US Market Snapshot
US markets ended mostly lower yesterday, with major indices Dow Jones and the S&P 500 closing in the red, as investors exercised caution ahead of the Federal Reserve Chairwoman, Janet Yellen’s speech scheduled at the end of the week. Procter & Gamble, Johnson & Johnson and Apple shed 0.5%, 0.7% and 0.8%, respectively. Pfizer slid 0.4%, after it agreed to acquire the biotech firm, Medivation, 19.7% up, in a bid to add prostate-cancer drug to its portfolio. Bucking the trend, Intersil soared 19.8%, after Japan-based company, Renesas Electronics, stated that it is in talks to acquire the former company for about $3 billion. Valeant Pharmaceuticals International jumped 8.8%, as the drugmaker confirmed that it has appointed Paul Herendeen as its new Chief Financial Officer. The S&P 500 slipped 0.1%, to settle at 2,182.6. The DJIA shed 0.1%, to settle at 18,529.4, while the NASDAQ rose 0.1%, to close at 5,244.6.
Europe Market Snapshot
Other European markets closed weaker yesterday, amid a decline in commodity producers. Getinge dropped 4.0%. The Swedish company fired its CEO, Alex Myers, due to disagreements related to future direction of the company. On the positive side, Syngenta surged 10.6%, after China National Chemical Corp received US national security clearance to acquire the Swiss seed maker in a deal worth $43.0 billion. Teleperformance jumped 9.0%, following its acquisition of the translation services company, LanguageLine Solutions LLC for $1.5 billion. Kingspan Group climbed 7.0%, as the insulation panels builder hiked its dividend after reporting an increase in its revenue and operating profit in the first half of 2016. The FTSEurofirst 300 index marginally declined, to close at 1,339.4. Among other European markets, the German DAX Xetra 30 slid 0.5%, to close at 10,494.4, while the French CAC-40 shed 0.2%, to settle at 4,389.9.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning. In Japan, auto exporters, Isuzu Motors, Honda Motor and Hino Motors have dipped 2.1%, 2.3% and 4.4%, respectively, amid broad strength in the Japanese Yen. On the contrary, Ono Pharmaceutical has surged 7.7%. There was news that the company’s blood cancer drug, Opdivo, will be available in the market this year. Peers, Sumitomo Dainippon Pharma, Astellas Pharma and Chugai Pharmaceutical have advanced 1.1%, 2.4% and 2.5%, respectively. In Hong Kong, energy producers, PetroChina and CNOOC have slipped 0.9% and 1.8%, respectively. In South Korea, index majors, Hyundai Motor and Samsung Electronics have gained 0.4% and 1.4%, respectively. The Nikkei 225 index is trading 0.2% lower at 16,561.0. The Hang Seng index is trading 0.4% down at 22,917.3, while the Kospi index is trading 0.1% higher at 2,044.2.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.96% or $0.47 lower at $48.69 per barrel, ahead of the American Petroleum Institute’s weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 3.38% or $1.72, to settle at $49.16 per barrel, amid concerns over higher crude oil production by major players.
At 0330GMT today, Gold futures contract is trading 0.25% or $3.30 higher at $1341.00 per ounce. Yesterday, the contract declined 0.20% or $2.70, to settle at $1337.70 per ounce, amid speculations that the Fed would hike its interest rate sooner than anticipated.
At 0330GMT today, the EUR is trading 0.10% higher against the USD at $1.1331, ahead of the preliminary manufacturing and services PMI data for across Euro-zone for August, set to release in a few hours. Yesterday, the EUR marginally weakened versus the USD, to close at $1.1320.
At 0330GMT today, the GBP is trading marginally higher against the USD at $1.3138. Investors will closely monitor US preliminary manufacturing PMI data for August, slated to release later today.  Yesterday, the GBP strengthened 0.47% versus the USD, to close at $1.3137. Meanwhile, in the US, Chicago Fed’s national economic activity index in July improved to a 12-month high.
Fixed Income
In the US, long term treasury prices rose and pushed yields mostly lower, with investors shifting their focus to a highly anticipated speech by the Fed Chief, Janet Yellen, at the Jackson Hole meeting, starting later this week, to gauge the timing of next rate hike. Yesterday, yield on 10-year notes fell 3 basis points to 1.55%, while yield on 2-year notes remained flat at 0.76%. Meanwhile, 30-year bond yield slid 5 basis points to 2.24%.

Key Economic News
Swiss M3 money supply climbed in July

M3 money supply climbed 2.70% on a YoY basis, in July, in Switzerland. M3 money supply had recorded a revised rise of 2.30% in the previous month.
US Chicago Fed national activity index registered a rise in July
The Chicago Fed national activity index registered a rise to 0.27 in July, in the US, compared to market expectations of an advance to a level of 0.20. The Chicago Fed national activity index had registered a revised reading of 0.05 in the prior month.
Canadian wholesale sales advanced more than expected in June
On a MoM basis, wholesale sales recorded a rise of 0.70% in Canada, in June, more than market expectations for a rise of 0.10%. Wholesale sales had advanced by a revised 1.90% in the prior month.
Japanese convenience store sales climbed in July
On a YoY basis, convenience store sales climbed 0.30% in Japan, in July. In the prior month, convenience store sales had recorded a rise of 0.80%.
Japanese manufacturing PMI registered a rise in August
The flash manufacturing PMI recorded a rise to 49.60 in Japan, in August. Manufacturing PMI had registered a reading of 49.30 in the previous month.
Japanese supermarket sales registered a rise in July
In July, on a YoY basis, supermarket sales in Japan climbed 0.20%. In the previous month, supermarket sales had fallen 0.50%.
Chinese MNI business sentiment index recorded a decline in August
In China, the MNI business sentiment index recorded a drop to 54.30 in August, compared to a level of 55.50 in the previous month.

Tue, 23 Aug 2016 08:17:00 +0100
Carbon Capture Can Drive a 21st Century Revival of British Industry Carbon Capture Can Drive a 21st Century Revival of British Industry
Here is the opening of this interesting article by Ambrose Evans-Pritchard for The Telegraph:

Renaissance beckons for the once great industrial hubs of northern England and Scotland, and the unexpected catalyst may be stringent global climate controls.
What looks at first sight like an economic threat could instead play elegantly to Britain's competitive advantage, for almost no other country on earth is so well-placed to combine energy-intensive manufacturing with carbon capture at a viable cost.
The industrial clusters of the Tees Valley and the Humber are linked by a network of pipelines to depleted and well-mapped oil and gas fields in the North Sea, offering rare access to infrastructure for carbon storage deep underground.
Liverpool has old wells of its own offshore in the Irish sea. Scotland's heavy industry in Grangemouth and the Forth have feeder pipelines to the Golden Eye.
Such sites may not be worth much today - with carbon prices in Europe too low to matter at barely $5 a tonne - but the COP21 climate deal agreed in Paris last December transforms the long-term calculus.
It implies a tightening regime of higher carbon penalties for the next half century, ending in net zero CO2 emissions. Once prices approach $50 a tonne the equation changes. Beyond $100 it inverts the pyramid of energy wealth: profits accrue to those with access to the cheapest low carbon power.
"Storage will be much more valuable than the fossil fuels themselves. If you are an energy-intensive industry in the middle of Europe and you don't have C02 storage, you're stuffed," said professor Jon Gibbins from Edinburgh University.

David Fuller's view
This is interesting and entrepreneurial long-term thinking.  I believe we will hear more of it following Brexit because the UK has voted to retake control of its destiny.  That is an exciting and positive development which will inspire additional creativity and economic development. 


Why the UK is Using Less Energy, but Importing More, and Why It Matters

The UK is in the midst of an energy revolution. Since the late 1990s the Government has committed to using cleaner energy, and using less of it.
Billions of pounds have been invested in renewable energy sources that generate electricity from the wind, waves and plant waste.
At the same time the UK has managed to cut its energy use by almost a fifth as households and businesses have steadily replaced old, inefficient appliances and machinery with products that use far less energy to run. Energy demand has also fallen due to the decline of the UK’s energy-intensive industries, such manufacturing and steel-making.
But Government data shows that the UK’s reliance on energy imports is at its highest since the energy crisis of the late 1970s, raising serious questions over where the UK sources its energy and what a growing dependence on foreign energy means for bills and for security.
In a leaner, greener energy system, why is the UK more dependent on foreign energy sources than it has been in more than 30 years?

David Fuller's view
The short answer is that the UK has largely run out of commercially viable North Sea oil at today’s prices.  It has also made a commendable push into renewables while cutting back on the use of coal.  However, this has been an expensive policy and the country faces an increasing risk of energy shortages.
Fortunately, there is a medium-term solution to this problem if the government moves quickly.

India Appoints a New Central Bank Governor

AS MUCH as the financial markets they seek to influence, central banks need the confidence of investors to function. So uncertainty over their leadership and questions about their independence are seldom welcome. On August 20th Narendra Modi, India’s prime minister, belatedly appointed a new head of the Reserve Bank of India (RBI), nine weeks after Raghuram Rajan, the respected incumbent, surprised everyone by announcing he wouldn’t stay on the job for a second term (as most of his predecessors had) after his three-year term expires on September 4th.
The new governor is Urjit Patel, a former management consultant and corporate adviser, who has served since 2013 as one of four RBI deputy governors. Mr Patel is thought to be of similar ilk to his current boss. That is reassuring for investors still baffled as to why Mr Rajan, a former IMF chief economist with a good record as head of the RBI, was effectively sacked by Mr Modi.
Mr Patel’s remit at the RBI has been to help shape monetary policy. The newish inflation-targeting framework, which has been successful in stemming rising prices (helped by outside factors such as falling oil prices), is as much his as Mr Rajan’s. So is the incoming arrangement, whereby interest rates will be set by a panel comprising government and RBI appointees rather than the RBI’s boss being in sole charge. Though he lacks the stature of Mr Rajan, which probably helped fend off inevitable calls for lower interest-rates from ministers and industrialists, Mr Patel is seen as just as hawkish as the outgoing governor. His appointment should alleviate fears that Mr Rajan's exit was a ploy by Mr Modi to hobble a fiercely independent central bank.

David Fuller's view
Mr Rajan was apparently a little too outspoken for Mr Modi.  Urjit Patel certainly has the qualifications to be governor of the Reserve Bank of India, where he has served as a deputy governor since 2013.

Europe Seeks Life After Brexit as Merkel Meets Allies at Sea

The Italian aircraft carrier Giuseppe Garibaldi usually patrols the Mediterranean as the flagship of the European mission to save shipwrecked refugees. On Monday, it will host the leaders of Germany, France and Italy as they try to ensure the European Union doesn’t founder in the aftermath of Brexit.
The meeting of Angela Merkel, Francois Hollande and Matteo Renzi off the coast of Naples will be rich in symbolism.
The Garibaldi, named after the general who helped unify the Italian state in the 19th century, is tackling one of today’s greatest challenges to the European project in migration. Before they are helicoptered aboard from the island of Ventotene, the leaders will visit the grave of Altiero Spinelli, an anti-fascist who helped draft a 1941 manifesto calling for a federal Europe. Spinelli wrote on cigarette papers smuggled out of a prison camp on Ventotene while interned during World War II and later became an EU commissioner.
The present-day leaders of the euro area’s three biggest economies will focus on both the future vision of Europe and immediate challenges such as Britain’s vote to leave the EU, economic growth, terrorism and political turmoil in Turkey, as well as migration. They’ll hold a news conference and then have dinner on board the Garibaldi, seeking to shape where Europe goes from here and the EU’s negotiating stance toward the U.K.

David Fuller's view
We hear that today’s meeting of Angela Merkel, Francois Hollande and Matteo Renzi aboard the aircraft carrier Giuseppe Garibaldi “will be rich in symbolism”.  No doubt, although perhaps not as intended.  Cartoonists may see it as an initial rescue of shipwrecked politicians who will face even more uncomfortably hot waters in next year’s elections.  
Left of centre political commentators, and not just within Europe, have long described the European Union as a ‘noble experiment’.  Unfortunately, it is another foundering socialist policy, which enriched the elite, while eroding European democracy, weakening the region’s economies and creating shameful levels of unemployment. 

European Sneers Take Shine Off GB Medal Haul

Britain’s stunning medals success in the Rio Olympics may have been a cause for elation at home — but in parts of Europe it has met with sneers, incredulity and withering criticism of UK sports policy.
Great Britain achieved its best Olympic performance in more than a century, garnering a total of 67 medals, including 27 golds. It ended the Rio games second in the overall medals table after the US and ahead of China.
Some fellow Europeans were impressed. Others were sceptical.
Germany’s Frankfurter Allgemeine newspaper, for example, singled out Team GB’s spectacular success in cycling, which it said “has led its rivals to wonder if there isn’t something fishy going on with the Brits”.
The paper also had harsh words for the Britain’s “no compromise” approach to funding, which allocates money to sports with a realistic chance of earning medals and has withheld it from disciplines that failed to meet their medals target in 2012.
“It made no difference how popular the sport was with the public, how suitable it was for the mass market,” the paper said. “Volleyball and table tennis were excluded from funding programmes, despite their broad appeal and wide take-up in the population.”
The article was headlined: “No compromise: why the Brits win more often in Rio than China, and what a high price they pay for it.”
There was a similar reaction in Spain, where the El País daily described Britain’s pursuit of Olympic glory as “brutal and heartless”, stating: “Every medal is the product of calculation, not the spirit of a nonconformist athlete.”
Perhaps even more irritating to British sports fans was the approach taken by the European Parliament. In a tweet it airbrushed out the Britain’s performance, instead congratulating the whole of the EU on the 325 medals it had collectively won.
That earned this terse response from one @JDrewer: “If you want to know why the Brits decided to leave the EU, this tweet pretty much sums it up.”

David Fuller's view
Oh dear.  How thoughtless of our Olympic athletes to deny their critics of schaudenfreuda which could have been satisfied by a post-Brexit crisis of confidence.
(See also: Treacy Crouch: The heroes of Team GB have inspired the nation – we must harness that feeling for good)

Email of the day
On nuclear fission being the bane of human civilization:
Nuclear fission will ultimately be the bane of human civilization. There are no solutions for storing spent fuel which is stored in pools around reactor sites and will remain deadly for uncounted future generations. The innards of reactors wear out in a several decades but remain deadly to life for tens of thousands of years. How will they be dismantled and stored safely? Multiply these hazards by future reactors yet to be built to imagine the legacy we are leaving. Renewable energy is the only way.

David Fuller's view
Well said.  You are correct and I have not mentioned this often enough. We can reduce the risk with individual reactors by converting to new nuclear but containment of deadly spent fuel from reactors still leaves lethally dangerous sites which have to be cordoned off for ever.  The tradeoff, I suggest, is that even 20th Century nuclear power shortens far fewer lives than any fossil fuel.  Meanwhile, renewable energy is one of the long-term solutions to our requirements but many more people would die prematurely from hardship if we could only use renewables today.  The other long-term solution, which many of us had hoped to see and surely our grandchildren will, is nuclear fusion.
See also: Why Nuclear Fusion Is Always 30 Years Away, from Science for the Curious Discover.

Tue, 23 Aug 2016 08:13:00 +0100
Fed, Oil, Dollar FTSE 100 Index called to open +20pts at 6850, even if yesterday’s bounce from 6810 has already found resistance at a trend line of falling resistance from last Monday’s peak. Friday’s bearish head & shoulders top reversal could still take the index back to 6740, but yesterday’s rebound does mean 6810 support is that little bit stronger. Bears are hoping for a retrace to test 6810 while Bulls are itching for a breakout from the current downtrend. Watch levels: Bullish 6870, Bearish 6830.
A positive opening call comes after another mixed session in Asia with early gains for Japanese exporters giving way to Yen strength that sees USD/JPY back testing the key 100 mark. This is derived from a tempering of market hawkishness about US monetary policy - and thus renewed USD weakness - as we edge towards Fed Chair Janet Yellen’s key Jackson Hole speech on Friday.
An oil price under continued pressure is also hampering global sentiment, although a weak Energy sector is failing to hold back Australia’s ASX, the index outperforming regional peers thanks to a weaker USD helping buoy the key commodity space. Note Chinese stocks also registering positive performance.
US bourses closed mostly lower yesterday with markets lamenting a 3% tumble in crude oil prices and absent investors awaiting Fed Chair Yellen’s speech on Friday. Consumer and energy names led declines on what was seen as one of this year’s lightest days volume-wise on the NYSE. Nonetheless, Chicago Fed National Activity beat expectations to post a good improvement on the last print.
Crude prices have fallen foul of Goldman Sachs again, with the investment bank declaring that the recent recovery has not had any fundamental support. Technical support for Brent Crude has kicked in at $48.50, but as Goldman and many others will argue, this is more likely profit taking by short sellers rather than a fundamental bullish reversal.
Interest rate sensitive Gold is still struggling near the floor of its new sideways range, though an early morning bounce on fresh USD weakness could break the 50-hour moving average and evolve into some form of uptrend as the day wears on. Sideways movement is nonetheless set to dominate this week, as markets will be jittery ahead of a much anticipated speech by US Fed chair Yellen on Friday
In focus this morning will be PMI Manufacturing and Services sentiment updates (preliminary) for France, Germany and the Eurozone. Consensus expects prints pretty static versus July’s finals, with Germany and the Eurozone in growth. However, any recovery/worsening of a weak situation in France could dictate market sentiment. UK CBI Trends will be of interest given the divergence between UK inflation, jobs and retail sales since Brexit versus the latest business sentiment indicators.
In the afternoon, Eurozone Consumer Confidence, US PMI Manufacturing and US New Home Sales are all expected almost flat but the Richmond Fed may have given up some ground. The latter would be in-line with last week’s intensification of the Empire State’s Manufacturing downtrend. It would, however, be at odds with improvements in the Chicago Fed yesterday and Philly Fed last Thursday.

Tue, 23 Aug 2016 08:12:00 +0100
Beaufort Securities Breakfast Alert: Alecto Minerals, Cyan Holdings, Galileo Resources, MySQUAR Limited, Stellar Diamonds Markets

The FTSE-100 finished yesterday's session 0.44% lower at 6,828.54, whilst the FTSE AIM All-Share index closed 0.29% higher at 788.79. In continental Europe, markets ended in the red after oil prices retreated on reports that Iraq would boost oil exports. In addition, losses in mining stocks hurt investor sentiment. Germany's DAX and France's CAC 40 shed 0.5% and 0.2%, respectively.
Wall Street
Wall Street ended slightly lower, as a fall in oil prices exerted pressure on energy stocks. Investors adopted a cautious approach ahead of Federal Reserve (Fed) Chief Janet Yellen's speech at the annual central banker's meeting on Friday. The S&P 500 fell 0.1% during yesterday's trading session.
Equities are trading lower as investors speculate whether the Fed would increase interest rates this year. The Nikkei 225 declined 0.6% as a stronger yen led to losses for export-driven stocks. The Hang Seng was trading 0.4% down at 7:00 am.
Yesterday, Brent oil prices declined 3.4% to US$49.16 per barrel, while WTI prices dropped 3.0% to US$47.05 per barrel.

No negative effect of Brexit on tourism in UK in near term
According to the World Travel and Tourism Council (WTTC), Brexit would not affect the UK's tourism sector in the near term. The organisation expects the sector to grow 3.6% over the year vis-à-vis the projected 3.1% rise in tourism globally. However, the WTCC said that fewer jobs would be created in the long term.

Company news

Alecto Minerals (LON:ALO, 0.09p) – Speculative Buy
Alecto Minerals, the African-focused gold and base metal exploration and development company, announced yesterday that it has signed a non-binding letter of intent (LOI) with Ashanti Gold (AGZ.V) to complete a Pre-Feasibility Study (PFS) for the Kossanto East gold project in Western Mali. Ashanti will have a 36-month period to complete the PFS and earn-in up to 65% of the project or else pay US$4m to Alecto within 90 days of the deadline for the PFS. Kossanto East has as JORC compliant mineral resource estimate of 6.72Mt grading 1.14g/t for an aggregate of 247,000oz of gold with significant exploration upside.

Our view: The announcement of an agreement with Ashanti is a significant result for Alecto and reveals the potential for continued gold mineralisation at the Kossanto East project. With Ashanti's expertise and exploration dollars at work we look forward to updates as the PFS develops. Alecto can now continue to focus on the development its Matala and Dunrobin gold projects in Zambia whist its JV partners (Randgold, Ashanti (potentially) and Kola Gold) manage its Mail assets. In the meantime, we maintain a Speculative Buy on the stock.

Beaufort Securities acts as a corporate broker to Alecto Minerals PLC

Cyan Holdings (LON:CYAN, 0.21p) - Speculative Buy
CyanConnode, the world leader in narrowband RF mesh networks for Omni Internet of Things communications, yesterday announced its half yearly results for the six months ended 30 June 2016. Financial highlights included revenue of £1,029,526 up more than five-fold on last year's comparative (H1'2015: £157,328), an operating loss of £2,858,715 (H1'2015: £2,289,524), basic and diluted loss per share of 0.04p (H1'2015: 0.05p) and cash/cash equivalents £2,370,504 (H1'2015: £628,069). Operational highlights included delivery against two contracts worth £1.5 million to Enzen Global Solutions, a transformational £10 million purchase order for smart metering for Iran, a follow-on order for a further 5,000 meters from Larsen & Toubro for Tata Power in India and agreement with JST Group to distribute smart metering technology in Thailand. Perhaps even more significantly, post-period Cyan completed the acquisition of Connode Holding AB, providing a smart metering contract with potential revenues of up to £37 million for the UK Smart Metering Implementation Programme; a pipeline of commercial opportunities in Europe and Asia; along with a fully-developed standards-based (IPv6/6LoWPAN) technology platform. Additional working capital funding of £4.3 million was also raised for the enlarged CyanConnode group, supported by institutional investors.

Our view: Smart metering is the answer! The true extent of the problem facing utility groups worldwide is not widely understood. The International Energy Agency calculates that 'non-technical' losses (largely meaning theft or power diversion as well as, to a lesser extent, equipment malfunction and billing errors) represent around 17% of total global energy production. In some developing territories, in fact, this can approach half of total generation whereas, by comparison, developed nations now urgently need to attain much greater demand response management. Indeed, the World Bank has demonstrated that it is three-times cheaper for utilities to save 1kWh of electrical energy by improving network efficiency than investing in new capacity. Such tasks are now the single most pressing issue for utilities groups worldwide and, demonstrably, smart metering is the complete solution. Cyan Holding's eyes are wide open to this developing scenario and, now combined with Connode, has positioned itself with a global 'future-proof' solution, to fully participate in the international upsurge in smart meter installation. Its business model has evolved into one capable of enjoying high SaaS margins, recurring IP royalties while also fully participating in the coming 'Internet-of-Things' revolution, together with prospective global leadership in narrowband RF mesh communication, CyanConnode finds itself ideally position to capitalise on the world-wide move toward energy grid management modernisation. Participating in the UK's SMIP and having received a £10m order from Iran, the Group has clearly passed the inflection point from which its participation in all things 'smart' (from metering through to cities) looks reassured. Expect momentum and activity levels at CyanConnode to take a series of rapid upward steps in the coming years. Beaufort retains its Speculative Buy recommendation on Cyan Holdings.

Beaufort Securities acts as corporate broker to Cyan Holdings PLC

Galileo Resources (LON:GLR, 1.02p) – Speculative Buy
Galileo Resources, the exploration and development mining company, announced yesterday an update on its Concordia Concession in the Northern Cape province of South Africa. The Concordia project covers an extensive area within the historically prolific Okiep Copper District. Minxcon Consulting, an independent mining and geological consulting firm, has completed an exploration desktop study identifying seven high-priority target areas and 27 prospective target areas based on modern re-interpretation of historical data. The seven high priority targets have potential for shallow mineralised zones. These targets plus the additional 27 prospective targets host conceptually 798.55Mt of which 50% are estimated to be mineralised with a mean grade of 0.57% Cu.

Our view: While results of the desktop modelling of all the target areas are considered non-compliant and conceptual in nature, they do confirm the presence of Cu mineralisation within the Concordia concession. The completion of the desk top study will help Galileo identify key mineralised structures and trends throughout the area. We are encouraged with the initial results and the potential for additional shallow deposits within the well-known Okiep mining district. We look forward to the next stage of exploration with ground-based geophysical surveys and ultimately resource definition drilling. In the meantime, we maintain our speculative buy on the stock.

Beaufort Securities acts as corporate broker to Galileo Resources PLC

MySQUAR Limited (LON:MYSQ, 3.36p) - Speculative Buy
MySQUAR, the Myanmar-language social media, entertainment and payments platform whose principal activity is to design, develop and commercialise Myanmar-focused internet-based mobile applications, yesterday announced that its latest game launched on 2nd August 2016, MyFish, has attracted in excess of 500,000 registered users in its first three weeks and is already generating revenue of US$600 to 800/day, at a gross profit margin of approximately 44%. The Company anticipates that MyFish - just one of many games planned - should achieve revenues of US$1,500 - 2,000/day within two months of launch. MyFish, which works on both Android and IOS devices, simulates fish hunting in a highly imaginative format involving 50 different types of fish. The game is run on the 'freemium' model, which allows free play up to a certain level, after which players have to pay for purchasing in-game assets such as virtual coins, gold and weaponry that enhance their fish hunting capability. MySQUAR's partners (telcos and cash top-up partners) collect the money paid by gamers and pay it to MySQUAR. A new game, Invincible Sword, is to be launched in September 2016 and the Company intends to continue to release new games at a rate of approximately one game every two months.

Our view: User account numbers going like gangbusters! Based on current and historical growth, the Company now states it '…confidently expects to have 5 million registered users across MySQUAR's different applications by the end of 2016'. Myanmar's young population, of course, is new to mobile online gaming that has gripped western audiences for a number of years now. MySQUAR's new games introductions benefit hugely, of course, from the Company's expanding MyCHAT user base. They are displayed and advertised on MyCHAT, being Myanmar's unique local language chat and social media networking application, and are programmed to allow MyCHAT users to log in using their MyCHAT accounts. The games therefore can quickly grow their user base at a minimal marketing cost and provide an ideal demonstration of the power the brand name can now wield over such a large and loyal consumer group. CEO, Eric Schaer put it very succinctly by noting "We are very pleased that our strategy with mobile gaming has been proven correct and is now providing strong revenue. We are confident that as we release more games we will continue to grow the revenue from this line of business. Leveraging this revenue stream through our agreement with MyPAY will increase our profit margins. There is strong demand for accessible entertainment. Our experience so far indicates that our programme of game roll-outs will become very valuable to the company." Further to this, management is also currently negotiating a commercial agreement with a VoIP technology provider, and both sides are working on technical integration of their respective services. The voice calling business - similar to a highly successful counterpart in Cambodia - is targeted for launch in the 4th quarter of calendar 2016. Thankfully none of these projects significantly build on operating costs, while still rapidly monetising their opportunity. This all suggests Myanmar's unique, local language social media operator can more than deliver on its promises. Based on recent progress, the Company has the very real potential to be achieving monthly break-even or better before the end of the current financial year. This is something that is unlikely to have been missed by its numerous and very cash-rich global peer group, who remains determined to continue ensnaring players in virgin territories that have successfully participated in an online user 'landgrab'. In this respect, MySQUAR now appears quite dramatically undervalued; Beaufort has set a price target of 21.0p/share and repeats its Speculative Buy recommendation.

Beaufort Securities acts as corporate broker to MySQUAR Limited

Stellar Diamonds (LON:STEL, 7.12p) – Suspended
Yesterday Stellar Diamonds published further information regarding the potential reverse takeover offer which led to the suspension of trading on 19 August. The Company has agreed to a proposed transaction with Octea Mining to combine Stellar's Tongo diamond project with Octea's adjacent Tonguma diamond project. The proposed transaction, if completed, would be classified as a reverse takeover under AIM rules and therefore would require the publication of an admission document and also be subject to shareholder approval. As such, the Company's shares will remain suspended until either an admission document is submitted or the proposed transaction is withdrawn. In addition, the proposed transaction is conditional on Stellar raising a minimum of US$25m to fund the project into production and entering into a final and binding transaction documentation with Octea.

Our view: We note that the combined inferred JORC-compliant resource would be 5M carats brought under a single mining operation with the average diamond value of US$193/carat for Tonguma and US$270/carat for Tongo and a further 8M carats has been estimated as an exploration target on the Tonguma licence by independent consultants. We look forward to a revised mine plan and an updated resource estimate for the enlarged project in due course. The Tonguma project has a 25-year mining licence in place and an existing 50t per hour processing plant whilst the Tongo mining licence is in the application stage. Combined, the two licences would cover a number of high-grade and high-value kimberlite dykes with the potential in-situ values of up to US$560 per tonne. Investors should base their investment decision on the back of the revised mine plan and assuming all necessary conditions have been met for the proposed transaction.

Tue, 23 Aug 2016 08:06:00 +0100
Oil price, Egdon Resources, Europa Oil & Gas, Bowleven, And finally... Oil price
Going, going, gone as the Brent price over 50 bucks went over the top in early trading this morning. I am also reminded that having not taken out the $52.51 resistance that even the chartists see a bit of a wobble. As for the non-chartists, they cant believe how the price got up here in the first place with so much negative news around in terms of plentiful supply and more on the way. As a rule they dont believe that any talks in Algeria next month can alleviate genuine oversupply with non-Opec production made worse by yet another increase in the rig count. My take on it was similar, on the 15th August, having seen statements from both the Opec Secretary General and the Saudi Minister, I wrote that the ‘machine’ was getting the price up ahead of the Algeria meeting, if all else fails you have just had 6 weeks of $5+ a barrel benefits…
The rig count showed another 10 overall to 491 and 10 also in oil to 406, although hardly price elastic longer term, the last three weeks have seen both the oil price and the rig count go up together.
Egdon Resources
A perfectly common sense deal from Egdon this morning as they pick up a 20% interest in PEDL 068 from DESS Energy for which they will pay 6 months of costs and existing abandonment liability but not further costs. This block contains the Kirkleatham gas field which is temporarily shut-in and adds 1.75 bcf of best estimate contingent and prospective conventional resources to their portfolio.
Europa Oil & Gas
Another technical update from EOG today, this one on their recently awarded licencing option 16/22 in the Padraig Basin offshore Ireland. The report suggests that there is gross mean un-risked indicative resources in the range of 300-600 mmboe which is possibly a fit with the Flemish Pass Basin. Either way, yet again EOG needs a partner, in this case to reprocess the historic 2D seismic and allow them to mature early leads into drillable prospects at comparatively low cost.
The best things about BLVN are that they are cashed up to the eyeballs and they have a potentially significant development on their hands, the bad thing is that their partners have been procrastinating for various reasons further delaying the Etinde project. As far as I am concerned, as long as investors are patient rewards will inevitably come when NewAge and Lukoil finally go ahead. In the meantime, although I have never been a huge fan of share buy-backs, what is proposed by BLVN seems extremely sensible. This will be accretive to NAV and a drop in the ocean for the treasury who will be getting another tranche of the farm-out shortly anyway. If they aren’t going to buy VOG, which they should, this is also a pretty good wheeze, shareholders should stick in BLVN for the long haul which will be worth the wait.
And finally…
So, the Olympics finished and Team GB did a fair bit better than expected pretty much across the board. They say that in Olympics year the Sports personality award get more difficult, this year is no exception. Disappointing were all the empty seats but at a months wages each you cant blame the locals much, the other real let down was the standard of judging which if I read Johnny Sutton’s excellent comments correctly are amateurs dealing with professionals which should change.
The Premiership played its latest new card at the weekend that of Friday Night Football, the inaugural match saw the Red Devils  see off the Saints 2-0. Elsewhere the happy Hammers played their first league game at the new London Stadium, after a few jitters and missing key players they beat the Cherries 1-0. Wins for the Noisy Neighbours, Chelski, Spurs, Hull and Everton were added to when the Boro won the Weir-Tees Derby 1-2. With Burnley seeing off the HubCap Stealers and the Foxes drawing with the Gooners the season is now truly up and running, it must be nearly time for an international break….

Mon, 22 Aug 2016 11:30:00 +0100
In the news: Metminco We will be marketing William Howe of Metminco*† from 30 August till 1 September. Fresh from entering a formal investment agreement for equity funding of US$45m to go into the Los Calatos Copper Porphyry Project in Peru from CD Capital, the company can now focus on the recently-acquired Quinchia Gold Portfolio in Colombia and the updated underground mine plan for the Miraflores Gold Project.
An updated mine plan and schedule for the underground-only development of Miraflores in Colombia was published on 1 August. Mineable resources were estimated at 4.0Mt, grading 3.51 g/t Au and 2.84 g/t Ag, containing 455,000oz of gold and 368,000oz silver. The schedule was designed to deliver 1,300tpd/475,000tpa to the mill over a mine life of nine years, with steady-state gold production of approximately 50,000oz pa. Jim Taylor and Imogen Whiteside’s last report on the company can be seen here: Metminco — Agreement to Acquire the Quinchia Gold Portfolio, 7 March 2016.

Mon, 22 Aug 2016 11:10:00 +0100
Today's Market View - ASA Resource Group, Glencore, Premier African Minerals, Stellar Diamonds ASA Resource Group* (LON:ASA) – Non-Executive Director appointment
Glencore (LON:GLEN) – Expect positive interims led by the Marketing business on Wednesday
Premier African Minerals (LON:PREM) – RHA tungsten plant delays and new £3.5m Darwin facility
Stellar Diamonds (LON:STEL) Suspended – Potential consolidation of diamond interests in Sierra Leone

Miners collapse as oil pulls back and US Fed comments suggest rate hike may come
• The Fed is playing cat and mouse with markets as Hawkish comments suggest September for a rate hike while others indicate later this year.
• Policymakers need to balance US economic recovery with strength in the US dollar and a need to keep US government borrowing costs down. 
• Add to that a need to stem flows into the US dollar and the maintenance of growth in the emerging markets and you need to tread carefully to avoid upsetting global markets.
• Many investors are still wary of the potential for a collapse in emerging markets particularly if liquidity for local debt moves back into US Treasuries.

Gold – Olympic medals are thankfully worth more than their gold content
• Olympic Gold medals won by the British team are said to have cost £5.5m per gold medal.
• Problem is that Olympic Gold medals have almost no gold in them with just 1.2% gold and 98.8% silver.
• The gold medal is actually worth around $550 though its clearly worth much more than any form of paper money.

Dow Jones Industrials  -0.24% at 18,553 
Nikkei 225   +0.32% at 16,598
HK Hang Seng   +0.264% at 22,998 
Shanghai Composite   -0.75% at   3,085 
FTSE 350 Mining   -3.05% at 11,660
AIM Basic Resources   +0.64% at   2,465

European markets are range bound this morning as gains in non-resource stocks compensate for a weaker performance of mining and oil and gas companies.
• Both precious and base metals are trading in the red on the back of stronger US$ index.
• Brent is off around 2% trading sub-$50/bbl on the news that Iraq is looking to raise oil exports while Nigerian militants announced an end to attacks on oil infrastructure agreeing to hold talks with the government.
• The yen is off (-0.5%) with local equities up 0.6%/0.3% (Topix/Nikkei225) after BoJ Governor Haruhiko Kuroda hinted to a chance of adding more monetary stimulus in Sep.
• Iron ore futures prices for Jan unchanged at CNY 444/t ($66.7/t) on the DCE following a 2.9% gain recorded last week with falling inventories in Chinese ports (-1.52mt at 96.8mt) supporting the sentiment for the bulk commodity.

US – The US$ index is up this morning on the back of voting FOMC member hawkish comments over the weekend that core inflation was within “hailing distance” of the bank’s 2% Fed target.
• Fischer comments come on the heels of William Dudley, a New York Fed President, last week remarks that a rate hike is possible in Sep.
• The focus now shifts to the Janet Yellen speech to be held on Friday in Jackson Hole, Wyoming, with investors keeping a close eye on any hints over the timing for the first rate increase this year.
• Markets currently assign a 22% and 51% chances for a rate move in Sep and Dec, respectively.
• Economic news this week:
Date Index Period Actual Expected (Bloomberg) Previous
Tuesday Markit Manufacturing PMI Aug  52.7 52.9
  New Home Sales Jul   -2.0%mom 3.5%mom
Wednesday Existing Home Sales Jul   -1.1%mom 1.1%mom
Thursday Jobless Claims   265k 262k
Durable Goods Orders Jul  3.5%mom -3.9%mom
Durable Goods Orders (ex Transport) Jul  0.4%mom -0.4%mom
  Capital Goods Orders (ex Air) Jul   0.1%mom 0.4%mom
Friday GDP (Second reading) Q2  1.1%qoq 1.2%qoq (previous estimate)
  Core PCE (Second reading) Q2   1.7%qoq 1.7%qoq (previous estimate)
Source: Bloomberg    

Japan – Jul inflation numbers are due on Thursday evening (23:30 GMT) with estimates for an eighth straight monthly negative reading (-0.4%yoy) highlighting challenges the BoJ is faced with in hitting the 2% target.

Eurozone – Manufacturing and services PMIs for Aug will released tomorrow morning with expectations for a modest decline.

UK – The second Q2 GDP reading is due on Friday with estimates for no change compared to previous estimates (0.6%qoq and 2.2%yoy).
• Although, Q3 GDP numbers (27 Oct) are undoubtedly to be a more interesting set of data being the first general gauge of economic activity post the Jun Brexit vote.

Turkey – Fitch cut the Turkey’s sovereign credit rating to negative from stable but confirmed the investment grade status last week assigning the nation’s debt notes a BBB- rating.
• Fitch and Moody’s are two agencies of major three currently rating the Turkey at investment grade level with S&P having the nation at BB (cut from BB+ in last month).

Philippines – The nation should follow the Indonesian policy to ban unprocessed ore exports, according to National Development Planning Minister Bambang Brodjonegoro, Bloomberg reports.

US$1.1296/eur vs 1.1336/eur yesterday.   Yen 100.73/$ vs 100.14/$.   SAr 13.597/$ vs 13.497/$.   $1.312/gbp vs $1.312/gbp.   
0.762/aud vs 0.762/aud.   CNY 6.656/$ vs 6.644/$ unch.

Commodity News
Precious metals:
Gold US$1,334/oz vs US$1,347/oz yesterday –
     Gold ETFs 65.2moz unch vs 65.2moz yesterday –
Platinum US$1,110/oz vs US$1,118/oz yesterday
Palladium US$708/oz vs US$705/oz yesterday
Silver US$19.00/oz vs US$19.57/oz yesterday      

Base metals:   
Copper US$ 4,749/t vs US$4,792/t yesterday –
Aluminium US$ 1,661/t vs US$1,682/t yesterday
Nickel US$ 10,205/t vs US$10,300/t yesterday –
Zinc US$ 2,283/t vs US$2,278/t yesterday
Lead US$ 1,873/t vs US$1,884/t yesterday
Tin US$ 18,500/t vs US$18,390/t yesterday –

Oil US$49.9/bbl vs US$50.6/bbl yesterday
Natural Gas US$2.630/mmbtu vs US$2.661/mmbtu yesterday
Uranium US$25.75/lb vs US$26.05/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$59.5/t vs US$58.9/t – A Brazilian court upheld injunctions issued in Dec against Vale prohibiting the Company from disposing of stakes in its Brazilian iron ore mines.
• The lawsuit is part of the general claim by federal authorities for a BRL 20bn ($6.2bn) compensation for a dam spill at Vale’s Samarco JV.
• The Company is looking at a streaming deal with Chinese that would allow to sidestep the limitations involved in the embargo, Bloomberg reports.

Steel rebar 25mm US$400.1/t vs US$399.6/t –

Thermal coal (1st year forward cif ARA) US$55.4/t vs US$57.0/t yesterday –

Tungsten - APT European prices vs $185-200/mtu unch vs $190-200/mtu –

Company News

ASA Resource Group* (LON:ASA) 0.975 pence, Mkt Cap £16.5m – Non-Executive Director appointment
• ASA Resource Group has announced the appointment of Mr David Murangari as a non-executive director with immediate effect.
• Mr Murangari, who is already Deputy Chairman of the ASA Group’s Bindura Nickel Corporation and also serves on the Board of ASA’s Freda Rebecca Gold Mine, is an experienced geologist with “has been influential in the mining industry in Zimbabwe for many years.”
• Mr Murangari is a former CEO of the Zimbabwe Chamber of Mines and is “currently Chairman of the Zimbabwe Mining Development Corporation, the state body that plans, coordinates and implements mining development projects on behalf of the government. It’s responsible for prospecting, exploration, mining and mineral beneficiation programmes.”
Conclusion: The appointment of an experienced, well-connected Zimbabwean mining professional with in depth experience of the Group’s Bindura and Freda Rebecca operations strengthens and broadens the experience of the ASA Board  where the company comments that “the profile of the non-executive board is more independently balanced than at any time in the past with experience in mining, metallurgy, auditing and investor relations.”
*SP Angel act as Nomad and broker to ASA Resources

Glencore (LON:GLEN) 184 pence, Mkt Cap £26.5bn – Expect positive interims led by the Marketing business on Wednesday
• Glencore’s interim results due on Wednesday will make interesting reading.
• We expect Glencore to report good numbers from their marketing / trading division as conditions appear to have been relatively good for trading from our perspective.  Eg we have not seen a re-run of the co-ordinated bear raid on the copper market by Chinese funds.
• Oil prices have traded steadily better with no big surprises.
• Base metals have generally traded better with nickel and zinc performing very well ahead of copper and aluminium.
• Even prices of thermal coal are going better as China, at long last, closes local uneconomic and underperforming mines
• The suspension of significant copper, zinc and coal production will impact sales but should not overly damage margins as most of this production was marginal/loss making at the time of its suspension and work done at affected mines should improve the operations when this production restarts.
• Debt levels should reduce further following $3.2bn of disposals in H1 and with streaming deals adding to cash receipts.
• Costs: should continue to fall due to weaker currency rates vs the US dollar in many of Glencore’s key areas of operation, eg Australia, Kazakhstan, South Africa and the DRC.
• We also expect to see further benefits from ongoing restructuring though there is likely to be a cost to the closure of coal production in South Africa due to ongoing local coal pricing issues.
• Relatively low oil prices through the period should also be a significant benefit.
• The potential suspension of mining at Glencore’s McArthur River lead, zinc mine in Australia may cost $1bn but could be offset by higher lead and zinc prices and may see Glencore restart other zinc production.
• Outlook:  There is evidence in markets that China has forced through rationalisation of uneconomic mines cutting back on production of coal, iron ore and a number of base metals.  This is very good news for Glencore and suggests prices should continue higher so long as demand growth in China remains in place.
• Demand and prices for steel within China led by resurging construction and the development of some new infrastructure projects has surprised the market indicating potential for ongoing demand growth for other materials so long as stimulative policies remain in place.
Conclusion:  We expect a mixed but slightly positive set of interim results for Glencore led by the marketing side of the business, though this is partially supported by the underlying production units within the Industrials group.

Premier African Minerals (LON:PREM) 0.525 pence, Mkt Cap £9.9m – RHA tungsten plant delays and new Darwin loan
• Premier African Minerals reports further delays to its optimization programme at the RHA tungsten mine in Zimbabwe. Although the improvements to the crushing circuit, combined with increased grades from  underground mining is leading to a “significant increase in the concentrate grades being produced”, continuing issues with the underperformance of the screening section will necessitate the replacement of 6mm sized screens with larger 10mm screens. Fortunately, the replacements  should be installed before the end of August.
• The company reports that recovery rates of up to 70% are being achieved and that it is producing concentrates at a grade of 65% tungsten trioxide. Shipments of concentrate are expected to resume in September.
• Premier African Minerals also describes results of its underground sampling programme which should feed into a revision to resource estimates in September 2016. Although the mineralised quartz vein is identifiable in underground workings, “the wolframite mineralisation does not show the same level of consistency. Tungsten grades show extreme variability and range from sub-economic to more than 300kg per ton over short strike distances. This variability in wolframite mineralisation may make application of normal geostatistical methodologies unreliable”.
• The company comments that “RHA is profitable when the recovery is 70% and the selling price of Ammonium para-tungstate (APT is US$180 per metric ton unit (mtu).” The APT price is currently standing at US$185/200 per mtu.
o New Debt:  Premier African Minerals has subscribed for yet another £3.5m worth of those ghastly Darwin loan notes.
o Each loan note has a face value of £25,000  and are repayable at a rate of eight loan notes per month.
o The notes carry an interest rate of 16%pa, which might not be a bad rate for Zimbabwe but it’s the other costs you’ve got to watch out for.
o The funding is said to be for the provision of general working capital for the company and to support exploration and development at the Zulu Lithium and Tantalum project.  We would not generally advise a company take up this sort of facility for the funding of a new and unproven exploration project.
Conclusion:  The RHA Tungsten Mine is overcoming some of the operational issues and seems to be improving recovery rates, however APT prices continuing to languish around the level the mine requires to be profitable. The variability in underground ore grades will present a challenge to grade control as well as for resource estimation purposes and may make it difficult to provide consistent feed to the plant.
When it comes to considering risk we see the adoption of the Darwin notes as potentially more risky from a shareholder perspective than the politics of Zimbabwe or the risk of mining.  Surely it would be better to fix up the tungsten mine and when this is done to then use the cash flow for the exploration?

Stellar Diamonds (LON:STEL) Suspended – Potential consolidation of diamond interests in Sierra Leone
• Stellar Diamonds has released further information concerning the possible reverse takeover which led to the suspension of trading in the company’s shares on Friday.
• The company “has agreed a proposed transaction with Octea Mining Limited (“Octea”) to combine Stellar’s Tongo kimberlite diamond project with Octea’s adjacent kimberlite diamond project, Tonguma, and to bring both assets into production under the same production infrastructure … in Sierra Leone.”
• The proposed transaction, which remains subject to a number of conditions and may not necessarily be completed, would combine the current 1.45m carats of JORC inferred resource at Tongo grading 165 cpht (carats per hundred tonnes) with Octeas’s 3.45m carats of inferred JORC resources at Tonguma at a grade of up to 290 cpht. The estimated value of diamonds from Tongo has been reported at US$270/ carat while those at Tonguma are valued at US$193 per carat.
• Additional exploration areas within the Tonguma licence area have been assessed by “independent consultants” to contain “a potential exploration target of a further 8 million carats.”
• The company reports that “Once in production the combined diamond mining operations will be the second largest in West Africa with an estimated maximum output at full production of approximately 250,000 carats of high value diamonds.” The company expects mining “to commence within the first 12 months post completion of the proposed transaction.”
• Under the proposed transaction, Stellar Diamonds would hold 100% of the voting “A” shares in a “NewCo” holding the combined assets and giving Stellar fill legal and management control. Octea would hold 100% of the non-voting “B” shares in “NewCo” which will entitle Octea’s existing shareholders to receive “royalty payments of between 5% to 10% of the combined revenues of Tonguma and Tongo (the “Enlarged Project”) and a 25% economic interest in the net cash flows of the Enlarged Project.”
• The two companies will be entitled to preferential repayment of their investment in the respective projects with Stellar’s contribution to Tongo assessed at “at least US$25m” and Octea’s investment on Tonguma set at “a maximum of US$5m during the same period.” “Any royalty payments and net profit share due to Octea under the Agreement will only commence once the total initial investment amount of both parties has been fully repaid by NewCo. There is therefore no upfront acquisition cost to Stellar in terms of the Potential Transaction.”
• One of the conditions required for completion of the Transaction is that Stellar raises “a minimum of US$25 million (through a combination of equity, debt and other hybrid products to fund the combined project into production.” We note, however, that initial estimates prepared by the company’s consultants suggest that initial capital required to develop the combined mining operation are approximately US$40m.
Conclusion: The proposed transaction to combine two adjacent diamond resources in Sierra Leone is still subject to a number of conditions including Stellar being able to fund the capital to develop the mine and the approval of the Sierra Leone authorities. The concept of combining the two resources seems eminently sensible but there may be some difficult negotiations ahead if an agreement acceptable to all sides is to be achieved. Meanwhile, the shares remain suspended.

Mon, 22 Aug 2016 10:41:00 +0100
Brokers: Deutsche lights up British American Tobacco Mon, 22 Aug 2016 10:06:00 +0100 Northland Capital Partners View on the City - Premier African Minerals, SalvaRx Premier African Minerals (LON:PREM) – CORP: Funding and projects update
Market Cap: £12.26m; Current Price: 0.65p

£3,500,000 loan from Darwin to fund project advancement
 At the RHA Tungsten Project, located in Zimbabwe, optimisation of the plant continues and the updated mineral resources estimate nears completion. Concentrate shipments are expected to recommence in September.
 At the Zulu Lithium Project, also located in Zimbabwe, test work is underway and drilling expected to commence in September.
 At the Catapu Limestone Project, located in Mozambique, due diligence is advanced and the acquisition is expected to close in 30 days.
 Prem has also secured 140 loan notes worth up to £3,500,000 from Darwin Strategic Limited. Each loan note will have a face value of £25,000 and is repayable at the rate of 8 per month from 01/02/17. Should the notes not be repaid they can be converted into Prem shares.
 £1,750,000 of notes will be issued today with a further £875,000 issued at any time in the next nine months with the remaining £875,000 to be issued six weeks after the second issue of the first anniversary of the first issue. The second and third issue are at Darwin’s discretion.
 Prem will receive 90% of the par value of each loan note and will be redeemable at 105% of the par value that also has an interest rate of 16% per annum. The Company will prepay a minimum of 6 months interest upfront. Darwin will also be issued with warrants equal to 30% of the par value of each loan note with an exercise price of 0.8437p and a three term.
 The loan notes also have the following conversion triggers into 100% of the par value: APT price drops below US$160/mtu for two consecutive days; the WO3 content of Prem’s concentrate drops below 60%; if the outstanding loans are in excess of 20% Prem’s market capitalisation; the Catapu acquisition doesn’t close before 01/11/16; the issue of any loan notes other than the first group of notes.
 Prem has also agreed with CEO George Roach to enter into a put option over the Companies 2m shares on Circum Minerals at a price of US$2 per share
 These funds will be used to support exploration and development activities at the Zulu Lithium Project in particular.
NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals continues to move the RHA Tungsten Project towards full production and is shortly going to begin drilling at the Zulu Lithium Project. The acquisition of the Catapu Limestone and Forestry Project is also expected to close in September and a liquidity event at Cirum Minerals is also anticipated. The potential cash flow from its operations (RHA and Catapu) and a liquidity event for its interest in Circum could give the Company the funds required to repay the loan notes to Darwin reducing potential dilution to shareholders.

SalvaRx (LON:SALV) – BUY*: Business update
Market Cap: £11m; Current Price: 30p; Target Price: 149p

SalvaRx secures further licensing deal and patent approvals for its existing assets
 SalvaRx issued a business update as at 22 August 2016.
 The company continues to progress its pre-clinical pipeline of immune-oncology assets.
 The group expects to progress several therapies into the clinic in the next calendar year.
 Also, the company has secured a further licensing deal and patent approvals for its existing assets. These include:
 The negotiation of an option to license an NY-ESO1 vaccine from the Ludwig Institute for Cancer Research, which is being used in combination with portfolio company iOx Therapeutics’ lead assets IMM60 and IMM65. SalvaRx has a 60.5% interest in iOx Therapeutics. 
 The granting of a US patent covering IMM60 alone and in combination
 The granting of a US patent covering portfolio company Intensity Therapeutics’ lead product INT230-6. SalvaRx has an 8.5% interest in Intensity Therapeutics.
 Other highlights include the commencement of work on IMM65 with the Horizon 2020 EU consortium. Of note, a recent announcement by the EU stated that all pre-existing grants including to UK companies will remain funded, meaning that the work of Horizon 2020 is not impacted by the UK's EU Referendum result.

NORTHLAND CAPITAL PARTNERS VIEW: SalvaRx’s continues to advance its portfolio of preclinical immune-oncology assets, while further growing the portfolio and broadening its patent estate. Today’s announcement indicated that iOx’s lead asset, IMM60, is now covered as a standalone treatment along with additional uses in a co-formulation with a tumour vaccine or given as a combination therapy alongside an immunomodulatory agent. iOx continues to work with the University of Oxford on the parameters of the company's initial Phase I/II trial of IMM60, which is to be fully funded by the University. We expect this trial to commence in 2017. As well, work has commenced on the company’s second asset, IMM65. Also, the Ludwig Institute has granted iOx the rights to use a novel cancer vaccines in combination with its products. Finally, progress continues at portfolio company Intensity Therapeutics, with the granting of a further US patent and the advancement of the group’s lead candidate closer to the clinic.

Mon, 22 Aug 2016 09:58:00 +0100
AIM Breakfast: FastForward Innovations, Elegant Hotels, 365Agile Group, Nektan, MBL Group, Scancell Holdings, 4D Pharma, Safeland, Image Scan Holdings, Palace Capital What’s cooking in the IPO kitchen?
LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m
Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap
Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September

Breakfast buffet

FastForward Innovations (LON:FFWD) 12.38p £16.5m
Updates on its investee companies include: Yooya exceeded 700m video views in July. Leap Gaming signed a direct licensing agreement with Pala Interactive, giving it access to the US market, for the social gaming space. Schoold has grown its audience to over 1.3 million downloads of its app, and has added a significant number of users month-over month at a reduced cost per user. SatoshiPay has formalised a partnership with Visa Europe through the release of a proof-of-concept product utilizing SatoshiPay's technology.

Elegant Hotels (LON:EHG) 69p £61.3m
The owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados,  announced that its recent acquisition, Waves Hotel and Spa ("Waves"), is now open for business. Waves has been extensively redesigned and refurbished since the Group acquired it for US$18m in March 2016, and now boasts 70 luxurious bedrooms, two restaurants, a coffee shop and deli, a fitness centre, a bar, two swimming pools, and a destination spa with eight treatment rooms. Fy16e 7x PE. 9.4% yield.

Nektan (LON:NKTN) 42.5p £10.2m
The international mobile gaming provider has entered into an asset transfer and simultaneous licensing agreement with Buckingham HMB Ltd ("Buckingham") for three of the Company's wholly-owned gaming brands. Buckingham will pay the Company a cash consideration of £1.75 million, with a further £200,000 expected to follow shortly, for the assets, whilst simultaneously entering in to a five-year licensing agreement with the Group for the continuing operation of the brands under Nektan's white label Evolve platform

Scancell Holdings (LON:SCLP) 18.5p £48.4m
The developer of novel immunotherapies for the treatment of cancer, today announces the appointment of Dr Alan J. Lewis to the Board of Scancell as Non-Executive Director with immediate effect.  Alan has extensive experience in the US life sciences industry with a proven track record of raising funds and advancing drug discovery and development in both biotechnology and large pharmaceutical companies.  Was CEO of Signal Therapeutics  when acquired by Celgene for $275m.

4D Pharma (LON:DDDD) 710p £460.5m
The pharmaceutical company focusing on the development of live biotherapeutics, announced that it has commenced dosing in a phase 1 clinical trial with Thetanix for the treatment of Paediatric Crohn's disease ('PCD').  The Primary Outcome Measure of the study will focus on the safety and tolerability of the Thetanix product, whilst the Secondary Outcome Measures include assessment of Weighted PCD Activity Index, analysis of the microbiome of subjects, &  an inflammatory marker of disease.  Safeland (SAF.L) 64p £9.96m
The principal activities of the Group comprise property trading, property refurbishment (including redevelopment), property investment and property fund management.  Final results to Mar 16: Group revenue of £21.1m comprises sales of development properties, rental income, management fees, and hotel revenue from the north London hotel (now closed), and was significantly in excess of the £10.3m in the FY2015. Operating profit fell from £6.9 million in the year to 31 March 2015 to £5.9 million. NAV/Share up 29% to 114p. Palace Capital (PCA.L) 322.5p £82.7m
The property investment company that focusses on commercial property mainly outside London, confirms that it has now completed the acquisition of Boulton House, Chorlton Street, Manchester. Boulton House is a 75,000 sq ft multi-let 1970s office building, the acquisition of which was first announced by the Company on 14 June 2016. The net price paid by the Company was £10.575 million and a new debt facility of £6.022 million has been secured with Santander. 

Safeland (LON:SAF) 64p £9.96m
The principal activities of the Group comprise property trading, property refurbishment (including redevelopment), property investment and property fund management.  Final results to Mar 16: Group revenue of £21.1m comprises sales of development properties, rental income, management fees, and hotel revenue from the north London hotel (now closed), and was significantly in excess of the £10.3m in the FY2015. Operating profit fell from £6.9 million in the year to 31 March 2015 to £5.9 million. NAV/Share up 29% to 114p.

Palace Capital (LON:PCA) 322.5p £82.7m
The property investment company that focusses on commercial property mainly outside London, confirms that it has now completed the acquisition of Boulton House, Chorlton Street, Manchester. Boulton House is a 75,000 sq ft multi-let 1970s office building, the acquisition of which was first announced by the Company on 14 June 2016. The net price paid by the Company was £10.575 million and a new debt facility of £6.022 million has been secured with Santander.

Image Scan Holdings (LON:IGE) 5.75p £7.2m
The Specialist supplier of X-ray screening systems to the security and industrial inspection markets, provided a trading update for FYSep16.  Following on from the development of the supply chain and manufacturing plans for the large order for ThreatScan®-LS1 portable X-ray systems , announced in June, the Company anticipates to have recognized the sale of approximately £400k by the end of the financial year & expects to materially exceed market expectations (£2.3m revenues).

MBL Group (LON:MUBL) 14.5p £2.5m
The UK Distributor and
Wholesaler of Home Entertainment Products  has reported FYMar16 results. Group revenue increased 14% to £14.8 million. Operating profit £21,000 (2015: loss £883,000, including a £450,000 exceptional impairment to intangible assets). No dividend is proposed. The Group ended the year with cash balances of £1.9 million. On current trading the year has started well and sales in both divisions are in line with management expectations. 365Agile Group (365.L) 33.5p £6.3m
Following the departure of the Group's CEO in April, the Board has reassessed its strategy to develop a meaningful business in the Internet of Things space resulting in the proposed closure of  its operations based in Nottingham and trading under the Wireless Things name. Should this transpire the company will become an AIM Rule 15 cash shell funded by the ongoing payments it receives from a licence Agreement.

365Agile Group (LON:365) 33.5p £6.3m
Following the departure of the Group's CEO in April, the Board has reassessed its strategy to develop a meaningful business in the Internet of Things space resulting in the proposed closure of  its operations based in Nottingham and trading under the Wireless Things name. Should this transpire the company will become an AIM Rule 15 cash shell funded by the ongoing payments it receives from a licence Agreement.

Mon, 22 Aug 2016 09:00:00 +0100
In the papers: Woodford, Port Talbot, Stellar Diamonds The Times
Woodford shocks City by scrapping bonuses: One of the most prominent figures in the City has taken the unprecedented step of permanently abolishing all staff bonuses at his firm. Neil Woodford, the star stock-picker and Founder of Woodford Investment Management, has rejected the conventional wisdom that bonuses are essential to motivate and retain staff and has put everyone on a flat salary.
Ministers go on spending spree to fill Brexit gaps: Central government has turned the spending tap on after the vote for Brexit with a stunning increase of more than 50% in the value of public sector contracts going out to tender.
Nigeria ceasefire could make oil price fall: Militants whose attacks on oil rigs and pipelines in the Niger Delta helped to force up oil prices this year announced a conditional ceasefire.
Sister seeking help for great Buffett giveaway: Warren Buffett’s sister Doris has put out an appeal for volunteers to help with an unusual task: giving away her billionaire brother’s money to those who have fallen on hard times.
Fears over economic future will bring house prices down: House prices are expected to fall across the U.K. next year as years of robust growth end and uncertainty over Brexit saps demand for property.
Luxury hotel makes waves: Elegant Hotels, the AIM-listed Barbados group, will launch its latest luxury hotel and spa this week. The group, which floated in London last year, said that the 70-room Waves Hotel in Barbados, acquired for $18 million, had been “extensively redesigned and refurbished”.
Brexit has done us no harm, Britain’s smaller companies say: The nation’s small and medium sized businesses are shrugging off initial concerns about Brexit and taking advantage of new growth opportunities.
The Independent
U.K. weather latest: New heatwave as sunshine to see temperatures hit 29C: The U.K. is set for a return to warmer weather with temperatures expected to reach 29C this week.
The Daily Telegraph
Port Talbot posts healthy profit but no relief for under-threat staff: Tata’s giant Port Talbot steel plant has clawed itself back into profit as staff strain to boost efficiency despite having no idea whether their jobs are safe.
Coq d’Argent Owner eyeing Amsterdam and Lisbon: The Owner of London’s Coq d’Argent and Quaglino’s restaurants is eyeing expansion in Europe as at shrugs off the impact of the Brexit vote on its exclusive London eateries.
Pensions lifeboat tightens rules ahead of possible Tata Steel rescue: Britain’s pensions lifeboat has tightened up the rules on who bears the cost of restructuring ailing companies and their retirement commitments, putting the burden squarely on those who benefit from the rescue and laying the groundwork for a deal for Tata Steel’s £15 billion pension.
GKN aims to fly high in China’s growing aerospace industry: Engineering group GKN is hoping to leverage its recent acquisition of Fokker to build a foothold in China’s burgeoning aerospace sector.
Car insulation group Autins joins Aim: Autins Group, an engineering company that reduces noise in Bentleys and Range Rovers, will float on London’s junior market on Monday.
Stellar Diamonds plots deal to build Sierra Leone’s second biggest diamond mine: An Aim-listed diamond explorer is planning a “transformation deal” that will create Sierra Leone’s second-biggest diamond mine from two “high-grade” deposits.
Health warning over plan to use hospital generators to avoid blackouts: National Grid’s drive for hospitals to help keep the U.K.’s lights on by using their back-up diesel generators is “highly questionable” because it will cause air pollution right in the vicinity of patients, a think-tank has warned.
Powerful European trade body refuses British Chief’s resignation saying U.K. is too important for him to quit: An offer to resign as the voice of industry across Europe by the boss of Britain’s engineering trade body in the wake of the Brexit vote has been rebuffed - showing industry’s vital cross-border trade links.
Virgin Media ‘furious’ over £120 million BT sport contract as EE gives channels away: A bitter row has erupted between BT and Virgin Media over the more than £120 million a year the cable operator pays its broadband rival for the BT Sport channels now being offered free to millions of EE mobile subscribers.
The Guardian
Dominic Chappell used £1.5 million BHS loan to pay off family mortgage: The family home of Dominic Chappell, the former Owner of BHS, was on the brink of being repossessed before cash from the department store chain was used to pay off the mortgage.
Rise in women facing discrimination on taking maternity leave: New mothers are facing increasing discrimination when they take maternity leave including being made redundant and switched to zero-hours contracts.
House prices to fall 1% in 2017, predicts Countrywide: House prices will fall next year as the economy weakens following the vote to leave the EU, Britain’s biggest estate agent has predicted.
BBC sells music rights to Luther, Doctor Who and Wolf Hall: The BBC has sold the rights to theme tunes and music from hit shows including Idris Elba’s Luther, Doctor Who and Wolf Hall.
Liverpool Owners open to selling stake in club amid Chinese interest: Liverpool’s Owners have said the club is not for sale, but they are willing to consider proposals from outside investors amid speculation that a Chinese-backed consortium wants to buy a stake.
Daily Mail
Co-op Bank Chiefs in line for pay rise - but bank reports six months of losses and warnings of more to come: Executives at the scandal-hit Co-operative Bank are set for a pay rise – despite another six months of losses and fears of more to come.
140 small firms sue RBS for £1 billion after claiming its turnaround unit forced them into administration: Small businesses are launching a £1billion legal case against Royal Bank of Scotland – claiming they were destroyed by its turnaround unit.
ITV must raise stakes for Entertainment One if it wants to mount a serious takeover bid, leading shareholder says: ITV must offer more for Entertainment One if it wants to mount a serious takeover bid, a leading shareholder has said.
Selfie boom gives Estee Lauder a reason to smile as it drives up revenue for the beauty firm: A boom in selfies has driven up revenue for U.S. beauty firm Estee Lauder.
Daily Express
Britain will keep booming: Fear-mongering experts admit U.K. will thrive outside EU: Britain can boom outside the European Union, Brexit doom-mongers are increasingly admitting. Some of the most die-hard City pessimists appear to be eating their words as the economy shows no sign of the collapse many forecast before the referendum.
Bitter German car manufacturer blames Brexit vote for causing production cuts: A German car manufacturer has blamed the historic Brexit vote for putting the brakes on production and cutting thousands of staff.
The Scottish Herald
Swedish bank aims high as it launches second Glasgow branch: Handelsbanken has thrown the open the doors of its second branch in Glasgow, signalling its commitment to woo business customers in the west of Scotland with its decentralised approach.
Former Dunne Group boss to lead new Keltbray offshoot: The Managing Director of collapsed Dunne Group, Gordon Dunne has been taken on as managing Director of Keltbray Structures, a new offshoot created by engineering firm Keltbray Group after acquiring some of Dunne’s assets from administrators.
Caltech adds ex-Dundee United Chairman Carnegie to board: Caltech Lifts has appointed former Dundee United Chairman Scott Carnegie as its first non-Executive Director.
U.K. dividends weakest in G7 in second quarter: U.K. dividends have fallen further behind other developed markets, with the fall in sterling following the Brexit vote cutting returns for overseas investors and cuts by the U.K.’s biggest listed companies hitting domestic shareholders.
The Scotsman
Financial services firms keep nerve after Brexit vote: The immediate impact on financial services firms of the vote by the U.K. to quit the European Union has been “not as stark as feared” says a new report.
Irish beauty clinic group in Scottish growth drive: An Irish beauty clinic group is to spend £2 million expanding into Scotland in a move that will create 20 jobs.
Persimmon set to shrug off Brexit blues: Persimmon, one of Britain’s biggest housebuilders, will unveil a substantial jump in interim profits this week when it is also expected to play down the potential impact of post-Brexit economic uncertainty on the housing market.
City A.M.
Janet Yellen to talk interest rates and Fed shake-up at Jackson Hole: The Federal Reserve’s No. 2 ratesetter has signalled the U.S. economy should prepare for a rate rise in the near future, as Janet Yellen gears up to make a key intervention at the annual central bankers’ gathering at Jackson Hole, Wyoming.
New poll claims the skills shortage is crippling the construction industry: The skills shortage in the construction sector is at “breaking point” according to a new survey of project Managers and contractors.
Small firms want Germany front and centre in Brexit negotiations, finds new research: The U.K.’s small businesses are keen to keep in touch with their German counterparts following Brexit, research out has found.
Nicholas Clegg retires as Chairman at United Trust Bank after 15 years: United Trust Bank has announced its 80-year-old Chairman is standing down after 15 years.
Smaller firms take £4 billion hit from suppliers: The U.K.’s small firms are battling against contract terms with suppliers that have cost them over £4 billion in the last three years.
Yorkshire Water boss took home a £240,000 bonus this year: Yorkshire water Chief Executive Richard Flint took home £1.2 million for the year through March, including a £240,000 bonus for meeting targets such as building “strong financial foundations” and a reputation as a trusted company.
Deliveroo Chief says employment laws are behind the times: Deliveroo boss William Shu has said the U.K.’s employment laws need updating, after the food delivery startup tried to temper an ongoing dispute with its riders over a new trial pay structure.

Mon, 22 Aug 2016 08:48:00 +0100
Market briefing: The FTSE 100 index closed lower amid a decline in housebuilders and mining sector stocks UK Market Snapshot
UK markets finished mixed on Friday. The FTSE 100 index closed lower amid a decline in housebuilders and mining sector stocks. Glencore dropped 3.9%, after a leading broker downgraded its rating on the stock to ‘Neutral’ from ‘Outperform’. Peers, Anglo American and BHP Billiton eased 1.1% and 2.1%, respectively, tracking lower metal prices. Housebuilders, Barratt Developments, Persimmon and Taylor Wimpey fell 1.0%, 1.6% and 2.5%, respectively. Schroders slid 1.1%, following a broker downgrade on the stock to ‘Hold’ from ‘Buy’. Financial services firms, Hargreaves Lansdown and Old Mutual shed 0.4% and 0.9%, respectively. Bucking the trend, William Hill advanced 3.9%, after its competitors, Rank Group and 888 Holdings, 0.6% and 5.4% up, respectively, announced plans to quit their bid for the bookmaker. easyJet gained 2.5%, on rumours that the airline company might get a takeover offer. The FTSE 100 fell 0.1%, to close at 6,859.0, while the FTSE 250 marginally rose, to settle at 17,874.1.
US Market Snapshot
US markets ended in the red on Friday, as investors remained worried about the US Fed’s decision to raise interest rates in the near term. Emerson Electric shed 3.1%, after it announced plans to acquire the valves and controls business of Pentair, down 1.1%, in a deal valued at $3.15 billion. Madison Square Garden slid 2.1%, as the company reported a net loss in the fourth quarter. On the brighter side, Deere rallied 13.5%, after its third quarter results beat market estimates and also raised its earnings guidance for the full year. Foot Locker surged 11.0%, as it posted upbeat results in the second quarter. Applied Materials jumped 7.1%, after it reported a surge in its orders in the third quarter and offered upbeat outlook for the fourth quarter. The S&P 500 slipped 0.1%, to settle at 2,183.9. The DJIA shed 0.2%, to settle at 18,552.6, while the NASDAQ marginally fell to close at 5,238.4.
Europe Market Snapshot
Other European markets closed in negative territory on Friday, dragged down by a drop in the Italian banks. Banca Monte dei Paschi di Siena fell 2.6%, after news emerged that its CEO, Fabrizio Viola and former Chairman, Alessandro Profumo are being investigated for charges of false accounting and market manipulation related to past derivative transactions. Peers, Banca Popolare di Milano Scarl, Banca Popolare dell'Emilia Romagna and UniCredit tumbled 5.3%, 5.8% and 6.3%, respectively. Bayerische Motoren Werke lost 1.7%, following a broker downgrade on the stock to ‘Neutral’ from ‘Buy’. On the positive side, AP Moller - Maersk climbed 1.9%, on the back of news that the company is evaluating various options following reports of getting split into an energy and a transport companies. The FTSEurofirst 300 index declined 0.7%, to close at 1,339.8. Among other European markets, the German DAX Xetra 30 slid 0.6%, to close at 10,544.4, while the French CAC-40 shed 0.8%, to settle at 4,400.5.
Asia Market Snapshot
Markets in Asia are trading mostly lower this morning. In Japan, railway-related stocks, West Japan Railway and East Japan Railway have advanced 3.1% and 3.6%, respectively. On the contrary, Nippon Suisan Kaisha has tanked 13.0%, after the seafood products manufacturer announced plans to sell its shares in a bid to raise about ¥16.8 billion. Japan Petroleum Exploration and Inpex have fallen 2.1% and 2.8%, respectively, amid lower crude oil prices. In Hong Kong, oil giants, CNOOC and China Petroleum & Chemical have slid 1.8% and 2.0%, respectively. In South Korea, index majors, Samsung Electronics and POSCO have fallen 0.2% and 1.1%, respectively. The Nikkei 225 index is trading 0.2% higher at 16,584.8. The Hang Seng index is trading 0.6% down at 22,806.1, while the Kospi index is trading 0.7% lower at 2,042.2.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 1.45% or $0.74 lower at $50.14 per barrel, after news surfaced that Iraq would boost crude exports by about 5% in the next few days after an agreement to resume shipments from three oil fields in Kirkuk. On Friday, the contract marginally declined or $0.01, to settle at $50.88 per barrel. Meanwhile, Baker Hughes reported that US oil rigs rose by 10 to 406 for the week ended 19 August 2016.
At 0330GMT today, Gold futures contract is trading 0.25% or $3.30 lower at $1337.10 per ounce. On Friday, the contract declined 0.80% or $10.80, to settle at $1340.40 per ounce, amid a stronger US Dollar.
At 0330GMT today, the EUR is trading 0.40% lower against the USD at $1.1280. On Friday, the EUR weakened 0.26% versus the USD, to close at $1.1325. The greenback gained strength against its major peers amid expectations of a US Fed interest rate hike this year.
At 0330GMT today, the GBP is trading 0.23% lower against the USD at $1.3045. On Friday, the GBP weakened 0.71% versus the USD, to close at $1.3075, after a report indicated that the UK could invoke ‘Article 50 of the Lisbon Treaty’, which might start negotiations on UK’s exit from the European Union, by the first half of 2017. Separately, in economic news, the UK public sector net borrowing reported a surplus in July.
Fixed Income
In the US, long term treasury prices fell and pushed yields higher, amid concerns related to the US Fed’s probable interest rate hike next month. On Friday, yield on 10-year notes advanced 5 basis points to 1.58%, while yield on 2-year notes gained 5 basis points to 0.76%. Meanwhile, 30-year bond yield rose 3 basis points to 2.29%.

Key Economic News
UK public sector net borrowing reported a surplus in July

The public sector net borrowing in the UK has posted a surplus £1.50 billion in July, from a revised deficit of £7.50 billion in the previous month. Markets were expecting public sector net borrowing to show a surplus of £2.20 billion.
German PPI rose more than expected in July
The PPI recorded a rise of 0.20% on a MoM basis in Germany in July, higher than market expectations for a rise of 0.10%. In the prior month, the PPI had risen 0.40%.
Spanish trade deficit rose in June
Trade deficit in Spain rose to €1.36 billion in June, from a trade deficit of €0.94 billion in the previous month.
Canadian retail sales unexpectedly dropped in June
In June, retail sales registered an unexpected drop of 0.10% in Canada on a monthly basis, compared to a revised flat reading in the prior month. Markets were expecting retail sales to advance 0.50%.
Canadian core CPI remained unchanged in July
On a MoM basis, the core CPI in Canada remained flat in July, at par with market expectations. In the previous month, the core CPI had recorded an unchanged reading.
Canadian CPI unexpectedly dropped in July
The CPI unexpectedly dropped by, on MoM basis, to a level of 128.90 in Canada, in July, lower than market expectations of 129.20. The CPI had recorded a level of 129.10 in the prior month.
Canadian CPI unexpectedly dropped in July
In Canada, the CPI unexpectedly dropped 0.20% in July on a MoM basis, lower than market expectations for a steady reading. The CPI had advanced 0.20% in the prior month.
Japanese nationwide department store sales recorded a drop in July
On an annual basis, nationwide department store sales slid 0.10% in July, in Japan. In the previous month, nationwide department store sales had dropped 3.50%.
Japanese all industry activity index rose more than expected in June
On a monthly basis, in June, the all industry activity index climbed 1.00% in Japan, more than market expectations for an advance of 0.90%. The all industry activity index had recorded a revised drop of 1.30% in the prior month.

Mon, 22 Aug 2016 08:32:00 +0100
VSA Capital Market Movers - Egdon Resources  

Egdon Resources (LON:DR) has announced that it has acquired an additional 20% WI in PEDL068 from DESS Energy to bring its total WI in the licence to 68%. As part of the deal EDR will pay DESS’ 20% share of costs for the next six months and also will accept liability for DESS’ 20% share of the existing liability for the Kirkleatham site and the Kirkleatham-1 well but not for any future works.

As a reminder PEDL068 is located in the Cleveland Basin of North Yorkshire and contains the Kirkleatham gas field which is currently shut-in pending the drilling of a side-track well. EDR estimate this transaction will add c1.75BCF of contingent and prospective resources to the company. We maintain our BUY recommendation and 38p TP.

Mon, 22 Aug 2016 08:29:00 +0100
Does the Dollar bounce have legs? FTSE 100 Index called to open -15pts at 6845, with its 1-week downtrend intact following Friday’s repeated failure to breach 6870 and overcome the solid trend of falling highs. The Bears are focusing on an overnight retreat to last week’s 6842 lows that reinforces the downtrend and increases the possibility of a breakdown towards 6800. The Bulls are hoping that 6-week intersecting rising support at 6840 helps prevent any further declines and engineer a turnaround, double-bottom recovery and breakout to 6900. Watch levels: Bullish 6865, Bearish 6835.
A soft opening call for European equities comes after a largely negative start to the week in Asia that echoed a weak US close on Friday. Japanese stocks are the only bright spot this morning with the USD bounce fuelled by hawkish Fed chat delivering a reciprocal boost to Nikkei exporters via a weaker JPY. Either that or it was the rather bizarre sight of PM Shinzo Abe dressed up as Super Mario in Rio to accept the Olympic flag as next host.
Markets remain very much focused on global monetary policy this week after conflicting Fed chat last week and ahead of this Thursday's US Kansas City Fed Jackson Hole Symposium. As much for the outlook for US monetary policy as for the ramifications for the Euro, itself hemmed in between a Fed wanting to tighten and the Bank of England in easing mode post Brexit.
US stocks ended the week in the red, pressured by increased expectations of an Autumn Fed rate hike ahead of this Friday’s speech by chair Janet Yellen, at which markets expect her to be a bit more specific about things. Of course, she might not be, but Vice Chair Stanley Fischer thinks things are close enough to target to consider raising US interest rates soon.
Crude prices are still buoyed by hopes of an output freeze, following some well-timed and likely completely spurious OPEC comments that have seen money managers cut bearish bets on the commodity by 26%. Gold has fallen foul of a stronger USD as markets re-adjust to a more hawkish (still dovish actually, just a little less so than before) Fed outlook. The USD Basket has made a bounce off rising support in a rising channel, which could see further upside continue to weigh on the whole commodity space and of course their Miners/Drillers.
In focus today we see the Chicago Fed National Activity Index pushing all other macroeconomic data prints into the remainder of the week, well Tuesday before European and US PMI Manufacturing and Services. The update is key given the city’s importance to the US economy as a whole and in light of the mixed data we have seen of late.
Traders will be on the lookout for an improvement on the prior reading, which itself surprised handsomely in posting the best figure since January. They’ll also note the Philadelphia Fed print of last Thursday, which went back above breakeven for only the third time this year (as expected), whereas just one week ago the Empire State Manufacturing Index (from New York) intensified its June downtrend.
Suffice to say that a beat here is unlikely to unseat the Chicago Fed Governor Charles Evans from his dovish stance on US monetary policy. Although he is notoriously fickle and Fed comments have been blowing hot and cold in the run-up to this Friday's Jackson Hole Fed meeting. It is here that markets will be desperate interpret all available chit-chat to get a better handle on when the US Central Bank is really looking to hike stateside interest rates next.

Mon, 22 Aug 2016 08:27:00 +0100
Beaufort Securities Breakfast Alert: PHSC, Fox Marble  Markets

The FTSE-100 finished Friday's session 0.15% lower at 6,858.95, whilst the FTSE AIM All-Share index closed 0.28% higher at 786.48. In continental Europe, markets ended in the red, dragged down by sharp loss in banking and mining stocks. Investors eyed the movement in oil prices and digested a mixed set of corporate earnings releases on Friday. France's CAC 40 and Germany's DAX shed 0.8% and 0.6%, respectively.
Wall Street
Wall Street ended marginally lower as investors remained cautious on uncertainty over whether the Fed would increase interest rates in the near future. The S&P 500 edged down 0.1% on Friday, with the utilities sector losing the most. For the week, markets remained broadly unchanged.
Equities are trading mixed as investors await a speech by Fed Chair Janet Yellen at a gathering at Jackson Hole to assess the possibility of an interest rate hike. The Nikkei 225 gained 0.3% amid the speculation of a further stimulus by the Bank of Japan. The Hang Seng was trading 0.3% down at 7:00 am.
On Friday, WTI prices rose 0.6% to US$48.52 per barrel, while Brent oil prices remained unchanged at US$50.88 per barrel.

Public finances in UK improve less than expected in July
Net borrowing in the public sector in the UK came in at a surplus of £1bn in July, compared with £1.2bn in July 2015, despite strong corporation tax receipts. The economist estimated a surplus of £1.6bn. For the financial year to date, public borrowing was 11.3% lower than in the previous year. Conversely, public sector debt at the end of July stood at £1,604.2bn, around 82.9% of the GDP, and £35.3bn higher than in July 2015.

Company news

PHSC (LON:PHSC, 25.0p) - Hold
PHSC, a leading provider of health, safety, hygiene and environmental consultancy services and security solutions to the public and private sectors, on Friday, announced that it has raised £350,000 (before expenses) through a placing of 1,590,909 new ordinary shares of 10p each with new investors at a price of 22p per share. The placing shares represented 10.8% of the enlarged issued ordinary shares of the Group. The placing shares will rank pari passu with the existing ordinary shares and admission of the placing shares to trading on AIM is expected to be effective on 5 September 2016.

Our view: Beaufort has previously pointed out that the relative weakness of PHSC's balance sheet and its modest cash resource could either limit scope for the re-organised Group to maximise its new divisional structure or seize opportunistic acquisitions. We also highlighted the fact that income investors may also become concerned that the high yield presently afforded by the shares could find itself under threat. With this in mind, Friday's announcement that the Group raised £350,000 for working capital and for recent acquisitions-related purposes at least provides some short-term comfort for the shareholders. As it stands, PHSC has now positioned itself for recovery in the current year, having been hit on the chin during 2016/17 by doubly bad luck from impairment charges due to its subsidiary, Adamson's Laboratory Services Limited, failing to secure a replacement contract as well as tumbling Sterling following the Brexit vote. The full effects of the latter will take some time to be become apparent. There is likely to be some form of direct impact because both the Group's security-related subsidiaries, B to B and SG, are routinely importing the electronic products they install and supply; a weaker pound has a detrimental effect on gross margins. Indirect impacts will also arise from how client confidence at Group subsidiaries is affected and whether there are any adjustments to UK economic policy. In addition, particularly as far as the safety-related subsidiaries are concerned, there could be changes to existing EU-initiated regulatory requirements that affect or change demand for specific services. Against this background, management stated in its full-year 2016 result that it believes the majority of retained clients and those who have given repeat business over many years will continue to provide a stable source of income, the risk profile of the Group has clearly changed over the past months. Given that without a bigger injection of additional funding, management will find its potential to seek & grab future opportunities limited, Beaufort retains hold rating on PHSC while awaiting further details of operational progress.

Beaufort Securities acts as corporate broker to PHSC plc.

Fox Marble (LON:FOX, 9.25p) - Speculative Buy
Fox Marble, the AIM listed company focused on marble quarrying and finishing in Kosovo and the Balkans region, on Friday provided an operational update ahead of the publication of its Interim Results for the six months ended 30 June 2016, which expected to be announced on or before 30 September 2016. It detailed the fact that its 2016 order book currently stands at €4.1 million, €0.5 million lower than previously announced on 29 June 2016. This was due to the impact of currency fluctuations on Sterling orders post the EU Referendum and a revised order from a customer included in the order book. The Board however confirmed it is beginning to see progress, not only in an increasing the order book but importantly conversion into sales and that it anticipates fulfilling the Group's order book for the 2016 financial year. Revenues for the half year were indicated as €0.26 million, with advances received totalling €415,000. Fox's cash balance at 30 June 2016 was €2.69 million, following a successful £2 million placing during June 2016. Management also confirmed that its factory is nearing completion, with two of the three eighty-blade block processing gang saws installed, the block yard prepared and the two gantry cranes operational. The resin line is on route from Italy to Kosovo for installation. As previously announced, the power and water to supply the processing plant are already in place. Commencement of installation of the polishing line is anticipated during September 2016, and once installed, the factory will be complete.

Our view: Fox Marble has to break free of its apparently endless 'Jam Tomorrow' scenario before it becomes really interesting for investors. They want delivery of a completed factory, that has been thwarted for the past couple of years either by bad luck or bad planning, together with a clear understanding that traction with global distribution partners will shortly start to boost sales momentum. Confidence in the exceptional quality and range of the Group's effectively infinite resource is not in doubt; low costs and relatively good transportation links, together with what will be an ultra-modern facility to industrialise elementary, but high-volume, stone cutting, means that Fox is ready to become a serious player on the dimensional stone 'stage'. And this is an expanding $10 billion global market, whose consumers are driven more by grading, fashion and ability to deliver in the right volume, at the right time and in the right place, than commodity pricing. Which suggests that Fox's real market test is about to come. It has to gain trust and credibility with a wide range global distribution partners – whereby it becomes one of the default suppliers-of-choice when, for example, a San Francesco contractor receives an order for half an acre of pure while Sivec destined for a new Middle Eastern hotel. This is a steep hill to climb and the question must be, just how long will it take? Once it has risen to this pinnacle, however, the rewards could become quite exceptional as low, largely fixed operating costs will see higher revenues trickle almost straight down to the bottom line. Management has already suggested this will be quickly returned to patient shareholders in the form of dividends. In expectation of the Board delivering an increasingly confident message with its half-year statement, Beaufort retains its Speculative Buy recommendation on Fox Marble shares.

Mon, 22 Aug 2016 08:14:00 +0100
ASHTEAD GROUP PLC - Renting new highs
As I near the end of the 'A's in my alphabetical forage through the FTSE 100, Ashtead (LSE:AHT) is presenting itself as perhaps worth a special mention.  This member of the FTSE Sub-set, Support Services, has recently been tending to lead the sector which, currently 7200 points, is on track for another 1,000 points of growth by the look of things. This calculation gives credence to the suspicion such growth with tend permit sector members share price to flourish also and currently, Ashtead feels ready to start moving.
My interest was quickened due to the share price now trading higher than ever previously. As the chart shows, the price has tended to stutter several times at the 1200p level since 2014 and now, trading at 1230p, it appears probable everyone who wanted to Bail at Break even (BABE) has left the building with common sense alone suggesting the share price can now explore new highs. Before continuing to the chart, there is another detail which piqued my interest. When I run the numbers since 2011 when hte current movement cycle made itself known, the absolute highest the share price should have reached was 1216p. It achieved this target back in 2015 and now, it appears the market wants it higher still.
The situation now is of anything above suggesting near term movement to an initial 1328p with secondary calculating at a very probable longer term 1513p. Regular readers will know I'm generally not interested in proposing unrealistic share price potentials but a rise of a further 25% appears extremely probable on this.

Of course, the immediate upward cycle has been pretty relentless but the share price would currently require to fall below 963p just to cancel its immediate potentials or below 810p (RED) to utterly foul up the shares long term prospects.

Sat, 20 Aug 2016 07:00:00 +0100
Strength and volatility: Andrew McKenzie highlights mining’s difficult juggling act Fri, 19 Aug 2016 13:17:00 +0100 Oil price, Independent Oil & Gas, Premier, Sundry-Tullow-Aminex-Bucket list-And finally... Oil price
Brent hasn’t been higher since the 23rd of June, roughly at the time that the Saudis started whacking up their production, partly of course to offset domestic use for summer power generation. Production from the KSA was 10.55m b/d in that month, up 280/- b/d according to Reuters and the Saudi response has been that ‘there was a strong demand for our crude as non-Opec supply is declining fast as well as outages and demand strength. Reports show that outages did continue then particularly from Nigeria. Readers will remember that after the expiry of September Brent on 1st August things looked bleak but writing here on the 3rd of that month I suggested that their might be ‘a decent rally’ as the charts were oversold and offered retracement. The 22% rally since then has come at a time of high stocks, increasing production, moderating demand and increasing short positions in the market which tells you all you need to know about the fundamentals…
Worth noting that the first shipment of US LNG has been exported from the US through the newly expanded Panama Canal on its way to Japan, this has come from the Sabine Pass liquefaction terminal, how long ago did we start talking about that? Finally the greenback remains weak and the inventory stats showed a draw in crude and gasoline which also helped the bulls this week.
Independent Oil & Gas
IOG has announced that the Skipper well has completed and the secondary targets were reached and were dry, the well is being P&A’d. The primary reservoir is as already announced good with viscosity above expectations and if confirmed in the lab will improve development economics. The shares are off the recent top maybe due to rather too high expectations but apart from that reflect significant success and determination. The commerciality of Skipper is increasingly likely to be confirmed and I look forward to interviewing messrs Routh and Young on TipTV next Tuesday.
Premier Oil
I get regularly beaten up for having been too optimistic about PMO throughout this year and whilst that stance is not yet vindicated I felt that yesterdays results and presentation are moving in my direction. Certainly the share price is reflecting the good news, at present it is up four times since the January low and more than justifies inclusion in the bucket list. All the operational factors are ticking the boxes, production is beating guidance through efficiency and the significant ‘hidden value’ that has emerged from the E.ON deal. Indonesia and Vietnam are proving to be sound cash cows and higher gas demand from Singapore and infill drilling will be enormously productive there. Solan has been a right royal disaster but now it is onstream, the second well now online and producing cash flow so time to let sleeping dogs lie and learn from mistakes.That means ensuring that Catcher is ready for production next year and with better than expected productivity may require fewer wells thus saving more money, the capex is already 20% below sanctioned budget. With opportunities in the gas portfolio at Tolmount and its neighbours the Southern Gas basin has a number of interests that work at <30p/therm. Sea Lion remains in progress with FEED going well and costs falling as ‘bid packages’ are assembled and will be triggered when in sight of sanction so bids maybe under way at the end of the year. Premier still consider that a farm-down is required here and whilst many companies show interest the sight of a cheque book will work wonders.
The financial highlights were of positive operating cash flow, genuine and long-lasting cost reductions and capex being lowered but the carrot of progress on debt restructuring was all people wanted to hear about and here the news appears to be moderately positive. Expect to hear early thoughts on a deal in maybe late September and a conclusion by the end of the year but with enough headroom to continue to develop the asset portfolio. Overall I think that the benefit of the doubt having been given, has rewarded such a call and that Premier has made a significant move in the right direction. Whilst debt levels are still worrying, the management has done more than enough to look forward to coming out of the other side, not something a number of commentators have suggested. Still in the bucket list.
Tullow announced yesterday that it has received first oil from TEN which to be frank I thought had already happened but good news all the same.
And on this subject Aminex announced that it had received first payment for Kiliwani North Gas from the TPDC which is highly significant and validates all Jay’s hard work and determination to succeed with this project, it also vindicates those of us that believed in it all the time!
The TipTV interview that I did on Tuesday updating the bucket list has proved very popular for some reason and the link is below. The order that the companies come in, so that you dont have to watch it all is as follows:


TipTV interview: Oil Bucket List 2016: Stellar results on recent stock picks &#8211; Part 3
For those who cant receive these by email it is on under interviews.

And finally…
The Olympics are concluding this weekend and whilst it has been exceptional for Team GB I suspect that it has done little for Brazil. with few people being able to afford tickets most venues have been virtually empty apart from the Team GB followers shouting the odds. yesterday provided more medals in all sorts of sports and there might be a little more tonight and tomorrow.
For the first time tonight the Premiership launches Friday night football which is all we need, football every night of the week. The Red Devils host the Saints which is always tasty and pick of the fixtures tomorrow include Spurs v the Eagles, the Gooners continue their tricky start going to the Foxes, whilst on Sunday the happy Hammers have their first league fixture at the London Stadium and old rivalry is renewed in the North East as the Maccams host the Boro.

Fri, 19 Aug 2016 11:43:00 +0100
Today's Market View - Stellar Diamonds Stellar Diamonds (LON:STEL) – Trading suspension pending possible reverse takeover

Lithium – MIT breakthrough doubles lithium-ion battery capacity
• Scientists at MIT reckon they can now make lithium-ion batteries with 2x existing capacity using existing manufacturing procedures
• The breakthrough could see the more powerful batteries coming into production as early as next year

Dow Jones Industrials  +0.13% at 18,598 
Nikkei 225   +0.36% at 16,546 Market closed for Mountain Day in Japan a new day off which became law in 2014
HK Hang Seng   -0.34% at 22,974 
Shanghai Composite   -0.13% at   3,108 
FTSE 350 Mining    -0.54% at 12,159
AIM Basic Resources   +1.93% at   2,448

China – further news on China’s rationalisation of its mining industry
• South 32 report that they are able to raise manganese ore prices partly due to lower Chinese production.
• This follows reports of lower iron ore production out of China.
• Ilmenite (titanium mineral sands) prices are also seen rising as is China processing less titanium-rich magnetite ores.
• Coal prices are also rising again as Chinese production falls
• Some of the cuts may be because long stretched Chinese mines are finally running out of ore.
• We believe China is also restricting funding which has maintained so many marginal mines.

Inflation – clouds of inflation are gathering on the horizon as commodity prices rise
• Expect commodity prices to continue to gain as factors which caused prices to drop turn.
• Commodity prices are rising as higher lower production, increasing supply / deficits and rising input costs serve to raise price levels.
• China’s new found rationalisation of its ageing and marginal mines is already showing signs of driving prices higher for bulk and specialist commodities.
• Inflation may not take off as seen in the ‘oil shock’ of the mid-70s, which I just about remember, but the relative impact may feel similar.

Southeast Asia – GDP for the 5 ASEAN nations of Indonesia, Thailand, Malaysia, Phillipines and Vietnam may rise by around 1/3rd to $3tr by 2020 (Bloomberg)
• The growth is forecast to drive substantial new infrastructure investment with Thailand and Vietnam planning >$60bn of infrastructure, mainly rail development.
• The rise of the ASEAN nations looks like it will supplement ongoing growth in China to continue to drive demand for iron ore, steel and related commodities.

Oil prices rise to >$51/bbl on speculation that OPEC members may agree to restrict production
• OPEC members meet next week in Algeria
• We feel a cut in production is unlikely as prices have risen sufficiently on speculation for this not to happen
• OPEC can see the threat to oil demand from the advancement of electric vehicles and better storage for renewable energy supply and need to make production available to remain competitive in the longer term.
• If Russia agrees to restrict production it might help lift prices but Russia needs every dollar it can earn and it has not agreed to cuts in the past.
• A former president of OPEC reckons a supply-freeze deal is likely but with crude oil production at record levels and shale oil displacing crude in the US this may not have much impact.

UK employment hit new record levels this week
• The numbers included >1m migrant workers – and that’s just the official figure.
• The implication is the UK economy is possibly growing faster than is being recorded.

Harley-Davidson fined $12m for sales of super tuners
Harley-Davidson has agreed a $12m fine for selling devices which enable their bikes to increase gas emissions.
• The super-tuners also generate extra power and no doubt even more noise
• Much as we admire the engineering of the Harley many Londoners would love them to be just a bit quieter.

George Osborne – goes Rambo according to the Daily Mail
• Former Chancellor, George Osborne, has been found blasting away with a heavy machine gun in the Vietnam Jungle.
• We look forward to his return to the jungle of British politics.

US$1.1336/eur vs 1.1329/eur yesterday.   Yen 100.14/$ vs 100.070/$.   SAr 13.497/$ vs 13.269/$.   $1.3126/gbp vs $1.307/gbp.   
0.762/aud vs 0.770/aud.   CNY 6.644/$ vs 6.633/$ unch.

Commodity News
Precious metals:
Gold US$1,347/oz vs US$1,351/oz yesterday –
     Gold ETFs 65.2moz unch vs 65.2moz yesterday –
Platinum US$1,118/oz vs US$1,126/oz yesterday
Palladium US$705/oz vs US$699/oz yesterday
Silver US$19.57/oz vs US$19.73/oz yesterday      

Base metals:   
Copper US$ 4,792/t vs US$4,825/t yesterday –
Aluminium US$ 1,682/t vs US$1,698/t yesterday
Nickel US$ 10,300/t vs US$10,300/t yesterday –
Zinc US$ 2,278/t vs US$2,207/t yesterday
Lead US$ 1,884/t vs US$1,898/t yesterday
Tin US$ 18,390/t vs US$18,305/t yesterday –

Oil US$50.6/bbl vs US$49.8/bbl yesterday
Natural Gas US$2.661/mmbtu vs US$2.629/mmbtu yesterday
Uranium US$26.05/lb vs US$26.05/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$58.9/t vs US$58.1/t –
Steel rebar 25mm US$399.6/t vs US$392.5/t –

Thermal coal (1st year forward cif ARA) US$57.0/t vs US$58.7/t yesterday –

Tungsten - APT European prices vs $185-200/mtu vs $190-200/mtu –

Company News

Stellar Diamonds (STEL LN) 6.3 pence, Mkt Cap £2.0m – Trading suspension pending possible reverse takeover
• Shares in Stellar Diamonds have been suspended from trading “pending announcement of a potential transaction …  which, if completed, would be classified as a Reverse Takeover under the AIM Rules for Companies”.
• Although the company cautions that there is no guarantee that the potential transaction will be concluded, in the event that it proceeds it would require shareholder approval and the publication of an admission document. Accordingly, the shares will remain suspended until publication of an admission document or Stellar Diamonds is in a position to confirm that the transaction is not proceeding.

Fri, 19 Aug 2016 10:28:00 +0100
Brokers: Antofagasta and KAZ get upgraded Fri, 19 Aug 2016 09:44:00 +0100 In the papers: Ibstock, Monsoon Accessorize, Sports Direct The Times
Ibstock’s final-salary pensions hit brick wall over £19 million deficit: Britain’s largest brickmaker is to cap the liabilities of its pension fund and block present members from making fresh contributions.
Kingfisher builds solid performance: Kingfisher reported strong sales at B&Q and Screwfix but trading was dampened in France. The home improvement retailer said that it had yet to notice any impact on consumer sentiment arising from the Brexit vote in June.
U.S. economy picks up the pace in July: Fresh signs that the U.S. economy is gaining steam after a slow first half of the year came with news that a basket of key economic indicators rose higher than expected last month.
Deutsche whistleblower shuns payout: A whistleblower who helped to expose false accounting at Deutsche Bank has turned down a multimillion-dollar award from the Securities and Exchange Commission in protest against the agency’s failure to punish Executives at the bank.
ECB hints at more stimulus for Eurozone’s weak growth: Policymakers at the European Central Bank have hinted that they may take further action aimed at boosting growth in the Eurozone if economic conditions do not improve, saying that the uncertain environment needed “very close monitoring”.
Successive governments have failed on energy, say Bosses: Successive British governments have failed to deliver secure or affordable energy supplies, dealing a blow to the nation’s competitiveness, business leaders warn.
Frankfurt starts campaign to usurp London’s financial throne: German banks began a campaign to make Frankfurt the “EU hub for the U.K.” in finance with a call for Angela Merkel to lead the fight to win the spoils of Brexit.
The Independent
Harrowing details emerge of Sergei Polonsky’s Cambodian incarceration: Dramatic claims have emerged of how a high profile billionaire wanted by the Russian authorities and currently pursuing a London high court action was seized from his home in Cambodia in what his legal team describe as an “extraordinary rendition”.
Nestle sales growth hits seven-year low, hit by China slowdown: Nestle, the world’s biggest food company, said deflation and a slowdown in China led to its weakest first-half sales growth in seven years.
U.K. consumers overpay staggering £18.7 billion on energy bills: The staggering cost of the U.K.’s uncompetitive energy market has been revealed , as new research shows consumers have handed an extra £18.7 billion to gas and electricity suppliers than if they had regularly switched to the best deals.
The Daily Telegraph
The City pushes for Swiss-style Brexit: The City is pushing for a bespoke Brexit deal amid rising fears that maintaining full access to the EU single market will be impossible.
House price rise boosts British wealth to £8.8 trillion: Britain’s total wealth hit a new record high of £8.8 trillion at the start of the year, according to the Office for National Statistics. Overall wealth increased by almost £500 billion on the year, largely because of rising house prices.
Overall wealth increased by almost £500 billion on the year, largely because of rising house prices: National Grid has slashed its forecasts for the number of big new power plants expected to be built in coming years, while admitting its estimates for the growth of solar farms and other small-scale generators were almost 50 times too low.
Volvo and Uber accelerate work on driverless cars in $300 million tie-up: The race to be first in self-driving cars has shifted up a gear after Volvo and Uber announced they were joining forces to develop autonomous vehicles.
Investors in commercial property take a ‘pause’ amid real estate uncertainty: The Chief Executive of property company U.K. Commercial Property Trust (U.K. CPT) has warned the market is in the midst of a “liquidity pinch” following the vote to leave the European Union referendum, as investors try and revalue real estate assets.
Virgin Media to increase costs by £42 for millions - the third price rise in a year: Over five million Virgin Media customers will pay an average 5.1% more from November after the firm announced its third price rise of the year.
The Guardian
Monsoon Accessorize jobs at risk after decision to close joint shops: Hundreds of jobs are at risk at one of Britain’s biggest high street retailers, Monsoon Accessorize, after it decided to close its largest shops.
Sports Direct vows to review board of Directors: Sports Direct has commissioned an external evaluation of its board of Directors, following criticism of the retailer’s corporate governance.
Business Chiefs attack U.K. government failure to secure energy supply: The Institute of Directors (IoD) has backed Theresa May’s decision to review the £18.5 billion Hinkley nuclear scheme but launched a savage attack on successive government policies for failing to deliver energy security.
U.K. retail sales rise 1.4% in July as shoppers shrug off Brexit gloom: Britain’s shoppers have shrugged off uncertainty caused by the Brexit vote with retail sales rebounding a month after the referendum as warmer weather boosted trade.
ONS data shows U.K. wealth wedded to property: Britain’s obsession with property has sent the country’s net worth soaring to an estimated £8.8tn, an increase of 6% (£493 billion) compared with the end of 2014.
Amazon to open packing centre in Essex: Amazon plans to open a new delivery warehouse in Essex next year, creating 1,500 permanent jobs.
Daily Mail
Betting firm rivals Rank and 888 walk away from £3 billion take-over of William Hill: Betting firms 888 and Rank have walked away from a takeover of bookie William Hill, blaming its board for a lack of interest.
Chelsea Owner Roman Abramovich has the blues as shares in Evraz fall leaving him £80 million out of pocket: Billionaire Chelsea football club Owner Roman Abramovich was nearly £100 million poorer after shares dived in his steelmaker Evraz.
Asda hit by worst ever sales slump: Supermarket blames competition from discounters as revenues fall 7.5%: The scale of the problems facing the new Boss of Asda was laid bare as Britain’s second-largest grocer posted its worst sales figures of all time.
Daily Express
Pensioners are releasing thousands of pounds in equity to help their families: Pensioners are plumbing their property wealth to hand over tens of thousands of pounds to their families, new figures reveal.
Retirement housing shortage set to cost the tax payer £14.5 billion: Britain’s shortage of retirement housing is set to cost the tax payer £14.5 billion over the next 50 years, according to new figures.
BT tests long phone line broadband in remote Scottish community of North Tolsta: A remote community in the Western Isles is the first in Scotland to test increased broadband speeds over long phone lines. Initial results from around 20 homes in North Tolsta on the Isle of Lewis have seen “significant increases” in fibre broadband
The Scottish Herald
Barrhead lifts profits as holidaymakers turn to trusted operators: Barrhead Travel has underlined renewed appetite from consumers in dealing with “trusted” brands when booking expensive holidays as it recorded a big leap in profits in its last financial year.
Profit for Falkirk business set to close with 200 job losses: Carron Phoenix, the sink manufacturing business that announced in April it was closing its Falkirk plant with the loss of 200 jobs, has posted a pretax profit of £563,000 for 2015.
Wood Group wins petrochemicals work in England: Wood Group has won a contract to provide engineering services at a petrochemicals plant on Teesside in northern England which is operated by SABIC of Saudi Arabia.
Restaurant supplier hails success of trade as profits grow: A meat business that supplies many of Scotland’s top restaurants has said the demand from Edinburgh venues during this year’s festival is higher than ever before.
Marine Harvest in record quarterly EBIT: Marine Harvest, the Norway-listed seafood manufacturer has reported operational revenues of €832 in the second quarter of 2016, helping it achieve its highest ever earnings before interest and tax (EBIT), of €149 million.
Figures show instant impact of Brexit on construction sector: The value of infrastructure contracts in the first full month since the Brexit vote dropped by 20% across the U.K.
Scotgold to delist from Australian stock exchange: Gold mining company Scotgold has applied to have its shares removed from the Australian stock exchange, saying the listing can no longer be justified.
The Scotsman
Lidl to create 100 jobs in move to Eurocentral hub: Supermarket chain Lidl is to build a new regional distribution centre (RDC) at Eurocentral near Bellshill, creating up to 100 jobs in the process.
Engineering consultant WSP expands Scottish team: WSP Parsons Brinckerhoff, the professional services and engineering consultancy, has added four new members of staff to its environmental team in Scotland.
Royal London pitches itself as Waitrose of pension world: The Chief Executive of Royal London has vowed to build Britain’s biggest mutually-owned life and pensions provider into “the Waitrose of our sector” after unveiling another set of solid financial results.
Headhunter Carlyle eyes expansion as revenues rise: Headhunting firm Carlyle is looking to further expand on the back of a fifth straight year of double-digit revenue growth.
Morrisons ‘bake officer’ rises to the challenge: Supermarket giant Morrisons has appointed what it says is the U.K.’s first dedicated “bake officer” in anticipation of TV series The Great British Bake Off returning to screens next week.
City A.M.
Struggling clothing retailer Gap delivers muted full-year outlook: Struggling clothing retailer Gap lowered its full-year earnings forecasts as it failed to entice more customers into its shops. The California-based company now expects adjusted earnings per share of $1.87-$1.92 for this year, down from its previous guidance of $2.20 to $2.25.
Oil re-enters bull market as it shrugs off rising Saudi exports: Oil thundered back into bull market territory, despite rising exports from de facto Opec leader Saudi Arabia.
U.S. Fed logs on to Facebook to boost visibility: The U.S. Federal Reserve has created a Facebook page, adding to its existing Twitter, YouTube, Flickr and LinkedIn pages. The Fed, often criticised for its communication methods, said in a statement it aims to “increase the accessibility and availability” of its “news and educational content” using Facebook’s likes, comments and shares.
Former pensions Minister calls for one simple change that could solve the majority of pension deficits: Britain’s former pension Minister has called for a “statutory override” to inflationary increases that are hardwired into three-quarters of the country’s defined benefit pension schemes.
Intercontinental Exchange questions U.K. competition watchdog concerns over Trayport takeover: The Owner of the New York Stock Exchange has questioned the justification of the British competition authority’s concerns over its Trayport takeover.
Lloyds Banking Group, HSBC and Royal Bank of Scotland in firing line in Australian rate rigging case brought in the U.S.: Lloyds Banking Group, HSBC and Royal Bank of Scotland are all in legal hot water after a case was filed in the U.S. against a slew of banks on allegations they rigged a key Australian benchmark rate.
Too big to fail still too big a problem for banks: Cleaning up the world’s biggest banks in the event of a crisis is easier than it has been but there is still more to be done, the Financial Stability Board (FSB) has warned.

Fri, 19 Aug 2016 09:07:00 +0100
Market briefing: UK markets finished higher yesterday, helped by gains in retail and mining sector stocks UK Market Snapshot
UK markets finished higher yesterday, helped by gains in retail and mining sector stocks. UK’s retail sales surprisingly rose in July. Retailers, Marks & Spencer, Next and Dixons Carphone rose 0.8%, 0.9% and 1.5%, respectively. Anglo American, BHP Billiton and Antofagasta advanced 1.7%, 2.8% and 5.3%, respectively. Peer, Fresnillo edged up 0.5%, after the precious metal miner’s stated that it has successful completed the first phase of its San Julian mine. Premier Oil gained 2.6%, after it raised its output guidance for the full year. Kingfisher advanced 1.9%, as it posted better than expected group sales for the second quarter. On the losing side, Legal & General Group, Pearson and British American Tobacco lost 1.1%, 2.2% and 2.3%, respectively, after they traded ex-dividend. The FTSE 100 rose 0.1%, to close at 6,869.0, while the FTSE 250 gained 0.6%, to settle at 17,871.0.
US Market Snapshot
US markets closed higher yesterday, led by gains in energy sector stocks. Transocean and Chesapeake Energy climbed 5.0% and 9.2%, respectively. Wal-Mart Stores gained 1.9%, after its second quarter same store sales and earnings surpassed market expectations. Bucking the trend, Corrections Corp of America and GEO Group sank 35.5% and 39.6%, respectively, after a report indicated that the Department of Justice might phase out the use of their facilities. Valeant Pharmaceuticals International lost 2.7%, after the investment firm, T Rowe Price Group, 0.2% up, filed a suit against the drug maker and alleged its involvement in a fraudulent scheme. Cisco Systems fell 0.8%, despite reporting better than expected earnings in the fourth quarter. Moreover, the company aNNounced that it plans to reduce 5,500 jobs. The S&P 500 gained 0.2%, to settle at 2,187.0. The DJIA rose 0.1%, to settle at 18,597.7, while the NASDAQ advanced 0.2%, to close at 5,240.1.
Europe Market Snapshot
Other European markets ended in the green yesterday, after the Euro-zone’s final consumer price inflation on an annual basis advanced in line with market projections. Vestas Wind Systems surged 9.9%, as it posted upbeat results for the second quarter and also raised its earnings outlook for the full year. NN Group NV jumped 8.8%, after it reported that its capital position had improved. Dfds climbed 6.0%, after its earnings in the second quarter surpassed market estimates. Jyske Bank gained 2.4%, after it increased its share repurchase programme. On the losing side, Airbus Group dropped 1.4%, after a leading broker downgraded its rating on the stock to ‘Sell’. The FTSEurofirst 300 index gained 0.6%, to close at 1,349.7. Among other European markets, the German DAX Xetra 30 rose 0.6%, to close at 10,603.0, while the French CAC-40 advanced 0.4%, to settle at 4,437.1.
Asia Market Snapshot
Markets in Asia are trading lower this morning. In Japan, railway stocks, Odakyu Electric Railway, Central Japan Railway and West Japan Railway have dropped 2.4%, 2.7% and 2.8%, respectively. On the contrary, chemical producers, Sumitomo Chemical, Mitsubishi Chemical Holdings and Mitsui Chemicals have climbed 4.1%, 5.1% and 6.7%, respectively. Auto exporters, Hino Motors, Mazda Motor and Honda Motor have advanced 2.5%, 3.3% and 3.4%, respectively, amid a weaker Japanese Yen. In Hong Kong, gaming stocks, Galaxy Entertainment Group and Sands China have declined 3.1% and 4.4%, respectively. In South Korea, index major, Samsung Electronics has gained 1.3%, while POSCO has slid 0.9%. The Nikkei 225 index is trading 0.1% lower at 16,474.7. The Hang Seng index is trading 0.5% down at 22,903.3, while the Kospi index is trading 0.2% lower at 2,052.1.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading a tad or $0.01 higher at $50.90 per barrel, ahead of the Baker Hughes weekly US oil rig count data, due to release later today. Yesterday, the contract climbed 2.09% or $1.04, to settle at $50.89 per barrel, extending its winning streak for the sixth consecutive session.
At 0330GMT today, Gold futures contract is trading 0.09% or $1.20 higher at $1352.40 per ounce. Yesterday, the contract advanced 0.63% or $8.50, to settle at $1351.20 per ounce, amid a weaker greenback.
At 0330GMT today, the EUR is trading 0.22% lower against the USD at $1.1329, ahead of Germany’s producer price index data for July, slated to release in some time. Yesterday, the EUR strengthened 0.58% versus the USD, to close at $1.1354, after the Euro-zone’s final consumer price index rose on annual basis in July, in line with market estimates.
At 0330GMT today, the GBP is trading 0.26% lower against the USD at $1.3134, ahead of UK’s public sector net borrowing figures for July, set to release in few hours. Yesterday, the GBP strengthened 0.97% versus the USD, to close at $1.3168, after the UK retail sales data surprisingly advanced on a monthly basis in July.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, as investors managed to digest the FOMC meeting minutes, which indicated that the policymakers were divided for a near term interest rate hike. Yesterday, yield on 10-year notes eased 3 basis points to 1.53%, while yield on 2-year notes slid 3 basis points to 0.71%. Meanwhile, 30-year bond yield fell 1 basis point to 2.26%.

Key Economic News
UK retail sales advanced more than expected in July

On an annual basis, in July, retail sales climbed 5.90% in the UK, compared to an advance of 4.30% in the prior month. Markets were expecting retail sales to rise 4.20%.
UK retail sales rose more than expected in July
In July, retail sales in the UK recorded a rise of 1.40% on a MoM basis, more than market expectations for an advance of 0.10%. In the prior month, retail sales had registered a drop of 0.90%.
ECB Minutes: Council Waiting for Further Information
The European Central Bank’s (ECB) minutes from its July meeting revealed that policy makers acknowledged the fact that Britain’s vote to leave the European Union created fresh headwinds for the Eurozone and the world economy. However, they felt that it was too premature to discuss new policy measures, as they wanted to wait until the extent of the economic disruption from the Brexit vote to became clearer.
Eurozone consumer price index dropped more than expected in July
In July, the consumer price index fell 0.60% on a MoM basis in the Eurozone, higher than market expectations for a drop of 0.50%. In the previous month, the consumer price index had advanced 0.20%.
Eurozone core consumer price index rose as expected in July
In July, on an annual basis, the final core consumer price index in the Eurozone climbed 0.90%, compared to a similar rise in the previous month. Markets were expecting the core consumer price index to rise 0.90%. The preliminary figures had also recorded an advance of 0.90%.
Eurozone construction output remained unchanged in June
The seasonally adjusted construction output remained unchanged on a MoM basis, in June, in the Eurozone. In the previous month, construction output had recorded a revised unchanged reading.
Eurozone consumer price index advanced as expected in July
In the Eurozone, the final consumer price index registered a rise of 0.20% on an annual basis in July, meeting market expectations. The consumer price index had risen 0.10% in the previous month. The preliminary figures had recorded a rise of 0.10%.
Eurozone current account surplus narrowed in June
The seasonally adjusted current account surplus in the Eurozone fell to €28.20 billion in June, compared to a revised current account surplus of €EUR 31.80 billion in the prior month.
Eurozone current account surplus expanded in June
The European Central Bank has reported that the Eurozone has reported the non-seasonally adjusted current account surplus of €37.60 billion in June, following a revised current account surplus of €16.50 billion in the previous month.
French ILO unemployment rate declined in 2Q 2016
In 2Q 2016, ILO unemployment rate eased to 9.90% in France, compared to market expectations of a fall to 10.10%. In the previous quarter, ILO unemployment rate had recorded a level of 10.20%.
Italy posted current account deficit in June
Current account deficit in Italy recorded a level of €7.18 billion in June, from a current account surplus of €3.19 billion in the previous month.
US initial jobless claims slid in the last week
Compared to a level of 266.00 K in the previous week the seasonally adjusted initial jobless claims dropped to 262.00 K in the US, in the week ended 13 August 2016. Market expectation was for initial jobless claims to fall to a level of 265.00 K.
US continuing jobless claims registered an unexpected rise in the last week
Compared to a revised level of 2160.00 K in the previous week the seasonally adjusted continuing jobless claims recorded an unexpected rise to a level of 2175.00 K in the US, in the week ended 06 August 2016. Market anticipation was for continuing jobless claims to fall to a level of 2145.00 K.
US Philadelphia Fed manufacturing index advanced in August
Philadelphia Fed manufacturing index advanced to 2.00 in the US, in August, in line with market expectations. Philadelphia Fed manufacturing index had registered a level of -2.90 in the previous month.
US leading indicator rose more than expected in July
Leading indicator registered a rise of 0.40% on a MoM basis in July, in the US, compared to an advance of 0.30% in the previous month. Markets were expecting leading indicator to climb 0.30%.
Foreign investors became net buyers of Canadian securities in the previous month
Foreign investors were net buyers of C$9.02 billion worth of Canadian securities in June, as compared to being net buyers of a revised C$13.99 billion worth of Canadian securities in the previous month.
Canadian investors became net buyers of foreign securities in the previous month
Canadian investors remained net buyers of C$4.15 billion worth of foreign securities in June, as compared to being net buyers of C$5.05 billion worth of foreign securities in the previous month.
Japanese machine tool orders eased in July
The final machine tool orders eased 19.70% on a YoY basis, in July, in Japan. Machine tool orders had recorded a drop of 19.90% in the prior month. The preliminary figures had indicated a drop of 19.60%.


Fri, 19 Aug 2016 08:49:00 +0100
VSA Capital Market Movers - Independent Oil & Gas completes Skipper well
Independent Oil & Gas (IOG)# has completed operations on the Skipper appraisal well. Whilst IOG had already confirmed it had completed the primary objective of the well by retrieving good quality reservoir condition oil samples from Skipper, it has now completed the well’s secondary objective by drilling the two exploration prospects in the Lower Dornoch and Maureen formations below Skipper. The well did not encounter any hydrocarbons in either of the two horizons and will now be plugged and abandoned.

As previously stated we did not attribute any value to either of these prospects and any exploration success here would have represented upside to our valuation. Therefore, overall we view the well as a success as the early indications from the Skipper oil samples indicate the oil viscosity to be better than anticipated in the Competent Persons Report (CPR).

As Skipper is a heavy oil development this means that should these results be confirmed by testing the oil will be more mobile in the reservoir and require fewer development wells thereby improving the project economics. We maintain our BUY recommendation and 124p TP.

Fri, 19 Aug 2016 08:44:00 +0100
FTSE breakdown imminent? FTSE 100 Index called to open -5pts at 6865, with the downtrend since Monday’s 14-month highs unabated. Coupled with another bounce at 6850 overnight, this takes us a step closer to a breakdown from what is now a 3-day bearish descending triangle. The Bulls will be hoping that the current bounce can challenge those falling highs and deliver a breakout. The Bears are focused on the potential for a breakdown to result in a drop back to 6800. Watch levels: Bullish 6885, Bearish 6845.
A largely breakeven open for equities comes in spite of mild gains in Asia and the US as investors try their very best to close the trading week with at least a modicum of optimism after a rocky few days.
A USD dollar off its worst levels has offered Japan’s Nikkei and its exporters some respite via a slight pullback in the Yen, which is managing to hold above the all-important 100 mark versus the greenback. Note Australia’s ASX benefiting from Oil price gains helping Energy and the weaker USD boosting commodity prices and the share prices of Miners.
The great debate about global monetary policy (Fed to delay hiking; ECB and BoJ likely to ease further next month; BoE digesting this month’s bazooka) continues with gusto. In summary though, easy policy looks like it is going nowhere soon. Which is good for risk appetite - equities in particular - with said policy forcing the hunt for yield (and better returns) to spill over from bonds to stocks.
US equities markets trudged higher once more on a still-rising oil price. Gains are likely being tempered though, with markets potentially pricing in an overly dovish outlook for US monetary policy. Fed chat from William Dudley underpinned this, with the New York Governor highlighting the strong jobs reports from the past two months that have helped quell fears of slowing growth that surfaced earlier this year. In addition, San Francisco’s Williams said it makes sense to return to a (mechanical?) slow and steady approach to raising rates ASAP.
The uptrend in crude oil prices has steepened, with Brent and WTI trading fresh 8-week highs and both markers in a well-defined bull market.  Even though there are signs that production is falling in some minor oil producing nations, much of the recent oil price strength has been driven by mania, with traders desperate not to be left out of what could be an impressive rally. Remember that it’s highly unlikely that major oil producers, who compete with each other, will agree to cooperate.  
Gold’s narrowing pattern is still in play with the yellow metal currently stuck below its 50-hour moving average. Note the USD Basket testing the floor of its 3-month rising channel - a bounce therein potentially taking gold back towards $1344 while a breakdown puts $1350 on the cards.
In focus today, amid a distinct lack of tier one macro data, and in light of recently muted US inflation prints that have served to counter fears of a US rate rise, Canadian consumer headline inflation is seen slowing to breakeven in July. The Core measure is, however, expected to have held firm at 2.1%, just above the central bank goal (a dream for many major peers) of 2.0%, while Retail Sales growth is forecast to have accelerated in June suggesting rising sentiment among consumers north of the US border.
The US Baker Hughes Oil Rig Count for last week will be looked to for further clues about the optimism of stateside drillers with regard to a recovering oil price, boosted this week by a weak USD in response to July’s Fed minutes and hopes of an OPEC production freeze at an informal meeting next month. We’ve had these before though. Simply another case of words speak louder than actions to boost the price? Central bankers have showed them the way.

Fri, 19 Aug 2016 08:43:00 +0100
Britain Should Leap-Frog Hinkley and Lead 21st Century Nuclear Revolution Britain Should Leap-Frog Hinkley and Lead 21st Century Nuclear Revolution
Here is the opening from this inspired and entrepreneurial column by Ambrose Evans-Pritchard for The Telegraph:

It is hard to imagine now, but Britain once led the nuclear revolution.
Ernest Rutherford first broke the nuclei of atoms at Manchester University in 1917. Our Queen opened the world's first nuclear power plant in 1956 at Calder Hall.
Such were the halcyon days of British atomic confidence, before defeatism took hold and free market ideology was pushed to pedantic extremes.
Most of Britain's ageing reactors will be phased out over the next decade, leaving a gaping hole in electricity supply. By historic irony the country has drifted into a position where it now depends on an ailing state-owned French company to build its two reactors at Hinkley Point, with help from the Chinese Communist Party.
The horrors Hinkley are by now well-known. The European Pressurized Reactor (EPR) is not yet working anywhere. The Olkiluoto plant in Finland is nine years late and three times over budget. EDF's Flamanville project is not faring much better.
What is clear is that the costs of 'old nuclear' have spun out of control everywhere in the developed world. It is too expensive to keep trying to refine an inherently dangerous technology dating back sixty years in a Sisyphean attempt to make it less threatening after Chernobyl and Fukushima.
The capital cost of new nuclear plants in Europe and the US has risen from $1,000 per kilowatt in the 1970s to around $5,500 today in real terms. Hinkley will be nearer $8,000. Hence the lapidary term 'negative learning' coined by Yale scientist Arnulf Grubler.
The standard light water reactors were solid workhorses in their day - and averted huge releases of CO2 from fossil fuels - but they operate at 100 times atmospheric pressure. They need costly containment structures  to prevent an explosive release of deadly radioactive gases across hundreds of miles.

This nuclear cost spiral has been happening just as solar and wind costs plummet, and the verdict is in. The nuclear share of global power has dropped to 10.7pc from 17.6pc in 1996. Ten new reactors were built last year, but eight were in China. In Europe they are shutting down.
There is an alternative. Research into a radical new wave of safer, cleaner, and cheaper reactors is suddenly reaching critical mass, some are entirely compatible with the intermittency of wind and solar.
This is what Theresa May should be looking at as she launches her industrialisation drive and fashions an energy policy fit for the 21st Century.
The Washington think tank Third Way has identified fifty advanced reactor projects in North America, including eight based on molten salt fuel, ten on liquid-metal, and some based on fusion designs.

David Fuller's view
It is beyond comprehension that any intelligent person with a reasonable understanding of competing energy developments in 2016 could think that the Hinkley Point white elephant was a good idea.  This was a short-term pre-Brexit political decision which should never have been seriously considered.  It totally ignored economic risks, given EDF’s reworked and risky Heath Robinson technology, plus the company’s catastrophic delays and soaring costs on Finland’s Olkiluoto Island and France’s own Flamanville project on the Cotentin Peninsula. 
Prime Minister Theresa May wisely put Hinkley Point on hold, to the consternation of French and Chinese officials, before leaving for her walking holiday in Switzerland.  If her advisors are up-to-date on our worldwide energy revolution and the Hinkley Point debate, Mrs May will be able to resume her sensible overhaul of Britain’s energy policies on return.  These commenced with realistic financial incentives for people living in regions where fracking needs to occur.  However, the delicate diplomatic issue, for which she will not thank David Cameron or George Osborne, concerns Hinkley Point.  The plain truth is that it does not add up and would be a costly disadvantage for the UK over 35 years.


Oil Prices Break Back Above $50 a Barrel

Oil prices broke above $50 a barrel for the first time in five weeks as hope that the world’s largest suppliers may act to cut the glut in global supply continues to drive prices higher for a sixth consecutive day.
Brent crude moved above $50 a barrel for the first time since early July on Thursday morning before dipping back to $49.70 later in the day. But by the afternoon the market surged well above the key earlier highs to around $50.80 a barrel.
The recent rally in prices, from lows under $42 a barrel just two weeks ago, began late last week after Saudi energy minister Khalid bin Abdulaziz Al-Falih said the Oraganization of Petroleum Exporting Countries would meet in Algeria next month to discuss measures to stabilise oil market prices with major producers outside of the cartel.
The rally found further support earlier this week after Russian energy minister Alexander Novak said that his country - the world's third largest supplier of oil - was involved in the early discussions.
Shakhil Begg, an analyst with Thomson Reuters, said oil prices bounced back as continued short covering activity sustained a rally which has propelled prices by more than 20pc since the lows of early August.

David Fuller's view
The Saudis’ 2H 2014 attempt to replay their successful 1970’s script - increasing oil supplies and driving the price down to knock out high cost producers - was always going to fail in the current era.  They were really targeting US shale oil production, without understanding the importance of this quantum technological leap which was beginning to tap billions of gallons of previously inaccessible oil, at increasingly commercial prices.
In fairness to the Saudis, they were not alone.  In fact, most western oil analysts also failed to grasp the potential of this rapidly developing new technology.  They talked about high drilling costs, rapid depletion rates within a few months, while polluting water tables and triggering earthquakes.

Labour Force: We Are Moving Part-Time as the Jobs Market Hollows Out
Here is the opening of this topical report from The Sydney Morning Herald:

Full-time employment has slid 64,500 since December while part-time employment has surged 136,600. The net result of 72,300 extra Australians in work reflects a hollowing out of employment rather than a boost in hours. There were scarcely any more hours worked in July than in December.
The international definition used by the Bureau of Statistics requires it to count someone as "employed" even if they work only one hour per week.
"With more than 86 per cent of total net jobs created over the last 12 months part-time, it is clear that Australia is becoming a nation of part-time employment growth with all the attendant negative consequences," said Bill Mitchell, director of the Centre of Full Employment and Equity at the University of Newcastle.

David Fuller's view

This trend has been clear for a number of years – the downside of technology in human terms is that many jobs across most industries and professions are being replaced more quickly than new jobs, other than part-time, can be found.  Additionally, Australia’s economy is adversely affected by China’s slowdown.
Click on The Sydney Morning Herald link above to see a painfully good cartoon on this subject. 

Italy Wants the EU to Change Tack on Growth and Security

Italy is seeking an expansionary push for growth in the European Union as the bloc forges a new course after the U.K. voted to leave, Prime Minister Matteo Renzi’s junior minister for European affairs said.
Undersecretary Sandro Gozi, speaking ahead of an Aug. 22 informal meeting of Renzi, German Chancellor Angela Merkel and French President Francois Hollande, called for a wide-ranging agreement to boost cooperation on security and defense as well as an expansionary economic policy to boost European growth.
“We need to increase and reinforce EU action on security and defense, including rapidly launching the European policing of its external borders,” Gozi said in a telephone interview. “Also as a reply to the terrorist threat, some EU countries should be able to work on joint initiatives in the security, policing or military fields if they wish to do so.”
In the wake of the Brexit referendum, and with the Italian economy unexpectedly stalling in the second quarter, Renzi has stepped up calls for a departure from what his government sees as German-inspired austerity policies. Renzi is preparing for a referendum on constitutional reform, expected to take place in November, on which he has staked his political future.

David Fuller's view
I think Renze will get what he wants from France and also Germany, albeit reluctantly.  Following Brexit, Italy is now the EU’s third largest economy and it is in trouble, as you can see from this weekly 10-year chart.  If Renzi loses his referendum on constitutional reform in November, the EU could face an even bigger problem than Brexit because other Southern European countries are similarly disillusioned with the Euro.
Meanwhile, there are plenty of successful, hard working Italians in London and I have yet to meet one who wants Italy to remain in the EU.

Fri, 19 Aug 2016 08:36:00 +0100
Breakfast Alert: Concepta, Kingfisher, National Grid, Physiomics, Premier Oil, Tullow Oil Markets

The FTSE-100 finished yesterday's session 0.14% higher at 6,868.96, whilst the FTSE AIM All-Share index closed 0.48% higher at 784.29. In continental Europe, markets ended sharply higher, driven by gains in basic resource stocks. Furthermore, positive corporate earnings released fuelled buying. Germany’s DAX and France’s CAC 40 advanced 0.6% and 0.4%, respectively.
Wall Street
Wall Street ended in the green, as oil prices rallied amid speculations that major oil producers would freeze production. Additionally, positive economic data and upbeat earnings released boosted investor confidence. The S&P 500 increased 0.2%, with the energy sector losing the most.
Equities are trading mixed, as some Fed officials reiterated the possibility of hiking interest rates in the coming months. The Nikkei 225 gained 0.4%, while the Hang Seng was trading 0.3% down at 7:00 am.
Yesterday, WTI prices increased 3.1% to US$48.22 per barrel, while Brent oil prices rose 2.1% to US$50.89 per barrel.

Retail sales in UK jump in July

As per the Office for National Statistics, the UK’s retail sales grew 5.9% y-o-y in July, above economists’ forecast of a 4.2% rise, after gaining 4.3% in June. Sales, excluding auto fuel, surged 5.4% y-o-y in July compared with the 3.9% growth in June. The increase in sales was primarily led by warmer weather conditions and a weaker pound.

Company news

Concepta (LON:CPT, 11.88p)– Speculative Buy
Concepta's AIM Admission followed a reverse takeover from Frontier Resources International plc and renaming back on 25th July. Injected into the corporate shell was a pioneering UK healthcare company and developer of a proprietary platform and suite of products targeted at the personalised mobile health market with a primary focus on women's fertility and specifically unexplained infertility. Yesterday, the Company announces its unaudited results for the six months ended 30 June 2016. Operational highlights for the period included the disposal or dissolution of all oil and gas related subsidiaries of the legacy business, while the new management undertook a strategic review while completing the acquisition of Concepta plc for £3.026 million comprising 30,343,950 New Ordinary Shares and £0.75 million in cash. Its MyLotus brand is a unique offering that allows quantitative and qualitative measurement of a woman's personal hCG and LH hormone levels in urine samples. It has defined its route to market as, (i) Regulatory approvals for launch in China in place - first order from distributor with payment in advance expected following hospital testing in Q3 2016 and, (ii) CE-Marking for UK and Europe to follow in 2017. The Company’s cash balance at the period end was US$1.335m (H1 2015: US$0.02m), while incurring losses of US$0.336m from continuing operations (H1 2015: US$0.504m).

Our view: Concepta has fills an important need for a significant number of apparently fertile women who, for apparently unexplained reasons, consistently fail to conceive. The pregnancy and ovulation testing markets are well established and global, with significantly the largest brand being Clearblue, the flagship of Swiss Precision Diagnostics GmbH, a 50:50 JV with Procter & Gamble. But such products are incapable of measuring the personal hCG and LH hormone levels necessary to optimise fertility cycle timing and thereby provide a genuine alternative to the IVF clinic. The global revenue opportunity for Concepta runs into billions of dollars and its initial target markets in China and Europe are estimated to have potential in the region of £600m alone. Concepta’s proprietary home-testing/point-of-care equipment also lends itself to wider family home-health monitoring to improve individual health parameters including chronic stress, inflammation, urinary tract, healthy pregnancy progression etc. Indeed, Concepta find itself in a unique position to come in at the ground floor of the fast growing global connected healthcare sector, which is set to be worth US$61bn by 2020. Beaufort places a Speculative Buy recommendation on the shares.

Beaufort Securities acts as corporate broker to Concepta

Kingfisher (LON:KGF, 364.70p)– Hold
Kingfisher provided a trading update for Q2 FY 2016 ending 31st July 2016. During the period, sales advanced 8.4% y-o-y to £3.0bn in reported basis, or 3.2% at constant currency basis, while like-for-like (LFL) sales expanded 3.0% at constant currency basis, compared with Q2 FY 2015. In the UK and Ireland, sales rose 5.1% to £1.4bn in reported basis, with an LFL sales growth of 7.2%. Sales from France rose 10.4% to £1.1bn in reported basis, while LFL sales declined 3.2%. Sales from Other International grew 12.8% to £539m on a reported basis, with LFL sales increasing 7.0%. On the operational front, Kingfisher completed disposal of the remaining 30% economic interest in B&Q China following the regulatory approval and received net cash proceeds of £63m. The company has returned £150m (44 million shares) to date to shareholders since year end through share buyback.

Our view: Kingfisher delivered excellent performance in Q2 FY 2016. The company recorded an increase in sales on both reported and LFL fronts. Kingfisher’s growth was led by a rise in sales of tools to tradesmen in the UK and a surge in sales in its Polish division. Wet weather conditions and extensive industrial activities led to fall in sales in the company’s French business. 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 good progress and remains ahead of schedule. The company continued to enhance shareholder value through its share buyback programme. However, Brexit has created uncertainty in the market and dampened investor confidence. We would like to wait and assess Kingfisher’s performance in the near future, and thus maintain a Hold rating.

National Grid (LON:NG., 1,081.50p) - Buy
National Grid provided an update on Mid-Period Review (MPR) for the RIIO-T1 price control, conducted by UK energy regulator Ofgem. The areas covered under MPR are related to specific outputs, with eight-year allowances in Gas Transmission and Electricity Transmission. Following the review, Ofgem proposed that allowances adjusted to reflect that some outputs are no longer required, which would result in a reduction of £169m in Gas Transmission and £38m in Electricity Transmission. Ofgem also proposed to approve £21m of the request related to the enhancement of system operator outputs. These changes are expected to be implemented April 2018 onwards.

Our view: The aforementioned update highlights Ofgem’s proposal to scrap some of the power and gas projects undertaken by National Grid. The scope of MPR is narrow, with no changes to financial parameters of the framework. National Grid delivered excellent performance in FY 2016 on both financial and operational fronts. The company benefitted from the electricity price difference in Britain and continental Europe, which lifted the trading volumes on its network. National Grid recorded robust growth in the UK and generated savings of over £330m for customers in the first three years of regulated price control (RIIO). The company made substantial progress with rate filings in New York and Massachusetts. Value-added metric, which reflects the key component of value delivery to shareholders, was strong with value added in the year totalling £1.8bn or 47.6p per share. National Grid is selling majority stake in its UK gas distribution business. After the sale, the company expects to deliver higher growth and maintain a strong balance sheet to fund its investment programme. In light of the above argument, we maintain a Buy rating on the stock.

Physiomics (LON:PYC, 0.03p) - Speculative Buy
Following the announcement on 31st March 2016 of its intention to acquire BioMoti Limited, Physiomics yesterday announced it has signed a Share Purchase Agreement with BioMoti. The acquisition remains conditional on the Company completing a successful placing to raise a minimum of £1m to develop the new joint Group's drug discovery and development pipeline. BioMoti's platform technology, Oncojan creates nanoparticles which package cancer drugs into sustained release delivery vehicles which are then coated with tumour targeting protein called CD95R ( BioMoti's lead asset, MOTI1001, contains the drug paclitaxel which has been approved for many years and is widely used to treat various types of cancer, therefore mitigating the risk of development. In pre-clinical mouse models of ovarian cancer MOTI1001 has shown significantly greater ability to shrink tumours than paclitaxel alone and also appears to be significantly more tolerable. The Consideration for the acquisition will comprise, (i) 50% of the entire issued share capital of the Company immediately prior to Completion (but for clarity prior to the issue of any ordinary shares in connection with the Placing) and: (ii) £50k in cash (subject to certain completion accounting adjustments to reflect the actual levels of cash and liabilities in the Company at completion). For the period ended 30 November 2015, BioMoti Limited had a turnover of £2,062 made a loss for the financial year of £9,700 and its gross assets were valued at £2,331. Completion is expected to occur on or before 31 October 2016.

Our view: If the BioMoti deal completes, Physiomics risk profile and prospective funding needs will change quite significantly. But that said, there is significant potential value in developing an oncology pipeline alongside existing and new opportunities in base modelling and simulation. And the existing pharmaceutical base development and simulation business continues to record important progress. Since March 2015, for example, it has confirmed the first contract for a clinical version of its Virtual Tumour model with global pharmaceutical company, Merck Serono, a (4th) large pharma customer for its Virtual Tumour (pre-clinical) model and a new speciality pharma customer for PK/ PD modelling of a new drug combination in the pain space and a subsequent extension of this contract, along with the 5th, 6th and 7th extensions to a Virtual Tumour project with a major global pharmaceutical company with which has now been a client for over 4 years. Credibility and momentum of Virtual Tumour Clinical, however, will take time to build into the high-margin repeat business envisaged by the Company’s original business plan so the new management now headed by CEO, Dr Jim Millen, is seeking to bolt on a new complementary arm that can create value by both exploiting its existing skills/development tools as well as generating additional newsflow. This will be created through Virtual Tumour being utilised to increase value of internal drug candidates via optimised regimens while targeting CD95L might also provide a way to personalise cancer treatment to appropriate patients. Additionally, Physiomics could employ its modelling techniques to predict the patients who would benefit most from drug candidates, and the Oncojan™ platform could be used in conjunction with Virtual Tumour to develop further targeted therapies for different cancer indications and drug combinations. So Physiomics is most certainly set to become a rather more exciting prospect. It needs to be recognised, however, that the proposed raise in this funding round will likely only suffice for a quite limited period and that the enlarged Group can be expected to seek additional support from shareholder as its projects progress. Beaufort places a Speculative Buy recommendation on the shares.

Premier Oil (LON:PMO, 76.50p) - Speculative Buy
In its Interims, Premier has raised its production guidance for FY2016 to 68-73k boepd and reported that it will be free cash-flow positive in H2 with oil prices above US$45 per barrel. Recent production has exceeded 95k boepd, helped by the 14k boepd from the first producer well on the Solan field. The second and final producer well on the Solan field is expected to be tied in shortly and to reach production of 20-25k boepd. The Catcher development project (Premier: 50% operating interest) remains on track for first oil in H2 2017. The subsea installation campaign is ahead of plan, while all six development wells drilled to date have met or exceeded predictions for reservoir quality while flow rates have been at or above prognosis. Negotiations on refinancing are reported as making good progress. The negotiations centre on amending covenants and extending debt maturities. The company anticipates negotiations to conclude and new agreements in place during H2 2016.

Our view: The debt restructuring was anticipated to take time but the Company have indicated that ‘Good progress is being made with the company's lending group over amendments to the medium term covenant profile and resetting of debt maturities’. With continuing production growth (Solan, EON assets acquisition) and Catcher on target for product 2017, we maintain our Speculative Buy stance on the Company.

Tullow Oil (LON:TLW, 239.60p) - Speculative Buy
Tullow Oil has announced that first oil has flowed from the Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana. First oil has been reached on time and on budget three years after the Plan of Development was approved in May 2013. The TEN start-up process is now well advanced and Tullow expects oil production to ramp-up gradually towards the FPSO capacity of 80,000 bopd through the remainder of 2016. Tullow estimates that TEN average annualised production in 2016 will be approximately 23,000 bopd gross (net: 11,000 bopd). Tullow is the operator of the TEN fields and holds a 47.175% stake. Tullow's joint venture partners are Anadarko Petroleum Corporation (17%), Kosmos Energy (17%), Ghana National Petroleum Corporation (15%) and PetroSA (3.875%).

Our view: This is an important moment for Tullow as production begins from the TEN fields. It is also pleasing to report the delivering of this project on time and on budget. This brings to a close a period of heavy investment for Tullow, and we look forward to seeing debt (US$4.7bn) reduction. It is important that production at least meets guidance for real impact on the debt reduction. Tullow Oil is one of Beaufort Securities Tips for the Year, and whilst we retain a Speculative Buy on the Company, short-term investors may wish to lock in some profits.

Fri, 19 Aug 2016 08:28:00 +0100
Brokers: Admiral winning few medals in the broking community Thu, 18 Aug 2016 13:59:00 +0100 Amur Minerals, Hybrid Air Vehicles, Jubilee Platinum, Lonmin PLC Amur Minerals* (LON:AMC) – 2016 drilling programme now approximately 80% complete with improved thickness and grade intersections at MKF
BHP talk on putting the giant Jansen Potash project in Sasketchewan on hold
Hybrid Air Vehicles (Private) - Airship test flight
Jubilee Platinum (LON:JLP) – Update on Dilokong chrome and Hernic projects
Lonmin PLC (LON:LMI) – Funding for tailings project

Dow Jones Industrials   at 18,574 
Nikkei 225    at 16,486 Market closed for Mountain Day in Japan a new day off which became law in 2014
HK Hang Seng    at 23,028 
Shanghai Composite    at   3,801 
FTSE 350 Mining    at 12,011 The 350 Mining index is up 64% since 1st January
AIM Basic Resources    at   2,403 AIM resource stocks up 57% since the January low and up 46% from 1st January

US Federal Reserve – reported to be split on next rate hike
• The US Federal Reserve is playing a game of cat and mouse with investors as it comments on the division between policy-makers over the timing of the next rate rise.
• So far the Fed has held rates at between 0.25-0.5% since December 2015 preferring to wait for greater evidence of inflation.
• The Fed are targeting 2% inflation as well as job creation but may also have an eye on maintaining historically low borrowing costs for the US Treasury.
• High government debt levels give the Fed every incentive to maintain low rates so long as investors are still willing to lend their cash to the government at these price levels.  Presumably the Fed might be forced to print new money if investors decide there are better / safer places to store their cash.
• Either way, the prospect looks like low rates for longer as is seen across yield curves with domestic mortgages now offering historically low 10-year rates.

UK – July retail sales rise in warm, dry weather
• July retail sales rose by 5.9% yoy and 1.4% on June driven by sales of watches and jewellery which rose by 16.6%
• The fall in sterling following the Brexit vote is likely to raise August’s retail sales numbers yet further

Ford is targeting 2021 for mass production of driverless cars / taxis
• Fords news cars will be fully automatous and you will be able to hail the car like a taxi according to the report.
• Ford has invested $75m in using Lidar ‘Light Detection and Ranging’ technology, which is quite often used for planning mines and geology.
• While Ford may offer the utility in its existing cars we suspect they will look to roll the technology out within a new range of Electric Vehicles.
• The race to pack new technology into cars led Ford to comment that it sees Apple as its new rival.
• We reckon this will lead to more rapid sales of new cars as the argument for going electric is compelling both from a running cost and new technology perspective.
• Many youngsters have been put off driving by the inability of using smart phones and tablets while driving and autonomous systems will help to recapture these lost customers.

Tesla – French authorities to investigate Tesla car fire
• A Tesla Model S 90D has caught fire in the area of Biarritz and Bayonne.
• In the US two Tesla cars have caught fire.  In both incidents the cars are said to have hit debris on the road which pierced the chassis causing the battery fire.  This makes me wonder what they are making the chassis out of, as I’ve have ever had debris pierce the chassis of a car before, though I did put my foot through the floor pan of an old triumph many years ago.

US$1.1329/eur vs 1.1255/eur yesterday.   Yen 100.07/$ vs 100.992/$.   SAr 13.269/$ vs 13.648/$.   $1.307/gbp vs $1.301/gbp.   
0.770/aud vs 0.763/aud.   CNY 6.633/$ vs 6.641/$ unch.

Commodity News
Precious metals:
Gold US$1,351/oz vs US$1,342/oz yesterday –
     Gold ETFs 65.2moz vs 65.4moz yesterday –
Platinum US$1,126/oz vs US$1,112/oz yesterday
Palladium US$699/oz vs US$696/oz yesterday
Silver US$19.73/oz vs US$19.55/oz yesterday      

Base metals:   
Copper US$ 4,825/t vs US$4,766/t yesterday –
Aluminium US$ 1,698/t vs US$1,690/t yesterday
Nickel US$ 10,300/t vs US$10,195/t yesterday –
Zinc US$ 2,297/t vs US$2,245/t yesterday
Lead US$ 1,898/t vs US$1,865/t yesterday
Tin US$ 18,305/t vs US$18,290/t yesterday –

Oil US$49.8/bbl vs US$48.7/bbl yesterday
Natural Gas US$2.629/mmbtu vs US$2.639/mmbtu yesterday
Uranium US$26.05/lb vs US$26.00/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$58.1/t vs US$59.5/t –
Steel rebar 25mm US$392.5/t vs US$401.7/t –

Thermal coal (1st year forward cif ARA) US$58.7/t vs US$58.8/t yesterday –

Tungsten - APT European prices vs $185-200/mtu vs $190-200/mtu –

Company News

Amur Minerals* (LON:AMC) 4.0p, Mkt Cap £20.6m – 2016 drilling programme now approximately 80% complete with improved thickness and grade intersections at MKF
• Amur Minerals reports that as a result of an earlier than expected start to the field season and better performance than expected, as of 1st August it has completed 54 holes (11,978m) of its 2016 summer drilling programme at its Maly Kurumkon Flangovy prospect. This represents around 80% of the planned 15,000 metres.
• A total of 34 resource definition holes have been completed along the 2100m long western part of the deposit at a drilling density which, in the opinion of the company’s consultants, SRK , is adequate to define indicated resources. Prior to this season’s work only 1300m of the deposit was drilled at sufficiently close intervals to support an indicated resource classification.
• Amur Minerals reports that it has now received assay results for all but three of the resource definition holes from the Alex Stewart laboratory. Among the results reported today are an intersection grading an average 1.09% nickel and 0.2% copper of 4.6 metres from a depth of 214.4m in borehole C401 and 65.3 metres at an average grade of 0.83% nickel and 0.24% copper from a depth of 135.8m in borehole C409.
• The resource definition work has also discovered a 400m long extension to the western 2100 metres of mineralisation defined by a 16 holes “step-out” drilling programme, “and infill drilling of an Inferred block of resource where intersected grades and thicknesses are greater than previously indicated”. The company comments that “drill results previously used to define the resource understated the mineralised thickness by as much as 78%. The average infill drill results indicate a thickness of 34.8 metres per hole at 0.74% nickel and 0.21% copper based on a 0.2% nickel cutoff grade.”
• The remaining 20 drill holes completed to date have recovered 6.9 tonnes of bulk material (from 3959m of drilling) for metallurgical testing to help assess mineral recovery rates and to aid process plant design and flowsheet development.
• The remaining drilling work, comprising around 3000 metres of the budgeted 15,000 metres, is aimed at targeting additional inferred resources at the eastern end of the MKF deposit where the company is aiming to upgrade some of the existing 9.2m tonnes at an average grade of 0.58% nickel and 0.17% copper currently classed as inferred to indicated. Currently this phase of work is scheduled to finish by 31st October but with better than expected progress so far and an earlier start than anticipated, there may, in our opinion, be scope for earlier completion.
Conclusion: The definition of additional strike length at the western end of the MKF zone, the wider than expected mineral intercepts and indications of down-dip extensions to the mineralisation all indicate that an updated resource estimate incorporating the 2016 drilling may well contain an increase in the overall resource volume as well as an upgrade to the resource classifications. We look forward to the results of drilling the eatern part of the deposit and to updated resources estimates in due course.
*SP Angel act as Nomad and Broker to Amur Minerals. An SP Angel analyst has been to site.

BHP talk on putting the giant Jansen Potash project in Sasketchewan on hold
• BHP may postpone further development of its giant Jansen potash project after what is said to be $3.4bn if investment out of a potential $14bn total capital cost.
• Development of two shafts is more than half way with shaft completion in 2018 and 2019
• BHP will then, reportedly, decide on whether to spend a further funds to complete the mine, its plant and infrastructure
• The Jansen mine could produce some 8mtpa of potash or 15% of global supply which would be larger than Mosaic’s Estarhazy mine at 6.3mt.
• Jansen is said to require potash prices of around $400/t to make an acceptable rate of return and >$500/t to compete for capital within BHP’s new project portfolio.
• Potash prices are relatively low at around $190/t in the spot market with China signing a benchmark supply contract with the Belarusian Potash Co. at $219/t, significantly lower than many forecasts and a long way off $900/t seen at the peak of the market.
• There may still be room for smaller, cheaper, lower capex players to come in
• The interesting part for BHP is that with the shafts completed they should be able to bring this online quicker than most other potential rivals and this should give them first mover advantage when there is a sustained improvement in potash prices.

Hybrid Air Vehicles (Private) - Airship test flight
• HAV’s Airlander 10 airship has taken its first test flight since returning to the UK following trials in the US.
• The vehicle is most likely to be used for surveillance in its first roles as it can carry a greater payload of radar and other surveillance equipment
• The airship is currently envisaging 5-day flights but in reality should be able to stay aloft for much longer.
• HAV’s airship is scalable with a 50t payload envisaged which would be useful for the heavy lifting of equipment and materials to remote mine sites and to difficult to reach locations.  The other great benefit is the ability to land payloads on very short landing sites.
• Amur Minerals has had discussions with the HAV team as have certain Canadian diamond miners – roll over ice road truckers!

Jubilee Platinum (LON:JLP) 3.375 pence, Mkt Cap £30.4m – Update on Dilokong chrome and Hernic projects
• Jubilee Platinum has announced that chromite revenues and earnings at its Dilokong Chrome mine tailings project (DCM Project) have increased by 33% and 46% respectively during July 2016 compared to the previous month. Earnings attributable to Jubilee Platinum increased by 30% during July to £0.29m (R5.11m).
• The company notes that since the start of the project in April 2016, the project has generated revenues from chromite concentrate sales of £1.69m (R31.2m) and earnings of £1.26m (R23.3m) implying an average margin of almost 75%.
• The announcement indicates that “Upgraded platinum values in surface material after chromite removal continue to exceed design expectations … “
• Construction work at the Hernic project, which plans to treat some 1.7m tonnes of surface chrome tailings resources generated by the Hernic ferrochrome plant (of which around 90% is classed as “measured”) to recover PGMs and chromite is reported to be around 55% complete with total capital expenditure to date of £6.2m (R108m).
• When complete, the Hernic project is expected to treat 660,000 tpa and will be “the largest PGM beneficiation plant of surface chrome tailings in South Africa” and aims to produce in excess of 31,000oz pa of PGM annually. Commissioning of the plant is expected to start in December 2016.

Lonmin PLC (LON:LMI) 236 pence, Mkt Cap £665.7m – Funding for tailings project
• Lonmin reports that it has secured US$50m of funding to develop its Bulk Tailings Treatment Project. The company has already received the initial $9m tranche of the funds and work is underway to move the project ahead.
• The funds are being sourced through a project finance metal streaming agreement with an undisclosed party.
• The project, which involves reprocessing 26 million tonnes of tailings from Lonmin’s Eastern Tailings Dam at a rate of around 300,000 tpm is expected to produce around 29,000 oz of platinum (55,000 oz of PGMs) per year from the 2018 financial year. Lonmin expects the project to deliver the lowest unit cost production of platinum and PGM within its portfolio.
Conclusion: When it comes into production the tailings treatment project will deliver low cost production which, although relatively small compared to the current 700,000oz pa guidance for 2016, is a welcome reaffirmation of Lonmin’s intention to deliver profitable platinum ounces as it restructures the business.

Thu, 18 Aug 2016 10:45:00 +0100
AIM Breakfast: Physiomics, Tricor, Concepta, Akers Biosciences, Rex Bionics, Empresaria Group, YOLO Leisure & Tech, Nostra Terra Oil and Gas, EG Solutions HydroDec Group What’s cooking in the IPO kitchen?
LoopUp—The provider of conference calls and online meetings is seeking to join AIM. 2015 revs of £9.2m and EBITDA of £1.02m
Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap
Aura Energy—ASX listed uranium developer (ASX:AEE) expected to join AIM 6 September
Autins Group plc - The acoustic and thermal insulation specialist now looks to join AIM late August

Physiomics* (LON:PYC) 0.04p £1.22m
The computational systems biology services company applying simulations of cell behaviour to drug development to reduce the high attrition rates of clinical trials has signed a share purchase agreement to acquire BioMoti whose  platform technology, Oncojan™, creates nanoparticles which package cancer drugs into sustained release delivery vehicles which are then coated with tumour targeting protein called CD95R. There are lots of synergies here. The deal is contingent on a  £1m placing.

Tricor (LON:TRIC) 0.4p £0.74m
Tricor which is a ‘Rule 15’ investing company has been informed that the Upper Tribunal (Tax and Chancery Chamber) has rejected the Company's appeal to reclaim £1,847,976.70 of input VAT plus any interest and costs. The Company has until 2 September 2016 to make any application for permission to make a further appeal to the Court of Appeal in England & Wales. The Company is considering the implications of the decision with its lawyers and is awaiting further advice from them.  There is also an unquantified prospective liability for costs incurred.

Concepta (LON:CPT) 11.87p £13m
The UK healthcare company and developer of a proprietary platform and suite of products targeted at the personalised mobile health market with a primary focus on women's fertility has announced H1Jun16 results. All Oil & Gas assets disposed or dissolved. Concepta acquired post year end for £3m. Cash balance at the period end was $1.335m . ‘MyLotus’ to launch in China this year and targeting UK/Europe launch in 2017 subsequent to CE Marking.

Akers Biosciences (LON:AKR) 235p £12.8m
The developer of rapid health information technologies, announces the results of a study of the Company's BreathScan OxiChek™ test, the first disposable breath test to rapidly determine levels of oxidative stress in the body - an indicator of the overall health and wellbeing of a person.  The study has demonstrated an exceptionally high correlation between an Akers Bio rapid breath test and an established reference laboratory blood test.  FDA clearance not required and already being marketed.

Rex Bionics (LON:RXB) 32.5p £8.3m
The pioneer of the REX Robot technology that enhances the mobility of wheelchair users, has announced positive results from a second interim analysis of its RAPPER II clinical trial showing that REX can safely be used by people with spinal cord injury.  51 out of 53 volunteers (96%) were able to complete the transfer-walk-exercise protocol ("Treatment Success") - the primary endpoint of the trial. There were no Serious Adverse Events.

Empresaria Group (LON:EMR) 98p £48m
H1Jun16 results from the international specialist staffing group. Net fee income +9% to £27.2m, adjusted EPS +26% to 4.3p. No interim dividend (traditionally only pays final). Average net debt of £10.5m was up 14% on prior year, due to the investment spend in the period of £3.4m. Continues to look for suitable external investments to fill in gaps in sector or geographic coverage with a pipeline of interesting prospects. 8.5xPE and 1.1% yield.

YOLO Leisure & Tech (LON:YOLO) 0.9p £1.6m
The company focusing on opportunities in the travel, technology and leisure sectors, announced that, TVPlayer Limited, in which YOLO has an interest by virtue of its investment into TVPlayer's parent company Simplestream Limited, has signed a multi-year agreement with Viacom International Media Networks to simulcast a selection of its pay-TV channels on TVPlayer Plus, TVPlayer's low cost subscription TV service.

Nostra Terra Oil and Gas (LON:NTOG) 1.85p £1.75m
Further to the recent announcements by the Company concerning the sale of its interest in the Chisholm Trail Prospect, the Company has announced the US$2.1 million sale has completed successfully. Nostra Terra intends to deploy the net proceeds from the Sale to accelerate its growth plans and for general working capital purposes. Nostra Terra continues to evaluate a number of opportunities across different geographic regions, particularly North America and Egypt.

EG Solutions (LON:EGS) 44p £9.98m
The back office workforce optimisation company, has announced that its partner Aspect Software Inc. has closed a three-year contract with a leading social networking corporation ('the Client') to supply eg's back office optimisation software.  The initial contract is valued at US$1 million with up to 4,000 licences being deployed over the next 3 years.  FYJAN17 forecasts suggest a 19.1x PE multiple falling to 8.7x the following year.

HydroDec Group (LON:HYR) 3.25p £26.1m
The specialist re-refiner of industrial oils reports that its Australian operation has been awarded a 5-year contract for the supply of inhibited transformer and switchgear oil by Essential Energy, a major Australian utility. The contract includes the collection and re-refining of all generated PCB (polychlorinated biphenyl) and non-PCB waste oils and is expected to generate over 1 million litres of new transformer oil sales over the life of the contract.  FY16E forecasts suggest £36.7 m revenues and a loss per share of 0.49p

Thu, 18 Aug 2016 09:25:00 +0100
In the news: Metminco, KEFI Minerals & Base Resources Our roadshow schedule from the day after the August Bank Holiday till the end of September is packed. Below we quickly go over the companies we’ll be taking round London.
Week of 30 August — Metminco*†
William Howe, fresh from entering a formal investment agreement for equity funding of US$45m into the Los Calatos Copper Porphyry Project in Peru from CD Capital, is now able to turn his focus onto the recently-acquired Quinchia Gold Portfolio in Colombia and the updated underground mine plan for the Miraflores Gold Project. An updated mine plan and schedule for the underground-only development of Miraflores in Colombia was published on 1 August. Mineable resources were estimated at 4.0Mt, grading 3.51 g/t Au and 2.84 g/t Ag, containing 455,000oz of gold and 368,000oz silver. The schedule was designed to deliver 1,300tpd/475,000tpa to the mill over a mine life of nine years, with steady-state gold production of approximately 50,000oz pa.
Jim Taylor and Imogen Whiteside’s last report on the company can be seen here: Metminco — Agreement to Acquire the Quinchia Gold Portfolio, 7 March 2016.
Week of 12 September — KEFI Minerals†
KEFI is a gold exploration and development company with projects in Ethiopia and Saudi Arabia, focused on developing the 95%-owned Tulu Kapi Project in western Ethiopia. A Mining Licence was granted in April 2015 and a DFS published in July 2015, which has since been materially improved through lower contracted capital and operating costs. The company is aiming to commence construction of the project around the end of 2016; this would allow production to commence in late 2017.
Optimisation of the DFS defined a project with steady-state production of 115,000oz pa at AISC of just under US$750/oz. This was based on a total resource of 1.72Moz, within which probable reserves of 1.05Moz grading 2.12 g/t were defined. The project will be developed as a conventional open-pit mine, with CIL processing delivering around 100,000oz pa over a ten-year period. The company is aiming to put in place the funding to develop the project before the end of 2016 and expects that the total financing requirement will be US$130m. This delivers attractive capital intensity numbers of US$135/oz of gold produced, or US$1,130/oz of annual gold production in the first eight years of operation. At a gold price of US$1,250/oz the project had an after-tax NPV8 of US$118m and an IRR of 22%.
Week of 19 September — Base Resources*†
We updated our valuation for Base Resources last month (Base Resources — Valuation Update, 21 July 2016) as improving near-to-mid-term fundamentals for ilmenite and rutile have led us to revise our pricing assumptions. Our new real price deck comprises long-term forecasts of US$180/t for ilmenite, US$1,050/t for rutile and US$1,350/t for zircon, which represent sustainable prices for of new development. For ilmenite and rutile, we have modelled the LT price running from 2021 onwards, whereas for zircon we anticipate these levels will not be attained until the mid-2020s, in accordance with industry projections. Our revised estimates re-align us with consensus and industry forecasts after we had previously maintained a conservative stance. We have a BUY recommendation and a target price of A$0.30.

Thu, 18 Aug 2016 09:17:00 +0100
VSA Capital Market Movers - KAZ Minerals, Premier Oil, Tullow Oil Kaz Minerals (LON:KAZ) has reported strong half year financials following strong Q2 2016 production results. Group copper cathode equivalent production was up 43% in H1 2016 to 53kt as a result of the contribution from the ramp ups at Bozshakol and Aktogay. Despite the increase in production, revenue of US$302m was down 11% YoY largely due to a 21% YoY decline in average copper prices. Gold production was also up strongly by 143% YoY to 39koz further offsetting weaker copper prices.

Despite weaker grades in the Eastern region down from 2.38% to 2.27% Cu and higher ramp up costs at the new mines, the depreciation of the Tenge, which averaged 86% lower through H1 2016, has had a significant and beneficial impact on costs. Indeed, EBITDA in H1 2016 was up 31% YoY to US$115m and cash cost guidance has been lowered for 2016.

Production guidance has been narrowed to 135-145kt from 130-155kt with the ramp up at Bozshakol set to continue which is crucial to achieving the full year target. Whilst KAZ’s operational performance is currently strong, the earnings outlook likely hinges on the Tenge’s performance, in our view and the stock remains high risk exposure to copper.

Premier Oil (LON:PMO) has announced its results for the six months to 30 June 2016. Operationally PMO performed well, with production flat YoY as it averaged 61kboepd (H1 2015: 60.4kboepd). In addition, record rates of more than 95kboepd were achieved post the period end. This was driven by high production efficiency across its assets, outperformance from the recently acquired E.ON portfolio and additionally the Solan field, which came online during the period and is now set to produce plateau rates. PMO has, therefore, increased its production guidance for FY 2016 to 68-73kboepd.

Revenue for the first six months was US$393.8m (-32% YoY) which is broadly in line with consensus. PMO beat consensus and made a profit after tax of US$167.1m vs loss of US$375.2m in H1 2015. H1 operating costs were US$16.5/boe, 14% below its budget. However, its net debt still stands at a significant US$2.63bn and it remains in discussions with its lenders to ensure it has the financial flexibility to deliver the Catcher project.

With low operating costs and the favourable tax position in the UK from the E.ON assets the Solan field produces important cash flow for PMO to reduce its debt. These results should be well received by the market but PMO’s financial position still lies in the balance. It needs to deleverage and requires an oil price of cUS$50/bbl to do this but we are cautiously optimistic.

Tullow Oil (LON:TLW) has announced first oil on the TEN fields offshore Ghana which has been achieved on time and on budget. TLW estimates the average annualised production in 2016 will be 11kboepd net to the company. A gradual ramp-up in production towards the FPSO capacity of 80kboepd is expected at the end of 2016. This is a significant milestone for TLW.

Thu, 18 Aug 2016 08:28:00 +0100
In the papers: Balfour Beatty, Carlsberg, Legal & General The Times
Fed begins push for rate rise: The chances of a rise in U.S. interest rates as early as next month increased after minutes from the Federal Reserve’s latest meeting showed policymakers in broad agreement that the world’s largest economy is growing at a reasonable pace.
Balfour builds on falling losses to pay dividend: Shares in Balfour Beatty were buoyed by news of an earlier-than-expected return of the dividend yesterday.
Carlsberg tries to learn the craft of lifting store sales: Carlsberg lost market share in Britain in the first half of the year after Tesco delisted the Danish brewer’s core lagers from thousands of its supermarkets.
Norway writes-down U.K. properties: The world’s largest sovereign wealth fund has cut the valuation of its U.K. property portfolio, which includes Regent Street in London, by 5% after the Brexit vote.
Cobham ditches Chief and says £3 million hello to new man: Cobham, the crisis-ridden aerospace group, is to pay a golden hello of up to £3 million to its new Chief Executive.
Loss of Lockwood sends Laird tumbling: Shares in Laird tumbled 7% yesterday as investors counted the cost of the loss of David Lockwood, the Chief Executive widely regarded as rescuing the company from a triumph that had become a millstone around its own neck.
Japan may curb monster yen: Japan renewed its threat to take steps to combat the strength of the yen after the currency broke through the important barrier of 100 against the dollar, its highest since Britain voted to exit the European Union.
Addiction treatment hope boosts Indivior: Shares in Indivior, the specialist pharmaceuticals producer, jumped by almost 9% as the company reported encouraging trial results for its main compound under development, a long-term treatment for opioid addiction.
Russia drops sale of stake in Bashneft oil company: Russia has shelved plans to shore up its finances by selling its controlling stake in Bashneft, a $10 billion oil company.
Discounters miss targets as shoppers go online: The discount store chain Target provided fresh evidence that many American retailers are feeling the squeeze from online competitors and a change in shopping habits.
L&G begins push into U.S. infrastructure in California: Legal & General has invested $100 million in a project to expand one of the University of California’s campuses in the British company’s first foray into infrastructure deals in America.
The Independent
Brexit latest: Airports start exchanging less than one Euro for each Pound Sterling: Certain London airport bureaux de change are now returning less than €1 for each pound offered, underlining how the slide in the value of the sterling since the 23 June Brexit referendum vote is already hitting holidaymakers in the pocket.
Brexit vote fails to stop Londoners eating and drinking out as restaurant sales improve: The uncertainty surrounding U.K.’s vote to leave the EU in June has failed to impact July sales in U.K.’s pubs and restaurant chain as Britons and tourists continued to dine out, new figures reveal.
Deliveroo abandons plan to force ‘absurd’ new contract for staff: Deliveroo riders have been celebrating after the company confirmed it would not force them to sign new contracts agreeing to a trial pay scheme that could see them earn barely half the National Living Wage.
The Daily Telegraph
U.K. to avoid recession and world economy to ‘stabilize’ as Brexit shock passes: Britain’s economy will slow down but should not go anywhere close to a recession, according to economists at credit ratings agency Moody’s, while growth in the rest of the world is also “stabilizing.”
Sage Group employee arrested on fraud charge: The City of London police arrested a Sage Group employee at Heathrow airport on Wednesday on suspicion of conspiracy to defraud, just two days after the FTSE 100 company revealed a data breach.
Cisco to cut 5,500 jobs: Cisco Systems is to cut around 5,500 jobs, representing almost 7% of employees at the world's biggest internet equipment manufacturer.
London Stock Exchange merger now heads to the regulators as Deutsche Boerse seals investor support: The London Stock Exchange’s merger with its German counterpart is now in the hands of the world's regulators after Deutsche Boerse’s shareholders belatedly gave their blessing to the pairing.
Capital Drilling sees signs of recovery in mining sector: The under-pressure mining sector might be seeing flickers of life, services company Capital Drilling has said, after reporting a rise in revenue for the first time in four years.
Former Bank of England heavyweight hired to beef up Office for National Statistics: Britain’s statistics office is recruiting a group of top economic heavyweights to boost its ability to crunch numbers and provide first class information on the health of the economy.
Uber to fight TfL plans forcing drivers to take written English test: Uber, the American taxi-hailing app giant, has started a legal battle with London’s transport authority over plans to force private hire drivers to pass a written exam in English.
Capital warning clouds Admiral's record results: Shares in the insurer Admiral have suffered their worst fall in five years after the firm warned that the market volatility and falling interest rates after Brexit had dented its capital reserves, overshadowing a record set of half year results.
The Guardian
Cancer drug companies cut prices to win NHS approval: Drug companies are slashing the prices of new cancer medicines to avoid having them banned from NHS use, following the closure of the Cancer Drugs Fund.
Public confidence in U.K. economy recovers after Brexit vote, survey finds: The British public’s confidence in the economy recovered in August as the country appeared to shrug off concerns that the Brexit vote would harm prospects for jobs and higher wages.
Proposal to fine tax avoidance enablers lacks teeth, campaigners say: Government proposals to impose heavy fines on banks, accountants and lawyers who market tax avoidance schemes will fail without more resources for HM Revenue & Customs to pursue offenders, campaigners have said.
Daily Mail
Chill out and live a little, Goldman Sachs Boss Lloyd Blankfein tells his interns: Outspoken Goldman Sachs Boss Lloyd Blankfein has urged his interns to 'chill out'. Speaking to an audience of aspiring bankers, the billionaire said young people were too wound up and should relax and enjoy themselves before settling into work.
More than half of U.K. graduates live with parents to pay off debts - and the same number think degree was not worth the fees: More than half of graduates under 25 are facing 'double jeopardy' as crippling debt and unaffordable housing means they are living with their parents after graduating.
Fresh fashion headache for Laura Ashley but booming demand for its furniture: Booming demand for Laura Ashley furniture complete with the company's trademark floral design helped the retail chain offset lacklustre fashion sales.
Daily Express
Gold demand surges amid fears for world economy: Demand for gold jumped in the wake of the Bank of England's decision to cut interest rates earlier this month, the Royal Mint has revealed.
Remainers were wrong! Wages up and unemployment down as Brexit Britain booms: Britain's jobless numbers fell, wages increased and out of work benefits dropped, in a triple whammy of positive news amid the vote to leave the European Union (EU), figures revealed today.
The shocking graph that proves Portugal is gaining on Italy in the economic 'doom loop': Portugal's banks are catching up with Italy in terms of the so-called doom loop measure of fragility. Italian banks have been struggling amid billions of pounds worth of bad loans, but it is also heavily exposed to debt issued by the government.
The Scottish Herald
Trust Chief laments "horrible" environment of rock-bottom U.K. interest rates and bond yields: The manager of the £1.6 billion Murray International Trust has described the U.K. economic environment of record low interest rates and gilt yields as “horrible”, and warned companies will consequently have to raise pension fund contributions.
Loch Ness Spirits launches first ‘single juniper’ Highland gin: A spirits business founded earlier this year by a husband and wife team will later today launch a new “single juniper” gin made on the banks of Loch Ness.
Oil and gas firm hails 'excellent' Shetland well result: Independent Oil & Gas has announced encouraging results from a well it drilled off Shetland where stormy weather posed big challenges.
Spirit of "Scottish samurai" inspires whisky fusion to export success: A blend of Scotch and Japanese whiskies inspired by famous Scottish merchant Thomas Blake Glover has released its third edition amid high demand for the range in export markets.
Subsea specialist creating 28 jobs amid crude price plunge: A company which supplies remote operated units that can be used underwater for tasks such as cutting and dredging is creating 28 jobs after achieving growth in the energy sector.
Beauty therapist returns to Inverurie salon as Owner: An Inverurie beauty spa has been bought out by one if its former therapists in deal backed by Clydesdale Bank. Vikki Mcintee, who first started working at Bajolo seven years ago, has bought the business from Founder Wendy Lobban.
The Scotsman
Record quarterly rise for employment in Scotland: Unemployment in Scotland fell by 26,000 between April and June, with the number of people out of work now at its lowest since 2009.
Fergus Ewing fails to get Brexit response from London: The political bidding post-Brexit continued yesterday but the pleas only confirmed ambitions – they did little in the way of providing clarity on what support farming will get and what it would be in life outside the EU.
Record profits for owner of car dealer Taggarts: Lookers, the motor retailer that owns the Taggarts brand north of the Border, has reported record half year profits after sales jumped by a third.
Climate data outfit Ecometrica enjoys sales surge: An Edinburgh software business that uses satellite data to map the effects of climate change has seen its sales more than double, fuelled by growth in North and South America.
Construction firm Bancon secures £20.5 million contracts: Aberdeenshire-based Bancon Group today announced that its construction division has been awarded contracts worth a total of £20.5 million across both the public and private sectors.
Fork & Field marks latest venture for pubs pairing: A landmark West Lothian pub has reopened following a six-figure investment by a joint venture involving the entrepreneurs behind Edinburgh’s successful Jolly Botanist gin bar.
Builder Bellway ramps up presence north of the Border: Housebuilder Bellway has acquired more than 55 acres of land with a development value of some £120 million as part of its continued expansion across the east of Scotland.
City A.M.
Top think tank says big bucks for graduates may be about to end: The graduate pay premium could come tumbling down over the next few decades, according to the Institute for Fiscal Studies (IFS), with companies unable to carry on offering bumper pay packets for swathes of degree-holders.
Sweet Mercy: Government drops all-out war on sugar but pushes ahead with its soft drinks levy: The government has today scrapped the most draconian measures from its long-awaited childhood obesity strategy, but the Treasury will forge ahead with its levy on soft drinks dubbed the "sugar tax".
There's €1.1 trillion locked up in companies worldwide: Businesses could pad out their cash position if they could unlock some of their easier to access assets, research out today has found.
Telegraph not for sale, say owners after rebuffing approaches from two high-profile media figures: The owners of the Daily Telegraph have reiterated that their newspapers are not for sale after it emerged that two high-profile media figures have approached them about the company this year.
Victoria's Secrets owner L Brands' second quarter results beat expectations: Victoria's Secrets owner L Brands' shares jumped in after-hours trading after it shook off retail industry woes with rising sales and earnings.
Discounting drives biggest online sales growth in 20 months in July as retailers scrap with Amazon over customers: Online sales growth hit a 20-month high in July as summer discounts convinced internet shoppers to click to the checkout.
They've got chemistry: U.K. private equity firm snaps up German catalyst maker: U.K. private equity firm Equistone Partners Europe has announced the acquisition of a majority stake in a German chemical initiators company.
China warns "protectionist" Australia after it blocks investment in energy grid: Beijing warned over its future willingness to invest in Australia, after two Chinese firms were prevented from taking a controlling stake in its largest energy network.

Thu, 18 Aug 2016 08:26:00 +0100
Market briefing: UK markets finished lower yesterday, led by losses in mining sector stocks UK Market Snapshot
UK markets finished lower yesterday, led by losses in mining sector stocks. Admiral Group plunged 7.7%, after the insurer reported a decline in its solvency ratio. Miners, Glencore, Anglo American and Antofagasta shed 2.2%, 2.7% and 2.9%, respectively. Standard Chartered lost 2.5%, following a broker downgrade on the stock to ‘Hold’. Old Mutual slid 2.1%, after a leading broker downgraded its rating on the stock to ‘Neutral’ from ‘Outperform’. On the brighter side, Balfour Beatty advanced 3.0%, after the infrastructure company narrowed its losses for the first half of 2016. CRH rose 0.9%, on the back of news that it might get included in the Euro Stoxx 50 index. The FTSE 100 declined 0.5%, to close at 6,859.2, while the FTSE 250 fell 0.3%, to settle at 17,758.7.
US Market Snapshot
US markets closed in positive territory yesterday, after the Federal Reserve (Fed) meeting minutes indicated that policy makers remained divided for a next month interest rate increase. Urban Outfitters rallied 15.4%, after it posted upbeat results in the second quarter. Power company, Dominion Resources advanced 2.6%. On the flipside, StemCells sank 29.2%, after its CEO, Ian Massey and CFO, Gregory Schiffman announced their resignations as the company plans to merge with Microbot Medical. Staples plunged 7.1%, after the company reported loss in its second quarter. Target dropped 6.4%, as it trimmed its earnings guidance for the full year. Lowe's Cos declined 5.7%, after reporting less than expected earnings in the second quarter. Cisco Systems fell 1.3%, after it announced plans to reduce almost 20.0% of its workforce. The S&P 500 advanced 0.2%, to settle at 2,182.2. The DJIA gained 0.1%, to settle at 18,573.9, while the NASDAQ rose marginally to close at 5,228.7. 
Europe Market Snapshot
Other European markets finished lower yesterday, on Fed rate hike speculations. Finnair plunged 7.8%, as the terrorist attacks in Europe lowered the travel demand. Carlsberg declined 5.2%, after the brewer’s sales slid more than expected in the first half of 2016. ASML Holding shed 4.9%, after the US-based, Intel, stated that it would not use the lithography technology of the company to make its 10-nanometer chips. Linde fell 1.2%, as the company’s merger deal with Praxair, would face hurdles from antitrust regulators. On the contrary, ABN AMRO Group advanced 2.5%, following better than expected profit in the second quarter. The FTSEurofirst 300 index declined 0.9%, to close at 1,341.2. Among other European markets, the German DAX Xetra 30 slid 1.3%, to close at 10,537.7, while the French CAC-40 shed 1.0%, to settle at 4,417.7. 
Asia Market Snapshot
Markets in Asia are trading mostly higher this morning. In Japan, telecom shares, KDDI, Nippon Telegraph & Telephone and SoftBank Group have slipped 1.2%, 2.8% and 3.6%, respectively. Real estate stocks, Mitsui Fudosan, Sekisui House and Daiwa House Industry have lost 2.9%, 2.7% and 3.1%, respectively. On the positive side, financial firms, Mizuho Financial Group, Shinsei Bank and Sony Financial Holdings have gained 0.3%, 3.2% and 3.3%, respectively. In Hong Kong, Tencent Holdings has climbed 6.0%, after it reported a surge in its profit for the second quarter. Lenovo Group has advanced 3.4%, as it posted better than expected net profit for the first quarter. In South Korea, index major, Samsung Electronics has added 2.6%, while Hyundai Motor has eased 1.5%. The Nikkei 225 index is trading 0.2% lower at 16,714.6. The Hang Seng index is trading 1.7% up at 23,180.3, while the Kospi index is trading 0.4% higher at 2,052.6.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.40% or $0.20 lower at $49.65 per barrel. Yesterday, the contract climbed 1.26% or $0.62, to settle at $49.85 per barrel, after the Energy Information Administration reported that US crude oil stockpiles surprisingly decline by 2.5 million barrels for the week ended 12 August 2016.
At 0330GMT today, Gold futures contract is trading 1.18% or $15.90 higher at $1358.60 per ounce. Yesterday, the contract declined 0.58% or $7.80, to settle at $1342.70 per ounce, reversing its gains from the prior session. The Fed minutes indicated that the central bank’s board members were divided on the prospects for raising the key interest rate.
At 0330GMT today, the EUR is trading 0.09% higher against the USD at $1.1299, ahead of the crucial consumer price inflation data for Euro-zone in July, slated to release in few hours. Also, investors would eye European Central Bank’s monetary policy meeting accounts, due to release today. Yesterday, the EUR strengthened 0.09% versus the USD, to close at $1.1289. The greenback lost gains, after the FOMC meeting minutes reduced expectations for an increase in interest rate before the end of the year.
At 0330GMT today, the GBP is trading marginally lower against the USD at $1.3041, ahead of the UK retail sales data for July, set to release today. Also, investors would focus on the US Initial Jobless Claims, due to release later today. Yesterday, the GBP weakened a tad versus the USD, to close at $1.3042. Meanwhile, the UK’s claimant count data unexpectedly declined in July.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after the FOMC meeting minutes indicated that the policy makers would look for more data before deciding on interest rate hike. Yesterday, yield on 10-year notes fell 1 basis point to 1.56%, while yield on 2-year notes lost 2 basis points to 0.74%. Meanwhile, 30-year bond yield eased 2 basis points to 2.27%.

Key Economic News
UK average earnings excluding bonus rose as expected in the April-June 2016 period

In the April-June 2016 period, the average earnings excluding bonus registered a rise of 2.30% on a YoY basis in the UK, compared to an advance of 2.20% in the March-May 2016 period. Markets were anticipating the average earnings excluding bonus to climb 2.30%.
UK average earnings including bonus rose as expected in the April-June 2016 period
In the April-June 2016 period, the average earnings including bonus rose 2.40% on a YoY basis in the UK, meeting market expectations. In the March-May 2016 period, the average earnings including bonus had registered a rise of 2.30%.
UK claimant count rate steadied in July
In July, the claimant count rate in the UK remained steady at a level of 2.20%. Markets were anticipating the claimant count rate to remain unchanged.
Number of unemployment benefits claimants in the UK eased surprisingly in July
In the UK, number of unemployment benefits claimants eased unexpectedly by 8.60 K in July, less than market expectations of an advance of 9.00 K. Number of unemployment benefits claimants had recorded a revised gain of 0.90 K in the prior month.
Employment in the UK climbed in the April-June 2016 period
The employment registered a rise of 172.00 K in the UK, in the April-June 2016 period, compared to market anticipations of an advance of 150.00 K. Employment had recorded a gain of 176.00 K in the March-May 2016 period.
UK ILO unemployment rate steadied in the April-June 2016 period
In the April-June 2016 period, the ILO unemployment rate remained unchanged at a level of 4.90% in the UK. Market anticipation was for the ILO unemployment rate to remain unchanged.
Swiss economic expectations index declined in August
The economic expectations index in Switzerland fell to a level of -2.80 in August. The economic expectations index had recorded a level of 5.90 in the prior month.
FOMC minutes: Members split over need for future interest rate hike
The Federal Open Market Committee's (FOMC) July meeting minutes showed that policymakers were split over the correct time to increase the benchmark interest rate. While some members favoured an early hike in interest rate, others wanted to wait for the flow of data to determine whether inflation was likely to pick up before raising rates.
US mortgage applications slid in the last week
In the US, mortgage applications eased 4.00% in the week ended 12 August 2016 on a weekly basis. Mortgage applications had climbed 7.10% in the previous week.
Japanese investors remained net buyers of foreign bonds in the previous week
Japanese investors remained net buyers of ¥1297.50 billion worth of foreign bonds in the week ended 12 August 2016, from being net buyers of a revised ¥897.20 billion worth of foreign bonds in the previous week.
Japanese exports fell more than expected in July
The exports in Japan slid 14.00% in July on a YoY basis, higher than market expectations for a drop of 13.70%. In the previous month, exports had registered a drop of 7.40%.
Japanese investors became net buyers of foreign stocks in the previous week
Japanese investors remained net buyers of ¥141.40 billion worth of foreign stocks in the week ended 12 August 2016, from being net buyers of ¥243.70 billion worth of foreign stocks in the prior week.
Foreign investors turned net buyers of Japanese bonds in the previous week
Foreign investors turned net buyers of ¥474.80 billion worth of Japanese bonds in the week ended 12 August 2016, from being net sellers of ¥266.30 billion worth of Japanese bonds in the prior week.
Foreign investors turned net buyers of Japanese stocks in the previous week
Foreign investors turned net buyers of ¥94.70 billion worth of Japanese stocks in the week ended 12 August 2016, as compared to being net sellers of a revised ¥492.80 billion worth of Japanese stocks in the previous week.
Japanese merchandise (total) trade surplus declined in July
Japan has reported merchandise (total) trade surplus of ¥513.50 billion in July, from a revised merchandise (total) trade surplus of ¥693.10 billion in the previous month. Market anticipation was for the nation to post a merchandise (total) trade surplus of ¥273.20 billion.
Japanese imports fell more than expected in July
In July, on a YoY basis, imports in Japan eased 24.70%, compared to a fall of 18.80% in the previous month. Markets were anticipating imports to drop 20.00%.
Japanese adjusted merchandise trade surplus narrowed in July
The adjusted merchandise trade surplus in Japan dropped to ¥317.60 billion in July, more than market expectations of a adjusted merchandise trade surplus of ¥167.70 billion. Japan had registered a revised adjusted merchandise trade surplus of ¥336.60 billion in the prior month.
Chinese house price index climbed in July
The house price index in China rose 7.90% in July on a YoY basis. The house price index had risen 7.30% in the prior month.


Thu, 18 Aug 2016 08:20:00 +0100
Fed Officials Split in July on Whether Rate Hike Needed Soon Fed Officials Split in July on Whether Rate Hike Needed Soon

Federal Reserve officials were divided in July over the urgency to raise interest rates again, with some preferring to wait because inflation remained benign and others wanting to go soon as the labor market nears full employment.
"Several suggested that the committee would likely have ample time to react if inflation rose more quickly than they currently anticipated, and they preferred to defer another increase in the federal funds rate until they were more confident that inflation was moving closer to 2 percent on a sustained basis," according to the minutes of the central bank’s July 26-27 policy meeting released in Washington on Wednesday.
“Some other participants viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the committee’s inflation objective would continue, even with further steps to gradually remove monetary policy accommodation,” the minutes also showed.
At the July meeting, the Federal Open Market Committee left the benchmark interest rate in a range of 0.25 percent to 0.5 percent and noted that “near-term risks to the economic outlook have diminished.”
A number of Fed policy makers have suggested in public comments since the last meeting that it will probably still be appropriate to raise interest rates at least once this year, with some indicating a move could come as soon as the FOMC’s Sept. 20-21 gathering.
Investors will listen closely for additional clues on timing when Fed Chair Janet Yellen will speak Aug. 26 at an annual symposium hosted by the Kansas City Fed in Jackson Hole, Wyoming. They put the probability of a rate increase this year at roughly 50 percent, according to the prices of federal funds futures contracts.

David Fuller's view
It is not difficult to make a case for or against a rate hike before yearend.  Those favouring a hike in September cite ‘near full employment’, although on average these are not high-paying jobs.  They also maintain that a rate increase would help savers and the banking sector.  Those favouring a further delay before the next rate hike point to very low inflation.  They are (or should be) more concerned about upward pressure on the USD in the event of a rate hike while economies in other developed countries remain generally weaker.
Of course there are a few other minor factors which some have mentioned but the key point, I believe, is that Fed Chairman Janet Yellen will have the most influential vote.  I see no evidence that she is about to change her cautious stance, but we will know more when she speaks on 26th August, during an annual symposium at Jackson Hole hosted by the Kansas City Fed.   
This item continues in the Subscriber’s Area, where another report is also posted. 

Modi Sends Warning Shot to China, Pakistan on Territory Spat

From the sandstone walls of the 17th-century Red Fort in India’s capital, Prime Minister Narendra Modi sent a warning shot this week to his counterparts in Islamabad and Beijing.
Modi’s reference to disputed territories on Monday during his annual Independence Day speech -- his most high-profile appearance of the year -- signaled that India would become more aggressive in asserting its claims to Pakistan-controlled areas of Kashmir. The region is a key transit point in the $45 billion China-Pakistan Economic Corridor known as CPEC that will give Beijing access to the Arabian Sea through the port of Gwadar.
"This is a recalibration" after Modi’s overtures to Pakistan and China failed to yield results, says Harsh V. Pant, a professor of international relations at King’s College London. It’s also a message to China: "You may be investing a lot in Pakistan, and think that CPEC is a done deal, but without India’s approval you might find it difficult to follow through."
A more vocal India threatens to raise tensions in a region rife with deep-seated historical animosity that has made South Asia one of the world’s least economically interconnected regions. Various insurgents and militant groups threaten both China’s investments in Pakistan and progress in India-controlled Kashmir, where recent violence has killed about 60 people.
While India is more likely to redouble efforts on developing transport links with Iran and Afghanistan than sabotage China-Pakistan projects, the saber-rattling may deal a setback to investor confidence in the region, according to Michael Kugelman, senior associate at the Woodrow Wilson Center in Washington.
“The bottom line is that in a volatile region like South Asia, you don’t need actual aggressive actions to cause economic consequences," he said. “Mere threats can have a very real effect on the economic state of play as well."
In a bold rhetorical move on Monday, Modi overtly referred to the region of Balochistan, a resource-rich, insurgency-riven Pakistani province that is home to the strategic deep-water port of Gwadar. He also mentioned Gilgit, a Pakistan-administered region that borders China and Afghanistan -- the northernmost edge of the planned economic corridor.

David Fuller's view
Unlike China’s rhetoric over its territorial expansion in the South China Sea, Narendra Modi’s remarks do not amount to sabre rattling, in my opinion.  Nevertheless, the rapid economic growth of large nations such as India and particularly China over a number of years also encourages military build-ups, enabling leaders to project their interests with greater confidence.  When big nuclear powers are involved, even a whiff of territorial disputes can unsettle investors.
This item continues in the Subscriber’s Area and includes charts.

Sinking Coast In Louisiana Is a $100 Billion Nightmare for Big Oil

From 5,000 feet up, it’s difficult to make out where Louisiana’s coastline used to be. But follow the skeletal remains of decades-old oil canals, and you get an idea. Once, these lanes sliced through thick marshland, clearing a path for pipelines or ships. Now they’re surrounded by open water, green borders still visible as the sea swallows up the shore.
The canals tell a story about the industry’s ubiquity in Louisiana history, but they also signal a grave future: $100 billion of energy infrastructure threatened by rising sea levels and erosion. As the coastline recedes, tangles of pipeline are exposed to corrosive seawater; refineries, tank farms and ports are at risk.
“All of the pipelines, all of the things put in place in the ’50s and ’60s and ’70s were designed to be protected by marsh,” said Ted Falgout, an energy consultant and former director of Port Fourchon.
Louisiana has an ambitious -- and expensive -- plan to protect both its backbone industry and its citizens from this threat but, with a $2 billion deficit looming next year, the cash-poor state can only do so much to shore up its sinking coasts. That means the oil and gas industry is facing new pressures to bankroll critical environmental projects -- whether by choice or by force.
“The industry down there has relied on the natural environment to protect its infrastructure, and that environment is now unraveling,” said Kai Midboe, the director of policy research at the Water Institute of the Gulf. “They need to step up.”
Every year in Louisiana, more than 20 square miles of land is swallowed by the Gulf. At Port Fourchon, which services 90 percent of deepwater oil production, the shoreline recedes by three feet every month. Statewide, more than 610 miles of pipeline could be exposed over the next 25 years, according to one study by Louisiana State University and the Rand Corporation. Private industry owns more than 80 percent of Louisiana’s coast.
The land loss exacerbates another natural threat: storm-related flooding, like that affecting Baton Rouge now. As days of heavy rainfall caused water to overrun levees along several tributaries this week, Exxon Mobil Corp. began shutting units at its Baton Rouge refinery, the fourth-largest in the U.S. About 40,000 homes in southeastern Louisiana have been affected by the devastating flooding, and at least 11 people have died.
In Louisiana, marshes, swamps and barrier islands can mitigate flooding, soaking up rainfall like a sponge and reducing storm surge. But as the land erodes, storms advance without a buffer, and Louisiana's flood protection systems become less effective. The state estimates that damage from flooding could increase by $20 billion in coming years, if the coastline isn't reinforced.

David Fuller's view
This is an interesting and somewhat worrying article, well worth reading for three perspectives: 1) climate change (they don’t mention it but I would stay well clear of floodplains; 2) oil refiners which are at risk because their processing plants are in coastal areas; 3) the state of Louisiana, with the help of the US Government, really took careless BP to the cleaners over their drilling accident.  This has set a precedent which other governments with needy regions will be tempted to emulate.

Thu, 18 Aug 2016 08:17:00 +0100
Northland Capital Partners View on the City - W Resources W Resources (LON:WRES) – CORP: Placing
Market Cap: £17.6m; Current Price: 0.44p

From yesterday: Additional funding for stage 1
  W Resources has raised £600,000 through the issue of 171,428,569 shares at 0.35p.
  Directors Michael Masterman and Byron Pirola have subscribed for 28,571,428 shares (£100,000) each.
  Following the placing the Company will have 4,168,188,281 shares in issue.
  Following the placing Michael Masterman will hold 23.38% of the Company and Byron Pirola will hold 6.69%.
  Forecasts, rating and price target remain under review.
NORTHLAND CAPITAL PARTNERS VIEW: The £600,000 raised in this placing combined with the US$1.2m forward sales contract facility with ICD Alloys and Metals (announced 16/08/16) will allow W Resources to commence mine development work. The Company also has a US$2m non-binding in principle agreement with ICD to provide equipment finance for the La Parrilla crusher. W Resources remains in discussions regarding equipment finance or debt for the €4.2m for the Jig and Mill and €2.2m for the concentrator.

Thu, 18 Aug 2016 08:14:00 +0100