column http://www.proactiveinvestors.co.uk Proactiveinvestors column RSS feed en Thu, 23 Feb 2017 12:18:12 +0000 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) Today's Market View - Atalaya Mining, BlueRock Diamonds, Bushveld Minerals, Glencore, IronRidge Resources http://www.proactiveinvestors.co.uk/columns/sp-angel/27156/today-s-market-view-atalaya-mining-bluerock-diamonds-bushveld-minerals-glencore-ironridge-resources-27156.html Equities range bound this morning after the Fed minutes showed members see little change in the previously highlighted path in the monetary policy tightening.
• Base metals are trading in the red for a third day amid a correction following a strong run YTD.
• Chinese iron ore and steel futures drop for a second day.
• US$ and gold are little changed.
• Brent is up on the back of the news of a contraction in US crude inventories according to the industry report.

World Trade Organisation deal forecast to boost global trade by $1trpa in biggest reform of global trade in a generation
• The Trade Facilitation Agreement (TFA) should make trade procedures simpler through tariff simplification
• It involves countries signing up to a long list of reforms, including easier access for businesses to information, reduced fees and simpler and faster procedures.
• WTO economists reckon it might cut the cost of trade by 14.3% with developing nations standing to gain the most.
• 110 countries have ratified the TFA.

Gecamines paid $100m to drop objections on China Moly/BHR $3.8bn bid to buy Tenke Fungurume copper/cobalt mine in the Congo
• Gecamines have been paid >$100m as part of a settlement to allow China Moly and BHR Partners, a Chinese private equity firm to buy stakes in the Tenke Fungurume copper, cobalt mine in the Congo.
• The settlement marks the end of a nine-month delay in the acquisition process.
• The deal demonstrates China’s continuing interest in buying copper and cobalt production around the world.
• We expect China inc to remain keen to buy into energy metals as it increasingly looks for self sufficiency and potential market control in these critical metals.
• China already has control of the majority of global production of rare earth metals and appears to be looking to gain greater presence in lithium and other speciality metals where it can use metal supply to direct the location of downstream manufacturing production.

FinnAust to potentially gain from $1.7bn Tronox deal with Cristal
Tronox has agreed to buy TiO2 business off Cristal for $1.7bn in cash plus stock to create world’s largest TiO2 pigment producer
• The combination of the two groups suggests a more positive view of the pigment market with global growth continuing to drive demand
• The two groups will have total capacity of 1.3mtpa representing around 15% of global capacity and taking over the number one spot in terms of production
• Cristal have a TiO2 smelter in Japan which we understand is not yet included in the deal and which is said to have had a troublesome and long commissioning period with new technology being utilised.  It is possible that Tronox may not take up this facility plant till they are happy with the performance of the plant and its technology.  If the Japan plant is able to ramp up production more quickly then it may need to find ilmenite supply from new sources.
• FinnAust’s Pitiffuk project has potentially the highest grade ilmenite in the world and is keen to start dredging this high grade material for export to pigment producers in North America and in China.  We expect to see a maiden JORC resource from FinnAust’s resource consultants relatively soon.

Dow Jones Industrials  +0.16% at 20,776 
Nikkei 225   -0.04% at 19,371 
HK Hang Seng   -0.36% at 24,115 
Shanghai Composite    -0.30% at 3,251 
FTSE 350 Mining   -1.15% at 16,649
AIM Basic Resources   -1.33% at 2,699 

Economic News
US – Jan Fed meeting minutes showed “many participants” agreed that rates should increase “fairly soon” should economic data come in with the Fed forecasts while highlighting risks to growth from uncertainty over potential fiscal changes from new administration.
• “Most participants continued to see heightened uncertainty regarding the size, composition and timing of possible changes to fiscal and other government policies, and about their net effects on the economy and inflation over the medium term, and they though some time would likely be required for the outlook to become clearer,” minutes read.
• Minutes also showed FOMC members agreed to restart talks on available options to reduce the Fed balance sheet suggesting discussions are preliominary in nature with the unwinding of its portfolio not to come any time soon.
• Markets’ reaction to the released minutes saw little changes to implied probabilities of a hike in Mar (34%, down from 38% before the announcement). Chances of a May remained relatively unchanged (62% v 59% before the announcement).
• US stock markets were little changed post the publication of the report.

Date Index Period   Actual Est Previous
Tuesday Markit Manufacturing PMI Feb (Prelim)   54.3 55.4 55
  Markit Services PMI Feb (Prelim)   53.9 55.8 55.6
  Markit Composite PMI Feb (Prelim)   54.3   55.8
Wednesday Existing Home Sales Jan %mom 3.3 1.1 -1.6
  Feb FOMC Meeting Minutes         
Thursday Weekly Jobless Claims   '000   240 239
Friday UoM Consumer Sentiment Feb (Final)   96 95.7
  New Home Sales Jan %mom   6.5 -10.4
Source: Bloomberg

China – Property prices inflation slowed in Jan as state-backed efforts to limit price increases take effect.
• The number of cities that recorded an increase last month fell to the lowest level in a year.
• New house prices climbed in 45 of the 70 tracked cities compared to 46 in Dec. 20 cities recorded a decline with the balance saw no change.
• The PBoC pledged to “strictly limit” the amount of credit made available in speculative housing market, as reported in its Q4 monetary policy report.
• The government is targeting land markets as well constraining funding for developers in an attempt to limit inflation in land prices which hit record highs last years.
• A number of bond issues by developers have been called off on mainland exchanges in Oct with some private equity investments in property projects were banned in key cities, Bloomberg reports.

Germany – Q4 GDP growth was confirmed at 0.4%qoq, up from 0.1%qoq in the previous quarter, taking the FY16 number to 1.9%yoy, the strongest reading in five years.
• Growth is reported to have been driven by strong domestic personal consumption and government spending.
• Net trade acted as a drag in the final quarter with imports growth significantly outpacing an increase in overseas shipments.
• On a less positive note, consumer sentiment is seen weakening with the GfK index hitting the lowest in four months as households highlighted accelerating inflation as risks to outlook.
• Q4 GDP: 0.4%qoq v 0.1%qoq in Q3/16.
• Private Consumption: 0.3%qoq v 0.2%qoq in Q3/16.
• Government Spending: 0.8%qoq v 0.2%qoq in Q3/16.
• Exports: 1.8%%qoq v -0.3%qoq in Q3/16.
• Imports: 3.1%qoq v 0.4%qoq in Q3/16.
• GfK Consumer Confidence: 10.0 in Mar v 10.2 in Feb and 10.1 forecast.

France – Private sector sentiment held at 103 in Feb for the second consecutive month and marked only a marginal slip from five year high of 105 recorded in Dec.
• Yields on sovereign bonds which climbed on the back of the news of growing support for far-right candidate Marine Le Pen broke the three day losing streak yesterday.
• Centrist candidate said he would not participate in elections but would support the Emmanuel Macron candidacy.

Philippines – Mining Industry Coordinating Council will form five technical groups to carry a review of Environmental Department orders to close and suspend 28 mines and prepare recommendations to President Rodrigo Duterte.
• The council will start work in Mar reviewing technical, legal, social, environment and economic aspects of 28 operations.
Environment minister says President Duterte agrees with mining ban in watershed areas
• We could not agree more when it comes to nickel laterite mining and raw ore exports with relatively little environmental consideration.
• The preservation of water quality is essential for local communities and the long term disruption of large areas of sulfidic soils, containing sulphide minerals, is rarely a positive for the local environment.

Currencies
US$1.0559/eur vs 1.0507/eur yesterday.   Yen 113.25/$ vs 113.28/$.   SAr 12.975/$ vs 13.058/$.   $1.246/gbp vs $1.250/gbp.
0.769/aud vs 0.771/aud.   CNY 6.877/$ vs 6.878/$.
Sterling strengthens on Bank of England comments that Brexit process will be smoother than originally predicted

Commodity News
Precious metals:         
Gold US$1,237/oz vs US$1,236/oz yesterday – Russia increases gold reserves to 31.1t
   Gold ETFs 58.7moz vs US$58.7moz yesterday – New Toyota catalysts reported to use 20% less platinum and palladium
Platinum US$995/oz vs US$1,002/oz yesterday
Palladium US$767/oz vs US$781/oz yesterday
Silver US$17.97/oz vs US$18.01/oz yesterday
          
Base metals:   
Copper US$ 5,979/t vs US$6,018/t yesterday
Aluminium US$ 1,875/t vs US$1,872/t yesterday
Nickel US$ 10,690/t vs US$10,815/t yesterday
Zinc US$ 2,832/t vs US$2,857/t yesterday
Lead US$ 2,266/t vs US$2,279/t yesterday
Tin US$ 19,150/t vs US$19,825/t yesterday
           
Energy:           
Oil US$56.5/bbl vs US$56.5/bbl yesterday
Natural Gas US$2.628/mmbtu vs US$2.532/mmbtu yesterday
Uranium US$24.15/lb vs US$24.75/lb yesterday
         
Bulk:   
Iron ore 62% Fe spot (cfr Tianjin) US$89.2/t vs US$90.5/t
McKinsey assessment of the Chinese steel industry joined other pessimistic estimates suggesting the sector is set for a prolonged decline.
• The consultancy expects production to decline every year through 2020.
• “The surprise that happened last year in terms of construction, infrastructure and the real-estate sector is unlikely to repeat itself this year,” McKinsey said during the iron ore conference in Dalian.
• Steel output is forecast to come down from 808mt in 2016 to 760mt by 2020; whereas, demand is expected to fall from 687mt in 2016 to 649mt in 2020.
• “We think there is more uncertainty and volatility in the second half. The PBoC and government has already indicated tighter monetary policy.”

Chinese steel rebar 25mm US$562.4/t vs US$567.4/t
Thermal coal (1st year forward cif ARA) US$67.8/t vs US$67.7/t yesterday
Premium hard coking coal Aus fob US$157.4/t vs US$156.6/t

Tungsten – APT European prices $195-205/mtu

Company News
Atalaya Mining  (LON:ATYM)  149.5 pence, Mkt Cap £174.4m – Acquiring 10% of a second Spanish copper project
• Atalaya Mining reports that it has exercised an option to acquire an initial 10% interest in Cobre San Rafael, which holds the Proyecto Touro copper project located 27km east of the city of Santiago de Compostella in northern Spain.
• The initial 10% interest is costing €0.5m and is part of a phased agreement whereby Atalaya Mining can earn up to 80% of the project by spending a further €2.5m  (for an additional 30%) to bring the project through permitting; a further €5m to earn an additional 30% interest once development capital is in place and construction is underway and a final 10% interest in return for a 0.75% NSR once commercial production is achieved.
• Proyecto Touro was operated by as an open pit copper mine  RioTinto Patino between 1973 and 1986 and Atalaya, in association with its specialist consultants, “has carried out significant drilling, resource evaluation, mine-planning, metallurgical test work, plant engineering and other auxiliary studies to fast track the project to feasibility stage ahead of permitting.”
Conclusion: Now that Atalaya has the Proyecto RioTinto project in southern Spain in full production mode following the successful ramp up to 9.5mtpa, it is encouraging to see them bring their expertise in mine refurbishment and operations to bear on another historic Spanish mine. We look forward to further news as the feasibility and permitting work progresses.

BlueRock Diamonds* (LON:BRD) 4.3p, Mkt Cap £2.4m – Former BloeRock ceo claims without merit    
• BlueRock Diamonds have received a number of financial claims from Riaan Visser the former ceo of the company.
• Visser claims that two creditor balances, which are not in his name, are amounts owed to him.
• The claims amount to the rand equivalent of around £232,000 which Visser claims are related to advances made by him to KML and expenses paid by him on behalf of KML for use of a generator owned by the company and controlled by Visser.
• The company has requested further information but has not received responses or a legal claim.
• Local legal advice indicates the claims are without merit.
• We expect to see news on diamond processing rates and recovery shortly
*SP Angel acts as Nomad & Broker to BlueRock Diamonds

Bushveld Minerals (LON:BMN) 2.9 pence, Mkt Cap £20.2m – Changes to BEE structure and shareholding
• Jaxson 640, a qualifying BEE company has agreed to acquire an effective 21.2% stake in Vametco from its previous BEE partner for ZAR47m ($3.6m).
• The transaction is conditional on completion of Bushveld’s acquisition of the Vametco assets from Evraz, consent from the funding bank in relation to this matter and a number of other related issues.
• Jaxson 640 is led by Bill Chipane who is well known to Bushveld Minerals and who has been a consultant to the group for some time.
• Many further details are given in the company’s press release on the transaction.
Conclusion:  Introduction of a BEE partner of Bushveld’s choice should help ensure alignment among the shareholders in the management of Vametco once the main transaction between Bushveld and Evraz completes.
*An SP Angel mining analyst and nomad have visited the Vametco vanadium mine and processing facilities in South Africa.

Glencore (LON:GLEN) 335 pence, Mkt Cap £48.2bn –2016 Results and dividend
• Glencore reports a substantial turn around in attributable net income in 2016  to US$1,379m reversing a loss of US$4,964m in 2015.
• At the EBITDA level, adjusted EBITDA rose by 18% to US$10,268m with the breakdown dominated by metals and minerals (up 43% to US$7,616m) with a further US$2,462m from energy products (down 20%) and the group’s agricultural interests dipping by 19% to US$592m.  Corporate costs were reduced from US$445m in 2015to US$402m.
• The US$7,616m contribution of the metals and minerals business comprised US$1,586m from marketing with the remaining US$6,030m from the industrial activities. The company points out that minerals marketing “reported a solid earnings increase, supported by improved demand fundamentals, notably in China. Indications in early 2017 reflect a continuation of these positive fundamentals. [and] 2016 is likely to be remembered as the year in which industrial metals found their cyclical floor”.
• In the mining business itself, the company reports a 46% improvement in EBITDA to US$3,333m and an EBITDA margin improvement from 23% to 38% for its copper operations.  Zinc operations improved EBITDA by 79% to US$1,916m improving the margin from 18% to 33% while EBITDA for the nickel operations declined by US$26m to US$427m though margins were maintained at 22% (2015 – 23%).
• Individual operations throughout the copper and zinc businesses all registered improved EBITDA with the African copper businesses improving from US$51m to US$264m and Kazzinc more than doubling EBITDA from US$490m to US$989m.
• The CEO, Ivan Glasenberg, noted that “Since our IPO in 2011 and subsequent acquisition and integration of Xstrata, Glencore has never been so well positioned as it is today.”
• A 41% reduction in capital expenditure to US$3,497m and US$5.9 bn of net disposals, including Tampakan and Falcondo, the $3.1bn disposal of agricultural interests and the Hunter Valley coal rail haulage business for US$840m, helped to deliver a 40% (US$10.4bn) decline in net debt to US$15,526m.
• Glencore characterises itself as “Uniquely diversified by commodity and geography”.
• The company is recommending a 7 cents per share dividend, for a total distribution of US$996m,  involving payments, each of 3.5cents/share, in May and in September.
Conclusion: Glencore has significantly turned around the company’s debt position through a combination of asset disposals and rigorous cost control at the continuing operations. Among the operating mining businesses, the copper operations are contributing almost 45% of EBITDA from, mainly, South American and African operations.

IronRidge Resources (LON:IRR) 23p, Mkt Cap £54.8m – Rock chips in Chad show interesting gold grades
• IronRidge in conjunction with Tekton Minerals have released details of work done on the Dorothe gold prospect in Chad.
• The work to test a 3x1km artisanal gold target and vein swarm shows rock chips grading 34g/t, 3.8g/t, 2.4g/t and 1.9g/t of gold.
• The team have started a 4km trenching program to test the mineral zone as already defined by artisanal workings.
• The work should be accelerated by the use of a 20t excavator in this dry terrain.
• Am Ouchar; previous trench samples at the Am Ouchar prospect showed 20m grading 6.8g/t, 16m at 4.7g/t and 12m at 5.7g/t gold.
• Critically, the results from trenching at Am Ouchar is said to show potential structural repetitions, which is the sort of thing that gets geologists and miners excited as it can potentially lead to much larger and more valuable resources due to the potential concentration of higher-grades often near surface.
• The full press release shows detailed maps showing the placing and results from sampling and trenching and the direction of veins on the Dorothe prospect.
• Echbara:  follow-up trench re-sampling at the 2km Echbara project which lies just 25km west of Dorothe confirms former UNDP results at 58m grading 1.29g/t and 28m at 1.29g/t Au.
• Nabagay: interestingly, the team have discovered auriferous quartz vein material up to 34.1g/t gold within a new target area without any previous occurrence data nor artisanal workings.  This demonstrates a certain amount of skill in understanding and interpreting the local geology.
o The company reported a cash balance of A$7.6m at end Dec.
Conclusion:  It’s still early days in terms of resource definition and discovery on these projects in Chad.  Today’s press release demonstrates the skilled and professional nature of the work being done by the IronRidge and Tekton teams.  The results look relatively good for this type of work and may well indicate valuable gold resources to come.  IronRidge are supporting the Tekton team because they see greater value and potential in the prospects described and are prepared to dedicate cash and resources to its further delineation.  We look forward to further results in anticipation.

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Thu, 23 Feb 2017 10:58:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27156/today-s-market-view-atalaya-mining-bluerock-diamonds-bushveld-minerals-glencore-ironridge-resources-27156.html
Northland Capital Partners View on the City - Edenville Energy http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27155/northland-capital-partners-view-on-the-city-edenville-energy-27155.html Edenville Energy (LON:RDL) – CORP: Secured wash plant
Market Cap: £7m; Current Price: 0.85p

Secured wash plant and crusher
  Edenville Energy has acquired a coal wash plant and a crusher for its Rukwa Coal Project, located in Tanzania. It has also appointed a wash plant engineer.
  The wash plant has been inspected by an independent engineering and was selected after extensive evaluation of alternative options.
  The plant is modular and can be transported to site in containers.
  The acquisition is expected to close following the GM - 17/03/13, after this it will be shipped to site.
  The Company plans to ship the crusher to site at the same time.
NORTHLAND CAPITAL PARTNERS VIEW: Edenville Energy is wasting no time after it secured the necessary finance it has acquired a coal wash plant and crusher just three days later. The wash plant, which is based on dense media separation, will allow the Company to produce a number of products increasing the number of potential customers for its coal.

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Thu, 23 Feb 2017 09:02:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27155/northland-capital-partners-view-on-the-city-edenville-energy-27155.html
Breakfast News -AIM Breakfast : IronRidge Resources, StatPro, Empyrean Energy and Ferrum Crescent http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/27154/breakfast-news-aim-breakfast-ironridge-resources-statpro-empyrean-energy-and-ferrum-crescent-27154.html Dish of the day

No NEX Growth Market Joiners Today

Off the menu

No NEX Growth Market Leavers Today


 
Dish of the day

No AIM Joiners Today

Off the menu

No AIM Leavers Today

 

What’s cooking in the IPO kitchen?

Sealand Capital— Publication of prospectus regarding the Reverse Take Over of SecureCom. The business of the Target is the operation of Metalk, a secure mobile communication software application that serves corporate executives and business people across the APAC region . Raising £1.4m at 20p. Readmission to Standard List expected 28 Feb.

Anglo African Oil & Gas— Admission expected early March. Acquiring stake in producing near offshore field in the Republic of the Congo.

Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play

Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime.  Issue closing 23 Feb.

Breakfast buffet

Ferrum Crescent (LON:FCR) 0.19p £4.08m

The metals developer, announced the results from its internal soil geochemistry and channel sampling at the Toral project, Spain. Detailed mapping, sampling and remodelling work carried out over the last three months has yielded positive zinc results.  The Company also announced a limited, shallow diamond drilling programme to target mineralised zones within 200 metres of the surface, which is expected to commence in Q2 2017. Various mineralisation styles near surface, including: 0.9m @ 10.5% Zn & 2.5% Pb average achieved on main structure within Adit 49, and 1.2% Cu, 6.5% Zn & 13.5% Pb returned from a 1.2m channel sample in Adit 54. 13 hole drill programme plan generated to intersect shallow untested targets within the  main anomalous area.

Fitbug Holdings* (LON:FITB) 0.16p £2.8m

The digital wellness provider for corporate organisations, yesterday announced a new contract for a one year programme to serve select UK-based employees of an international FMCG (Fast moving Consumer Goods) company. This programme will be administered in collaboration with Olympic gold medallist Sally Gunnell, OBE.

Fitbug can confirm an initial contract value of £36,000 in revenue, but client confidentiality does not allow for the disclosure of further details at this time.

Tristel (LON:TSTL) 150p £63.6m

HY Dec16 results form the manufacturer of infection prevention, contamination control and hygiene products. Revenue up 22% to £9.75m. Overseas sales up 45% to £4.2m, representing 43% of total sales (2015: 36%). Adjusted EPS before share based payments up 14% to 3.30p. Interim dividend of 1.40p per share (2015: 1.14p), an increase of 23%. Cash of £3.9m (2015: £4.3m) post £1.1m for acquisition. Strategic targets remain achievable including 10-15% average rev growth over next 3 years,  to attain a profit before tax and share based payments margin of at least 17.5%, whilst investing in future growth and to return cash that is surplus to the operational and investment needs of the business in the form of special dividends. FYJun17E rev £19.57m and £3.61PBT, div 3.43p.

Empyrean Energy (EME.L) 3.5p £7.76m

The oil and gas company has received the second and final tranche of $2.6m relating to the sale of its  3% working interest in the Marathon Oil operated Sugarloaf AMI. Negotiations with international and domestic contractors for the acquisition of 3D seismic for the Company's recently acquired 1,800 km2 offshore China conventional Pearl River Mouth Basin Project are progressing well.  Empyrean hopes to finalise negotiations with a view to commencing the programme in Q2. The Project, approximately 200km South East from Hong Kong, is directly South of a large producing field and importantly contains a further ten leads which have been mapped and that will require follow up exploration work. 

StatPro Group (LON:SOG) 90.5p £58.57m

The provider of cloud-based portfolio analysis and asset pricing services for the global asset management industry, has increased its shareholding in Infovest Consulting (Pty) Ltd, a South African headquartered software provider, specialising in data warehouse, ETL and reporting software for the asset management industry, from 51.0% to 72.7%. The consideration for the additional 21.7% shareholding was ZAR 19.1 million (£1.2 million) in cash. Expected to be earnings enhancing in the current year. The multiple is just under eight times EBITDA. “Since we took a majority share on 1 March 2016, Infovest has experienced a 77% revenue growth and 130% profit growth.” FYDec17E £38.67m and £3.33m PBT.

Global Invacom Group (LON:GINV) 7.75p £20.12m

FYDec16 results from the  fully integrated satellite equipment provider. Revenue US$127.3 million (FY2015: US$129.1 million) including first full-year contributions from U.S. subsidiary Global Skyware. Gross profit improved 4.5% to US$26.0 million (FY2015: US$24.9 million). Loss after tax US$2.7 million following restructuring of Chinese manufacturing facilities (2015: US$1.1 million loss). Cash and equivalents  stood at US$7.9 million. Net cash generated from operating activities was US$3.2 million compared to US$0.5 million used in operating activities for FY2015; offset by the purchase of property, plant and equipment and the repayment of shareholder loans. Closely monitoring effect of recent political changes on international trade.

Monitise (LON:MONI) 2.62p £60.16m

HYDec16 results from  the digital technology group specialising in financial services. Revenues down from £33.4m to £28.2m but turnaround from £30.2m EBITDA loss to £0.3m profit. Cash £27.3m from £42.1m at year end. FY revenue decline expected but capital spending to reduce and focus moving to the Company’s FINkit platform which ‘solves the challenge banks face when seeking to accelerate the delivery of compliant digital services to their customers.‘  FYJun16E rev of £58.9m and £16.1m pre-tax loss.

Koovs (LON:KOOV) 45.5p £79.8m

The fashion-forward business focused on the young Indian e-commerce market  has partnered with Masaba Gupta to launch its latest collaboration of sporty athleisure wear, Masaba X KOOVS. The daughter of legendary West Indies cricketer Viv Richards and Bollywood actress Neena Gupta, Masaba not only has an unparalleled pedigree in India, but is also the go-to designer for many Bollywood stars, renowned for her impeccably-cut feminine shapes and unconventional fun prints.  The launch follows Koovs recent nine-months trading statement with sales up 101% year on year to £13.45 million, over 100% growth in web visits and social followers, and mobile transactions up by 151%.

IronRidge Resources (LON:IRR) 22.62p £53.9m

Exploration update on its project portfolio in Chad, Central Africa.  4km trenching programme commenced at the Dorothe gold prospect to test the broader 3x1km mineralised zone defined by extensive artisanal workings. Reconnaissance rock chip sampling at Nabagay returns results of 34.1g/t, 3.76g/t, 2.53g/t and 1.9g/t gold over a newly defined target from the regional structural interpretation. "The structural interpretation has been vindicated by a grass-roots gold anomalies without the presence of artisanal workings and provides a valuable platform for future exploration growth."

BOS Global (LON:BOS) 7p £4.7m

The software developer focused on optimising employee/individuals' productivity, provided a sales update following the launch of its first cloud-based productivity apps, BOS Meet and BOS Automate.  Over 200 BOS Meet and BOS Automate seats subscribed for in Australia and the UK since the products were launched in December 2016 and January 2017 respectively.  An Australian multi-national company has subscribed for 100 seats of both products. Agreement entered with London based reseller.  This positive reception bodes well for the launch of our BOS 360 Work Patterns platform as a service, which is planned for May 2017.

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Thu, 23 Feb 2017 08:40:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/27154/breakfast-news-aim-breakfast-ironridge-resources-statpro-empyrean-energy-and-ferrum-crescent-27154.html
VSA Capital Market Movers - Millennial Lithium, Glencore and KAZ Minerals http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27153/vsa-capital-market-movers-millennial-lithium-glencore-and-kaz-minerals-27153.html Millennial Lithium (CVE:ML)
Millennial Lithium has announced that it intends to complete an equity placing of C$8.7m at a price of C$1.45 per share (6m shares), a discount of 4% to the last close. For each share purchased investors will receive one half common share purchase warrant. This will entitle the holder to purchase one common share a t a price of C$1.9 for a period of 24 months from the closing date.

Proceeds will be used to advance the Pastos Grandes project, in Argentina, particularly drilling and process and evaporation trials engineering as well as working capital. ML indicates that the full placement would enable a PEA to be completed.

Please click here for our recent initiation.

We reiterate our Speculative Buy recommendation.

Glencore (LON:GLEN)
Glencore has announced modestly improved results for 2016. Revenues of US$153bn were up 4% YoY while adjusted EBITDA of US$10.3bn was up 18% YoY. EBITDA for energy products and agricultural products were down 20% and 19% YoY to US$1.5bn and US$138m respectively. This was despite the recovery in oil prices. However, the recovery in metals prices meant that the improvement in EBITDA in the metals division of 43% YoY to US$6bn more than offset weakness in other divisions. Net income of US$1.9bn was up 48% YoY. GLEN reduced net debt by 40% YoY to US$15.5bn, below the published target, while capex was down 41% YoY to US$3.5bn. GLEN announced a dividend of US$0.07/sh.


KAZ Minerals (LON:KAZ)
KAZ Minerals  has announced strong results driven by a combination of rising copper and gold prices as well as a strong operational performance. Revenue of US$969m was up 43% YoY as copper production of 140kt was up 73% YoY and gold production of 120koz was up 245% YoY, ahead of guidance. Group net cash costs of US$0.59/lb were down 46% YoY, driven by the significant by product credit contribution. Consequently EBITDA of US$492m was up 136% YoY. Net income of US$180m reversed a loss of US$10m in the prior year. KAZ has opted to not pay a dividend given the ramp up of Aktogay and Bozshakol, which drove the increase in production, is ongoing. We note that net debt increased 18% YoY to US$2.7bn owing to continued pressures from expansionary capex. However, with the ramp ups progressing well, KAZ appears to be on track to reducing its operating leverage.

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Thu, 23 Feb 2017 08:29:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27153/vsa-capital-market-movers-millennial-lithium-glencore-and-kaz-minerals-27153.html
Le Pen Wins Over Women Voters Who Feel Left Behind in France http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27152/le-pen-wins-over-women-voters-who-feel-left-behind-in-france-27152.html French women are starting to picture their next president as a divorced mother of three.
The anti-euro, anti-immigrant candidate Marine Le Pen has been playing up her gender as she seeks to convert a likely first-round victory into an overall majority in the run-off on May 7 -- and it’s paying off. The 48-year-old National Front leader has already rallied some 2 million additional female voters to her cause since her last run for president in 2012 and she’s betting more will follow.
“Women are the key,” said Nonna Mayer, a researcher at the Sciences Po institute in Paris who has studied the National Front for 25 years. “These women often abstain and now they are backing Le Pen to protect their jobs and their security.”
While women make up just over half of the electorate in France they are far less likely to turn out than men, offering a well of untapped support for the candidate who manages to tune into their concerns. Le Pen’s pitch weaves together concerns about immigration, security, and the economic decline of many white French communities into a potent populist brew that borrows freely from U.S. President Donald Trump, blaming “the elite” for the problems of ordinary voters.
In 2012 Le Pen lagged behind with female voters, winning 17 percent compared with 20 percent of men’s ballots. Now she’s closed that gender gap, attracting 26 percent of voters of both sexes, according of pollster Ifop. That makes her the favored candidate among women for the first round.
“What she is proposing is really different, just like Trump offered something really new,” said Cindy Blain, a 27-year-old pharmacist in the rural north east of France. “Maybe if we see Trump succeed, then voters will give her a chance.”
The prospect of a populist president committed to taking France out of the single currency pushed the spread between French 10-year bonds and similar-maturity German bunds to its widest in more than four years on Wednesday. The risk premium dropped 3 basis points to 76 basis points at 5:24 p.m. Paris time after earlier reaching 84 basis points.
Asked if she was concerned about the risks involved in Le Pen’s plan to leave the euro, Blain brushed the question off with a flick of her hand, as if swatting away a fly.
Le Pen’s bid for women’s votes is clear: on Feb. 4 she began distributing 4 million copies of a glossy, magazine-style brochure that set out her plan to “defend French women” as the country’s first female president. The pamphlet was interspersed with pictures of her navigating “the world of men” as a sister, mother, lawyer, sailor and political leader and included a promise to be a shield against Islamic fundamentalists who, she said, want to stop women “wearing a skirt, going to work or to the bistro.”
“This is not a feminist vote,” Mayer said.
Le Pen sent another signal to the voters Tuesday on a visit to Beirut, when she refused to wear a head scarf to meet with a senior Muslim official, who insisted she don one. With neither side backing down, she left without seeing him.

David Fuller's view
This is a fascinating situation, partly because Le Pen is the candidate for a protest vote, not least because she is the only anti-EU candidate at a time when it is less popular than ever in France, and also because she is a single woman via divorce and the mother of three children.  If Le Pen can attract the woman’s vote (and why not?) the second May election may be a lot closer than pundits currently think.   Presumably all the other candidates who are pro-EU will do everything they can, by hook or by crook, to stop her.  That may backfire.   
(See also: Markets Are Right to Take a Le Pen Presidency Seriously, also from Bloomberg, plus Tuesday’s lead article)

Trump Eyes Easing Obama Rules for Sprawling Pipeline Network
Here is the opening of this article from Bloomberg:

The hints of a pipeline spill are subtle: the hiss of rushing fluid, a streak of rainbow sheen. Tucked far below ground, a ruptured line can escape notice for days or even weeks, especially in the backcountry, where inspectors rarely venture.
Regulators in the waning hours of the Obama era wrote rules aimed at changing that, and the industry is looking forward to the new administration rolling them back. The Pipeline and Hazardous Materials Safety Administration “has gone overboard,” said Brigham McCown, a former head of the PHMSA who served on President Donald Trump’s infrastructure transition team. “They built a Cadillac instead of the Chevrolet that Congress told them to build.”
The oversight agency, an arm of the U.S. Department of Transportation, is just one of many where Barack Obama’s policies are in the Trump team’s sights. The battle lines are predictable, with companies on one side and safety and environmental activists on the other. What’s particularly worrying the latter is timing, because the rules could be upended as new shipping routes go into service across the country.
The president, a fan of fossil fuels, has revived two controversial pipelines, TransCanada Corp.’s Keystone XL and Energy Transfer Partners LP’s Dakota Access. They would add 2,300 miles (3,700 kilometers) to the U.S. network with room to transport 1.1 million barrels a day. As it is, there are more than 200,000 miles of pipe cutting across the country carrying crude, gasoline and other hazardous liquids -- about 18 billion barrels worth annually. Many other projects are on the map; in Houston alone, planned lines are expected to increase capacity by 550,000 barrels a day in the next few years.
“I’m terrified about what is going to happen under Trump,” said Jane Kleeb, president of the Bold Alliance, a coalition of groups opposing Keystone XL. “My worry is that they will just budget-starve PHMSA.”
Read More: Why Keystone counts
While Obama was president, the PHMSA budget grew by 61 percent. Then, seven days before Trump’s inauguration, the agency finalized a ruletoughening up inspection and repair demands, mandating, for example, that companies have leak-detection systems in populated areas and requiring they examine lines within 72 hours of flooding or another so-called extreme weather event. The American Petroleum Institute, the oil and gas industry’s main trade group, characterized it all as overreaching and unnecessary.


David Fuller's view
The extraction of industrial resources from the earth has always been a messy business.  Pollution risks remain although they are declining in the 21st Century, thanks to technology, regulation and more sensible management.
Effective energy independence is a key aspect of the USA’s long-term GDP growth potential.  It means that the USA can produce more energy domestically when prices are higher, perhaps even selling some excess capacity, or increase imports of energy when they are lower.  An effective pipeline system is necessary for energy efficiency in a large country such as the USA.

The Weekly View: Ride the Bull, But Do Not Chase It
My thanks to Rod Smyth for his excellent timing letter, published by RiverFront Investment Group.  Here is a brief sample:
Our advice to investors is to “ride the bull” but not to chase it.  We believe the bull market in global stocks reflects the recovery in global economic and earnings growth, which we think will continue in 2017.  Our strategic allocation process recently reaffirmed our strategic preference for stocks over bonds, and this is currently reflected across our asset allocation portfolios.
That said, we do not see this as a time to take above-normal risk by chasing the current bull market.  Our strategic process reminds us that US stocks are above trend, and with sentiment so optimistic, we think the pace of returns is likely to moderate.  As you can see from the chart above, the 200-day moving average is rising (a good thing, in our view), but the index is now at the top of its rising band, with the 200-day moving average at the bottom of the band.  Our balanced portfolios are close to their strategic targets and have sufficient cash and bonds to take advantage of a pullback should it occur.


David Fuller's view
This strategy makes sense to me.
This item continues in the Subscriber’s Area, where a PDF of The Weekly View is also posted.

Video commentary for February 22nd 2017

Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.

Big Batteries Coming of Age Prompt Bankers to Place Bets

This article by Joe Ryan and Brian Eckhouse for Bloomberg may be of interest to subscribers. Here is a section:
“Having big money come in is the first step to widespread deployment,” Brad Meikle, a San Francisco-based analyst for Craig-Hallum Capital Group LLC, said in an interview.

That’s a shift from many of the storage projects we’ve seen to date as expensive components and unproven revenue potential made commercial lenders leery. Developers typically have financed systems from their own balance sheets, cobbling together revenue from short-term utility contracts or wholesale electricity markets.

“We see an opportunity in the space,” Ralph Cho, Investec’s co-head of power for North America in New York, said in an interview. “We’re attempting to be a first mover.”

Storage contracts to date in the U.S. and Canada rarely exceeded three years, said Bryan Urban, head of North American operations for the Yverdon-les-Bains, Switzerland-based storage developer Leclanche SA. Now utilities are signing agreements for three to seven years, and sometimes as long at 10 years, he said. And in the U.K., National Grid Plc is signing four-year contracts for storage services


Eoin Treacy's view
One of the most popular statistics quoted is that solar cells are rapidly approaching competitiveness even with coal. However that does not solve the intermittency problem. A better question is when will batteries be competitive with the cost of maintaining coal fired backup supply for inevitable demand surges? That is a question we should be able to answer soon as the number of utility scale batteries in operation increases.

The Mark Zuckerberg Manifesto Is a Blueprint for Destroying Journalism

This article by Adrienne Lafrance for The Atlantic may be of interest to subscribers. Here is a section:
In other words, Facebook is building a global newsroom run by robot editors and its own readers.

This strategy may be right for Facebook, which has a strong track record of predicting what its users want. You certainly don’t rake in nearly $9 billion a quarter by building something people aren’t interested in. But if journalism is an indispensable component of the global community Zuckerberg is trying to build, he must also realize that what he’s building is a grave threat to journalism.

“A strong news industry is also critical to building an informed community,” Zuckerberg wrote in his manifesto. “There is more we must do to support the news industry to make sure this vital social function is sustainable—from growing local news, to developing formats best suited to mobile devices, to improving the range of business models news organizations rely on.”

There is more Facebook must do. But what? Lip service to the crucial function of the Fourth Estate is not enough to sustain it. All of this is the news industry’s problem; not Zuckerberg’s. But it’s also a problem for anyone who believes in and relies on quality journalism to make sense of the world.


Eoin Treacy's view
I’ve been ruminating over the last couple of weeks on the role of journalism in modern society. This bell curve of where news organisations fall on the political spectrum is a testament to the tendency of journalists to write for well-defined demographics in service to the maxim “Give the people what they want”, or at least some of the people.

Deviations From Covered Interest Rate Parity

I found this report by Wenxin Du, Alexander Tepper and Adrien Verdelhan for the National  Bureau of Economic Research to be fascinating and commend it to subscribers. Here is a section:
In this paper, we examine the persistent and systematic failures of the CIP condition in the post crisis period. After formally establishing CIP arbitrage opportunities based on repo rates and KfW bonds, we argue that these arbitrage opportunities can be rationalized by the interaction between costly financial intermediation and international imbalances in funding supply and investment demand across currencies. Consistent with this two-factor hypothesis, we report four empirical characteristics of the CIP deviations. First, CIP deviations increase at the quarter ends post crisis, especially for contracts that appear in banks’ balance sheets. Second, proxies for the banks’ balance sheet costs account for two-thirds of the CIP deviations. Third, CIP deviations co-move with other near-risk-free fixed income spreads. Fourth, CIP deviations are highly correlated with nominal interest rates in the cross section and time series.

Looking beyond our paper, we expect a large literature to investigate further the CIP deviations. The deviations occur in one of the largest and most liquid markets in the world after the crisis in the absence of financial distress, suggesting that other arbitrage opportunities exist elsewhere. While trading in exchange rate derivatives is a zero-sum game, the CIP deviations may have large welfare implications because of the implied deadweight cost borne by firms seeking to hedge their cash flows. Furthermore, the existence of CIP deviation introduces wedges between the interest rates in the cash and swap markets, which affects the external transmission of monetary policy. The welfare cost of the CIP deviation is behind the scope of this paper; it would necessitate a general equilibrium model. Yet, even without such model, the CIP condition is a clean laboratory to test the impact of financial frictions in a very general framework. In this spirit, we present the first international evidence on the causal impact of recent banking regulation on asset prices. We expect more research in this direction in the future.


Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area. When aberrations appear in what is by definition a zero-sum game it is certainly a topic worthy of further study. This is a subject likely to be of particular interest to large institutional traders where a move of 10s of basis points can be multiplied by weight of money and leverage.

The Chart Seminar 2017


Eoin Treacy's view
The Chart Seminar 2017

Our venues for the 48th year of the seminar are:

Singapore April 12th and 13th at the M Hotel
London November 16th and 17th TBA

The CFA Institute has once more agreed to co-host the Singapore event and I will also provide certificates for continuous professional development to anyone who wants one.

I now also have some copies of the Mandarin edition of Crowd Money so please specify which version you would like to receive at the seminar when booking.

If you are interested in either of these venues or would like to suggest a venue please contact Sarah at sarah@fullertreacymoney.com  I would be more than happy to plan a US based seminar next year if we have the critical mass to make it viable and I will be stopping off in Japan on the way back from the seminar in Singapore if there is any interest for an event in Tokyo.

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

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Thu, 23 Feb 2017 08:23:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27152/le-pen-wins-over-women-voters-who-feel-left-behind-in-france-27152.html
Beaufort Securities Breakfast Alert: Ferrum Crescent, Hummingbird Resources, SerVision and Barratt Developments http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27151/beaufort-securities-breakfast-alert-ferrum-crescent-hummingbird-resources-servision-and-barratt-developments-27151.html "The Dow Jones notched up its 9th consecutive all-time high last night, buoyed by Du Pont shares spiking on the news that it is likely to win conditional approval for its proposed US$130bn merger with Dow Chemicals. By comparison the S&P 500 and NASDAQ closed with fractional losses, as Fed Minutes appeared to keep the expectation of a hike at the next two-day FOMC meeting stating on 15th March alive, while slipping commodity prices also saw mining stocks under pressure. Asia was weaker across the board, although a range-bound the Nikkei recovered most of its early losses after the Yen weakened against the US$ following the BOJ's Kiuchi voicing concern over Trump's reflationary and growth programmes; the region's other principal bourses fell more convincingly albeit on relatively light volumes. London continued to be dominated by individual corporate stories, with stronger than expected earnings reports emerging from Lloyds Banking Group (LON:LLOY), Barratt Developments (LON:BDEV)and UBM (LON:UBM) keeping the main indices pointing upward, while Unilever (ULVR.L) also spiked higher as its management responded to a view that it is 'not a case of if, but when' Heinz will return with a second merger proposal by increasing its guidance for margin growth and promising to capture value for shareholders more quickly. Traders also warmed to the second estimate of UK GDP from the ONS showing that growth advanced 0.7% sequentially in the fourth quarter, slightly faster than the 0.6% growth estimated on January 26th and higher than level achieved in the third quarter. Indeed, firm consumer sentiment, continuing low interest rates and a weak pound are now suggesting consensus expectations of just 1.4% for 2017 could now be slightly too low, although a beady eye is still being kept on the inflationary effects of higher input costs. Other than the CBI Distributive Trades Survey for February and CML Mortgage lending numbers, there is little significant macro news due from the UK today, although a large batch of US data, ranging from Initial Jobless, Housing Prices and the Chicago Fed National activity Index, will be accompanied by a speech from the Fed's Dennis Lockhart. A large number of UK corporates are due to release earnings or trading updates this morning, including Barclays (LON:BARC), BAT (LON:BATS), Centrica (LON:CNA), Glencore (GLEN.L), Howdens (LON:HWDN) and RSA Insurance (LON:RSA). With most portfolio managers already having positioned themselves ahead of the President's next major announcement, which is expected to come with next Tuesday's State of the Union Address, London is seen opening quietly unless that emerges any significant surprises from scheduled corporate releases, leaving the FTSE-100 between flat and 5 points firmer in early trade."
- Barry Gibb, Research Analyst

Europe
The FTSE-100 finished yesterday's session 0.38% higher at 7,302.25, whilst the FTSE AIM All-Share index gained 0.03% to stand at 909.47. In continental Europe, the CAC-40 finished up 0.15% at 4,895.88 whilst the DAX was 0.26% higher at 11,998.59.
Wall Street
In New York last night, the Dow Jones rose 0.16% to 20,775.6, the S&P-500 fell 0.11% to 2,362.82 and the Nasdaq shed 0.09% to stand at 5,860.63..
Asia
In Asian markets this morning, the Nikkei 225 had fallen 0.25% to 19,364.19, while the Hang Seng lost 0.35% to 24,117.35.
Oil
In early trade today, WTI crude was up 0.88% to $54.06/bbl and Brent was up 0.86% to $56.32/bbl.

Headlines
Barclays reports rise in full-year profits
Barclays (LON:BARC) has reported a rise in profits after making "strong progress" in restructuring. The bank reported a profit before tax of £3.2bn for 2016, up from £1.1bn the year before. Its reorganisation has included the sale of its Africa business. Barclays has also been selling off other parts of the business which the bank deems "non-core", and it said it would bring forward the closure of the unit dealing with this by six months. Chief executive Jes Staley said the "non-core" unit would close on 30 June. "We are now just months away from completing the restructuring of Barclays, and I am more optimistic than ever for our prospects in 2017, and beyond," Mr Staley said.

Ferrum Crescent (LON:FCR, 0.19p) – Speculative Buy
Ferrum Crescent announced today encouraging exploration results on its Toral zinc project in NW Spain. Detailed mapping, sampling (soil, rock chip and channel) and remodelling work has yielded positive zinc mineralisation results. Channel samples returned 0.9m grading 10.5% Zn on the main structure within Adit 49 and a 1.2m channel sample returned 1.2% Cu and 6.5% Zn in Adit 54. Soil sampling has identified a continuous 2km long by 150m wide zinc-in-soil anomaly with values up to 1.4% Zn. New styles of mineralisation have been identified associated with shear-related structural repetition and multiple structures sub-parallel to the main structure. Cross-cutting faults are associated soil anomalies and sulphide mineralisation. As a result, Ferrum is planning a 13 drill hole programme for Q2 2017 focusing on shallow untested targets within the main anomalous zone. Currently, Toral has a combined (Indicated & Inferred) resource of 8.7Mt with a weighted average grade of 10.7% (Pb + Zn).

Our view: The past three months has yielded positive exploration results on the Toral project. We are encouraged with the high zinc grades from channel samples on the main structure as well as the potential for different styles of mineralisation throughout the project area. Ferrum has acquired a significant amount of data from previous explorers and have used this dataset to develop a new approach towards mineralisation at Toral. We look forward to the Phase 1 drill programme results in the coming months focusing on near-surface mineralisation for the first time. In the meantime, we maintain our Speculative Buy on the stock.

Hummingbird Resources (LON:HUM, 26.00p) – Speculative Buy
Hummingbird Resources, the gold exploration and development company with assets in Mali and Liberia, announced today that it has appointed Kevin Moxham as General Manager for its Yanfolila gold project in Mali, where mine construction is currently underway. Mr Moxham is a well experienced mining engineer with over 30 years of effective management and commissioning of mining projects in West, East and South Africa. Most recently, Mr Moxham was General Manger and Head of Operations at Newmount Golder Ridge where we oversaw the commissioning and production of the 9Mtpa Akyem gold mine in Ghana. He has also held numerous senior roles at Barrick, Gold Fields, Lonmin Platinum Mines and Anglo American.

Our view: Having secured project funding, mining and construction contractors and now a well-qualified GM, Hummingbird can now focus on full-scale construction at Yanfolila. The appointment of an experience GM to manage the operations at Yanfolila is key as the company looks beyond immediate construction to commissioning. We are encouraged with the progress being made and look forward to production by the end of 2017. In the meantime, we maintain a Speculative Buy rating on the stock.

SerVision (LON:SEV, 5.50p) – Speculative Buy
SerVision, the leader in mobile live video streaming over wireless and cellular networks, yesterday announced that a US based investment fund, Cascade SVP, LLC, has subscribed US$2.0m of new capital through 14,089,084 ordinary shares of 1.0p each in the capital of the Group at a price of approximately 11.4p per share. The proceeds will be used as working capital purpose and for debt repayments. Under the terms of the subscription, Cascade will transfer US$1.0m in 5 business days, on receipt of 7,044,542 SerVision shares, while the second tranche of US$1.0m is to be transferred in 90 days on receipt of a further 7,044,542 shares. In addition to the US$2.0m subscription, Cascade have been granted an option to invest up to a further US$4.0m in two tranches; the first option period runs until 20 October 2017, with an option price of approximately 10.2p per share, and the second option period runs until 29 September 2018, with an option price of approximately 9.3p per share. The Options are conditional upon shareholder approval. SerVision's CEO, Gidon Tahan, commented "The Company has been under capitalised in recent years and this significant boost to our financial strength will allow us to pursue a number of opportunities around the world that, if converted into new customers, will help the Company to become cash flow positive". Cascade's Director, Craig Flashner, commented "The worldwide mobile DVR market is growing dramatically and we believe that SerVision has superior technology in this market. In addition, we believe there is significant potential in their relationship with Mobileye, which opens access to their customers worldwide".

Our view: Very positive news for SerVision! A subscription price of 11.4p represents a significant premium to Tuesday's closing price of 2.75p, or 315% higher, valuing the Group at c.£14.4m against just a £3.5m market capitalisation the previous day . Following the completion of the subscription, Cascade will be a second largest shareholder of the Group, holding c.10% of the issued share capital. Moreover, should Cascade choose to exercise its Options in their entirely, its total holdings will rise to c.27%, assuming no other new ordinary shares are issued in the meantime. The proceeds will be used for scheduled repayment of its facility with CSS Alpha (BVI) (US$215,000 at an interest rate of 1.0% per month plus other fees repayable in May 2017) and YA II PN Ltd (US$786,500 as at H1, at an interest rate of 12% per annum plus other fees repayable in July 2017) as well as for working capital purpose. SerVision has been demonstrating its products, IVG400-N system, a high definition mobile video gateway system, fulfils the industry needs and standards through extensive trial period with various customers, such as Skills Motor Coaches Ltd and City of Cardiff Council Transport Department which led to a new purchase order in December 2016. SerVision's IVG400-N system permits viewing of 'live' camera feeds, whether travelling in the UK or in Europe, along with the ability to download quality footage directly via the mobile network. This can ensure increased protection, while insurers are provided with supporting CCTV evidence of any incidents within a matter of minutes of them occurring and potentially lower the cost of policies that otherwise are disadvantaged by lack of irrefutable evidence. This new capital will significantly strengthen SerVision's balance sheet "for several years" according to the CEO, giving comfort to its customers, enabling the Group to grasp global opportunities in heavy-duty bus market (e.g. Transit Buses, Coaches, Shuttle Buses, and School Buses) which estimated to grow at CAGR +8.6% from 2015 to 2022 according to Frost & Sullivan. This is also backed by the long-term fundamentals of encouraging public transport against private vehicles, as well as increasing population. Although value of each contract remains modest, its large addressable market meaning new customer orders and follow-on orders will likely to see the volume piling up. In the light of positive news along with the Board's expectations of improved trading in 2017, Beaufort retains its Speculative Buy rating on the shares.

Barratt Developments (LON;BDEV, 517.00p) – Buy
Barratt Developments, a FTSE100 UK housebuilder, yesterday announced results for the 6 months ended 31 December 2016 ('H1 FY2017'). During the period, revenue fell by -3.2% to £1,816.2m as total completions dropped by -5.8% to 7,180 plots, against the comparative period. Gross margin however, improved by +2.1% as average selling price increased by +3.8% to £263,800, which resulted profit from operations to advance by +7.4% to £324.0m. Operating margin also improved by +1.7% leading to pre-tax profit rose by +8.8% to £321.0m. Basic earnings per share hence increased by +8.4% to 25.9p. ROCE improved by +1.5% to 27% and net cash balance significantly enhanced to £196.7m, up +712.8%. The Group recorded a net private reservation rate of 0.68 (2015: 0.66) per active outlet per week, and operated from an average of 374 outlets (including JV's) (2015: 386). Barratt said it has made a good progress on new site openings, launching 83 new developments (including JV's) (2015: 63) during the period. The Group declared an interim dividend of 7.3p per share, up +21.7%, to be paid on 19 May 2017.

Our view: Barratt delivered a strong result for H1 FY2017, reflecting confidence with yet another hike in its dividend payout. As previously noted, total completions dropped by 5.8% due to lower activity in London, primarily reflecting its planned build programme which focusses on wholly owned sites. This, however, was more than offset by the record completions outside of London, which were at their highest level in 9 years. Despite the reduction in revenue, pre-tax profit came ahead of the previous guidance of +7% growth, supported by +3.8% increase in average selling price and change in mix. Reflecting the Board's confidence in the business going forward, the Group hiked its interim dividend by +21.7% and announced improvement and extension of its Capital Return Plan with dividend cover re-set at 2.5x (from 3x) and special dividends of £175m in November 2017 (total return FY2017: £395.5m) and November 2018 (total return FY2018: £402.5m). Post the period, net private reservations per average week stood at 290 (2016: 280), resulting in average net private reservations per active outlet per average week of 0.77 (2016: 0.76). The total forward sales (including JV's) as at 19 February 2017 was at record £3,018.2m, up +17.0%, and the Group said it is on track to meet its full year outlook. Barrett is lowly rated, trades on a modest premium to net assets and provides excellent income – which, despite providing quite exceptional forward visibility, suggests their share prices already discount the imminent arrival of a severe cyclical downturn. This is the reason Beaufort has been and remains overweight in the sector, with Taylor Wimpey as its key pick. The recently published Housing White Paper reaffirmed the government's committed to increasing housing supply, with affordable housing at high on its political agenda. The market continues to see high customer demand, good mortgage availability, along with low interest rates and government policy such as Help-to-Buy. The shares are cheap, being valued on a 2017E P/TNAV of 1.5x, with a P/E multiple of 9.4x, along with dividend yield of 7.2%. Beaufort remains overweight of the UK housebuilding sector and keeps Barratt Developments on its Buy list.

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Thu, 23 Feb 2017 08:18:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27151/beaufort-securities-breakfast-alert-ferrum-crescent-hummingbird-resources-servision-and-barratt-developments-27151.html
Fairly soon? Same old tune http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27150/fairly-soon-same-old-tune-27150.html FTSE 100 Index called to open -20pts at 7280 having gone ex-div for 26pts and traded sideways overnight, within roughly the same 7275-7290 confines as the prior night. Feb’s uptrend remains intact, but we continue to flirt with Feb rising support at 7275. Bulls need a break above 7288 overnight highs to allow for another challenge of 7300. Bears want to see a test of 7275 to open the door for a drop towards at 7255. Watch levels: Bullish 7290, Bearish 7270.

Calls for a negative open come despite Fed policy meeting minutes leaving markets a little less hawkish about the timing of the next US rate hike. Solid US data clearly warrants further increases but Trump policy (especially on tax) uncertainty also allows the FOMC to bide its time. “Fairly soon” likely favours May or June versus an imminent March where debate will, nonetheless, surely fiercen.

Asian equities are negative overnight, echoing a stateside session that saw only the Dow close higher (another record) with a slightly softer Dollar (off its worst levels) holding back Japan’s Nikkei via a slightly stronger Yen. Australia's ASX is underperforming with base metals under pressure higher China copper inventories and a pullback in steel futures pressuring the likes of zinc and nickel. This despite a bounce by oil.

FTSE sentiment may be impacted by major bank Barclays swinging back to FY profit thanks to a surge in investment banking revenue and close to completing major restructuring although it has cut its dividend. Elsewhere, the government has cut its bailout stake in Lloyds to below 4%. In the mining space, Glencore adjusted profits look to have beaten consensus, and while 40% debt reduction is not to be sneezed at it is slightly less than expected.

US equity markets finished Wednesday mixed, with the Dow Jones outperforming (+0.2%) as DuPont and Dow Chemicals’ merger is expected to get the green light, while Fed minutes failed to provide markets with any further information on the date of its next rate hike. The S&P closed 0.1% lower in its worst performance since 6 Feb as rallying Utilities were unable offset weakness from Energy names, while the Nasdaq also finished weaker by 0.1%, its worst showing since 2 Feb.

Having sold off yesterday investors positioned themselves for a further rise US stockpiles, Crude Oil prices have since bounced from two week rising lows support with US industry inventory data showing a surprise drawdown in stocks, breaking a streak of six consecutive builds. The focus for investors will now be on this afternoon’s official government inventories (3:30pm) for any confirmation.

Gold prices spiked after the release of the Fed minutes last night after testing $1233 support in the hours preceding the release, as no further clarity was given as to when the next rate hike will come. However, the precious metal was unable to overcome $1239 resistance and has since gently sold off overnight, trading in a tight $1236-$1238 falling channel.

In focus today will be fallout from last night’s Fed minutes which were taken as less hawkish than the meeting itself. While reiterating that rate hikes should come sooner rather than later, the minutes also pointed towards uncertainty from incoming Trump administration policies that could impact the Fed’s decision making before the next meeting. As such, all meetings remain live, however we are left no more enlightened as to when exactly the next hike will come.

We also have multiple central bank speakers including the ECB Chief Economist Praet in the morning and the Fed’s Lockhart (non-voter, retiring end-Feb) in the afternoon, followed by EU President Juncker and the Fed’s Kaplan (voter, neutral).

Data-wise this morning, UK CBI Sales are expected to have rebounded in February. In the afternoon, the Chicago Fed index may have fallen back to breakeven while Jobless Claims hold firm along with FHFA House Prices and the Kansas City Fed.

It could be that US Oil Inventories offer the most spice given the run of builds we have had and API data breaking its streak overnight.

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Thu, 23 Feb 2017 08:01:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27150/fairly-soon-same-old-tune-27150.html
Today's Market View - Ariana Resources, Beowulf Mining, Golden Star Resources and Savannah Resources http://www.proactiveinvestors.co.uk/columns/sp-angel/27149/today-s-market-view-ariana-resources-beowulf-mining-golden-star-resources-and-savannah-resources-27149.html Ariana Resources (LON:AAU) – Additional targets identified at Tavsan
Beowulf Mining (LON:BEM) – Drilling underway at Aitolampi
Golden Star Resources (CVE:GSC) – 2016 results and 2017 guidance

Savannah Resources (LON:SAV) – £2.24m placing and subscription

US stocks hit new highs on Tuesday providing strong growth momentum in other markets.
• The MSCI All-Country World Index is up for a third day while the Stoxx Europe 600 Index climbed for a fourth consecutive day reaching the strongest level since Dec/15.
• The US$ index is up this morning with the € down against the US currency for a fourth consecutive day.
• Gold is steady with investors seen raising gold ETF holdings.
• Brent is off this morning from the highest level in more than a week.
• Chinese rebar futures broke their two-and-a-half-weeks winning streak posting a 1.2% decline today; although, prices remain 11.7% higher since the start of the month. Iron ore futures followed steel prices lower falling 0.6% marking the first decline in the last three days.

Tronox to buy TiO2 business off Cristal for $1.7bn in cash plus stock to create world’s largest TiO2 pigment producer
• The new group will have total capacity of 1.3mtpa through the combination of Crystal’s eight plants and Tronox’s three.
• Tronox is selling its Soda Ash business (sales ~$800m) to help pay for the deal.
• The group also has titanium feedstock capacity of 1.5mtpa, though with concentrate prices set to rise
• The combination would give Tronox 15% of global market placing them ahead of Chemours, a DuPont spinoff, which currently holds a 14% market share.
• The deal further consolidates the market at a time when feedstock concentrate prices are forecast by industry observers to rise strongly
• The Tronox chairman sees the deal as cutting their net leverage ratio by 50% with EPS accretion of >100% in the first year with EPS, EBITDA and Cash Flow growth rates of 70%, 30% and 60% between 2018-2021 versus Tronox as a standalone business.
• These are impressive numbers indicating significant synergies to come through relatively quickly through the combination of the two groups.
• The National Industrialization Co. of Saudi Arabia which holds 79% of Cristal and other shareholders will retain a 24% stake in the combined group.
• Cristal saw sales of $1.7bn on 860,000t of capacity last year.  Tronox TiO2 sales were $1.3bn on 470,000t of capacity.
• Huntsman Corp also plans to sell off ‘Ventor’ its TiO2 business later this year.
• The consolidation sounds like it has a sound rationale but may also be a reaction to a tightening market for tiO2 feedstock at a time when weak demand in China may make price rises difficult to push through.
• The market for TiO2 feedstock is evolving with a dramatic decline of TiO2 feedstock from the processing of titano-magnetite ores in China as low iron ore prices rendered processing of this material all-but obsolete.
• Much titano-magnetite production has either been closed or severely impaired with Chinese enforcement of environmental regulations also cutting titano-magnetite production and processing capacity.
• We expect TiO2 feedstock price rises to potentially outpace expected price rises in pigments and other TiO2 products and for this to potentially put margins under some pressure for TiO2 processors which do not have sufficient captive feedstock supply.
• The evolution of the market should prove to be good for primary producers like Iluka and Kenmare and near-term projects, such as FinAust in Greenland.

President Trump lists 50 projects worth US$137.5bn for rebuilding American infrastructure
• The list contains 3-5 projects from each state with the American steel industry to deliver ‘made in USA’ iron products as required
• Democrats are also reported to have offered to support Trump if he endorses their list of $1tr worth of infrastructure projects in a move typical of the pork barrel politics which the US is so well known for.  The projects are thought to create as many as 15m jobs
• Trump’s projects include renewing US highways, airports, dams and bridges.
• Documentation is reported to propose funding by way of Public-Private Partnerships which half of the funding coming from private investment.
• Reports suggest a priority list of Emergency and National Security Projects includes cost estimates and job creation numbers

Dow Jones Industrials  +0.58% at 20,743 
Nikkei 225   -0.01% at 19,380 
HK Hang Seng   +0.99% at 24,202 
Shanghai Composite    +0.24% at 3,261 
FTSE 350 Mining   -0.32% at 17,025
AIM Basic Resources   -0.43% at 2,735 

Economic News
US – Cleveland Fed President Loretta Mester said the FOMC does not want to surprise the markets on interest rates.
• The US economy is “on a pretty good and sound footing” with the committee stands ready to adjust the policy should the economy evolve “differently than we anticipated”, Mester highlighted.
• Markets are currently pricing in a 38% chance of rates going up in Mar and a 60% chance for a May move.
• Mester advocated for higher rates though most of H2/16 having voted for an increase in Sep and Nov when the majority decided to leave rates unchanged.
• She is not voting this year.
• US private sector growth slowed in Feb from Jan/s 14-month peak as the post-election upturn loses some of its moementum, according to the latest Markit PMI numbers.
• “However, even with the Feb dip, the PMI remains at a level broadly consistent with the economy growing at a 2.5% annualised rate in the first quarter.”
Date Index Period   Actual Est Previous
Tuesday Markit Manufacturing PMI Feb (Prelim)   54.3 55.4 55
  Markit Services PMI Feb (Prelim)   53.9 55.8 55.6
  Markit Composite PMI Feb (Prelim)   54.3   55.8
Wednesday Existing Home Sales Jan %mom  1.1 -2.8
  Feb FOMC Meeting Minutes         
Thursday Weekly Jobless Claims   '000   240 239
Friday UoM Consumer Sentiment Feb (Final)   96 95.7
  New Home Sales Jan %mom   6.5 -10.4
Source: Bloomberg     

Eurozone – Inflation hit the highest level in four years in Jan the Eurostat data confirmed preliminary estimates.
• While headline number hit 1.8%yoy in Jan, core inflation remained weak at 0.9%yoy which justifies further monetary easing by the ECB.

UK – Q4 GDP growth rate has been revised slightly upwards from first estimates released in Jan with expansion led by strong trade and private consumption compensating for a decline in business investment.
• Q4 GDP: 0.7%qoq v 0.6%qoq estimated in Jan.
• Exports climbed 4.1%qoq while imports contracted 0.4%qoq with net trade contributing 1.3pp to GDP growth.
• Household spending increased 0.7%qoq compared with a 0.9%qoq growth in the previous quarter.
• Business investment was off 1.0%qoq versus a 0.7%qoq increase in Q3/16.
• Accelerating inflation weighing on household real incomes may translate into a slowdown in consumer spending moving forwards challenging one of the growth drivers.
• Market estimates are for UK growth to slow down to 1.4% this year from 1.8% in 2016.

Mexico – The peso rallied around 1.9% against the US$ yesterday as the central bank surprised markets planning to auction up to $20bn  in FX hedges.
• The move is directed to support the currency without using up international reserves.


Iron ore – Chinese iron ore steel demand is expected to come off this year and fall every year until 2030, according to the state-backed China Metallurgical Industry Planning and Research Institute.
• Demand is forecast at 660m this year, down 1.8% from 2016.
• Prices are estimated to range at $55-85/t this year and average $65/t compared with the spot $95/t (62% Fe Qingdao) reached on Tuesday, the highest level since Aug/14.
• Another pessimistic forecast was voiced by the World Steel Association during the Metal Bulletin China Iron Ore Conference in Dalian today.
• The WSA highlighted that “the future is kind of pessimistic” with the Chinese steel demand is set to fall sharply over the next decade in line with the experience of Japan, Germany and the US.
• “The trend for steel demand in China is very similar to the US, Japan and Germany… peak then a sharp decline.”

Currencies
US$1.0507/eur vs 1.0564/eur yesterday.   Yen 113.28/$ vs 113.50/$.   SAr 13.058/$ vs 13.129/$.   $1.250/gbp vs $1.243/gbp.
0.771/aud vs 0.766/aud.   CNY 6.878/$ vs 6.883/$.
Sterling strengthens on Bank of England comments that Brexit process will be smoother than originally predicted

Commodity News


Precious metals:         
Gold US$1,236/oz vs US$1,234/oz yesterday – Russia increases gold reserves to 31.1t
Gold ETFs 58.7moz vs US$58.5moz yesterday – ETF Securities reports strong inflows into gold ETFs.
• Maybe one day they will also report on strong outflows?
Platinum US$1,002/oz vs US$999/oz yesterday
Palladium US$781/oz vs US$768/oz yesterday
Silver US$18.01/oz vs US$17.97/oz yesterday
           
Base metals:   
Copper US$ 6,018/t vs US$6,042/t yesterday
Aluminium US$ 1,872/t vs US$1,889/t yesterday
Nickel US$ 10,815/t vs US$11,090/t yesterday
Zinc US$ 2,857/t vs US$2,887/t yesterday
Lead US$ 2,279/t vs US$2,315/t yesterday
Tin US$ 19,825/t vs US$19,900/t yesterday
           
Energy:           
Oil US$56.5/bbl vs US$56.5/bbl yesterday
Natural Gas US$2.532/mmbtu vs US$2.767/mmbtu yesterday
Uranium US$24.75/lb vs US$25.00/lb yesterday
           
Bulk:   
Iron ore 62% Fe spot (cfr Tianjin) US$90.5/t vs US$91.1/t – Reuters report that surging steel and iron ore inventories are at odds with price gains
• The interesting thing is that we have heard this a few times before and iron ore prices continue to post gains
• Part of the reason is that Chinese blast furnaces are using more higher-cost, better quality, Australian iron ore to cut on energy costs and reduce emissions.
• Investors are also trading on expectations for price gains and may be using iron ore as a store of value in case of a potential weakening of the Renminbi

Chinese steel rebar 25mm US$567.4/t vs US$565.6/t
Thermal coal (1st year forward cif ARA) US$67.7/t vs US$69.0/t yesterday – Hwange colliery in Zimbabwe gets new coal concessions.
• The new concessions should extend the mine life from five to >50 years and encourage further investment. 
• Hwange currently employs around 2,400 currently produces around 55,000tpm down from peak production of around 200,000tpm. 
• The miner recently secured a $3.2m loan for the repair of key underground coal mining equipment including its continuous miner

Premium hard coking coal Aus fob US$156.6/t vs US$153.6/t

Tungsten APT European prices $195-205/mtu

Company News
Ariana Resources (LON:AAU) 2p, Mkt Cap £18m – Additional targets identified at Tavsan
• Ariana Resources reports that a review of data and target generation at its Tavsan property within the Red Rabbit project area has identified a total of 16 new target areas.
• Threee of these targets are charcacterised as “Very High” priority with a further 4 identified as “High” priority. The ranking is based on data including historical drilling intersections, one of which was as high as 11m at an average grade of 5.11g/t gold, trenching and rock chip sampling.
• Managing Director, Kerim Sener, commented that “More work is required at Tavsan before we can refine our models and operational plans, but it is certainly a project deserving of our efforts due to the significant potential uplift in company value that it represents to our shareholders”.

Beowulf Mining (LON:BEM) 10.3 pence, Mkt Cap £51.5m – Drilling underway at Aitolampi
• Beowulf Mining reports that drilling has started at its wholly owned Aitolampi graphite prospect in Finland where it is planning a two phase programme comprising approximately 2000 metres over 30 drill holes.
• The first part of the programme comprising 1150metres is expected to take 2-3 weeks with a second phase of work planned for the summer after the test results from the earlier work are available for interpretation.
Conclusion: Beowulf Mining’s planned drilling should improve the geological understanding of the mineralisation and provide sample material for testing. The decision to conduct the drilling in two stages will provide the opportunity to evaluate the first results and perhaps refine the plan for the work in the summer which should help to make the drilling cost effective.

Golden Star Resources (CVE:GSC) C$0.99, Mkt Cap C$362m – 2016 results and 2017 guidance
• Golden Star reports a reduction in net attributable losses to US$39.65m compared to a loss of US$67.68m in 2015. After “certain adjustments” which include US$13.85m relating to share based payments, US$25.63m for fair value adjustments on financial instruments and US$11.59m for a loss on the repurchase of the comp[nay’s 5% convertible debenture. the company reports adjusted net earnings of US$11.18m compared to an adjusted loss of US$28.36m in 2015.
• The results reflect production of 194,054 oz of gold with fourth quarter production of 53,403 oz “representing Golden Star’s strongest quarterly performance of the year.” Cash operating costs fell by 11% in 2016 to US$872/oz and on an all-in-sustaining (AISC) cost basis declined by 5% to US$1093/oz.
• Eighty-four percent of the US$84.4m capital expenditure during the year was deployed on development of underground mines at Wassa and Prestea where the company is making the transition from the metallurgically complex high cost refractory ore production to high grade underground ore sources which are simpler to process.
• Before US$22.21m of additional working capital, Golden Star’s operations generated a 40% increase in cash generated by operations to US$75.46m.
• The company’s guidance for 2017 indicates production rising by 31-44% to 255-280,000 ounces of gold, cash costs falling by 1-11% to US$780-860/oz, AISC falling by 2-11% to US$970-1070/oz and capital expenditure reducing by 31% to US$58m.
• In more detail, the Wassa open pit and underground operation is expected to produce 145-160,000 oz of gold in 2017 (2016 -104,381oz) at a cash cost of US$830-915/oz while the Prestea mine is targeting 110-120,000oz (2016 – 89,673 oz) at a cash cost of US$715-780/oz.
Conclusion: Golden Star’s evolution towards a higher grade, lower cost, largely underground, mining operation is well underway with the company indicating that it will increase gold output by over 30% in 2017 while reducing both operating and capital costs.

Savannah Resources (LON:SAV) 5.9p, Mkt Cap £26.5m – £2.24m placing and subscription
• Savannah Resources has announced that it has raised £2.24m shares by way of a placing and subscription priced at 5.25p per share.
• The company also reports that “Letters of intent have been received from a Director and Al Marjan Limited, the Company's major shareholder, for an additional £1.01 million cash ordinary shares at the Placing Price, once the Company has exited its current close period. … The Company will be required to seek additional authorities from shareholders in order to issue 11,190,088 ordinary shares of the shares relating to Al Marjan's proposed subscription.” Additional funding by Al Marjan would “maintain its shareholding of 29.99%”.
• The new funds will be used to progress the Oman copper project through mineral resource estimation, preparation of a scoping study and the preparation of licensing documents. In addition the company will progress both its Mutamba mineral sands project in Mozambique and the identification of potential drilling targets at the lithium exploration projects in Finland which were acquired last year.

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Wed, 22 Feb 2017 11:07:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27149/today-s-market-view-ariana-resources-beowulf-mining-golden-star-resources-and-savannah-resources-27149.html
In The News - West Cumbria Mining http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/27148/in-the-news-west-cumbria-mining-27148.html FROM THE BROKING DESK
I’m sure many recipients of this e-mail are closet readers of The Daily Mail. Let’s face it, who doesn’t occasionally like to dip into the online edition for some celebrity gossip and fashion news? It also has a business section; as the paper shifts 1.2m print copies per day and its website is one of the most viewed in the world, it is considered the ‘holy grail’ for companies to get a write-up in. Well, yesterday there was a feature article on West Cumbria Mining***, a private company that RFC Ambrian is advising, which is developing a coking coal project in Whitehaven on the north-west coast of England.


Once you get through the slightly slushy stuff about CEO Mark Kirkbride, the article highlights the project’s ambitions and the long history of coal mining in the area. The aim is to start production of coking coal before the end of this decade to supply the European steel industry via the ports in Teesside. While this may seem ambitious given that the UK coal industry has been a story of managed decline since the 1980s (emphasised by the closure of the last deep pit mine at Kellingley in 2015), this was thermal coal; the economics at West Cumbria will be quite different. West Cumbria Mining’s project will be a low-cost, high-quality coking coal operation with significant freight and logistic advantages over North American and Australian competitors in terms of shipping product to the European market. It’s an exciting story.


After the success Sirius Minerals had in raising capital for its polyhalite mine in North Yorkshire, the UK mining industry is in something of a renaissance. The genesis of these projects pre-dates Brexit and the whole ‘Northern Powerhouse’ stuff, but there can be no doubt that the government is very supportive of what will represent large UK industrial projects over the years to come.

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Wed, 22 Feb 2017 10:17:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/27148/in-the-news-west-cumbria-mining-27148.html
Northland Capital Partners View on the City - Savannah Resources, Active Energy Group and VELTYCO http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27147/northland-capital-partners-view-on-the-city-savannah-resources-active-energy-group-and-veltyco-27147.html VELTYCO GROUP PLC (LON:VLTY) – BUY*: Update
Market Cap: £28m; Current Price: 42p; Target Price: 52p
 

Significantly ahead – double digit increase to forecasts
  Strong trading update from Veltyco last week, where the company confirmed results for FY16 will be significantly ahead of our expectations. Revenue is expected to be in excess of €5.7m or 16% ahead of our forecast of €4.9m and EBITDA is expected to be in excess of €2m or 47% ahead of our forecast of €1.4m.
   On the back of the strong performance we bring our forecasts for FY16E in line with the new expectations and also increase forecasts for FY17E and FY18E, where more efficient marketing investment is increasing revenues and margins. We now expect EBITDA of €4.3m, +34% (€3.2m) on previous forecasts and YoY growth of 111% for FY17E and for FY18E EBITDA increases to €5.4m, +29% (€4.2m) on previous forecasts.
  On our new forecasts the shares trade on 7.6x FY17 EBITDA, a c. 22% discount to peer multiples. On a relative basis, applying the peer multiples supports a price of 49p. Our DCF points to 55p and we take the midpoint as previously applied, which points to 52p, or +24% upside to the current price.

NORTHLAND CAPITAL PARTNERS VIEW: The strong performance in FY16 drives healthy double digit increases to forecasts for FY17E and FY18E. Despite the strong performance in share price in recent months the stock still trades on and undemanding rating of 7.6x EBITDA or 8.6x earnings on our new forecasts. We reiterate our Buy rating on the stock.

Savannah Resources (LON:SAV) – CORP: Placing and subscription
Market Cap: £28m; Current Price: 6.25p

Raises £2.24m with LoI for £1.01m
  Savannah Resources has raised £2.24m through the issue of 42,699,200 shares in a placing and subscription at a price of 5.25p per share.
  Savannah also has Letters of Intent for an additional £1.01m from Chairman, Matthew King, and major shareholder, Al Marjan. Savannah will seek authorities from shareholders to issue the 11,190,088 shares relating to this subscription. The subscription would see Al Marjan maintain its 29.99% interest.
  Following the receipt of £2.24m the Company will have a pro-forma cash balance of £3.02m.
  Following admission there will be 493,645,655 shares outstanding.
NORTHLAND CAPITAL PARTNERS VIEW: A significant fund raise for Savannah Resources that will allow the Company to make some major strides forward by completing its Mineral Resource Estimate updates and scoping study at its Block 4 and 5 Copper Project, located in Oman, continue the scoping study for the Mutamba Heavy Mineral Sands Project, located in Mozambique and define drill targets at its lithium projects, located in Finland.

Active Energy Group (LON:AEG) – CORP: Operations and Trading Update
Market Cap: £26.2m; Current Price: 3.15p

Update on separate but complementary divisional activity
  Active Energy, the renewable energy, forestry management and timber processing business, has issued an operational and trading update for each of its three divisions; AEG CoalSwitch, AEG TimberLands and AEG WoodFibre. 
  AEG CoalSwitch continues to expand in N. America, with additional initiatives in Europe and Asia. AEG states that it is “confident that AEG's CoalSwitch division will be the Company's primary area of growth in 2017”.  AEG has identified a location for the first reference plant in North America to be operational “before the end of 2017”. It is also encouraged by developments regarding the Métis Settlements in Alberta, following meetings “in recent weeks between representatives of the Métis Settlement Partners, officials representing the interests of the Government of Alberta and members of the Active Energy board to discuss the requisite regulatory, legal, operational issues and establish the corporate framework for the CoalSwitch initiative”.  AEG has also “expanded its commercial development pipeline with numerous groups” in North America, Europe and Asia.  As a result, the company indicates “hopes that an additional reference plant will also be established either in Malaysia or in the Baltic States during 2017, subject to available funding”.   
  AEG TimberLands update. AEG reports harvesting rights over more than 100,000 hectares of forestry assets in Alberta and targets additional assets local to its CoalSwitch operation. It also reports preliminary discussions for the potential acquisition of similar assets in N. America and Europe.
  AEG WoodFibre sources feedstock in Ukraine for the supply of Turkey's largest MDF producers.  AEG reports that the operation experienced slower trading in the aftermath of the July 2016 attempted military coup in Turkey.  As a result AEG reports that FY16 divisional revenue will be below 2015 levels ($24.378m reported); however, divisional gross profit will “show an increase” year-on-year.  Installation of the planned softwood processing line was adjusted to new circumstances with the result that completion is expected by the end of April 2017. AEG remains “focused on improving the trading prospects for AEG WoodFibre and, with the market having settled following the disruption in H2 2016, is executing its long-term investment plan to increase production output to meet demand for both hardwood and softwood in the region”.
NORTHLAND CAPITAL PARTNERS VIEW:  AEG notes that its three divisions operate separately but are complementary.  This is evident in the alignment of developments for CoalSwitch – rapidly emerging as its leading initiative – with those of AEG TimberLands.  Likewise it is logical that the WoodFibre operation has adjusted to geopolitical circumstances. This update confirms that AEG has been far from idle in developing its strategy into FY17.

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Wed, 22 Feb 2017 09:04:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27147/northland-capital-partners-view-on-the-city-savannah-resources-active-energy-group-and-veltyco-27147.html
VSA Capital Market Movers - Millennial Lithium http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27146/vsa-capital-market-movers-millennial-lithium-27146.html Millennial Lithium (CVE:ML)
Millennial Lithium  has announced the results from the completion of a ground geophysics programme at its Cruz Property in the Salta Province, Argentina. Southern Lithium (SNL CN) has an option to acquire up to 80% of the project through the completion of certain payments, exploration funding and completion of a feasibility study.

A Transient Electromagnetic Survey (TEM) covering 20.25km2 demonstrated a continuous north-south trending conductive unit over a distance greater than 6km, the full distance of the Cruz property. In the central core of the property indications of brine are apparent from 30m and up to 250m beyond which point data becomes limited due to the highly conductive nature of the anomaly. High conductivity is often an indication of high lithium brine contents.

 

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Wed, 22 Feb 2017 08:40:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27146/vsa-capital-market-movers-millennial-lithium-27146.html
Beaufort Securities Breakfast Alert: Bezant Resources, Prairie Mining, Galliford Try and InterContinental Hotels Group http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27145/beaufort-securities-breakfast-alert-bezant-resources-prairie-mining-galliford-try-and-intercontinental-hotels-group-27145.html Markets


Europe
The FTSE-100 finished yesterday's session down 0.34% at 7,274.83, whilst the FTSE AIM All-Share index rose 0.15% to 909.18. In continental Europe, the CAC-40 finished up 0.49% at 4,888.76 whilst the DAX was 1.18% higher at 11,967.49.
Wall Street
In New York last night, the Dow Jones rose 0.58% to 20,743.0, the S&P 500 firmed 0.6% to 2365.38 and the Nasdaq gained 0.47% to 5865.95.
Asia
In Asian markets this morning, the Nikkei 225 had fallen 0.07% to 19,368.01, while the Hang Seng rose 0.77% to 24,147.73.
Oil
In early trade today, WTI crude was up 1.24% to $54.06/bbl and Brent was down 0.44% to $56.91/bbl.

Headlines


Lloyds boosted by lower PPI payments
Lloyds Banking Group has reported a 158% increase in annual pre-tax profits to £4.24bn as a result of a reduction in payment protection insurance (PPI) provisions. Provisions for PPI declined from £4bn to £1bn. However, underlying profits fell to £7.9bn, down from £8.1bn. The UK government's stake in Lloyds has now fallen below 5% and it has said it wants to return the bank to full private ownership this year. On Tuesday HSBC reported a $7.1bn (£5.7bn) pre-tax profit for 2016, down 62% on the $18.9bn reported a year earlier. The government spent £20.3bn to acquire a 43% stake in Lloyds at the height of the financial crisis.

Company news


Bezant Resources (LON:BZT, 1.74p) – Speculative Buy
Bezant announced that the Filipino Department of Environment and National Resources has notified Bezant that its Mankayan project sits in a watershed and is therefore subject to potential cancellation. Bezant has the opportunity to show why this is not the case, although fighting this battle could be an expensive process. This is part of a programme by the DENR which affects 74 other mine development licences supposedly in a watershed. It follows a similar programme of closing open pit mines which had environmental 'irregularities'.

Our view: This is disappointing news but not a massive surprise given the DENR's recent form under the new president. Bezant had already written down Mankayan to zero and returned 8p per share to shareholders in 2013 (money it received from Gold Fields) so overall the Filipino project has been a success and profitable. We retain our Speculative Buy recommendation based on Bezant's core projects in South America, notably the platinum in Colombia.

Beaufort Securities acts as corporate broker to Bezant Resources plc

Prairie Mining (LON:PDZ, 27.18p) – Update
Prairie Mining has announced excellent results from an infrastructure study of Debiensko (its 100% owned coking coal project) which show a capital cost of only $10m to deliver water, power, road and rail for commercial scale coking coal production. This extremely low capital cost is the result of historical production at Debiensko (pre-2000) and infrastructure investments by the previous owner. For example Debiensko already has a rail siding which connects directly to the national rail network. During the recent analyst site visit we saw freight wagons travelling along the rail only a few hundred yards from the new wash plant location.

Our view: Debiensko is a premium hard coking coal project with valuable infrastructure already in place, the most important of which is rail with sufficient spare capacity. Having rail so close saves large amounts of capex and avoids permitting challenges. It also links Debiensko to the European steel industry, much of which is within a 200km radius and currently relies on imports of coking coal from overseas. There are very few if any new coking coal projects with the same infrastructure benefits as Debiensko. In some ways it is akin to a mine expansion project, except where the best coal seams are still available for extraction. Plus it sits in the middle of one of the largest coking coal markets.

Beaufort Securities provides Investor Relations services to Prairie Mining plc

Galliford Try (LON:GFRD, 1,503.77p) – Buy
The housebuilding, Partnership & Regeneration and Construction group yesterday delivered a strong first half performance with profit before tax up 19% to £63.0 million, EPS up 19% to 61.9p and interim dividend up 23% to 32.0p reflecting management’s confidence in the full year outlook. Galliford’s net debt of £113.8 million (H1 2016: £95.7 million) at period end was in line with expectations, having seen the balance sheet further strengthened with £450 million bank facility extended to 2022 on same terms, plus a private debt placement of £100 million 10 year fixed-rate notes, in order to add flexibility and diversity of lenders. Group strategy to 2021 targets sustainable growth and strong returns across all three of its businesses, with targets include 60% growth in profit before tax to FY 2021, a five year CAGR on dividend of at least 5% and a return on net assets in FY 2021 of at least 25%. Linden Homes continued to make significant progress with operating margin rising to 18.2% (H1 2016: 17.0%), while revenue rose 12% to £407.6 million (H1 2016: £362.7 million) from 1,491 unit completions, 1,319 units net of joint venture partner share (H1 2016: 1,357 and 1,171 respectively). 2021 financial targets include 4,750 - 5,000 units per annum, revenue of £1.25 billion - £1.35 billion and operating margin of 19% - 20%. Operating margin of 3.4% (H1 2016: 3.0%) for the Partnerships division were driven by planned increase in proportion of higher margin mixed tenure revenue. A 16% increase in total sales currently reserved, contracted and completed to £92 million (H1 2016: £79 million) was achieved with the contracting order book up 6% at £925 million (H1 2016: £875 million). Construction delivered revenue of £742.0 million (H1 2016: £738.6 million), with cash balance of £110.8 million (H1 2016: £154.7 million) reflecting delayed cash flows on some legacy projects. Its operating margin of 0.4% (H1 2016: 1.2%) continues to be constrained by the resolution of legacy contracts, while margins on new projects support improving divisional returns in future years. The order book remains solid at £3.4 billion (H1 2016: £3.7 billion), as the business continues its disciplined approach to contract selection.

Our view: Solid performance now backed by additional growth planning. Robust demand and pricing in residential markets, benefit both Linden Homes and Partnerships & Regeneration, driving good sales rates while the land market remains benign in all regions. Linden Homes continues to achieve margin improvement, including much improved overhead efficiency. Partnerships achieved a higher proportion of mixed tenure development revenue, resulting also in first-half margin growth. Construction is making steady progress in resolving legacy contracts, and the contribution from newer work is encouraging, demonstrating that the underlying business is strong. Order books for the first two are at record levels and, although Construction is lower than the prior year, the quality is now making progress. Improved debt facilities have further strengthened the balance sheet, providing financial flexibility to underpin the Board’s strategy for growth out to 2012. Indeed, the business model fits well with government planning detailed in the recent Housing White Paper that cites the need to accelerate the build-out of new builds both for sale and rental, making management targets out to 2021 achievable. In fact, it will be something of a surprise if the housebuilding sector as a whole does not take the hint by deciding to ramp up output by building on its heavy landbank, with a view to closing in on Westminster’s annual targets or fact more punitive future measures. This increased activity could even create two or three bonanza years for shareholders, who may be rewarded through additional special cash distributions. So even through there are various clouds gathering on the horizon of this highly cyclical sector, the good times still appears to have some time to roll. Despite having rebounded strongly post-Brexit to recover the highs being achieved 18 months ago once again, the shares still offer good value based on a 6.2% current year yield while trading on a price/book of 1.8x. Galliford Try remains on Beaufort’s buy list.

InterContinental Hotels Group (LON:IHG, 3,887.92p) – Buy
InterContinental Hotels Group, a global organisation with a broad portfolio of hotel brands, yesterday announced its preliminary results for the year ended 31 December 2016 (‘FY2016’). During the period, on a reported basis, revenue fell by -4.9% to US$1,715, operating profit grew +4.0% to US$707m and adjusted earnings per share rose +16.2% to 203.3 US cents, against the comparative period (FY2015). On an underlying basis, revenue advanced by +4.6% to US$1,582m, operating profit grew adjusted +9.5% to US$702m and adjusted earnings per share increased by +23.1% to 203.1 US cents. Net debt at the period-end stood at US$1,506m (FY2015: US$529m). On the operational front, the Group opened 40,134 rooms and closed 17,367 rooms, bringing total number of rooms to 767,135 rooms, up +3.1%. The Group also signed 75,812 rooms into the pipeline (representing over 500 new hotels) during the year, bringing total pipeline rooms to 230,076, where c.45% is currently under construction. InterContinental Hotels’ CEO, Richard Solomons commented “Despite the uncertain environment in some markets, we remain confident in the outlook for the year ahead, as well as our ability to deliver sustainable growth into the future”. The Group declared a final dividend of 64.0 US cents, bringing full year dividend to 94 US cents, up +11%, to be paid on 22 May 2017. The Group also proposed a special dividend of US$400m (equating to 202.5 US cents per share) to be paid on the same day (22 May 2017).

Our view: The Group performed well in FY2016, delivering pre-tax profit, adjusted earnings per share and dividend all ahead of the markets consensus analysts’ estimates. The strong results were supported by +1.2% rise in prices while enjoying record occupancy levels, leading to +1.8% improvement in revenue per available room (‘RevPAR’). Regionally, RevPAR in the Americas increased by +2.1% (rate +2.0%) while rising by +1.7% in Europe (rate +1.4%). In Greater China, RevPAR grew by +2.2% despite rates declined by -2.2%, although this eased in Q4 to -0.7%. In AMEA, RevPAR fell by -0.2% with -0.8% rate decline, as it suffered from weak Middle Eastern spending due to declining oil prices. Fee revenue (i.e. revenues excluding owned & leased hotels, managed leases and significant liquidated damages), which accounts for 89% of the Group’s underlying take, also increased by +4.4% with a margin improvement of +3.3% (CER: +2.5%) to 48.8% through strategic cost management. Although Group’s net debt has almost tripled to US$1,506m, due to special dividend payments of US$1.5bn in May 2016, this was partially offset by the benefits of translational amounting to US$205m. The period-end net debt to EBITDA level stands at 1.9x (2.4x on a proforma basis assuming payment of the special dividend), which remains within the Group’s target range of 2.0x to 2.5x. The Group declared +11% hike in its full year dividend, together with US$400m a special dividend, follows last May’s exceptional US$1.5bn payment. Such sums being enabled by the Group’s strong free cashflow generation of US$646m, up +39% year-on-year, along with management’s confidence in its ability to sustain long-term growth. The shares are valued at a FY2017E P/E multiple of 21.4x with dividend yield of 2.1% before specials. Having surpassed consensus in 2016, with similar growth expected for the current year, along with its commitment to shareholder returns, Beaufort seed no reason to change its recommendation. Beaufort retains its Buy rating.

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Wed, 22 Feb 2017 08:25:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27145/beaufort-securities-breakfast-alert-bezant-resources-prairie-mining-galliford-try-and-intercontinental-hotels-group-27145.html
Rested US bulls crank up the volume http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27144/rested-us-bulls-crank-up-the-volume-27144.html FTSE 100 Index called to open +10pts at 7285, having traded sideways 7275-7290 overnight into the apex of a narrowing pattern. Bulls need a break above 7290 to overcome 2-day falling highs resistance and revive hopes of a rally back to 7365. Bears require a breach of overnight rising lows at 7280 to open the door for a drop to support at 7250. Watch levels: Bullish 7295, Bearish 7275.

Calls for a firm open come after US bourses posted a solid return from a long weekend. Helped by corporate results, fresh record highs come via continued investor optimism about Trump policies that has now kept the S&P 500 Index from anything worse than a 1% fall for more than 90 days. A stronger USD suggests expectations of hawkish Fed minutes banking up this view this evening. DAX called to open +0.3% thanks to a weaker EUR.

Bullishness has been echoed in Asia overnight with only Japan’s Nikkei spoiling the party, flirting with breakeven on account of a slightly stronger Yen. Hong Kong is outperforming despite a continued drag from HSBC’s disappointing results yesterday. Australia’s ASX is higher thanks to a buoyant oil prices offsetting weakness among metals while retail sector results buoy and China property price growth maintains confidence.

FTSE sentiment may be impacted by Lloyds Banking Group results which appear to have beaten at the underlining profits before tax level (highest in 10 years; lower PPI) and the dividend being increased. Housebuilder Barratt Developments says it is confident with its FY outlook thanks to forward sales +17% and has announced special dividends of £175M for both Nov 2017 and Nov 2018.

Having enjoyed a long weekend, US equity markets continued where they left off, with the four major bourses of Wall Street all notching fresh record closing highs as corporate earnings once again impressed. The Dow Jones rallied 0.6% as Retail names Home Depot and Wal-Mart reported positive FY earnings, while the S&P also closed 0.6% stronger as all 11 sectors represented on the index finished firmer. The Nasdaq finished 0.5% higher and the small-cap Russell outperformed, up 0.65%.

Crude Oil prices broke out from 2017 falling highs resistance yesterday morning, as optimism that OPEC’s production cut is effectively rebalancing the supply glut saw fresh bullish sentiment in the marketplace. However, US dollar strength in the face of the Euro at 6-week lows could see potential investors deterred as the relative value of both Brent and US crude decrease.

Gold, having recovered from a one week low of $1226 yesterday, was unable to overcome weekly highs of $1238, further hampered by a trend of falling highs resistance that began on Friday. While political tensions in the US and Europe - most notably France - may harbour fresh demand for the safe haven asset, emergent US dollar strength today (Fed minutes this evening could be a key influencer) may see the precious metal test support at $1233.

In focus today will be UK Q4 GDP (9.30am) for which the second estimate is seen unchanged at 0.6% QoQ for a third straight quarter and 2.2% YoY for the second quarter in a row as the Index of Services and Business Investment both cooled into the end of last year.

Fed Minutes may also garner a smidgen of attention this evening given the hawkish rhetoric from the central bank of late (“unwise to wait to long”) and decent US data, although political uncertainty could yet play a part in delaying, even scuppering, plans for multiple hike stateside interest rate hikes this year.

Elsewhere this morning German IFO surveys (9am) may show all three components edging back again in February. The final reading for January Eurozone Consumer Price Inflation (CPI) is forecast to show a monthly figure plunging following last month’s jump while an annual jump is confirmed and the core print holds firm, albeit still well below the ECB’s 2.0% target.

This afternoon the China Leading Economic Index may add to this morning's solid property prices data to give us an update on the state of play in the world’s #2 economy, before US Existing Home Sales are expected to show an increase in January after December’s fall to add to the message of solid US consumer confidence.

Speakers today include the Bank of England’s (BOE) Cunliffe (11am) followed by his colleague Shafik (11.30am) before this evening sees the Fed’s Powell (6pm, voter, neutral) tee us up for the Fed Minutes (7pm)

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Wed, 22 Feb 2017 08:21:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27144/rested-us-bulls-crank-up-the-volume-27144.html
Fillon Jumps in French Polls as Macron Pays for Campaign Gaffe http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27143/fillon-jumps-in-french-polls-as-macron-pays-for-campaign-gaffe-27143.html Fillon Jumps in French Polls as Macron Pays for Campaign Gaffe
Here is the opening of this topical report from Bloomberg:

Republican candidate Francois Fillon is back on track to qualify for the run-off in France’s presidential race, a poll showed on Tuesday, as a sweetened program of reforms and intensive campaigning on social media and across the country pay dividends.
Fillon leapfrogged independent front-runner Emmanuel Macron, gaining three percentage points to 21 percent, while Macron shed five points to 18.5 percent, according to the survey by Elabe for L’Express magazine. National Front leader Marine Le Pen would still get the most votes in the first ballot on April 23 but she would lose to Fillon by 56 percent to 44 percent in the second round on May 7. Le Pen was on 28 percent, up as much as two points.
Contenders across the board are searching for traction in the most open presidential election in living memory. The campaign has already seen former Prime Minister Alain Juppe lose the Republican primary after a year as favorite while one ex-president dropped out and the incumbent Francois Hollande opted not to run.
For a dashboard on European political risk, click here
While no surveys have shown Le Pen winning the presidency, Elabe showed she’s narrowing the gap polling above 40 percent in the second round against both Fillon and Macron for the first time.
The prospect of the anti-euro Le Pen cutting through the melee to claim victory has pushed the spread between French 10-year bonds and similar-maturity German bunds to its widest in more than four years. The risk premium rose 2 basis points to
Fillon, a 62-year-old former prime minister, has made gestures to both conservative and moderate voters in the past days with an intense campaigning to ram home his credentials on security while dialing back his plan to cut health care spending. Macron was in London Tuesday to raise his international profile, meeting with Prime Minister Theresa May before a rally later to court expatriate and a fund-raising dinner.
For an analysis of the hurdles facing a Le Pen presidency, click here
Running for office for the first time in his career, Macron suffered his first significant misstep of the campaign last week, when he qualified French colonial rule in North Africa as a “crime against humanity.” Since then he’s taken the brunt of rivals’ attacks and was forced to apologize to French citizens who left Algeria when it gained independence in 1962.

David Fuller's view
There are two reasons why this year’s French presidential election is probably closer than French pollsters currently indicate.
This item continues in the Subscriber’s Area.

Brexit Could Be the Best Thing That Ever Happened to the UK Tech Industry
Here is a middle section of this informative article by Harry Briggs of BGF Ventures, for The Telegraph:

The EU used to be a start-up on a mission. The first mission was peace, after two world wars in four decades. Then food security… the single market… eastern expansion… the euro. It achieved extraordinary things.
But at some point it grew too big. It did not know what its mission was any more. It caught “institutionitis”. To quote Yuval Harari in his book Homo Deus: “As bureaucracies accumulate power, they become immune to their own mistakes”.
How do I know this? Well, when your second largest customer, sorry, country, gives you a vote of no confidence, and instead of resigning or promising reform, you continue exactly as before and “punish” it for its “mistake”, you have a clear case of institutionitis.
When two million migrants enter your Schengen zone illegally in a single year, stoking an alarming rise in the Far Right, and it takes you years to do anything about it, you have institutionitis.
When four of your member countries still have youth unemployment of more than 40pc five years after the financial crisis, and you say it’s not your problem, you have institutionitis.
In companies, the cure for institutionitis is the market. Companies that stop caring about their customers will be killed off by a new disruptive company (hopefully one backed by my VC fund) turning up and stealing their customers. The old companies change, or they die. It’s healthy.
In government bodies, the cure for institutionitis is democracy. If a government is doing a lousy job, we throw it out and replace it with new leadership and bold policies. That is healthy. It clears out the bureaucrats who have forgotten their purpose. But there is no way to “throw out” the EU if it does a lousy job.
What is worse, our national governments, whom we can throw out, increasingly find they cannot make the dramatic change which people are calling for because the EU has tied their hands. So we, too, get infected by EU institutionitis. We cannot behave like a start-up any more.
Which brings me to Britain, and our tech sector. I voted firmly to Remain in last year’s Brexit vote, but the EU’s response has forced me, uneasily, to re-think.
Most of us in the UK tech sector have blithely assumed the EU is “a good thing” because it gives our companies access to fantastic pools of talent, and untrammelled access to the world’s biggest single market.
But what about all that fantastic talent outside the EU? Is it really fair that if I am Polish or have an Italian grandma then I get access to the UK willy-nilly, but if I am Indian or Zimbabwean I have to pass stringent tests and arduous visa renewals every year?
Tech City & Nesta’s Migration survey, published this week, shows that non-EU nationals make up a higher share of the UK’s tech sector than those from the rest of the EU – and they are more likely to have a Master’s or PhD.
ROLI is a case in point: it has 60 Britons in its team, and 17 people from the rest of the EU, but nearly twice as many, 33, from the rest of the world. They include Chinese product designers, Ecuadorian engineers, Korean material scientists, American execs… ambitious companies think beyond the EU.
At Oxford and Cambridge universities right now, we have more than 11,000 students from non-EU countries such as the US, China and India, against 6,000 from the rest of the EU. Yet our EU bias means we send most of those brilliant non-EU students back home at the end of their studies.
There is no doubt that extracting ourselves from the EU is going to be an almighty and expensive pain in the neck.
Yet Brexit could prove to be a fabulous chance to simplify our immigration policies, so that the most brilliant enterprising people from every country, Asian, African, European or American, have a fair chance to work in the UK, and to nudge our most ambitious entrepreneurs to think beyond the Atlantic, the Mediterranean and the Black Sea in terms of talent.
And perhaps the upheaval of Brexit might even cure us of institutionitis, and free us to become a truly “start-up” nation.



David Fuller's view
My only criticism of this article is that the EU was never on a mission of the type Harry Briggs describes.  It was the European Common Market, also called the European Free Trade Area of separate, independent states which was on a mission.
The EU suffered from “institutionitis” from the day it was founded and the Euro launched without any federal backup.  That was around the time Harry Briggs gained his impressive MA (hons) (1st Class) Experimental Psychology degree from the University of Oxford in 1998.   
Everything else Harry Briggs says in the article above is absolutely correct, in my opinion.
A PDF of Harry Briggs' article is posted in the Subscriber's Area.

 



Email of the day 1
On the problem of antibiotic resistance:
“Further comment on Amoxycillin, mentioned recently in email of the day 2. When I sent in my original observation on the use of Amoxycillin as a treatment for chest infections in dogs, (very honoured to see my email in print) I was of course using it some 20 years ago when antibiotic resistance was a minor problem. Things are very different now. The truth is that since 1987 there has not been any new class of antibiotics developed. It has simply not proved to be a profitable proposition for drug companies to fund research and development into a drug that will possibly be used in a patient over a period of some five to seven days. Far more profitable it seems, in an era of a rapid increase in the elderly population to develop drugs that are going to be used by this group over many years or even decades.



David Fuller's view
Many thanks for this follow up.  You obviously know more about this than I do and I decided to also run it past your fellow subscriber, Dr David Brown, who is a specialist in this field and the author of Email of the day 2 below.



Email of the day 2
More on the problem of antibiotic resistance:
Dear David
It's a broad generalisation to say there have been no new classes of antibiotics. There have been some but unfortunately not against many of the most deadly bacteria.
Bacteria are generally divided into 3 classes, the mycobacteria (TB etc), and Gram-positives (MRSA etc) and Gram-negatives (E coli etc). There have been a few new classes of antibiotic in recent decades against 2 of the 3, though not against Gram-negatives such as E coli, K. pneumoniae, A baumannii and P aeruginosa. Gram-negatives have an extra cell coat (2 instead of just one that Gram-positives have) which makes it much more difficult for antibiotics to gain entry. And these bacteria have also developed capability to pump out our antibiotics or degrade them rapidly. Those four Gram-negatives in particular are a major cause for concern, as we have had no effective new chemical classes invented against them since the 1970s. They are increasingly gaining resistance to our best antibiotics. There have been some new antibiotics against them launched onto the market but these are minor variations on the same old chemical templates. These are easier to discover but also easier for the bacteria to resist. We desperately need new chemical templates. All efforts have failed for nearly 4 decades.
Apart from the scientific problems, there are commercial problems too. The pharmaceutical industry cannot make money from antibiotics for several reasons.
First, they are very difficult to invent. I heard a talk by Sir Andrew Witty, CEO of GlaxoSmithKline in which he said it has proved to be the hardest area of drug discovery. Scientists from both GSK and AstraZeneca separately published major review articles summarising over a decade of research in each company trying to find new antibiotics, with no success in either company.
Second, the commercial model is broken. Antibiotics cost a lot to invent yet get used for only a few days when needed, compared with drugs for chronic indications such as cancer, high blood pressure and diabetes which are easier to invent and get used every day. So companies make little money from antibiotics.
Third, if a drug company does in future invent a stunningly good antibiotic, there will be intense pressure to reserve it for use as a last resort when other antibiotics fail, to save it from resistance for for use in the most seriously ill patients. Again, this indicates low sales volume. It would need very high prices or a very different commercial model to overcome this problem. The review that David Cameron established under Jim O'Neill a few years ago proposed a new commercial model, and also John Rex at Astra Zeneca has been a thought leader on new models. I have attended several meetings with them both including meetings with politicians in parliament but progress seems to have stalled now we have a new government with other priorities.
Re amoxycillin, my view is that it should never be used alone. It has been an excellent antibiotic for over 3 decades, one of the best, but inevitably bacteria are becoming resistant to it. There is a version in which it is used alongside a resistance breaker called clavulanic acid, (co-amoxyclav is the commercial name, and here is the Wikipedia entry https://en.wikipedia.org/wiki/Amoxicillin/clavulanic_acid). This combination is still effective for many infections. I carry it myself when I travel in the Himalayas, as I will be doing in coming weeks.
Finally, I thought I would add some advice for subscribers if they get a serious infection.
This item continues in the Subscriber’s Area.



David Fuller's view
Dear David,
On behalf of all subscribers, thank you so much for this import email, generously and thoughtfully provided. It contains potentially lifesaving information.
As a personal aside, when a young, very nice temporary doctor at our personal surgery offered me amoxicillin for my developing chest infection, I recognised the name and accepted it rather hopefully. The 5-day course did nothing for my condition but caused me to optimistically assume that I was getting better.  The next two weeks were a disturbing reality check.  I trust I will be less naïve next time. 

 



Video commentary for February 21st 2017




Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.



Musing from the Oil Patch February 21st 2017
Thanks to a subscriber for this edition of Allen Brooks’ ever interesting report for PPHB. Here is a section:
All of the forecasts for domestic oil production appear feasible. The U.S. is home to some of the best oil and gas geology in the world with the largest number of independent explorers testing new theories about where to find and how to produce more hydrocarbons cheaper. These hundreds of independent operators are supported by the largest, most technically sophisticated oilfield service industry. Combine these elements with the deep capital markets existing in the United States that ensures that the petroleum industry has access to adequate capital for creating value for investors, and you have the makings of a vibrant and healthy industry. Depending on events around the world, the risk for the domestic oil industry is that its success could undercut the global oil industry’s recovery and knock down the prospect for a slow steady rise in oil prices and future domestic oil output. We don’t know what the odds of that happening are, but it is a scenario that everyone should keep in the back of their minds as they cheer on the nascent oil industry and oil production recoveries. However, too much U.S. oil success could actually be a bad thing for the industry, but probably a good thing for consumers.



Eoin Treacy's view
A link to the full report is posted in the Subscriber's Area.

The US oil sector remains highly competitive at today’s levels and the quantity of oil and gas available for export continues to increase. With a tight spread between near and far contracts, the futures curve is flat suggests a great deal of hedging has already taken place; supporting the view producers are profitable at today’s levels.



North Korea lights fire under coking coal price
This article from Mining.com may be of interest to subscribers. Here is a section:

On Saturday the totalitarian dictatorship's largest trading partner, China, reacted to the Feb. 12 test of a long-range ballistic missile by announcing a ban on coal from the rogue nation till the end of 2017.
The decision by the China's Ministry of Commerce, issued jointly with the country's customs agency, was made to comply with a UN Security Council resolution that China helped draft and pass in November.
Along with restricting the export of coal, the resolution also targets non-ferrous metals, statues and other luxury items like tapestries.
China's import ban on North Korean coal was supposed to be lifted in January but the missile test has meant that Beijing's coal ban will continue.
Last year China imported 22.4 million tonnes of anthracitic coal that can be used as an alternative to coking coal in the steelmaking process from North Korea, a nearly 15% rise from 2015.
China forges more steel than the rest of the world combined and the country last year imported a total 59.2 million tonnes of coking coal, an increase of nearly 24% over 2015.



Eoin Treacy's view
China and Russia have long applied a satellite state foreign policy strategy in order to protect their borders from the risk of being overrun by a surprise land invasion. North Korea has played just such a role for China which the ban on coal but import of anthracite highlights. Does anyone really think North Korea would be testing ballistic missiles without China’s tacit support?



Japan's manufacturing sector hasn't looked this good in years
Thanks to a subscriber for this article by David Scutt for Business Insider. Here is a section:
Output, new orders, new export orders, stock purchases and employment all grew at a faster pace than they did in January.
As lead indicators, the strength in new orders — both at home and abroad — bodes well for activity levels in the months ahead.
An increase in order backlogs, along with a faster decline in inventory levels, also points to a strengthening in activity levels.
“Encouragingly, with backlogs of work accumulating for the first time in 14 months, the added pressures on capacity should ensure growth will be maintained at a solid pace during at least the first half of this year,” said Samuel Agass, an economist at IHS Markit.
“Subsequently, business confidence was at a survey-high.”
That’s good news, and suggests the positive momentum in the global economy may have continued after a strong start to the year.



Eoin Treacy's view
Despite the fact the Yen has spent the last few months strengthening, in what was a steady reversion back towards the mean, the fact it is trading considerably below where it averaged in the last decade is a broad positive for the Japanese market. 

 



Email of the day on creating Preset Templates
I would like the code to access Eoin's Dow/Gold chart which was on this weekend's transcript.
Also is there a chart plotting inflation rate v interest rates.  Again an interesting comment made by Eoin



Eoin Treacy's view
Thank you for this question which may be of interest to other subscribers. To create the Dow/Gold Ratio follow these instructions.
Select the Dow Jones Industrials Average from the Major Charts Section of the Chart Library.
Click on the Charting tab (located right above the chart area)
Select Gold from the Relative dropdown menu.
Set the date range at the top of the page to 50 years.
Hit Apply.
To save this chart as a template so you can come back to it later.
Click on Charting.
In the greyed out area click on Save.
Give the Preset a name and Click OK.
This will save the ratio into your Chart menu located in the upper right. Anytime you wish to look at the Dow/Gold ratio all you need do is pull up the Dow’s chart and click on the relevant Preset from the dropdown menu.
To create the ‘real interest rate spread’ follow these instructions.
First find the Fed Funds Rate using the Chart Library’s search.
Click on Charting
Click on Other Relative
In the ensuing popup box type CPI and click on search.
Click on US Chained CPI All Items MOM
Change the ratio dropdown to difference.
Click on Apply.
To save this chart as a template so you can come back to it later.
Click on Charting.
In the greyed out area click on Save.
Give the Preset a name and Click OK.
This will save the ratio into your Chart menu located in the upper right. Anytime you wish to look at the chart of real interest rates all you need do is pull up the Fed Funds Rate Chart and click on the relevant Preset from the dropdown menu.
I would suggest adding the Fed Funds Rate and the Dow Jones Industrials Average to your Favourites so they are easy to find whenever you wish to view ratio or spread charts.



The Chart Seminar 2017




Eoin Treacy's view
The Chart Seminar 2017

We are currently in the planning stages for choosing venues for The Chart Seminar next year.
Here are the confirmed dates

Singapore April 12th and 13th
London November 16th and 17th

We will provide venue details shortly.

The CFA Institute has once more agreed to co-host the Singapore event and I will also provide certificates for continuous professional development to anyone who wants one.

I now also have some copies of the Mandarin edition of Crowd Money so please specify which version you would like to receive at the seminar when booking.

If you are interested in either of these venues or would like to suggest a venue please contact Sarah at sarah@fullertreacymoney.com  I would be more than happy to plan a US based seminar next year if we have the critical mass to make it viable and I will be stopping off in Japan on the way back from the seminar in Singapore if there is any interest for an event in Tokyo.

The full rate for The Chart Seminar is £1799 + VAT. (Please note US, Australian and Asian delegates, as non EU residents are not liable for VAT). Subscribers are offered a discounted rate of £850. Anyone booking more than one place can also avail of the £850 rate for the second and subsequent delegates.

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Wed, 22 Feb 2017 08:19:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27143/fillon-jumps-in-french-polls-as-macron-pays-for-campaign-gaffe-27143.html
M&A - One reason why I’m still bullish on UK equities http://www.proactiveinvestors.co.uk/columns/the-naked-fund-manager/27137/ma-one-reason-why-im-still-bullish-on-uk-equities-27137.html Wed, 22 Feb 2017 06:40:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-naked-fund-manager/27137/ma-one-reason-why-im-still-bullish-on-uk-equities-27137.html Oil price, Wood Group, And finally... http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27142/oil-price-wood-group-and-finally-27142.html WTI $53.88 +48c, Brent $56.54 +36c, Diff $2.66 +25c, NG $2.77 -5c


Oil price


A weak dollar ahead of the Fed meeting helped in a quiet market with the US closed for Presidents Day. Net long positions have crept up to another high and with the data from Saudi Arabia confirming the cutbacks, the price picked up.

A short blog today as I am off to see a couple of companies (not Wood Group as I am now off their list of ‘approved persons’!)


Wood Group


Wood Group figures today are broadly in line with expectations carefully managed but that is about the best that can be said for them. Operating profit was $244m but $34.4m at the net level giving EPS of 7.5p and EBITA was $363m down 22.8%. Exceptional costs were $140m which included the kitchen sink but margins were a creditable 7.4% and show the board’s plans for the business.

The dividend was 33.3p in total, up the 10% as prescribed by existing policy and against EPS of 7.5p (64.1p adjusted fully diluted) with a rise clearly untenable, so it is no surprise to see previous management’s’ policy ripped up and replaced with ‘progressive in line with cash flow and earnings’. Depending on how you look at the earnings number the divvi might be covered but I would suggest that shareholders should prepare themselves for a shock unless business picks up dramatically in the first half of this year, not something that the statement suggests.

WG shares have come off 10% today and are 20% off the recent peak as the market realises that the service companies aren’t all going to pick up as quickly as some of the E&P’s have, the coming results season will bring mixed fortunes and with Wood in the stronger camp this may be a portent of things to come…


And finally…


It was never going to be for Sutton and on the night they did well to keep the score down and left the FA Cup with a huge amount of respect all round. The Gooners now head for a home tie against Lincoln City and a likely semi-final spot, again. Who’s to say that Arsene may be evicted being second in the Prem and the FA Cup in his hand luggage, be careful of what you wish for eh?

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Tue, 21 Feb 2017 15:15:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27142/oil-price-wood-group-and-finally-27142.html
Today's Market View - Anglo American, Asiamet Resources, Ortac Resources, West Cumbria Mining http://www.proactiveinvestors.co.uk/columns/sp-angel/27141/today-s-market-view-anglo-american-asiamet-resources-ortac-resources-west-cumbria-mining-27141.html FTSE 350 Mining Index is up slightly this morning on the back of better than expected results by BHP with precious and base metals slightly off.
• Chinese iron ore futures hit CNY742/t ($108/t) climbing 3.9% today ont eh Dalian Commodity Exchange taking YTD gains to 33%.
• Steel rebar futures surged 2.4% on the Shnaghai Futures Exchange to the highest level since Dec/13 supported by the news of temporarily closing steel mills in the Hebei region on state orders.
• The US$ index is up this morning with the € sliding on the back of France’s presidential race poll results showing Ms Le Pen is taking the lead with 27% versus 20% scored by two other contenders Francois Fillon and Emmanuel Macron, according to OpinionLab data.
• Investors are selling French sovereign bonds with trading volumes at its highest level since the Eurozone crisis and the spread with German 10-year yields reaching 0.8pp for the first time since Aug/12.
• Additionally, Philadelphia Fed President Patrick Harker, a voting FOMC member, said Mar hike should not be discounted completely.
• Eurozone private sector growth strengthened in Feb to the highest since 2011 led by increases in major economies of the single currency block including Germany and France, slash Markit PMI numbers showed.
• Markit Composite PMI: 56.0 v 54.4 in Jan and 54.3 forecast.

Dow Jones Industrials     20,624 Markets were closed on Monday
Nikkei 225   +0.68% at 19,381 
HK Hang Seng   -0.76% at 23,964 
Shanghai Composite    +0.41% at 3,253 
FTSE 350 Mining   +0.90% at 17,238
AIM Basic Resources   -0.59% at 2,747 

Economic News
Japan – Manufacturing sector growth continued to strengthen in Feb reaching the highest level in 35 months with positive dynamics recorded on a number fronts.
• Markit report showed stronger new orders at both domestic and export markets, increases in backlogs of works as well as an improvement in a the business outlook.
• Stronger business sentiment translated into increases in employment levels.
• Markit Manufacturing PMI: 53.5 in Feb v 52.7 in Jan.

Germany – Manufacturing growth accelerated to the  strongest pace in over three years while services sector has also strengthened in Feb.
• Manufacturing sector growth  climbed for the third consecutive month on the back on increases in domestic and export new orders.
• Stronger growth translated into an increase in employment in both manufacturing and services.
• Input costs continued to increase with manufacturers citing higher prices for metals and oil-based products as well as the weak euro; services providers linked higher input costs to salaries and fuel.
• Final goods inflation climbed to a 68-month high as stronger demand allowed firms to pass higher costs onto consumers.
• Private sector outlook hit a new record high since the data on a combined sub-index was first calculated in Jul/12.
• Given strong start to the year “economic growth will strengthen in Q1/17 to around 0.6%qoq (up from 0.4%qoq in Q4/16 and 0.5%qoq forecast for the last quarter)”, Markit said.
• “German GDP to rise 1.9%... this year, which would be the strongest growth since 2011.”
• “Official annual rates of producers and consumer price inflation will continue to trend upwards from 2.4% and 1.9%, respectively, in Jan”.
• Markit Manufacturing PMI: 57.0 v 56.4 in Jan and 56.0 forecast.
• Markit Services PMI: 54.4 v 53.4 in Jan and 53.6  forecast.
• Makrit Composite PMI: 56.1 v 54.8 in Jan and 54.8 forecast.

France – Composite private sector growth index climbed to the highest level in 69 months led by increases in services segment.
• While new business continued to grow for eight consecutive months the rate of expansion at service companies far outweighed the one for manufacturing which posted only a marginal increase.
• Producer prices inflation continued to increase; although, strong competition and weaker end markets saw final goods prices declining for the 58th consecutive month.
• Business outlook strengthened from Jan and reached the strongest level in four-and-a-half years.
• Markit Manufacturing PMI: 52.3 v 53.6 in Jan and 53.5 forecast.
• Markit Services PMI: 56.7 v 54.1 in Jan and 53.9  forecast.
• Makrit Composite PMI: 56.2 v 54.1 in Jan and 53.8 forecast.

Ecuador election – Lenin Moreno faces runoff as he fails to reach 40% needed for outright victory over Guillermo Lasso
Ecuador waits for knife edge election results (BBC)
• Moreno received 39.09% of the vote but needed over 40% and a 10pt lead over his nearest rival.  Moreno was a former vice-president under Rafael Correa.
• Guillermo Lasso is the right wing candidate and has a better chance of success in the next round as he may gain from groups against Moreno.
• Lasso is a former banker.  He has pledged to cut taxes and government spending, to boost employment and evict Julian Assange from the Ecuadorean Embassy in London.  Now that gets our vote anyday.

UK – The House of Lords are starting a review of the draft Brexit law today ahead of the planned Article 50 trigger date next month.

UK – London property prices hit by lack of new money flowing into the capital
• Central London property prices are pulling back due to a lack of new money from foreign buyers.
• It is our view that central London property prices have been unfeasibly high for some time with prices inflated by sovereign wealth funds, money from wealthy Russian and Middle Eastern buyers and buy-to-let landlords providing a perfect storm for the property market.
• But all good things come to an end and property is no exception.
• Buying for short-term rentals through Airbnb continued to support the market for a while but has since been curtailed as new rules for short-term hotel style lets in London prohibit more than 90 days of this type of letting.  The rules were no-doubt lobbied by the protective hotel industry no doubt supported by security and safety issues.
• The collapse of Sterling has rendered sales by many overseas investors unattractive reducing transactions in the market, while transaction taxes have put off some new overseas buying.  This has served to stall the market to some degree.
• The potential for further falls in sterling devaluing UK property for existing investors may also be having some impact as is the prospect for Brexit to cause multinationals to relocate employees to properties elsewhere in Europe post-Brexit.
• Normally one might expect local buying to support the London property market but prices are way too high for most employees and even for city bankers who are suffering a certain amount of anxiety over job cuts at present.
• More stringent criteria for new and for extending existing mortgages also appears to be holding back the market and even the government’s help-to-buy scheme is being mainly applied outside London, removing this small pillar of support.
• Government support for the property market appears to have lessened with the resignations of Cameron and Osborne following the Brexit vote.
• An expected rise in US interest rates to 1.35% by the year end and a collapse in the bond market late last year is further persuading investors to seek, easier to manage, yield in more liquid assets.
• It is our view that London property prices remain vulnerable till looser lending practices return and London salaries recover alongside confidence in job security.  For the time being it’s going to be a buyers’ market.

Zimbabwe – Grace Mugabe reckons Robert Mugabe is so popular he could still run as a corpse in the 2018 election
• We suspect Grace is looking for a position in Mr Mugabe’s corpse cabinet if re-elected.
• We also suspect voting may yet again bring a surprisingly large turnout by already dead people as seen in the last election.

Currencies
US$1.0564/eur vs 1.0620/eur yesterday.   Yen 113.50/$ vs 113.05/$.   SAr 13.129/$ vs 13.168/$.   $1.243/gbp vs $1.245/gbp.  
0.766/aud vs 0.767/aud.   CNY 6.883/$ vs 6.878/$.

Commodity News
Precious metals:         
Gold US$1,234/oz vs US$1,236/oz yesterday
   Gold ETFs 58.5moz vs US$58.5moz yesterday
Platinum US$999/oz vs US$1,003/oz yesterday
Palladium US$768/oz vs US$777/oz yesterday
Silver US$17.97/oz vs US$18.00/oz yesterday
           
Base metals:   
Copper US$ 6,042/t vs US$6,012/t yesterday
Aluminium US$ 1,889/t vs US$1,891/t yesterday
Nickel US$ 11,090/t vs US$11,105/t yesterday
Zinc US$ 2,887/t vs US$2,819/t yesterday
Lead US$ 2,315/t vs US$2,271/t yesterday
Tin US$ 19,900/t vs US$19,600/t yesterday
           
Energy:           
Oil US$56.5/bbl vs US$56.1/bbl yesterday
Natural Gas US$2.767/mmbtu vs US$2.759/mmbtu yesterday
Uranium US$25.00/lb vs US$25.00/lb yesterday
           
Bulk:   
Iron ore 62% Fe spot (cfr Tianjin) US$91.1/t vs US$87.5/t
Chinese steel rebar 25mm US$565.6/t vs US$555.5/t
Thermal coal (1st year forward cif ARA) US$69.0/t vs US$66.9/t yesterday
Premium hard coking coal Aus fob US$153.6/t vs US$150.0/t

Tungsten – APT European prices $195-205/mtu

Company News
Anglo American (LON:AAL) 1352 pence, Mkt Cap £17.4bn – 2016 Preliminary results
• Anglo American reports attributable profits of US$1,594m for 2016 reversing a loss of US$5,624m in 2015.
• The company’s cost control and assets disposal initiatives have “enabled us to reduce debt by 34% to $8.5billion, significantly below our $10billion target.”
• Chief Executive, Mark Cutifani, commented “Despite a 3% year-on-year decrease in average prices, we delivered a $3.5billion increase in attributable free cash flow, a 25% increase in underlying EBITDA to $6.1billion and grew our underlying EBITDA margin by five percentage points to 26%.”
• The growth in the underlying EBITDA is dominated by a 57% increase in the contribution of the Group’s coal operations to US$1,646m followed by a healthy 50% rise in the iron ore and manganese business to US$1,536m and a 42% increase from DeBeers to US$1,406,.
• EBITDA growth benefitted from US$1,465m of cost and volume improvements, including US$1,175m of cost improvements, and a further US$694m of foreign exchange benefits, partially offset by lower prices (US$79m) , and inflation effects of US$578m.
• The company reduced overall net debt by US$4,410m to US$8,487m aided by a 38% improvement in cash flow from operations to US$5,853m. Capital expenditure was reduced by 43% to US$2,387m. Overall, a free cash flow deficit of US$982m in 2015 was reversed in 2016 with the Group generating US$2,562m of free cash flow.
• Proceeds of disposals amounted to US$1.8bn, “primarily from the sale of the niobium and phosphates business, which contributed $1.5 billion and the sale of its 9.7% stake in Exxaro Resources, contributing $0.2bn. The post-tax proceeds on disposals was $1.6billion (2015 $1.7 billion.)”
• Mr Cutifani commented that “the focus for the year ahead is on the ongoing implementation of the Operating Model across the portfolio and to continue to leverage the Group’s now significantly enhanced technical and marketing capabilities … In 2017, we are aiming to deliver an incremental $1 billion of net cost and volume improvements, 75% of which has already been identified.”
Conclusion: Anglo American has made significant capital and operating cost savings and strengthened its balance sheet during 2016. The Group is looking to achieve an additional US$1bn of savings in 2017, of which 75% have already been identified.

Asiamet Resources (LON:ARS) 5p, Mkt Cap £36m – Peter Bird strengthens Asiamet board
• Asiamet Resources, reports it has appointed Peter Bird to the board as its new ceo.
• Bird is a good hire for a small company like Asiamet and demonstrates support for Tony Manini who is moving to the role of executive chairman
• Peter Bird was most recently with Heemskirk Consolidated Limited where he worked with our analyst Simon Beardsmore on the construction and commissioning of the Los Santos tungsten mine in Spain as well as projects in Canada.  Bird has also worked with Western Mining Corporation, Merrill Lynch Equities and Newmont Mining. He has held senior executive roles at Newcrest Mining and Normandy Mining, two of Australia's largest gold producers with substantial operations in Indonesia.
• Asiamet are currently drilling the Beruang Kanan Main ("BKM") copper deposit in Central Kalimantan in Indonesia.
• 70 holes for 7,030m of diamond drilling have been done to date with a further 49 holes for another 3,870m planned.  A third drill rig was recently mobalised.
• Recent drill results include:
BKM32600-05   4.8 meters at 1.07% Cu (from 21.3 meters)
                        26.85 meters at 2.34% Cu (from 34.15 meters)
Including 3.0 meters at 3.38% Cu (from 38.0 meters)
                        Including 16.0 meters at 3.02% Cu (from 44.0 meters)
BKM32600-06   14.0 meters at 0.74% Cu (from 34.0 meters)
Including 4.0 meters at 1.53% Cu (from 36.0 meters)
BKM32550-08   4.35 meters at 4.93% Cu (from 3.00 meters
Including 2.0 meters at 8.97% Cu (from 4.0 meters)
33.5 meters at 0.75% Cu (from 34.5 meters)
BKM32100-02   4.0 meters at 1.87% Cu (from 2.00 meters)
2.0 meters at 1.36% Cu (from 17.00 meters)
BKM32150-05   30.0 meters at 0.75% Cu (from 9.00 meters)
Including 5.0 meters at 1.73% Cu (from 24.0 meters)
Including 5.0 meters at 1.03% Cu (from 34.0 meters).
Manini comments “The higher grade BKM044 Zone has demonstrated excellent continuity of copper mineralization over more than 500m of strike length and is up to 325 meters wide and 100 meters thick in parts. This continuity coupled with the consistently shallow nature of the mineralization is expected to have a strong positive impact on project economics as mine engineering studies are completed.”

BHP Billiton (LON:BLT) 1,403p, Mkt Cap £82.5bn – Half year results to December 2016
• BHP Billiton reports a reversal of the US$7.030 bn half year loss in 2015 to report US$3.204 bn of attributable profits in the six month period to December 2016.
• At the underlying EBITDA level, BHP Billiton reports a 65% year-on-year improvement to US$9.896bn (2015 US$5.994bn).
• The EBITDA performance is dominated by the contributions from the iron ore business - US$4.16bn (2015 US$2.82bn); coal - US$2.01bn (2015 US$ 155m) and; petroleum – US$2.00bn (2015 US$2.22bn). Copper contributed a further US$1.74bn (2015 US$829m) to EBITDA.
• Net Debt has been reduced by 23% to US$20.057 bn reducing gearing to 24% from the US$25.921bn (30%) reported at 30th June 2016.
• The Group reduced its capital and exploration expenditure by 38% to US$2.7 billion and the company reports that “We now expect to invest US$6.5billion in the 2017 financial year and US$6.3 billion in the 2018 financial year.”
• Group Chief Executive, Andrew Mackenzie, commented that “Greater productivity and increased capital efficiency supported strong free cash flow generation of US$5.8 billion. … As we further strengthen the balance sheet our ability to invest counter cyclically will only be enhanced.”
• The company has also announced this morning that it has approved a bond repurchase plan of US$2.5 billion which will “target 2018,2019, 2021, 2022 and 2023 US dollar denominated notes and be funded by BHP Billiton’s strong US$14 billion cash position.”
• The Company notes that it expects world economic growth in the range 3-3.5% in 2017 and that it expects “China’s economic growth to moderate in the coming year … [as] … China’s policymakers … seek a balance between the pursuit of reform and the maintenance of macroeconomic and financial stability”.
Conclusion: BHP Billiton has achieved a strengthening of its balance sheet and the plan to repurchase US$2.5bn of debt should help position the company to take advantage of opportunities to “invest counter cyclically” should they present themselves in the future.

Ortac Resources* (LON:OTC) 0.03p, mkt cap £2.1m – Andiamo fundraising
• Ortac Resources reports that its associate company, Andiamo Exploration has raised US$0.5m through a placement of 5m new shares to Emerald Ex at a price of 10 cents.
• Emerald Ex is reported to be a subsidiary of NutureEx BV, “which is funded by African Mineral Exploration and Development (AMED) which is a private equity group investing in mineral exploration and development projects predominately in sub-Saharan Africa.”
• The company has also announced that “Andiamo intends to offer new shares under the same terms as the Emerald placement, US$10 cents per share, to raise up to US$1.0 million”.
• The placing and new offering will reduce Ortac’s current 26.99% interest in Andiamo to 18.48%.
• The new funds, if the offering is adequately  subscribed will enable Andiamo to “extend its exploration efforts to other parts of the Haykota licence, including the Frtaka VMS target, the substantial Shambotei gold showings around the hundreds of local artisans working to recover gold in the area, and to progress the development of the Yacob Dewar oxide gold deposit.”
• Andiamo and Environminerals East Africa Limited (EEAL) have now “terminated the Joint Venture arrangement over a part of the Haykota licence for consideration of 13,140,365 shares of Andiamo issued to EEAL at an implied value of approximately US$17cents per share.”
Conclusion: Additional funding should enable Andiamo to further its exploration efforts in Eritrea while the backing of AMED brings an investor with an established history in African exploration projects to Andiamo’s register.
*SP Angel acts as Nomad and broker to Ortac Resources

West Cumbria Mining (Private) - Potential resurrection of Haig Pit and Whitehaven coal mine in Cumbria, UK
• The Mail online reports that Mark Kirkbride and his partner are planning on reopening the Whitehaven coal mine in Cumbria, UK
• The mine is currently a museum with Kirkbride using part of the museum facilities as his offices
• The company plan to restart mining somewhere near the site of the Haig Pit on the cliffs of Whitehaven
o The Haig Pit closed in 1986, in the aftermath of the miners’ strike.
o The press report indicates that the company are preparing to start digging for coal a few hundred yards down the road in a muddy field surrounded by rows of modest houses, close to The Stump pub.
o The first coal from Kirkbride’s mine is expected by the end of 2019 – just over 100 years since the Haig Pit opened first time around.
o Kirkbride expects to create 500 direct jobs with around 1,000-2,000 indirect jobs supported in the area with full-time jobs paying between £40,000-£60,000 in the area.
o There is no mention of licenses, permits or environmental reviews for the new coal mine.  Minor details perhaps?

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Tue, 21 Feb 2017 15:12:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27141/today-s-market-view-anglo-american-asiamet-resources-ortac-resources-west-cumbria-mining-27141.html
VSA Capital Market Movers - Sula Iron & Gold, Anglo American and BHP Billiton http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27140/vsa-capital-market-movers-sula-iron-gold-anglo-american-and-bhp-billiton-27140.html Sula Iron & Gold (LON:SULA)
Sula Iron & Gold has announced the issue of 9.375mn ordinary shares at an exercise price of 0.16p following the exercise of warrants. The gross proceeds raised amounted to £15k. Share capital is now 2,086mn ordinary shares.

We reiterate our Buy Recommendation and target price of 1.7p/sh.

Anglo American (LON:AAL)
Following strong production results Anglo American  has announced strong full year results. Group revenue of US$23.1bn was marginally higher at 1%. However, margins were significantly stronger owing to cost cutting and currency depreciation and EBITDA of US$6.1bn was up 25% YoY. The key segments which drove the improvement were De Beers, iron ore and coal although this was offset by modest declines in platinum and copper. Net income of US$1.6bn reversed a loss of US$5.6bn in the prior year.

AAL opted not to pay a dividend in 2016. The net debt target of US$10bn was well beaten, however, as the strong earnings combined with asset sales (US$1.8bn) and capex reduction (-37% YoY to US$2.5bn) resulted in a 34% YoY decline in net debt to US$8.5bn. AAL is targeting a further US$1bn in cost savings and is aiming to resume dividend payments by the end of 2017.

BHP Billiton (LON:BLT)
BHP Billiton  has released robust interim results as the strong recovery in bulk and base metal commodity prices offset production weakness in petroleum, copper and thermal coal. Group revenues for H1 FY 2017 were up 20% YoY to US$15.7bn driven primarily by the recovery in prices in iron ore, copper and coal. Underlying EBITDA of US$9.9bn was up 65% primarily as a result of the strong top line. EBITDA in the iron ore division was up from US$2.8bn to US$4.2bn while in copper EBITDA was up from US$0.8bn to US$1.7bn and US$0.2m to US$2bn in coal.

Net debt decreased from US$25.9bn to US$20bn owing to a 38% reduction in capex to US$2.7bn combined with the significant recovery in earnings. The final dividend of US$0.3/sh. meant that the full year dividend of US$0.4/sh. was up 150% YoY.

BLT has announced an increase in exploration spending for FY 2017 and 2018 by around US$400m.

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Tue, 21 Feb 2017 14:50:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27140/vsa-capital-market-movers-sula-iron-gold-anglo-american-and-bhp-billiton-27140.html
Miners 1, HSBC 0 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27139/miners-1-hsbc-0-27139.html FTSE 100 Index called to open flat at 7295, still holding on to February’s uptrend and the key 7300 mark. This keeps Bulls optimistic of a bounce and rally back to January’s 7365 record highs, while Bears focus on RSI negative divergence that could be the precursor for a breakdown. Bulls will be looking for a break above 7300 while Bears want to see another test of 7290. Watch levels: Bullish 7305, Bearish 7285.

Calls for a flat open come after a mixed day in Asia, echoing Europe’s close yesterday with no lead from the US on account of the President's day holiday. Politics still to the fore as polls suggest Le Pen closing the gap on rivals just two months before the first round of the French election. Note Greece has also missed yet another bailout deadline as creditors maintain demands on reforms.

Japan’s Nikkei is outperforming thanks to a stronger USD producing helpful Yen weakness, and despite mixed manufacturing/industrial data.  Australia’s ASX is in the red, underperforming as the stronger Greenback impedes the key commodity space, bar Iron Ore which is pushing fresh 2yr highs and oil prices challenging 2017 falling highs resistance.

FTSE sentiment this morning likely hampered by disappointing HSBC results (profits -62%, smaller buyback) sending the shares 4% lower in Hong Kong. Remember the stock makes up 7.1% of the index which means it has a big influence. On the flipside, in the Mining space, note Anglo American profits beating expectations and BHP Billiton back to profitability thanks to higher commodity prices and operational improvements allowing it boost the dividend.

US equity markets were closed yesterday for President’s day, however futures are pointing to a marginally higher opening on Wall Street later today for the Dow Jones, S&P 500 and Nasdaq, despite the former two bourses falling back from yesterday’s early morning highs.

Crude Oil is currently challenging 2017 falling highs resistance, having rallied yesterday on account of a flat US dollar and weaker trading volumes with US traders enjoying a long weekend. Investors are betting on hopes that the supply in the market has been rebalanced thanks to OPEC’s coordinated production cuts with non-members, while the increase in US production will not be significant enough to fill the gap.

Having fallen overnight in reaction to the stronger dollar, Gold is bouncing from a duo of support at $1233, however bearish sentiment could lead to a breakdown of support as no less than three US Federal Reserve speakers are scheduled today. With their Boss Janet Yellen having produced perhaps her most hawkish speech in recent memory last week, will the regional Fed heads concur?

In focus today will be day 2 of the second reading of the Brexit Bill debate in the House of Lords before its heads to the committee stage and an eventual vote, with or without amendments.

Speakers today include ECB vice president Constâncio who participates at the ECOFIN meeting in Brussels and BoE Governor Carney who testifies before UK Parliament's Treasury Committee on the central bank's latest inflation report.

In the afternoon what Fed members Kashkari (voter, dove, “Fireside chat on the economy”), Harker (voter, hawk, “Economic outlook”) and Williams (non-voter, centrist, "Getting to Know the Fed,") have to say will be of particular interest in light of hawkish Fed comment of late and supportive data.

Data-wise, it’s all about PMI Manuf & Services with the Eurozone seen flat in Feb (France down for both; Germany Manuf down, Services up) while the US gains a little ground for both segments.

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Tue, 21 Feb 2017 14:39:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27139/miners-1-hsbc-0-27139.html
Beaufort Securities Breakfast Alert: Premier African Minerals, Bovis Homes, Hammerson and Mineral and Financial Investments http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27138/beaufort-securities-breakfast-alert-premier-african-minerals-bovis-homes-hammerson-and-mineral-and-financial-investments-27138.html "With the US markets closed for a public holiday and little in the way of significant macro data to shape sentiment, yesterday's equity trading in London was largely driven by corporate events. Top of these was Heinz's apparent 'amicable' withdrawal of its approach on Unilever (ULVR.L), although disappointing full year results also knocked Bovis Homes (BVS.L) hard while RBS (RBS.L) shares celebrated the news that its management had abandoned efforts to sell Williams & Glyn. The fact that Unilever shares only gave back half of Friday's gains was testament to the opinion that Heinz, backed by dealmaker Warren Buffett, is considered unlikely simply walk away from a proposal that it will have spent months intricately crafting. So the corporate 'dance' has now moved behind the scenes, with Heinz ultimately wishing to arrive at a recommended merger although it is, of course, is permitted to make another unsolicited approach in six months' time. Meanwhile, there will be the opportunity to trade volatility in both their shares, as contradictory stories inevitably ebb and flow. During this morning's Asian trading, HSBC (HSBA.L) also kicked off the banking sector's reporting season with a drop in pre-tax profits and dividend declaration much as anticipated, although a US$1bn share buy- back following US$2.5bn in 2H'2016 rather disappointed investors. This left the Nikkei leading the regions gains despite the US$ being broadly stronger against all local currencies, while the Hang Seng and Shanghai Composite went in opposite direction and the ASX trod water. Economic releases due from the UK this morning include January Public Sector Net Borrowing followed by a 10:00hrs speech to MPs from The Governor of the Bank of England. The EU is due to provide Markit PMI for February, while the US also details Markit PMI and its Redbook along with speeches from FOMC members Patrick Harker and John Williams. UK corporates due to report also include Anglo American (AAL.L), BHP Billiton (BLT.L), InterContinental Hotels (IHG.L), Galliford Try (GFRD.L) and Wood Group (WG..L). Traders will also be listening out for more news from Greece, which has taken a small but significant step with respect to re-commencing its bailout negotiations as the Greek government agrees with Eurozone Finance Ministers to receive a technical team in Athens. The London equity market is seen opening quietly this morning, with the FTSE-100 expected to be down 10 points or so in opening trade."
- Barry Gibb, Research Analyst

 

Markets


Europe
The FTSE-100 finished yesterday's session little changed at 7,299.86, whilst the FTSE AIM All-Share index dipped 0.01% to 907.82. In continental Europe, the CAC-40 finished down 0.05% at 4,864.99 whilst the DAX was 0.60% higher at 11,827.62.
Wall Street
In New York last night, Wall Street was closed for the Presidents' Day public holiday.
Asia
In Asian markets this morning, the Nikkei 225 had risen 0.7% to 19,386.62, while the Hang Seng fell 0.33% to 24,066.88.
Oil
In early trade today, WTI crude was up 0.47% to $53.65/bbl and Brent was down 0.04% to $56.16/bbl.

Headlines
HSBC shares down as annual profit falls 62% Shares in HSBC (HSBA.L) have fallen after the bank saw a sharper-than-expected drop in annual profits for 2016. The $7.1bn (£5.7bn) pre-tax profit is 62% lower than the $18.9bn reported a year earlier. HSBC attributed the fall to a string of one-off charges, including the sale of its operations in Brazil. It said its performance had been "broadly satisfactory" given "volatile financial conditions" but warned a rise in global protectionism was a concern. HSBC shares were down by 3.5% in Hong Kong.

Company news


Mineral and Financial Investments (LON:MAFL, 11.62p) – Speculative Buy
Mineral and Financial Investments Limited (MAFL), an investment company that focuses on the natural resources sector, announced yesterday that it raised £350,000 from the issue of 4.375M shares at a price of 8p per share. The funds raised will be used to back potential new investments and general working capital purposes. MAFL is a 49% shareholder of TH Crestgate, a private Swiss-based investment company that owns 85% of the Lagoa Salgada copper-zinc project in southern Portugal. TH Crestgate is currently drilling four holes totally 1,700m on Lagoa Salgada to test for the potential of copper mineralisation within a porphyritic intrusion.

Our view: We eagerly await drill results from the Lagoa Salgada project, which is highly prospective for copper and zinc mineralisation. Drilling is currently targeting an IP anomaly extending south of the existing resource which could have potential for copper porphyry style mineralisation. We look forward to initial assay results in the coming weeks and maintain a Speculative Buy rating on the stock.

Premier African Minerals (LON:PREM, 0.78p) – Speculative Buy
Premier African Minerals, the South and Western Africa focused mineral explorer and developer, announced today an update on its RHA tungsten mine and its lithium/tantalum exploration project both located in Zimbabwe. Shaft upgrades have now been completed and terms for the contract mining by African Mining and Exploration (Afmine) have been finalised at RHA. Under terms of the agreement, up to 16,000t of ore per month from underground operations will be delivered to the plant and at the same time 24,000t per month will be delivered from the open pit operations, all commencing in March 2017. The Company also announced assay results form its Zulu lithium and tantalum project where a recent drilling programme was designed to test the 3.5km strike length of the deposits. Lithium mineralisation was intercepted over 15.63m grading 1.54% Li2O, including 4.31m grading 2.16% Li2O (DDH ZDD-3). Drill hole ZDD-15 returned 5.6m grading 1.46% Li2O, including 1.97m grading 2.04% Li2O.

Our view: The conclusion of the mining contract is an important milestone for restarting operations at the RHA tungsten mine. The contractor, Afmine, has also elected to take its second payment of £100,000 in equity. With shaft upgrades now complete and implementation of the XRT ore sorter continuing, we expect commissioning of the mine to begin soon. We are also encouraged by initial drill results at Zulu, while tantalum assay results are still pending we note the high-grade lithium intersected in ZDD-3, up to 3.3 Li2O. We look forward to initial start-up at RHA in the coming weeks and additional drill results from the Zulu lithium and tantalum project. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Premier African Minerals plc

Bovis Homes (LON:BVS, 755.00p) – Buy
Reporting finals for the year ended December 2016, management detailed a clear set of priorities to deliver operational improvements following a difficult year. Although revenues grew by 11%, basic earnings fell by 5% as operating margins declined by 2.1% and ROCE fell by 1.3%. Weakness in the production process and a high level of customer service issues led to a one-off £7m customer care provision. The focus of 2017 has therefore been to reset operations, while delivering clear operational priorities which will result in a deliberate slowing in the Group's rate of production. Management has adopted a strategic and structural review to ensure it delivers the highest possible future returns from Bovis' valuable land assets, having added over 3,000 plots to its high-quality consented landbank. With a strong financial position at year end, with net cash increasing to £38.6m, the Board recommended an increase of 13% to the total 2016 dividend taking the payout to 45p/share.

Our view: Amongst the basket of UK housebuilders, Bovis is the one that has messed-up. A great shame, particularly given that it occurred during an extended period that history will almost certainly rank as offering close to ideal trading conditions, one in which management should be 'making hay' rather than 'fixing a leak'. Target completion volumes for 2017 are now expected to be some 10% to 15% below the 2016 level, before anticipating a return to normal industry production trend levels; new customer care staff have been recruited and management are reviewing regional programmes to improve Board-level controls. The background market remains generally supportive, with overall demand conditions across the UK unchanged on H2'2016, although house price inflation is muted while build costs are presently running at 4%+, in line with that being experienced across the sector. So the interim CEO appears to be taking the right steps, which to some extent includes altering management culture, and hopefully this will be built upon when a new, permanent replacement has been installed. Assuming this takes place before the end of the first half, and that he/she builds upon the steps already taken as well as bringing a background capable of running the business through the inevitable cycles that national housebuilders suffer, the operations that emerge should become a more predictable, and therefore more valuable, operation. Following yesterday's 10% hit on the shares, Bovis now trades on a deep discount to its peer sector in terms of 2018E P/TNAV, standing at 0.90x compared with 1.4x while also offering a sector-beating 6% coupon. The shares look cheap, but given that they continue to carry greater than average risk, Beaufort has retained its 'Buy' recommendation while lowering its price target from 925p/share to 840p/share.

Bovis Homes (LON:BVS, 755.00p) – Buy
Reporting finals for the year ended December 2016, management detailed a clear set of priorities to deliver operational improvements following a difficult year. Although revenues grew by 11%, basic earnings fell by 5% as operating margins declined by 2.1% and ROCE fell by 1.3%. Weakness in the production process and a high level of customer service issues led to a one-off £7m customer care provision. The focus of 2017 has therefore been to reset operations, while delivering clear operational priorities which will result in a deliberate slowing in the Group's rate of production. Management has adopted a strategic and structural review to ensure it delivers the highest possible future returns from Bovis' valuable land assets, having added over 3,000 plots to its high-quality consented landbank. With a strong financial position at year end, with net cash increasing to £38.6m, the Board recommended an increase of 13% to the total 2016 dividend taking the payout to 45p/share.

Our view: Amongst the basket of UK housebuilders, Bovis is the one that has messed-up. A great shame, particularly given that it occurred during an extended period that history will almost certainly rank as offering close to ideal trading conditions, one in which management should be 'making hay' rather than 'fixing a leak'. Target completion volumes for 2017 are now expected to be some 10% to 15% below the 2016 level, before anticipating a return to normal industry production trend levels; new customer care staff have been recruited and management are reviewing regional programmes to improve Board-level controls. The background market remains generally supportive, with overall demand conditions across the UK unchanged on H2'2016, although house price inflation is muted while build costs are presently running at 4%+, in line with that being experienced across the sector. So the interim CEO appears to be taking the right steps, which to some extent includes altering management culture, and hopefully this will be built upon when a new, permanent replacement has been installed. Assuming this takes place before the end of the first half, and that he/she builds upon the steps already taken as well as bringing a background capable of running the business through the inevitable cycles that national housebuilders suffer, the operations that emerge should become a more predictable, and therefore more valuable, operation. Following yesterday's 10% hit on the shares, Bovis now trades on a deep discount to its peer sector in terms of 2018E P/TNAV, standing at 0.90x compared with 1.4x while also offering a sector-beating 6% coupon. The shares look cheap, but given that they continue to carry greater than average risk, Beaufort has retained its 'Buy' recommendation while lowering its price target from 925p/share to 840p/share.

 

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Tue, 21 Feb 2017 14:30:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27138/beaufort-securities-breakfast-alert-premier-african-minerals-bovis-homes-hammerson-and-mineral-and-financial-investments-27138.html
Oil price, Sound Energy, Lekoil, President, Velocys, And finally... http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27136/oil-price-sound-energy-lekoil-president-velocys-and-finally-27136.html WTI $53.40 +4c, Brent $55.81 +16c, Diff -$2.41 +12c, NG $2.83 -2c


Oil price


The oil price was effectively flat last week, a few cents off between friends. The same influences are exerting and unless something changes dramatically we will remain range bound. All the reports are in and show around 90% adhesion to the Opec and Non-Opec agreement which is better than the doom mongers predicted and talk is already about not just extending the agreement come June but tightening it as well. By then it should be showing signs of working and even a rollover should create a modest shortage, a further cut would see prices rising again. The rig count only rose by 6 in oil last week, less than the overall number of 10 which is hardly blowing the doors off. The US is closed today for Presidents Day.


Sound Energy


News from Sound that TE-8 spudded yesterday which is highly encouraging as this 12 km step out appraisal well is drilling further into the TAGI reservoir and on deeper into the Paleozoic formation. The initial well should take 40-50 days plus 30 days for the sidetrack. In addition, the company has signed binding contracts for the OGIF deal which is very good news for shareholders as it opens up more of the company to them. With only weeks before the spud of the Badile well in Italy everything appears to be firing on all cylinders for Sound.


President Energy


I remain confident that President will deliver and today it announces a Puesto Guardian operations update. The rig is mobilised and operations have commenced, the programme is first to sort out the 2 producing wells that are in maintenance followed by the workovers of shut-in wells. To ensure value for money they are doing the multi-well frac programme in batches of three and also creating a water injector. All being well the target of 1,200 b/d in Argentina by the ‘end of summer 2017’ should be achieved.I have a call with Peter Levine coming up so may be able to add more later but this is broadly positive. at long last….


Lekoil


I met up with Lekoil recently after a number of followers suggested that it would be a good idea, it certainly was and particularly well timed. Today they have announced that they have started continuous production at Otakikpo, 5/- b/d now and up to 10/- b/d by the end of Q2 2017. The well is in a relatively safe part of town in the eastern Delta, away from the violence and the Shell/Chevron pipelines, I am told….It is also highly efficient with a cash breakeven of around $24. With some exciting projects on the case, highly supportive shareholders and now signs of activity Lekoil looks quite interesting, even to someone who normally avoids Nigeria for choice.


Velocys


I recently met with David Pummell, CEO of Velocys, a company I have always found most interesting, if not usually rather too far away from visible progress. On meeting David again he greeted me with a glass jar and significant smile, a jar of wax made by VLS only 15 years after conception. With a plant now capable of making the product the key is how to leverage it and bring it to the market. The ENVIA plant in Oklahoma is the first smaller scale commercial GTL plant in the world and the opportunities are plenty, most important, these things are done in partnership which VLS have been building lately.

The company has a number of avenues to follow which shows important diversity and risk aversity, industries, technologies and geographies help to give balance and avoid any single market. These include focusing on the renewable jet fuel market in the US, stranded gas onshore in Canada and a number of ‘significant’ opportunities in Asia. The former has a substantial addressable market in the US for jet and diesel, up to 30 plants where VLS could put in kit and of course without doing the heavy lifting, design, build and hand over the keys is the mantra. Partnerships have been and will continue to be important, indeed take the potential with fuel traders with their need for credits, VLS have made a significant hire in this area already. Refiners and feedstock owners also come into this category as do airlines who will see increasing regulation on fuel blendings.

With regard to Asia much progress has been made in the last year and in the longer term I expect this area to be extremely valuable to the company. The size of the plants in China, made in partnership will be the most cost effective in the market and of course here, as in  the USA, bank financing and loan guarantees are available at the right times. I am reliably informed that much progress is being made in some key areas in China particularly where stranded gas is also a problem.

As time moves on there is little doubt that VLS is growing up, last years raise and a much lower cash burn helps and the balance sheet actually looks moderately healthy, by its standards. Shareholders appear to be highly supportive, the next year is looking increasingly exciting and  progress is looking as good as it has for a long time.


And finally…


It was mainly about the FA Cup at the weekend and the giant killing by Lincoln City who beat Burnley and to a lesser extent Milwall who beat the Foxes. Chelski, the Red Devils, Spurs and Boro go through as well although the Noisy Neighbours were held to a draw at Huddersfield…The Gooners are at Sutton tonight and will play Lincoln in the next round, apart from that the stand out tie is at the Bridge where Chelski host the Red Devils.

Cue card was majestic on Saturday and the Tizzard yard will be busy on Gold Cup day with four already in the picture.

Ben Stokes went for £1.7m in the IPL to play for the Rising Pune Supergiants, as one does, Tymal Mills went for £1.4m (?) with Woakes fetching £500/-, Morgan £245/- and Roy £120,-.

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Mon, 20 Feb 2017 13:31:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27136/oil-price-sound-energy-lekoil-president-velocys-and-finally-27136.html
Breakfast News -AIM Breakfast : Sareum Holdings, Feedback, Fishing Republic, GAN, Condor Gold http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27135/breakfast-news-aim-breakfast-sareum-holdings-feedback-fishing-republic-gan-condor-gold-27135.html What’s cooking in the IPO kitchen?

Anglo African Oil & Gas— Admission expected early March. Acquiring stake in producing near offshore field in the Republic of the Congo.

Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play

Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime.  Issue closing 23 Feb.

  
 
Breakfast buffet

Sareum Holdings* (LON:SAR) 1.07p £28.4m

HY Dec 16 from the specialist cancer drug discovery and development business  showing a Maiden profit on ordinary activities (after taxation) of £573,000, driven by the licensing agreement for its CHK1 inhibitor cancer drug candidate.  Cash at bank at period end was £2,305,000 (2015: £335,000) and the Company's unspent investment in the Chk1 Project was £258,000 (2015: £841,000). TYK2 progressing to lead optimisation in auto immune and also being investigated for lupus and  acute lymphoblastic leukemia ("T-ALL") and other cancers. Biomarker strategy on Aurora+FLT3 has made good progress with the candidate showing measurable reductions on markers downstream of both Aurora B and FLT3 signalling in a disease model of FLT3 mutant Acute Myeloid Leukemia.

Feedback (LON:FDBK) p £m

HYNov16 results from specialist in imaging tools for clinical decision makers.  Revenue  was £203,000 (2015: £225,000) and the loss after tax was £126,000 (2015: Loss £143,000). The loss before interest, tax and amortisation was £115,000 (2015: Loss £132,000). The cash balance at 30 November 2016 was £63,000 (30 November 2015: £164,000). Received a significant number of purchase orders for TexRAD research versions during the period, the majority of which were installed shortly before the period end. Accordingly, these sales only made a modest contribution to revenue in the period.  received additional new orders from customers in Singapore and Korea. Expects substantial increase in TexRAD-related revenue in  H2. There are no market forecasts.

Restore (LON:RST) 369p £412.52m

Acquisition of The ITAD Works Limited, a Surrey-based provider of IT asset recovery and recycling services. ITAD Works was founded in 2002. For the 12 months ending 30 September 2016, it generated revenues of £3.5 million based on unaudited management accounts. The acquisition was funded from Restore's existing bank facilities. FYDec17E rev of £132.26m and PBT of £22.27m. Div of 4.84p.

Fishing Republic (FISH.L) 41.5p £15.7m

FYDec16 trading update from one of the largest fishing tackle retailers in the UK. The Company continues to make encouraging progress and results for the year are expected to be in line with current market expectations. Revenue is expected to show an increase of approximately 40% year-on-year, driven by the addition of new stores, organic growth across existing stores, and strong growth in own website sales.  Own website sales increased by 132% year-on-year and accounted for c. 40% of Total online sales for the year. As expected, with lower third party sales, total online sales decreased but, importantly, overall gross margins improved. 3 stores opened in H1. Lincoln acquired in September, plus Mildenhall opened before year end and Milton Keynes in January. Good pipeline ahead. FYDec16E of £5.7m and PBT of £0.4m.

GAN (LON:GAN) 36p £25.2m

The award-winning developer and supplier of enterprise-level B2B Internet gaming software, services and online gaming content in the United States, has executed an agreement with Everi Games Inc., a subsidiary of Everi Holdings Inc. (NYSE: EVRI) to launch several key Everi Class II and Class III slot titles online for GAN's US casino Simulated Gaming™ clients. This is an expansion of an already well developed partnership. FYDec16E £7.99m rev and £4.8m loss.

Condor Gold (LON:CNR) 65p £34.39m

Placing at 62p together with a proposed Director's subscription of 161,290 units has raised £5.242m. The net proceeds will be used for general working capital purposes and to continue with the strategy to fully permit Mina La India in Nicaragua for a 2,800tpd processing plant with capacity to produce 100,000oz gold p.a., secure the surface rights for the rural land that host and surround the future mine infrastructure and continue work to demonstrate the significant exploration upside of the 2.4 millionoz gold resource at 4.0g/t gold at La India Project via scout drilling on new exploration targets that have never been drilled and expand some of the existing resource areas.

European Metals (LON:EMH) 76.5p £99m

EMH announced on Friday a  substantial upgrade of its JORC compliant Indicated Mineral Resource at the Company's 100% owned Cinovec Lithium/Tin Project in the Czech Republic, confirming its status as the largest Lithium resource in Europe.   Lithium Indicated Resource increased 50% to 3.9 Mt LCE, contained in 347.7 Mt @ 0.45% Li2O and 0.04% Sn (0.1% Li cut-off). Total contained tin in the Total Mineral Resource increases to 262,600 tonnes. Lithium Exploration Target remains 350 to 450 Mt @ 0.39% to 0.47% for 3.4 Mt to 5.3 Mt of LCE.

7digital Group (LON:7DIG) 7.87p £9.11m

The specialist in end-to-end digital music solutions, announced that it has signed a deal with DTS, a pioneer in audio solutions for automotive, mobile devices, home theatre systems and cinema. The Company has been contracted to partner with DTS, a wholly owned subsidiary of Tessera Holding Corporation, on the development of new high-resolution audio solution prototypes for the automotive market. DTS provides dashboard-mounted audio for several leading brands and its portfolio of technology is integrated in more than two billion devices globally. This deal is a significant move for 7digital into the in-car vertical. The deal will contribute to 7digital's revenues for 2017. FYDec17E

Premier African Minerals (LON:PREM) 0.875p £34.73m

The mining exploration and production company, reported further assay results from shallow drilling from its high grade Zulu Lithium and Tantalum Project. The drilling programme was designed to drill test for the extensive lithium mineralisation over the known 3.5 km strike length of this deposit. Exceptionally high grade lithium encountered at Zulu with Drill-hole ZDD-3 returning grades up to 3.3% Li2O between 25.14 meters and 54.15 meters down hole, including 4.3 meters from 40.15 meters grading 2.16% Li2O. A new drilling programme has commenced with the aim of increasing the size of further

Edenville Energy (LON:EDL) 0.85p £6.76m

£2m oversubscribed subscription at 0.8p. The net proceeds from the Subscription will be used predominantly for the advancement of mining development and to facilitate the Company's progress into full coal mining operations as soon as possible, including purchase of a wash plant and crusher and facilitate the transportation and installation of these items on site in Tanzania, and supporting infrastructure, including weighbridge facilities and implementing systems for coal delivery to customers.

*A corporate client of Hybridan LLP

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Mon, 20 Feb 2017 10:55:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27135/breakfast-news-aim-breakfast-sareum-holdings-feedback-fishing-republic-gan-condor-gold-27135.html
Today's Market View - Condor Gold, FinnAust Mining, Gemfields, Petra Diamonds, Plymouth Minerals, Premier African Minerals and Stellar Diamonds http://www.proactiveinvestors.co.uk/columns/sp-angel/27134/today-s-market-view-condor-gold-finnaust-mining-gemfields-petra-diamonds-plymouth-minerals-premier-african-minerals-and-stellar-diamonds-27134.html Condor Gold (LON:CNR) – Raising £5.2m
FinnAust Mining* (LON:FAM) BUY Target Price 15p – FinnAust consolidates holding in major asset
Gemfields (LON:GEM) – Interim Report and Lusaka emerald auction update
Petra Diamonds (LON:PDL) -  Interim results and trading update.
Plymouth Minerals (ASX:PLH) – 250m grading 1.01% lithium from first drill hole at San Jose in Spain
Premier African Minerals (LON:PREM) – Intersections of mineralisation at Zulu
Stellar Diamonds (LON:STEL) Suspended – Discussions to acquire Tonguma terminated in favour of tribute mining

Gold prices look set to rise - Alan Greenspan reckons the Euro will collapse and the ECB chief should come clean on the state of the Eurozone economy.
• Greenspan says it’s only a matter of time before the Euro collapses. Greece is suffering yet another debt crisis, Italy is also having to bail out its banks wiping out the savings of many Italian investors, Deutsche Bank has issues and Brexit may cause further economic consternation.
• While we agree with many of Greenspan’s comments and views we wonder how concerned he is about the mountain of US debt which exists and which is likely to grow under the Trump administration.
• With so much debt and banking issues in the world it is no wonder that investors are increasingly buying gold as a preferred currency

Copper prices are up nearly $50/t trading above the $6,000/t level on the news of a deadlock in negotiations between Freeport and local authorities over terms of its production license.
• Freeport said it is prepared to take the government to court over changes to the existing Contract of Work at Grasberg while halting its copper concentrate shipments in the meantime.
• The Company “reserved all of its rights pursuant to the contract against the government, including the right to commence arbitration to enforce all provisions of the contract and seek applicable damages”.
• Gold is little changed after climbing in seven out of the past eight weeks.
• ETFs holdings recorded the first decline since Jan 30 on Friday.
• Brent is up for a third consecutive day after posting the tightest trading range in 13 years last week as planned OPEC production cuts are met with increased US output.
• US drilling rig count climbed to the highest level since Oct/15 (+6 to 597), according to the Baker Hughes data; whereas, US oil production is reported to have reached the strongest level since Apr last year.
• Chinese steel futures jumped 2.1% taking YTD gains to 24% on the news the government asked major steel producers in Hebei, the largest producing province, to cut output on environmental reasons ahead of an annual parliamentary meeting next month in Beijing. Iron ore futures followed steel prices climbing 1.7% on the Dalian Commodity Exchange.

Dow Jones Industrials  +0.02% at 20,624 
Nikkei 225   +0.09% at 19,251 
HK Hang Seng   +0.47% at 24,146 
Shanghai Composite    +1.18% at 3,240 
FTSE 350 Mining   +0.65% at 16,974
AIM Basic Resources   +0.57% at 2,763 

Economic News
US – Markets are closed today as the nation celebrates the President’s Day.
• Loretta Mester, the Cleveland Fed President, reiterated the central bank view over the continuation of the monetary policy tightening cycle during her speech in Singapore this morning.
• She said the economy is on a “sound footing” and she is comfortable with rates increasing over time.
Date Index Period   Actual Est Previous
Tuesday Markit Manufacturing PMI Feb (Prelim)   55.3 55
Markit Services PMI Feb (Prelim)   55.8 55.6
  Markit Composite PMI Feb (Prelim)       55.8
Wednesday Existing Home Sales Jan %mom  0.9 -2.8
  Feb FOMC Meeting Minutes         
Thursday Weekly Jobless Claims   '000   240 239
Friday UoM Consumer Sentiment Feb (Final)   96 95.7
  New Home Sales Jan %mom   6.5 -10.4
Source: Bloomberg     

Germany – Producer prices continued to surge through Jan hitting 2.4%yoy growth on stronger oil prices and a weaker €.
• This marks the strongest PPI reading since Mar/12 accelerating from 1.0%yoy recorded at the end of the year.
• Excluding energy producer prices were up 1.8%yoy.

UK – London property prices fell 0.4%yoy in Feb marking the strongest fall in almost six years, according to Rightmove.
• Slowing demand is attributed to slowdown in activity amid the EU Brexit vote and tax increases in the early part of the year.
• UK-wide prices climbed 2.3%yoy which was the weakest pace since Apr/13.
• “Perhaps we’re approaching the territory where many buyers are unable or unwilling to pay what sellers are asking, given the negative combination of rises in the cost of living, tighter lending criteria, and a dose of Brexit uncertainty,” Rightmove said.

Greece – Two year Greek bond yields remain high hovering around 9.7% after hitting an eight-month  high of nearly 10% earlier in the month.
• Eurozone finance ministers are holding talks this afternoon hoping to iron out differences over the terms of the €86bn bailout programme.
• Greece needs to close the deal before a €7bn debt repayment is due this Jul.

Currencies
US$1.0620/eur vs 1.0647/eur last week.   Yen 113.05/$ vs 113.18/$.   SAr 13.168/$ vs 13.088/$.   $1.245/gbp vs $1.249/gbp. 
0.767/aud vs 0.768/aud.   CNY 6.878/$ vs 6.868/$.

Commodity News
Precious metals:         
Gold US$1,236/oz vs US$1,238/oz last week –
   Gold ETFs 58.5moz vs US$58.7moz last week
Platinum US$1,003/oz vs US$1,014/oz last week
Palladium US$777/oz vs US$792/oz last week
Silver US$18.00/oz vs US$18.05/oz last week
           
Base metals:   
Copper US$ 6,012/t vs US$5,973/t last week
Aluminium US$ 1,891/t vs US$1,878/t last week
Nickel US$ 11,105/t vs US$10,970/t last week
Zinc US$ 2,819/t vs US$2,848/t last week
Lead US$ 2,271/t vs US$2,274/t last week
Tin US$ 19,600/t vs US$19,625/t last week
           
Energy:           
Oil US$56.1/bbl vs US$55.7/bbl last week
Natural Gas US$2.759/mmbtu vs US$2.854/mmbtu last week
Uranium US$25.00/lb vs US$25.00/lb last week
           
Bulk:   
Iron ore 62% Fe spot (cfr Tianjin) US$87.5/t vs US$87.1/t
Chinese steel rebar 25mm US$555.5/t vs US$538.2/t
Thermal coal (1st year forward cif ARA) US$66.9/t vs US$66.9/t last week
Premium hard coking coal Aus fob US$150.0/t vs US$150.4/t

Tungsten – APT European prices $195-205/mtu


Company News
Condor Gold (LON:CNR) 65p, Mkt Cap £34.4 m – Raising £5.2m
• Condor Gold has announced that it has raised £5.242m (gross) through the issue of approximately 8.29m units at 62p/unit. In addition, Directors will subscribe for a further 161,290 units at the same price.
• Each unit consists of one share plus a share purchase warrant entitling the holder to purchase an additional share at a price of 93p within 24 months.
• The funds are to be used to help fund the permitting process and land acquisition, for the La India project in Nicaragua where the company plans a 2800 tpd processing plant to produce 100,000 oz pa of gold.
• The company points out that Ross Beaty, the Canadian mining investor, who took a stake in Condor in April 2016, has subscribed for £1m of the units which “will increase his shareholding to 8.74% of Condor Gold.
Conclusion: The additional funds should assist Condor Gold to press ahead with securing the permits for La India. The additional investment from Ross Beaty can be interpreted as further support for the project from a seasoned mining investor.

FinnAust Mining* (LON:FAM) 7.8p, Mkt Cap £48m – FinnAust consolidates holding in major asset
BUY Target Price 15p
• FinnAust Mining has consolidated its holding in Bluejay Mining. FinnAust acquired 60% of Bluejay mining in December 2015.
• The Bluejay deal came with an option for Finnaust to acquire the remaining 40% of Bluejay Mining for shares in FinnAust.
• Bluejay Mining held the license for the Pituffik ilmenite project in Greenland which has since driven the value of FinnAust shares with relatively little activity ongoing on FinnAust’s Finnish licenses due to slow progress in Finland and the relatively low nickel price seen in recent years.
• Essentially it has been more value accretive and cost effective to develop value at Pitiffuk which holds some of the world’s highest natural grade ilmenite than in Finland where the assets are deeper and more complex to drill and evaluate.
• The additional shares being issued are included in our valuation.
*SP Angel act as nomad and broker to FinnAust

Gemfields (LON:GEM) 46.5p, mkt cap £255.6m – Interim Report and Lusaka emerald auction update
• Gemfields has announced an after tax interim loss of US$13.6m (2015- US$8.2m profit) for the six months to 31st December 2016. At the EBITDA level, the company also recorded a loss of US$4.3m (2015 – profit of US$35.6m).
• The result in part reflects the sharp decline in revenues to US$51.046m from US$94.025m which stemmed from the decision to defer the emerald auction, originally timetabled for November 2016 to February 2017, in order to allow its Indian customers additional time to adjust to the impact of the Indian Government’s de-monetisation programme. We have previously commented that this response to customer needs should in the long term enhance Gemfields’ relationships with its customers.
• The auction has now taken place in Lusaka raising a total of US$22.3m on the sale of 349,935 carats. The average sales price of US$63.61 per carat is reported to be the third highest on record.
• A total of 67,125 carats of the 417060 carats offered for sale remain unsold and these appear to be largely among the lower value stones offered.
• The company also discloses that it “has decided to remove one of the scheduled higher quality emerald auctions from the current financial year. The removal of this auction will result in a material reduction in revenue and EBITDA for the financial year ending 30 June 2017.”
• The decision to reduce the number of auctions may also reflect operational issues related to the inherent short term variability of the mineralisation as the company comments that “Low first half production at Kagem mine is expected to reduce targeted total production of rough emerald and beryl to 25 to 30 million crats for the financial year 2017 (previous guidance30-35 million carats). The company however, remains confident that it will be able to achieve its planned ramp up in emerald and beryl production over the coming years.”
• Operational performance at the Montepuez ruby mine “remains encouraging in both terms of operational and financial performance. The recently upgraded processing plant will allow the Company to achieve its planned increase in production over the coming periods”.
• Addressing the state of the emerald market, the Company reports that “The emerald market has experienced a short period of uncertainty created by the demonetisation programme in India which has impacted buyer’s liquidity. This is nearing completion with some level of stability beginning to return to the sector”.
• The company continues to hold significant inventory levels (US$111.8m at 31st December vs US$111.9m at 30th June 2016) and reports cash balances of US$12.3m at 31st December.
Conclusion: Gemfields has had a tough half year and is pulling back on its forecast emerald production for the full year. Although this may disappoint some observers, we see the move as prudent management as the company adjusts to the impact of Indian demonetisation and waits for the stabilisation of the market while the company has substantial inventory stock.

Petra Diamonds (LON:PDL) 143.4p, mkt cap £760.2m -  Interim results and trading update.
• Petra Diamonds reports a reversal of the H1 2016 US$2.2m after tax loss by recording a profit of US$35.2m in the six months to 31st December 2016.
• The increase reflects a sharp rise of 48% in revenues to US$228.5m (2016 – US$154.0m) and the control of costs in the face of “inflationary pressures”.
• The company notes that “We are now reaching an exciting inflection point in the Company’s development and are on track to start benefitting from a declining Capex profile, a significant increase in ROM grades and product mix and the associated improvement in margins and cashflow.”
• The Cullinan and Finsch underground operations are delivering improved grades as they move into areas of undiluted ore and contributed to a 24% increase in diamond production to over 2m carats and the company “remain on track to deliver full year production of ca 4.4-4.6 Mcts”
• Commenting on the wider state of the diamond market, the company notes that they detect “some evidence of improving retail demand  … whilst Chinese retailers continue to record some declines in Hong Kong and Macau, some ar now seeing positive trends in Mainland China.”
• The “Signs of stabilisation in the rough diamond market are evident with steady demand across the majority of size ranges, except in the smaller, lower value categories which have been experiencing some pressure due to the Indian government’s demonetisation of high value banknotes and the subsequent impact of smaller midstream players on liquidity in the Indian diamond market.”
• Gearing in terms of net debt to net debt + equity remains stable at approximately 48% and as the peak capex is now behind it and with rising future cashflow  expected, these levels should now start to decline.
Conclusion: The benefits of the investments at Cullinan and Finsch are starting to make a significant impact as the mines access better grades. The company remains on track to produce 4.4 to 4.6M carats of diamonds in the year to June 2017.

Plymouth Minerals (ASX:PLH) A$0.23, mkt cap A$31m – 250m grading 1.01% lithium from first drill hole at San Jose in Spain
• Plymouth Minerals report first results from drilling at their San Jose prospect in Spain.
• The first drill hole intersected 250m grading 1.01% Li2O from surface with the hole ending in mineralisation of 1.08% Li2O.
• Significant intercepts are quoted with a +1.0 % Li2O cut off;
o . 5m @ 1.27% Li2O from 51m
o 12m @ 1.21% Li2O from 67m
o 31m @ 1.28% Li2O from 89m
o 23m @ 1.24% Li2O from 126m
o 19m @ 1.10% Li2O from 151m
o 12m @ 1.23% Li2O from 227m
o The deposit has an Historical Foreign Estimation of mineralisation of 83Mt @ 0.56% Li2O for 468kt of contained lithium oxide or 1.15Mt lithium carbonate equivalent (LCE). Historical drilling outlined a deposit which is open at depth and open along strike.
o Historic pre-feasibility work shows >90% Li recoveries by calcining and atmospheric pressure only sulphuric acid leaching to create a saleable lithium carbonate end product. Tin was also recovered to +80% in this process flow sheet..
o The mineralisation is mainly found in the micas of muscovite-fengite type in the host rock, and in lesser proportion in the amblygonite-montebrasite of the veins and there is some discussion in the industry over the recovery of lithium from historic tin mines where lithium is contained in micas and is often contained in waste dumps.
o “The San Jose Deposit was formed by an amalgamation of quartz and quartz-pegmatite veins, which formed a stockwork hosted by a metasediments. The mineralisation is disseminated in both the host as lithium micas and the veins hosting tin as cassiterite, lithium as amblygonite-montebrasite and minor tungsten as wolframite.”
Conclusion:  This is a great drill result for Plymouth Minerals.  We now need to work out the best process route for this type of mineralisation and the capital and operating cost for the extraction of lithium.

Premier African Minerals (LON:PREM) 0.88 pence, Mkt Cap £35m – Intersections of mineralisation at Zulu
• Premier African Minerals report relatively high grades of lithium oxide at their Zulu project in Zimbabwe.
• The host rock is reported to contain around 0.9% Li2O while grades of up to 3.3% are seen in drilling.
• Drill results:.
o ZDD-3 15.63m grading 1.54% Li2O from 25.14m inc.  4.31m grading 2.16% Li2O
o ZDD-15 5.6m grading 1.46% Li2O from 73.61m inc 1.97m grading 2.04% Li2O.
• The holes add to previous drilling showing:
o ZDD-14 2.49m grading 1.44% Li2O from 44.17m
o ZDD-16 0.90m grading 2.67% Li2O from 54.82m.
• RHA Tungsten mine (Zimbabwe)  We are more interested to see better progress on the company’s RHA tungsten plant in Zimbabwe following commissioning issues seen last year.  Management reported that “the implementation and commissioning of the redesigned crushing, screening and ore upgrade circuits is scheduled for completion on the 28th February 2017. Immediately thereafter, processing is expected to resume and over the course of March, initial optimization of the XRT sorter and ore sizing screens will take place. During this time, the plant is expected to begin to produce wolframite and will generate revenue.”
• A contractor ‘Afmine’ was recently appointed to deliver ore following the completion of ‘shaft upgrades’.  The contractor Afmine also elected to take their second milestone payment of £100,000 in equity.
• New share issues:  The company has seen substantial numbers of new shares issued by way of a Darwin convertible loan facility, an equity placing and payments to contractors:
• Darwin also announced on 7 February the conversion of their remaining loan notes into equity of 317,844,496 new shares at 0.212368p. A conversion on 3 February of loans saw an extra 294,646,277 new shares at 0.203634p and 1 February 196,430,851 new shares were issued at 0.203634p. Further new shares were issued on 31 January of 196,430,851 new shares into at 0.203634p.
• The company also announced the placing of 536,842,105 new shares to raise £1.02m at a price of 0.19p on 30 January.
• All this takes the company’s share capital to new shares
Conclusion:  While there are some interesting headline grades in these results the intersections look somewhat skinny compared with other lithium prospects.
It feels more important for investors to watch the re-commissioning of the RHA tungsten plant to see how well the new process arrangement works and contractor performs.  Slow progress to the achievement of good tungsten concentrate grades could eat though the company’s cash resources restricting expenditure on other projects.

Stellar Diamonds (LON:STEL) Suspended – Discussions to acquire Tonguma terminated in favour of tribute mining
• Stellar Diamonds has announced that discussions to acquire Tonguma Limited, the holder of the mining licence over the Tonguma kimberlite pipe in Sierra Leone have been terminated as a result of the “reverse-takeover” status of the proposed transaction.
• Stellar Diamonds will now mine the licence under a tribute mining agreement to develop the Tonguma licence area “alongside Stellar’s own Tongo prject and process and sell any diamonds mined from these concessions whilst paying a proportion of the sale proceeds to Octea” [Octea is the owner of Tonguma Limited].
• The company goes on to explain that “Due to the combined mine plan that is intended to be implemented, (i.e. mining both the Tongo and Tonguma project) any revenue share payments payable to Octea will be in respect of diamond revenues from both the Tongo and Tonguma licences. The revenue share economics that have been agreed reflect this.”
• Under the joint development scheme, the Preliminary Economic Assessment (PEA) indicates a pre-tax NPV of US$172m at a 10% discount rate and an IRR of 49%. The plan envisages first production within 12 months of funding and development with production rates rising to over 200,000 carats pa in the 4th year.
• Capex to develop the project is expected to be US$31.8m and operating margins are expected to exceed 50%.
Conclusion: The Tongo / Tonguma project looks to be going ahead as a tribute mining agreement following the failure to resolve the reverse-takeover issues.

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Mon, 20 Feb 2017 10:28:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27134/today-s-market-view-condor-gold-finnaust-mining-gemfields-petra-diamonds-plymouth-minerals-premier-african-minerals-and-stellar-diamonds-27134.html
In The News - Peak Resources http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/27133/in-the-news-peak-resources-27133.html Peak Resources††
ASX:PEK | A¢10 | US$37m
Trenching Returns High-grade Fluorite at Ngualla Rare Earth Project
Peak Resources has announced that trenching at its Ngualla Rare Earth Project in Tanzania has returned up to 78m @ 37% fluorite from an alteration zone that surrounds the central carbonatite zone; this has a diameter of around 3km, the central portion of which hosts the project’s neodymium- and praseodymium-rich core.
COMMENT: The high-grade fluorite assay results reinforce the multi-commodity potential of the Ngualla complex. Although it is early days for the evaluation of its economic potential, the results indicate the potential for Ngualla to host significant quantities of fluorite, which can be used as a flux in smelting and is also used in the manufacture of hydrofluoric acid.
Peak remains focused on the completion of a bankable feasibility study (BFS) on the neodymium- and praseodymium-rich Ngualla Project, which is expected around the end of 1Q17.
________________________________________
Peak Resources is focused on delivering an integrated rare earths project — The company’s 75%-owned project combines the Ngualla rare earth deposit in western Tanzania with downstream processing in a solvent extraction separation plant in the UK, producing a range of rare earth products. Approximately 85% of the value of the final product is associated with a high-purity neodymium and praseodymium oxide. Peak completed an updated pre-feasibility study (PFS) in March 2016 and plans to complete a BFS on the project around the end of 1Q17.
Ngualla deposit one of the world’s largest Nd/Pr deposits — Ngualla is one of the world’s largest neodymium and praseodymium (Nd/Pr) deposits, with total resources containing 4.6Mt of REO. The deposit is host to a thick blanket of weathered, high-grade mineralisation from surface. This weathered bastnaesite zone at a cut-off of 1.0% REO comprises total resources of 21Mt grading 4.7% REO, containing 1.0Mt of REO, of which 90% was in the Measured category.
Tanzanian operations to produce 27,900tpa of beneficiated REO concentrate grading 45% REO — The updated PFS of March 2016 outlined a mining inventory of 18Mt grading 4.9% REO, containing 900,000t REO. The company plans to process 556,000tpa of dry ore through a flotation-based beneficiation process to produce 27,900tpa of high-value, 45% REO concentrate containing 12,555tpa of REO.
UK-based rare earth leach recovery and separation processing to produce final products — Having investigated a number of different leach recovery flowsheets and following positive trials on concentrate from the project, the BFS will use an alkali roast processing route to produce a rare earth solution that will be fed to a solvent extraction-based separation process. In this, the material is firstly roasted with alkali, then washed and filtered before being leached using a low-strength hydrochloric acid, a process that selectively targets Nd and Pr. The project benefits from the relatively low rate of acid consumption, owing to the low levels of acid consuming carbonate and phosphate in the gangue minerals and the relatively low levels of iron in the concentrate. Final products from the project are planned to be:
• 2,300tpa of Nd/Pr rare earth oxides;
• 250tpa of mixed samarium, europium and gadolinium rare earth oxide; and
• 5,900tpa of cerium/lanthanum carbonate (equivalent to 4,240tpa of contained REO).
Key project parameters — The updated PFS of March 2016 estimated capex for the project at US$330m (including a 25% contingency), comprising US$194m and US$120m for the Tanzanian- and EU-based operations respectively, and US$16m owners’ costs. The project was planned to operate for a total of 31 years and to have operating costs of US$97m pa. The updated study did not present NPVs or IRRs for the project; however, we estimate that at current prices of around US$39/kg for a Nd/Pr mixed oxide, the project would be around breakeven at the operating level.
Neodymium and praseodymium exposed to high-growth permanent magnet demand — Nd/Pr are used in combination to create high-power permanent magnets. Prices of rare earths, including those for Nd/Pr oxides, peaked in 2011 and have since fallen back to pre-bubble levels. Owing to the increased use of high-power magnets in electrical motors and generators, particularly in electric cars and bikes, the outlook for demand for Nd/Pr is very positive, suggesting that current price levels could represent a cyclical low.
Appian and IFC own direct stakes in the Ngualla Project and are also significant shareholders in Peak — Peak owns 75% of the project and Appian owns 20%, with the IFC owning the remaining 5%. Appian and the IFC also own 16.1% and 6.7% of Peak. The company had A$5.1m in cash and debt of A$4.4m (a three-year, 15% term loan from Appian) at the end of December 2016 and is fully funded for the completion of the BFS.

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Mon, 20 Feb 2017 09:37:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/27133/in-the-news-peak-resources-27133.html
Northland Capital Partners View on the City - Premier African Minerals, Fishing Republic and Edenville Energy http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27132/northland-capital-partners-view-on-the-city-premier-african-minerals-fishing-republic-and-edenville-energy-27132.html Premier African Minerals (LON:PREM) – CORP: RHA and Zulu updates
Market Cap: £30m; Current Price: 0.775p

Finalisation of RHA underground mining contract and Zulu drill results
RHA Update
 Shaft upgrades now completed and terms for underground mining contracts finalised with African Mining and Exploration (Afmine).
 Afmine will deliver up to 16,000t of ore to the plant per month. Final terms also agreed to deliver 24,000t of ore from the open pit per month from March-17.
 Implementation of the XRT sorter and allied plant improvements on schedule to be commissioned this quarter.
 Afmine taking its second milestone payment in shares. 14,098,407 shares issued at a price of 0.7093p
 Following the issue of shares the Company will have 3,982,742,765 shares in issue.
Zulu Update
 Drilling at Zulu returned 1.54% Li2O over 15.63m from 25.14m (ZDD-3) and 1.46% Li2O over 5.6m from 73.61m (ZDD-15). Final Tantalum grades are still awaited.
 Drill rig has not been demobilised from site and a new drilling programme has commenced with the aim of increasing the size of further defining the ore body.
NORTHLAND CAPITAL PARTNERS VIEW: With the completion of the shaft upgrades, signing of the underground mining contracts and agreement of the terms for production from the open pit Premier African Minerals is now on the verge of getting the RHA Tungsten Mine back up and running. The XRT sorter and associated plant upgrades are expected to be commissioned this quarter and should be the final developments before the operations can recommence commercial production. At Zulu, Prem continues to define significant intercepts on mineralisation and is opting to continue drilling to further increase the size of the mineralisation.

Fishing Republic plc (LON:FISH) – BUY*: Trading Update
Market Cap: £14.8m; Current Price: 39p; Target Price: 47p

Two further store openings planned before 1Q17
 Good progress made in FY16 on the back of growing the store network and focusing on increasing sales from own websites, which are higher margin in nature compared to third party websites. Revenue is expected to show c. +40% YoY, which looks marginally ahead of our £5.7m.
 Two stores were opened, one in Mildenhall just prior to the end of FY16 and one in Milton Keynes in January 2017. Two further store openings are planned prior to the end of the 1Q17, one store in Reading and one store in Ipswich. This should take the store footprint to 15 stores and importantly the two additional stores should be ready for the new fishing season in 2017. Furthermore, sales from own website sales was +132% YoY in FY16 and accounted for c. 40% of total online sales. This is very encouraging given the higher margin nature of own website sales.
 No changes to forecasts at this stage, however the two new stores will require some upfront capital investment in order to be operational before the fishing season and these two stores will add to revenues in FY17.

Edenville Energy (LON:EDL) – CORP: Subscription
Market Cap: £7.5m; Current Price: 0.91p

Raises £2m in oversubscribed subscription
 Edenville has announced an oversubscribed subscription to raise £2m, through the issue of 250,000,000 shares at a price of 0.8p with one-for-two warrants at an exercise price of 1.08p per warrant.
 Following the subscription the Company will have 1,049,290,000 shares in issue.
NORTHLAND CAPITAL PARTNERS VIEW: Edenville will be using these funds to advance mine development by completing the purchase of a wash plant and crusher, acquire mining equipment, complete land compensation payments, build supporting infrastructure such as a weighbridge and provide the Company with general working capital.

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Mon, 20 Feb 2017 09:12:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/27132/northland-capital-partners-view-on-the-city-premier-african-minerals-fishing-republic-and-edenville-energy-27132.html
Beaufort Securities Breakfast Alert: Premier African Minerals, Stellar Diamonds, AstraZeneca http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27131/beaufort-securities-breakfast-alert-premier-african-minerals-stellar-diamonds-astrazeneca-27131.html "There is was, gone. Having swallowed Kraft in a 2015 deal engineered by Warren Buffett, Heinz enlivened Friday's otherwise lacklustre trading by putting a US$50/share deal on the table for Unilever (LON:ULVR). Most thought the 'merger dance' between the two giant consumer groups had only just begun. Following Unilever's initial rejection, a formal proposal was expected to emerge in less than one month ahead of an improved 'final' offer being made in order to finally arrive at a recommended deal. In the process, this sparked speculative excitement from peers like Reckitt Benckiser (LON:RB.) and PZ Cussons (LON:PZC), prompting traders to asking if this might be the starting gun for a new 2017 wave of M&A, led by US groups enjoying the recent Trump-inspired strength of the US$. Huge potential synergies were eyed from such a merger, that would only need Unilever to lift operating margins half way to Heinz's own for the deal to wash its face on the initial terms while also creating a consumer powerhouse to rival Nestlé. An extended period of regulatory abeyance would, of course, be anticipated as swinging conditions are set by international monopolies authorities and politicians, although a team as experienced as Heinz's would have already second-guessed the likely outcome. So Sunday morning's surprise 'amicable' withdrawal, having concluded that a protracted public battle for control would cause more damage than good, comes as a big surprise, big enough in fact to consider that behind the scenes a deal is still being cooked? This time maybe on a friendly basis, emerging perhaps in a few months with a more generous outcome for Unilever shareholders? Donald Trump's rather bazaar weekend rally in Florida does not appear to have knocked the market's confidence in his determination to deliver on reflationary campaign pledges. Following Wall Street upward but uninspiring close on Friday, the Asian markets were generally mixed, with the Chinese markets leading the gains, as the Nikkei trod water and ASX suffered some modest profit taking in minerals groups and financials. UK Macro data due today includes the Rightmove House Price Index and the CBI Industrial Trends Survey for February, with nothing other than a scheduled speech from the FOMC's Loretta Mester due from the US London equities appeared not particularly concerned by Friday's Retail Sales data, which confirmed UK consumers are starting to feel the Brexit pinch, slipping for the third consecutive month, after hitting a 14-year high in October, leaving them to primarily to reflect on corporates due to report earnings or trading updates including Bovis Homes (LON:BVS), Dorcaster (DAR.L), Feedback (LON:FDBK), Fishing Republic (LON:FISH) and Hammerson (LON:HMSO). Overall, however, the UK markets are seen continuing to bask in the reflection of Friday Unilever bid with traders, who appear convinced that there is more to the Unilever story than presently meets the eye, seen pushing the FTSE-100 to a 20 point gain in early trading."
- Barry Gibb, Research Analyst

 

Markets


Europe
The FTSE-100 finished Friday's session 0.30% higher at 7,299.96, whilst the FTSE AIM All-Share index added 0.14% to stand at 907.94. In continental Europe, the CAC-40 finished down 0.65% at 4,867.58 whilst the DAX finished at 11,757.02.
Wall Street
In New York on Friday, the Dow Jones rose 0.02% to 20,624.05, the S&P-500 firmed 0.17% to 2,351.16 and the Nasdaq finished up 0.41% at 5,838.58.
Asia
In Asian markets this morning, the Nikkei 225 had risen 0.09% to 19,251.08, while the Hang Seng firmed 0.52% to 24,157.77.
Oil
In early trade today, WTI crude was up 0.26% to $53.54/bbl and Brent was up 0.29% to $55.97/bbl.
 

Stellar Diamonds (LON:STEL, 7.12p) - Under Review
Stellar has announced exclusive heads of terms over a new agreement with Octea which means the transaction is no longer a reverse takeover. The economics remain similar for both parties (Stellar Diamonds and Octea) but instead of being a takeover of Octea's Tonguma license, the transaction will be in the form of a Tribute Agreement. These are common in Australia where a mining company might allow a third party to mine non-core deposits in return for a royalty. The Stellar - Octea tribute agreement means that Stellar remains responsible for funding and operating the mine, Stellar markets the diamonds and effectively controls the business and cashflows. Stellar must pay Octea a 10% revenue royalty (after any government royalty) once it has recouped the "development capital". Other details include a one-off $5m payment to Octea, 5 years after start of development. Despite this change, Stellar shares remain suspended until funding is announced.

Our view: This new agreement should save Stellar the costs of a reverse takeover plus the economics remain attractive for Stellar and its shareholders. Assuming the terms of the tribute agreement remain the same (today was heads of terms not a final agreement), Stellar estimates a post tax NPV 8% of $104m to Stellar. Note that the quantum of cashflows to existing Stellar shareholders will depend on the funding structure and whether existing shareholders take part in potential future fund raises. Stellar is at the due diligence stage with at least one strategic investor, and securing cornerstone funding should be the catalyst for the whole deal to fall into place. Although this is a positive announcement, while the shares are suspended we have our recommendation Under Review.

Beaufort Securities acts as broker to Stellar Diamonds PLC

Premier African Minerals (LON:PREM, 0.78p) – Speculative Buy
Premier African Minerals, the South and Western Africa focused mineral explorer and developer, announced today an update on its RHA tungsten mine and its lithium/tantalum exploration project both located in Zimbabwe. Shaft upgrades have now been completed and terms for the contract mining by African Mining and Exploration (Afmine) have been finalised at RHA. Under terms of the agreement, up to 16,000t of ore per month from underground operations will be delivered to the plant and at the same time 24,000t per month will be delivered from the open pit operations, all commencing in March 2017. The Company also announced assay results form its Zulu lithium and tantalum project where a recent drilling programme was designed to test the 3.5km strike length of the deposits. Lithium mineralisation was intercepted over 15.63m grading 1.54% Li2O, including 4.31m grading 2.16% Li2O (DDH ZDD-3). Drill hole ZDD-15 returned 5.6m grading 1.46% Li2O, including 1.97m grading 2.04% Li2O.

Our view: The conclusion of the mining contract is an important milestone for restarting operations at the RHA tungsten mine. The contractor, Afmine, has also elected to take its second payment of £100,000 in equity. With shaft upgrades now complete and implementation of the XRT ore sorter continuing, we expect commissioning of the mine to begin soon. We are also encouraged by initial drill results at Zulu, while tantalum assay results are still pending we note the high-grade lithium intersected in ZDD-3, up to 3.3 Li2O. We look forward to initial start-up at RHA in the coming weeks and additional drill results from the Zulu lithium and tantalum project. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as corporate broker to Premier African Minerals plc

AstraZeneca (LON:AZN, 4,595.00p) – Hold
AstraZeneca, a global, science-led biopharmaceutical company focused on three main therapy areas – Oncology, Cardiovascular & Metabolic Diseases and Respiratory, on Friday announced that its Lynparza (olaparib) tablets met primary endpoint in Phase III OLYMPIAD trial for the treatment of patients with BRCA-muted metastatic breast cancer. The primary endpoint was to show improvement in progression-free survival ('PFS'). Lynparza demonstrated a statistically-significant improvement in PFS for the patients compared to standard of care chemotherapy, while safety profile remains consistent with previous studies. A full evaluation of the OLYMPIAD data is ongoing, with secondary endpoints to include overall survival, time to second progression or death, objective response rate, and effect on health-related quality of life.

Our view: This is a positive news for AstraZeneca. Its Phase III BRCA-muted metastatic breast cancer drug, Lynparza, has indicated more favourable results compared to the chemotherapy, without compromising its safety profile. Metastatic breast cancer is a common disease, with approximately one-third of those diagnosed with breast cancer (approximately one in eight women) progressing to the metastatic stage of the disease (Dr Joyce O'Shaughnessy, The Oncologist 2005:10). As there is currently no treatments available for patients diagnosed with metastatic breast cancer, the primary endpoint for improvement in progression-free survival, meaning even slowing the progression of the disease, has potential to significantly enhance the patient's quality of life. For now, however, our focus is on the success/failure of AstraZeneca's MYSTIC trial (for non-small cell lung cancer), for which, the PFS data readout is expected in mid-2017, followed by final overall survival data during 2018. Beaufort maintains its 'wait and see' approach on the shares and therefore retains its Hold rating on AstraZeneca.

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Mon, 20 Feb 2017 08:18:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27131/beaufort-securities-breakfast-alert-premier-african-minerals-stellar-diamonds-astrazeneca-27131.html
Kraft-Heinz Uni-Leaver http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27130/kraft-heinz-uni-leaver-27130.html FTSE 100 Index called to open +15pts at 7315, extending Friday’s 7250 bounce and having tested 7320 overnight. This takes it a step closer to regaining last month’s 7365 all-time highs, but Bulls likely want to see 7325 cleared for fresh 1-month highs before getting too excited. Bears likely want to see rising support around 7310 give way, if not a breach of Friday’s 7300 close. Watch levels: Bullish 7325, Bearish 7305.

Calls for a positive start to the new trading week, one without the US today on account of President’s Holiday, come after US bourses closed positive on Friday and despite a mixed session in Asia overnight. While the FTSE is called higher this morning, note Kraft-Heinz has withdrawn its offer for Unilever, news which helped the latter rally over 13% on Friday and contribute over 24pts to the index which gained only 22pts itself.

Whilst Asian markets have failed to be derailed by the above news, existing USD strength from Friday’s bounce has helped Japan’s Nikkei post gains via a weaker JPY. Further benefit comes from more M&A, after reports that telco Softbank (which acquired the UK’s ARM) may approach T-Mobile US about a potential merger with US Sprint in which it holds a majority stake.

Australia’s ASX is the long underperformer, posting small losses in response to some disappointing corporate reporting and despite buoyant oil prices in the face of rising US production and metals starting to show a bit more life again for the Miners.

US equity markets managed to begin their long weekend at record highs, but only just, as a late rally gripped Wall Street. The Dow Jones closed only 4 points higher as gains for Verizon, Boeing and Home Depot helped to offset losses for UnitedHealth, while the Telecoms sector outperformed to help the S&P 500 strengthen by 0.2% and the Nasdaq by 0.4%.

Despite the Baker Hughes Rig Count increasing for a fifth straight week on Friday to a 16-month high, Crude Oil prices have climbed steadily higher overnight as the USD softens in Asian trading. Investors will continue to weigh up the impact of rising US production in offsetting OPEC’s cuts, however reports showing record compliance by the cartel’s members is helping to keep prices supported.

Gold remains in a sideways channel, holding steady at $1234 support as the US dollar rally falters overnight. This comes after Friday’s sell-off from $1244 as US Federal Reserve Chair Janet Yellen once again showed her hawkish hand, prompting a greenback rally while demand for the non-yielding precious metal declined. With no Fed speakers scheduled today on account of the US holiday, investors will have to wait until tomorrow for any further comment from the States’ central bankers.

In focus today, one likely to prove quiet on account of President’s Day holiday in the US, is likely to be a combination of withdrawal of Kraft-Heinz Bid for Unilever and any sound bites from the first of a 2-day second reading of the UK Brexit Bill in the House of Lords (Upper house), where over 190 are set to participate, highlighting the bill’s significance.

The EU’s Tusk and US Vice-President Pence speak at 10am, the later having offered diplomatic rhetoric at the weekend’s Munich Security Conference meeting, helping counter some of his Boss’s more aggressive chat since taking office.

Data-wise, releases are limited to UK CBI Trends Orders, seen holding positive for two consecutive months for the first time since 2015, while Selling Prices will look to better last month’s 28 mark driven by a weaker GBP. Eurozone Consumer Confidence is seen marginally lower at -4.8 after January’s 2-year best reading of -4.7.

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Mon, 20 Feb 2017 08:17:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27130/kraft-heinz-uni-leaver-27130.html
VSA Capital Market Movers - Petra Diamonds http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27129/vsa-capital-market-movers-petra-diamonds-27129.html Petra Diamonds (LON:PDL)


Petra Diamonds (PDL) interim results were in line with expectations following a soft trading update. The significant increase in revenues, up 48% YoY, was largely due to the timing of sales with production in the period up 24% YoY to 2mncts. PDL is on track for full year production of 4.4-4.6mncts.  Realised price performance was mixed with changes in product mix the key driver. As expected the benefits of processing undiluted ore impacted earnings positively and along with the stronger top line this meant that EBITDA of US$87m was up, 80% YoY. This meant that net income of US$35.2m reversed a loss of US$2.2m in the prior period.

PDL has not yet opted to resume dividend payments. Capex of US$135m represents the majority of spending for FY 2017 which is expected to be lower YoY overall. Net debt, however, increased in the period from US$385m to US$464m.

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Mon, 20 Feb 2017 08:16:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27129/vsa-capital-market-movers-petra-diamonds-27129.html
Oil price, Jersey Oil & Gas, EnQuest, Ithaca, Sundry-Bowleven-Solo-Gulfsands-Chariot- And finally... http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27128/oil-price-jersey-oil-gas-enquest-ithaca-sundry-bowleven-solo-gulfsands-chariot-and-finally-27128.html Oil price

The oil price is almost the same as it was last friday, nothing is moving it at the moment almost as if it was the subject of price fixing, à la gold and silver of yore, not any tomfoolery I assure you… This week saw another set of whopping inventory increases which only seem to steady the price, indeed that is a subject worth looking at on its own. Money managers are still incredibly long and yesterday, chat out of Opec was that they are considering extending their pact with non-Opec countries and indeed possibly increasing it. They will need to do just this and then, maybe next year they might be able to make out like bandits. On that subject the only bearish stuff comes from those who worry about US production to whom I would say, dont worry your pretty little heads about it, whatever they can produce isnt enough to move a determined market…

Jersey Oil & Gas

A corporate and operational update today from one of the new members of the bucket list and all appears to be going pretty well. Statoil are close to signing a rig and services contract for the Verbier well expected to be drilled in the North Sea in the summer, JOG are carried up to $25m worth of costs here. Azinor has announced that it intends to drill the newly named ‘Partridge’ (Homer) prospect on farmed-out JOG acreage later this year, success here would trigger payments of $2m for a discovery and another $2m at the time of a successful FDP. Finally JOG are committed to acquiring some producing acreage to balance their portfolio and say that the number of opportunities remains good as a number of sellers have come to the market  recently. JOG is an interesting play and still remains cheap if you bear in mind what might be when the drill bit turns at Verbier. Significant skill will be needed in trading the shares but with the underlying upside so substantial, the risk at JOG is not being involved.

EnQuest

Good news from EnQuest this morning as news from Kraken is that the FPSO has arrived and has been hooked up successfully. With delivery of first oil ontrack for Q2 this year things are beginning to look up for ENQ and it probably deserves a better reception than that given by the market this morning.

Ithaca- Alert, being sold out on the cheap…

Along the same sort of lines, Ithaca has announced that the Stella Field has started up production  albeit some time after the market had expected. Having said that, the news will be exceptionally good for the company as revenues will start to flow and debt can be paid down.

I’m sure that this is what Delek thought when it bid for the company at a modest, nay measly, 11% premium last month. Despite it being the star performer in the 2016 bucket list, as soon as the good times are in sight and meaningful rewards are offered, management and shareholders jump ship at the first sign of men from the east bearing gifts. I would like to think that those in decision making positions whether they be institutional or retail would think twice before selling out like the management have done, after all Ithaca is the original wallet warmer…

Sundry

Bowleven has issued a long list of counter points following COC’s recent letter to shareholders. Having said my piece earlier I do not intend to do so again, shareholders can make their decisions between now and March 14th.

Solo raised £2m by issuing 400/- shares at 50p, a raise that had been telegraphed for some time but given that the shares have roughly doubled recently one can understand management’s desire to wait!

Gulfsands also appeared with a begging bowl, theirs was to lenders who popped up with £4m. 37.3% came from Waterford, 31.4% from Blake Holdings (Richard Griffiths) and 31% from ME Investments which I think we can have an inspired guess at. I am slowly, very slowly, thinking of taking another look at GPX and am looking forward to a meeting with new MD, John Bell.

And Chariot announced a re-jig of their licences in Morocco ensuring that they retained exposure to the Kenitra permit and its possible upside. With no other commitments, CHAR will run 1,000 square kilometres of seismic which will cost about a third of what it would have been a couple of years ago. With nothing to drill at all this year CHAR has been off the radar screen but the management, who describe themselves as being ‘cautious but not conservative’ deserve credit for staying in the game. With Rabat Deep to drill next year, it may be the time to revisit the watch list.

Finally, following on from the Facon announcement I did a short interview with Proactive, the link is below.

Proactive Investors Stocktube interview: Falcon Oil & Gas has “colossal” potential gas discovery

And finally…

No international rugby this weekend although the IRB are suggesting that the 6 Nations  tournament is played over 5, not 7 weeks.

Last night in the Boropa Cup St Etienne went to the Theatre of Dreams and despite playing some exciting football and sometimes the ref, came away losing 3-0. Spurs went to Gent and lost 1-0 which they shouldn’t have really…

This weekend it is back to the FA Cup where a few of the minnows get their chances. The biggest could be Lincoln City at Burnley or possibly Oxford at ‘Boro but Sutton might fancy their chances against the Gooners on Monday night… Elsewhere the Noisy Neighbours are at Huddersfield, Wolves host Chelski, the Red Devils go to Blackburn, the Foxes go to the Den and there will be a tasty derby as Fulham host Spurs.

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Fri, 17 Feb 2017 10:41:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/27128/oil-price-jersey-oil-gas-enquest-ithaca-sundry-bowleven-solo-gulfsands-chariot-and-finally-27128.html
Today's Market View - Asa Resource Group PLC, Strongbow Exploration http://www.proactiveinvestors.co.uk/columns/sp-angel/27127/today-s-market-view-asa-resource-group-plc-strongbow-exploration-27127.html ASA Resource Group* (LON:ASA) – Q3 Results – moving ahead with improvements at the nickel, gold and diamond operations.

Strongbow Exploration (TSX:SBW) – PEA on South Crofty

 

The Major Mining equities are pulling back on lower copper prices as stock inflows into Shanghai warehouses weight on prices

• Copper stock levels in Shanghai rose by 6.5% today up 18,071t to 295,730t with a further 36,308t on warrant taking this week’s on warrant level to 135,896t

• The major mining companies have had a strong run recently and appear to be following a typical pullback before their next upward move

• The environment remains strong for commodities and miners though China’s recent injection of liquidity may be seen as a symptom of problems to come

 

Dow Jones Industrials  +0.04% at 20,620 

Nikkei 225   -0.58% at 19,235 

HK Hang Seng   -0.31% at 24,034 

Shanghai Composite    -0.85% at 3,202 

FTSE 350 Mining   -0.62% at 16,974

AIM Basic Resources   +0.28% at 2,748 

 

SP Angel tin mugs spotted in Cape Town and Gabon this week.  Please tell us if you see a SP Angel tin mug in a wild and remote location?

 

Economic News

South Africa – banks accused of rigging South African currency

Barclays, JP Morgan and HSBC have been named amongst 17 banks involved in colluding to rig the South African rand rate following a two year investigation by the country’s competition watchdog (BBC).

• The investigation claims that banks colluded using online chat rooms to co-ordinate fictitious bids and offers in order to sway the market

• The watchdog has called for the banks to be fined 10% of in-country annual turnover.

 

Philippines – The Philippine Inquirer.net carries today news that some 11,000 families in the towns of Paracale and Panganiban have lost their primary source of income following the closure of subsistence mining in the region.

• The government has issued a cease-and-desist order against mining activity in 12 towns of Camarines Norte Province

• One solution to the problem of unregulated and uncontrolled mining may be to allow expert mining companies to take over certain mines and to put proper environmental controls in place, though we suspect the government is keen to simply close these mines altogether.

 

Currencies

US$1.0647/eur vs 1.0625/eur yesterday.  Yen 113.18/$ vs 113.77/$.  SAr 13.088/$ vs 12.930/$.  $1.249/gbp vs  $1.249/gbp.

0.768/aud vs 0.771/aud.  CNY 6.868/$ vs 6.859/$

 

Commodity News

Precious metals:         

Gold US$1,238/oz vs US$1,236/oz yesterday

   Gold ETFs 58.7moz vs US$58.6moz yesterday

Platinum US$1,014/oz vs US$1,012/oz yesterday

Palladium US$792/oz vs US$791/oz yesterday

Silver US$18.05/oz vs US$17.99/oz yesterday

           

Base metals:   

Copper US$ 5,973/t vs US$6,033/t yesterday

Aluminium US$ 1,878/t vs US$1,906/t yesterday

Nickel US$ 10,970/t vs US$10,905/t yesterday – Vale produced 311,000t of nickel in 2016, up 7% yoy.

• First Quantum restores access to Ravensthorpe nickel complex following flooding in the region

Zinc US$ 2,848/t vs US$2,859/t yesterday

Lead US$ 2,274/t vs US$2,312/t yesterday

Tin US$ 19,625/t vs US$19,920/t yesterday

           

Energy:           

Oil US$55.7/bbl vs US$55.9/bbl yesterday

Natural Gas US$2.854/mmbtu vs US$2.927/mmbtu yesterday

Uranium US$25.00/lb vs US$25.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$87.1/t vs US$86.6/t – Indian iron ore output forecast to grow to 185mtpa in 2021 vs 136mt in 2017

• Vale iron ore production hits new record at 349mt in 2016.  Guidance for 2017 remains at 360-380mt with 400mt targeted for 2018

Chinese steel rebar 25mm US$538.2/t vs US$536.8/t – Iranian steel now seen as a threat to European steel industry as Iranian steel exports rise to >1mt (Fitch)

• India exported 1.9mt and China at 5.7mt shipped in 2016.

Thermal coal (1st year forward cif ARA) US$66.9/t vs US$67.3/t yesterday

Premium hard coking coal Aus fob US$150.4/t vs US$154.8/t

 

Tungsten - APT European prices $196-205/mtu vs $194-200/mtu

• Ferrochrome – Zimazco ferrochrome production set to double to 12,500tpa of metal + 20,000tpa of chrome ore concentrates

• The smelting complex hits 80% production capacity

 

Company News

ASA Resource Group* (LON:ASA) 1.7p, Mkt Cap £29m – Q3 Results – moving ahead with improvements at the nickel, gold and diamond operations.

• ASA Resources has reported its operating results for Q3 ending 31st December 2016.

• The quarter was, in a number of ways, one of transition with the phasing in of increasing proportions of massive nickel sulphide ore, work on the nickel smelter restart and the shaft deepening project at the Trojan nickel mine; the expansion of milling capacity at the Freda Rebecca gold mine; and the completion of treating  fine “slime” tailings in preparation for a move to retreating coarse tailings at the Klipspringer diamond operations all being progressed during the quarter.

• Elsewhere, plans to develop a small scale mining and gravity gold recovery operation at Zani Kodo in the DRC are also progressing with a view to generating “sufficient income to continue drilling and reclassify more of the current resource from inferred to indicated – currently 634,335 oz of total 2.97m oz resource is indicated.”

• ASA Nickel’s mining and milling operations continued the trend, established from mid¬-2016, of increasing tonnages with mined ore tonnes up quarter-on-quarter by 19% to 123,532 tonnes and mill throughput rising by 18% to 122,721 tonnes. Improvements in hoisting capacity and the improving rates of underground development by the mining contractor as additional equipment is commissioned are expected to deliver improved equipment availability and production improvements in Q4.

• Nickel grades, however, declined q-on-q to 1.495% nickel (Q2 2.016%) and recovery rates dipped from 89.1% to 85.6%. As a result, total nickel in concentrate production fell by 16% q-on-q to 1,571 tonnes and costs, on an all-in-sustaining basis increase to $6554/tonne.

• The US$5m shaft re-deepening project, which includes the installation of a new underground crusher. extends the shaft system by 240m to the mine’s 450 level,  and is expected to “extend the life of mine by about5 years and allow access to drill for ore reserves beyond 450 level and potentially provide higher grades in advance of the smelter restart.”

• Work on the smelter restart is now around 78% complete. Restarting the smelter to convert nickel sulphide concentrates at a grade of around 10% nickel into a nickel matte at a grade of around 70% nickel provides the twin benefits of allowing ASA Nickel to capture revenues equivalent to 85% of the value of the contained nickel compared to 65% for the sale of nickel concentrates while reducing the overall transport costs as nickel matte has “approximately eight times less bulk”. The benefits in terms of improved revenue and transport cost reductions are partially offset, however, by the running costs of the smelter “including the extra cost of electricity”.

• The company is continuing “to explore discussions with third party nickel producers to add toll income over the medium term when the smelter is fully operational”.

• ASA Resources comments that action by the Philippine and Indonesian Governments to curb “more environmentally controversial mining practices”, has caused the nickel price to fluctuate between $8,800 and $10,800 over recent months but that as the consensus builds that the “Philippines Government will implement its original plant to curtail the shipment of unprocessed ores” the market will stabilise.

• ASA Gold’s Freda Rebecca gold mine suffered a 14% reduction in revenue to US$18.4m (Q2 US$21.3m) as a result of the impact of 11% lower gold prices at US$1195/oz and a 3% decline in gold production to 15,365 oz.

• The reduced gold output reflects a decline in head grades to 1.78 g/t from 2.28g/t in the previous quarter, partially offset by a 21% increase in the tonnages treated to 319,026 tonnes.

• Despite the lower grade, Freda Rebecca mine reduced its all-in-sustaining costs by US$100/oz to US$1055/oz during the quarter.

• The Company is maintaining its guidance of 70-90,000 oz pa of long term production and its “AISC target of US$1000/oz … over the next few quarters.”

• The Freda Rebecca gold operations benefit from both a “2.5% export incentive scheme to large mining exporters in 2016” introduced by the Reserve Bank and also from “an additional 2..5% export incentive bonus” credit as the “Best Large Scale Top Producer” [which] “will give a total export incentive in the next 12 months of 5% which translates to more than $4.5 million in cash rebates”.

• At the Klipspringer diamond mine in S Africa, the transition to treating coarse tailings resulted in production during only two  of the three months in the quarter with quarterly production declining by 39% to 22,105 carats as a result. The transition is expected to also impact the current quarter with only two months of production “but as time progresses, we expect production and income to grow steadily, to a peak of circa $800,000 per annum.”

• At the corporate level, “the Group’s corporate overhead continues to be at an all-time historical low” and “we continue to integrate functions between corporate and subsidiaries, streamlining procurement and merging accounting and administrative roles”.

• An S P Angel team recently had the opportunity to visit ASA Resources’ gold and nickel mining operations in Zimbabwe. We found an energetic and committed team of professionals focussed on delivering the Group’s capital projects, achieving cost reductions and on identifying new opportunities across the range of the nickel and gold operations.

Conclusion: ASA Resource Group has a number of projects underway which should significantly change the profile of its nickel, gold and diamond operations. In addition, the Zani Kodo gold project in DRC exposes the company to a 3.6m oz resource in an area of the DRC where majors such as Anglogold and Randgold Resources have major deposits. Initial production on a small scale, which should yield valuable information on the mining, metallurgical and operating conditions is envisaged to help fund further exploration at Zani Kodo. We look forward to a continuing series of announcments as these projects move ahead.

*SP Angel acts as Nomad and broker to ASA Resources and its analysts have visited ASA’s Bindura Nickel, Freda Rebecca and Zani Kodo assets.

 

Strongbow Exploration (TSX:SBW) CAD0.14, Mkt Cap CAD7.5m – PEA on South Crofty

• Strongbow Exploration has released a summary of the results of a NI-43-101 compliant Preliminary Economic Assessment (PEA) for the re-opening of the historic South Crofty tin mine in Cornwall. The study was undertaken by P&E Mining Consultants in Canada.

• Using a 5% discount rate and assuming a tin price of $10/lb, copper price of $2.65/lb and zinc price of $0.90/lb, the study estimates that the project generates an after-tax NPV of US$130.5m and an IRR of 23.4% from an initial pre-production capital expenditure(including contingency) of US$118.7m. Sustaining capital over the planned 8 year mine life is estimated at a further $83.8m.

• The company reports that the average life-of-mine cash cost of production is $3.36/lb of tin equivalent.

• The plan envisages extracting 2.575m tonnes of mineralised material at a an average grade of 1.55% tin equivalent over the planned life. The plant is expected to treat 1,000tpd and achieve recovery rates for tin in the range 88-90%.

• At this level of study, the PEA includes the extraction of “mineralised material [which] contains Mineral Resources classified in the Inferred category and therefore cannot be considered a Mineral Reserve, however, the PEA demonstrates that approximately 83% of the Mineral Resources are demonstrated to be potentially extracted under the mine plan supported by the PEA”.

• Strongbow will need to complete additional resource estimation work to upgrade the inferred portion of the resources and has to firm up and implement plans to de-water the mine, although many of the required permits to do this are already in place,

• Project construction is estimated to require 24-36 months so it will be some time before the resurgence of Cornwall’s historic tin mining industry becomes a reality but many had never expected to see the revival of mining in Cornwall and Strongbow’s commitment may yet see them confounded.

• The PEA “has concentrated on the four main mining areas that were in production when the mine ceased operating in 1998 [however] There are numerous other mineralized zones and production areas that are developed and accessible but have yet to be included in an NI 43-101 Mineral Resource Estimate.  Strongbow is currently working to define the Mineral Resources in these areas and will potentially bring them into the mine plan in due course.”

Conclusion: The publication of the PEA is an important milestone in Strongbow’s plans to re-open the South Crofty mine – we look forward to the full study which is to be released within the next 45 days.

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Fri, 17 Feb 2017 10:09:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27127/today-s-market-view-asa-resource-group-plc-strongbow-exploration-27127.html
VSA Capital Market Movers - Metal Tiger http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27126/vsa-capital-market-movers-metal-tiger-27126.html Metal Tiger (LON:MTR)

MOD Resources (MOD AU), which holds a 70/30 JV with Metal Tiger (MTR LN) has announced drill results which indicate further mineralisation at greater depth than the current T3 resource. The additional drilling has been carried out as part of the PFS work. This result confirms our view that there is potential for resource expansion at the T3 project.

Hole 64D indicated new mineralisation at depth below the current zone, this may be the source of a geophysical anomaly known to lie beneath the current resource. The core showed a 75m wide zone at a depth of around 247m. The drill core also shows that the mineralised interval sediments are folded upon themselves, suggesting that the mineralised horizon repeats, at least in some places. As the potential scope of total copper in resource is expanding MOD has mobilised another drill rig to speed up the effort to assess this new discovery. A new deep drill hole, to a depth of 600m, is intended to tes geophysical anomalies south and below the T3 resource. There are, however, no assays reported as yet and it is not yet possible to determine the grade.

We reiterate our Buy recommendation and 5.68p/sh.
 

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Fri, 17 Feb 2017 09:06:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/27126/vsa-capital-market-movers-metal-tiger-27126.html
In the Papers - Wizz Air, Argos, Laura Ashley, Microsoft http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/27125/in-the-papers-wizz-air-argos-laura-ashley-microsoft-27125.html Newspaper Summary
 

The Times

French bond trading doubles over election fears: The volume of French bonds being traded has doubled this month to levels not seen since the Eurozone crisis because of uncertainty about the outcome of the Presidential election in late April.

Defeated bidders on HS2 contract may go to court: The decision by HS2 Ltd to hand lucrative contracts to CH2M, the American consulting engineer, could end up in court because losing bidders for the latest parcel of work may launch a judicial review.

Gas storage site may be out of action: Britain has taken a step closer to relying on imported gas after Centrica said that the country’s only sizeable storage facility may be out of action next year.

New twist on menu at Simpson’s: One of London’s oldest and grandest dining rooms is to close for refurbishment, putting the future of its 27 staff in doubt.

Private firms should have code of conduct too, says IoD: The Institute of Directors is calling for a new corporate governance code for private companies after recent scandals, including the collapse of BHS.

Free trade ‘will lift growth’: Britain could record a 4% bounce in GDP if it stripped away tariffs on imports after leaving the European Union, according to pro-Brexit economists.

Uber hopes to charm its drivers out of revolt: Uber has launched a charm offensive aimed at its estimated 40,000 drivers in Britain in an attempt to head off protests and legal challenges over their employment status.

Eurozone can’t relax yet, ECB insists: Interest rate setters in the Eurozone concluded that it was too early to think about easing back on stimulus measures, according to the minutes of the European Central Bank’s monetary policy meeting last month.

Dividend hope caps solid year for Coca-Cola bottler: Shares of Coca-Cola Hellenic Bottling Company fizzed more than 4% higher after the soft drinks maker reported strong 2016 results and hinted at the possibility of a special dividend.

Canada Goose set for $300 million float: Famous for its £1,000 Parkas with coyote fur-lined hoods, Canada Goose is to go public with a dual listing in the U.S. and Canada that will provide an exit for Bain Capital, its owner.

Cult drama helps Virgin lure viewers: Virgin Media has reversed losses of television subscribers, swinging from a net decline in 2015 to a net gain last year as it upped its game against Sky with a new set-top box and network upgrade.

The Independent

Deutsche Bank has examined Trump’s accounts for Russia links: Deutsche Bank, the troubled German lender that loaned hundreds of millions of dollars to Donald Trump, has performed a detailed investigation into the U.S. President’s personal accounts in a bid determine whether he had any connections with Russia, according to the Guardian.

Chief Executives to earn 400 times the average worker by 2037: A major re-think of corporate governance is needed to improve transparency across U.K. Executives’ pay ahead of Britain’s departure from the EU, according to a new report.

Snapchat slashes valuation by billions ahead of stock market flotation: The owner of Snapchat has set the valuation on its initial public offering at between between $16.2 billion and $18.5 billion (£13 billion - £14.8 billion), significantly below expectations of between $20 billion and $25 billion, the BBC has reported.

Pressure group turns to crowdfunding to stop companies funding hate: A pressure group whose aim it is to encourage corporations to stop advertising on media outlets that they say encourage hate speech and extremism has launched a crowd-funding campaign to raise awareness and spread support.

EU worried it will be flooded by ‘British champagne’ after Brexit: The European Union is reportedly worried that “British champagne” and “British Parma ham” could flood the continent after the U.K. leaves the EU.

RBS accused of fraud and ‘systematic’ forgery by former employee: A former RBS employee has said the bank “systematically” forged documents in order to cover up its own misconduct.

Austria’s defence ministry to sue Airbus: The Austrian defence ministry has said that it will sue the European aircraft manufacturer Airbus over alleged corruption and bribery.

Global stocks hit all-time high thanks to Donald Trump’s promises and strong economic data: Global stocks scaled new all-time highs on Thursday, spurred by a double whammy of robust economic data and lingering confidence in the Trump administration’s promises to cut taxes and roll back regulation.

The Daily Telegraph

Banks caution against ‘significant’ overhaul of pay rules: The U.K.’s biggest banks have warned the Government against launching a “significant” overhaul of the rules governing Executive pay, the Daily Telegraph has learned.

Philip Hammond is an ‘economic illiterate’ on trade, says former Thatcher adviser: Chancellor Philip Hammond is an “economic illiterate” and does not understand the benefits of free trade, according to veteran economist and former Treasury Advisor Professor Patrick Minford.

Nestlé’s new Boss sets out recipe for growth as sales disappoint: Nestlé will ditch poorly performing businesses that cannot be fixed and spend millions more on restructuring the company, its new Chief Executive said, as the food giant reported lacklustre full-year results.

Shire’s shares rally as pharma giant beats expectations: Shares in Shire jumped 6% after the pharmaceuticals giant reported full-year results that beat City forecasts.

The Questor Column:

This 22% discount can’t last – and the new manager is motivated to deliver: The actual fate that could await the team that runs the Montanaro U.K. Smaller Companies trust is that shareholders could vote to wind it up, putting them out of a job. If it fails to narrow before the poll, shareholders could be encouraged vote for a wind-up, which would take place at much closer to net asset value, effectively eliminating the discount and handing them an instant profit. If, on the other hand, the discount does narrow between now and the vote, they are in line for a windfall from the rising share price. Irrespective of such tactical motives for buying the shares, there are good reasons to expect an improvement in performance. Opportunistic investors could not be certain that the vote would be for liquidation, which would remove some of the buying pressure and limit the narrowing of the discount. Mr Montanaro has an excellent long-term track record, making returns of 111.7% over the past decade, compared with 81.3% for his peers, according to FE Trustnet, the investment analyst. Questor says ‘Buy’.

The Guardian

Argos to pay £2.4 million to 37,000 workers paid less than minimum wage: Argos is being forced to pay £2.4 million in wages to more than 37,000 current and former shopworkers, and has been fined nearly £1.5 million after a HMRC investigation.

Business rates rise is biggest issue for small firms in London: Nearly three-quarters of small companies in London say business rates are the most important issue they face, piling further pressure on the government over the controversial tax.

Vauxhall’s future in U.K. is secure, says business secretary: The U.K. business secretary has said he has been reassured about the future of General Motors’ Vauxhall production operations in Britain, following a meeting with the U.S. carmaker’s Chairman.

Choi-gate: Samsung heir Lee Jae-yong formally arrested for corruption: The Samsung heir, Lee Jae-yong, has been formally arrested as part of a probe into the “Choi-gate” corruption and influence-peddling scandal that led to the impeachment of Park Geun-Hye as South Korea’s President.

Giggs and Neville skyscrapers ‘threaten Manchester’s heritage’: A plan by former footballers Ryan Giggs and Gary Neville to build two bronze skyscrapers in Manchester city centre is a “planning disaster of a magnitude not seen in decades,” heritage bodies have warned as they urged Ministers to intervene.

Daily Mail

Insurance Bosses at Beazley cash in £5 million after share price surges 10% since start of the year: Board members at insurer Beazley cashed in almost £4.9million of shares after a recent surge in the stock. Five Executives at the firm sold share options, offloading more than 1.2 million shares in the business, in total.

We were wrong on Brexit, admit top economists as they more than triple their growth forecasts for the U.K.: Leading economists have more than tripled their growth forecasts for the U.K. this year in a stunning admission they were wildly wrong about the impact of Brexit.

Power company Drax dives after dividend is cut as it reinvents itself for a low carbon future: Power company Drax is planning to review its dividend policy as it reinvents itself for a future without coal.

Fears for the City as Deutsche Boerse Boss claims German takeover of LSE will create 300 jobs in Frankfurt: A German takeover of the London Stock Exchange will create 300 jobs in Frankfurt – fuelling fears it will take the City’s business. Deutsche Boerse wants to buy LSE for £21billion, which critics say is against the U.K.’s interest.

Budget airline Wizz Air chooses Luton for its first U.K. hub amid booming demand for trips: Budget airline Wizz Air is opening its first U.K. base, in Luton, stressing its commitment to Britain. The low-cost carrier, founded in Hungary, is opening the hub amid booming demand for trips here.

Laura Ashley shares drop 10% as it warns on profits after poor Christmas: Laura Ashley suffered a 29% drop in pre-tax profits in the final six months of 2016, amid falling sales and rising costs.

Daily Express

Cobham shares hit 11-year low as aerospace group fires fifth profit warning in 15 months: Cobham shares plunged to their lowest for more than 11 years as the aerospace and defence technology group fired off its fifth profit warning in 15 months.

‘We need a post-Brexit visa’ Unskilled migrants cost U.K. taxpayers £3,500 each, say experts: Unskilled migrants to Britain drain thousands of pounds more from the country than they contribute, according to a group of economists backing the end of uncontrolled immigration after Brexit.

Trump trade could end in Dow Jones and FTSE stock market crash: Record high stock markets have raised fears the bubble could BURST with a devastating crash looming on the horizon.

Heineken’s £403 million takeover of Punch Taverns under scrutiny by competition watchdog: Heineken’s £403 million takeover of pub chain Punch Taverns is being put under the microscope by Britain’s competition watchdog amid concerns over the deal.

The Scottish Herald

Ian McConnell: Chancellor should take a leaf out of TUC book as pay squeeze looms: Hard-pressed U.K. households might feel, entirely justifiably, that they are due a break from the exhausting economic headwinds of recent years. Sadly, however, two sets of key economic statistics this week highlight the likelihood that things are set to get even worse.

Berkshire Hathaway-owned metals firm shuts plant in Livingston after loss: Caledonian Alloys, the aerospace metals recycler owned by U.S. billionaire Warren Buffet’s Berkshire Hathaway, fell into the red ahead of the closure of its plant in Livingston in December.

Property deals in cities are all set to total £68 million: The Cuprum building in Glasgow is on the verge of being sold for £28 million to a fund controlled by Credit Suisse in what would be the biggest property deal in the city since the Brexit vote.

Activist investor ups Johnston Press stake: Crystal Amber has increased its stake in Johnston Press, the publishing group which owns The Scotsman and Yorkshire Post newspapers, to 21.36%.

North Sea star joins Wood: Wood Group has appointed North Sea veteran Alan Johnstone to lead the European arm of the division that maintains and modifies oil and gas facilities such as production platforms.

Beattie Communications grows sales and profits: Beattie Communications Group increased profits by around 6% in its 30th anniversary year helped by winning new clients.

Call for tariff-free deal with the EU: The Director of the Scottish Retail Consortium has stressed the importance of getting a fair deal for consumers in the Brexit negotiations.

The Scotsman

Deal struck for rental flats development in Leith: Nearly 140 build-to-rent flats have been given the go-ahead in Leith after property firm Rettie & Co concluded legals on behalf of Forth Ports.

Cala poised to build another year of record profits: Upmarket housebuilder Cala Group said it was on course deliver another year of record earnings as it hailed a “very strong” performance for the first half.

North Berwick gin makes it a treble at Brit Awards: East Lothian spirits firm NB Gin is preparing for a return appearance at the Brit Awards with special limited edition bottles.

Comms agency Beattie buoyed by record annual results: Beattie, the public relations and ¬communications group, has predicted a “flourishing” year ahead after unveiling record annual results.

Microsoft hikes prices by up to 15% after Brexit vote: Microsoft has raised prices on a raft of products including laptops and tablets by as much as 15% in direct response to the collapse in the pound following the Brexit vote.

City A.M.

Sales of bad debt top €100 billion in 2016 as Europe’s banks try to put crisis behind them: European loan sales broke through the €100 billion (£85 billion) mark in 2016 as struggling banks look to offload big books of bad debt.

Asset manager Fidelity urges Ministers to get tough on Executive pay committees: Fidelity International wants Ministers to back a proposal for boardroom pay committee chairs to be forced out if a large minority of shareholders do not back remuneration plans.

ECB continues to look through rising inflation as big risks loom on the horizon: The European Central Bank (ECB) remains committed to “looking through” rises in headline inflation as Europe faces a balance of risks “tilted to the downside”, according to the minutes from its latest monetary policy meeting.

Italian parliament signs off on €20 billion bank bailout fund, as country’s lenders creak under billions of euros of non-performing loans: Italy’s parliament has given the thumbs up to the law which will create a €20 billion (£17 billion) bailout fund for the country’s troubled banks.

The City of London’s policy chair is taking up the Chairman role at the firm which runs the U.K.’s cash machine network: The firm responsible for running the U.K.’s 70,000-strong cash machine network has appointed the City of London’s policy chair as its new Chairman.

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Fri, 17 Feb 2017 08:41:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/27125/in-the-papers-wizz-air-argos-laura-ashley-microsoft-27125.html
Market Briefing - US markets closed mostly lower yesterday, led by a drop in energy and consumer-discretionary shares http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/27124/market-briefing-us-markets-closed-mostly-lower-yesterday-led-by-a-drop-in-energy-and-consumer-discretionary-shares-27124.html UK Market Snapshot

UK markets finished in negative territory yesterday, weighed down by losses in oil heavyweights and mining sector stocks. BP and Royal Dutch Shell declined 2.0% and 2.2%, respectively. Miners, Glencore, Anglo American and Antofagasta fell 0.6%, 1.8% and 2.0%, respectively, amid lower base metal prices. Cobham plunged 15.3%, after the company issued another profit warning for 2016 and offered a dismal outlook for 2017. Drax Group tumbled 5.3%, after the company reported a drop in its underlying earnings for 2016. AstraZeneca slipped 3.4%, after the drugmaker went ex-dividend. On the positive side, Shire advanced 3.8%, after the company posted upbeat results for the fourth quarter and provided a robust growth outlook for 2017. Peers, GlaxoSmithKline and Hikma Pharmaceuticals climbed 1.4% each. The FTSE 100 declined 0.3%, to close at 7,277.9, while the FTSE 250 fell 0.6%, to settle at 18,705.7.

US Market Snapshot

US markets closed mostly lower yesterday, led by a drop in energy and consumer-discretionary shares. Oil giants, Exxon Mobil and Chevron slid 1.0% and 1.7%, respectively. Tripadvisor sank 11.0%, after the company posted downbeat results for the fourth quarter amid a lower sUBScription revenue and rising marketing costs. MGM Resorts International plummeted 9.3%, after the company reported weaker than expected earnings for the fourth quarter. Dean Foods plunged 8.1%, after its profit for the fourth quarter missed analysts’ estimates and it offered a disappointing outlook for 2017. Bucking the trend, Stericycle surged 7.7%, after it posted upbeat fourth quarter results. Cisco Systems advanced 2.4%, after the company reported better than anticipated earnings for the second quarter and raised its quarterly dividend. The S&P 500 slipped 0.1%, to settle at 2,347.2. The DJIA rose marginally, to settle at 20,619.8, while the NASDAQ slid 0.1%, to close at 5,814.9.

Europe Market Snapshot

Other European markets ended in the red yesterday, amid a slump in financial sector stocks. Banks, Banco Santander, UBS Group and Deutsche Bank dropped 1.0%, 1.3% and 1.7%, respectively. Schneider Electric tumbled 4.2%, after the company posted a drop in its revenue in 2016 and its net profit for the year trailed market expectations. Nestle slipped 1.0%, after the company reported a slowdown in its sales for 2016 and warned about subdued growth in 2017. On the brighter side, Air France-KLM surged 12.6%, after the airline posted upbeat earnings for 2016, mainly helped by a sharp decline in fuel costs and promised that it would take more cost-cutting measures in 2017. The FTSEurofirst 300 index declined 0.4%, to close at 1,459.7. Among other European markets, the German DAX Xetra 30 slid 0.3%, to close at 11,757.2, while the French CAC-40 shed 0.5%, to settle at 4,899.5.

Asia Market Snapshot

Markets in Asia are trading weaker this morning, tracking the lacklustre cues overnight from Wall Street. In Japan, exporters, Mazda Motor, Toyota Motor and Panasonic have dipped 0.7%, 1.1% and 1.7%, respectively, amid a stronger Japanese Yen. On the contrary, Sharp has advanced 2.5%, after the company boosted its earnings estimates for the year ending 31 March 2017. In Hong Kong, oil stocks, PetroChina, CNOOC and Sinopec Oilfield Service have dropped 0.2%, 0.6% and 1.2%, respectively. In South Korea, index major, Samsung Electronics has fallen 1.6%, after Samsung Group’s Head, Jay Y. Lee, was arrested over his involvement in the high level corruption scandal. The Nikkei 225 index is trading 0.7% lower at 19,215.5. The Hang Seng index is trading 0.4% down at 24,011.3, while the Kospi index is trading 0.2% lower at 2,078.2.

Key Corporate Announcements Today

Final Dividend Payment Date

Blackrock Frontiers Investment Trust, Catco Reinsurance Opportunities Fund Ltd (DI), Catco Reinsurance Opportunities Fund Ltd (DI) C shares, Scottish Inv Trust, Shaftesbury, TUI AG Reg Shs (DI), Victrex plc

Interim Dividend Payment Date

Consort Medical, Fletcher King, Investment Company, Jupiter Dividend & Growth Trust, Jupiter Dividend & Growth Trust Common, Murray International Trust, NB Global Floating Rate Income Fund Ltd GBP, North American Income Trust (The), Starwood European Real Estate Finance Ltd

Special Dividend Payment Date

Halfords Group, Scottish Inv Trust

Quarterly Ex-Dividend Date

Canadian General Investments Ltd.

Key Corporate Announcements for Monday

EGMs

RM2 International S.A. (DI)

Final Dividend Payment Date

Compass Group

Interim Dividend Payment Date

Aberdeen Asian Income Fund Ltd.

Quarterly Payment Date

SQN Asset Finance Income Fund Limited

Trading Announcements

Bovis Homes Group, Hogg Robinson, Vedanta Resources

Key Economic News

ECB showed no sign of dialling back stimulus

The European Central Bank’s (ECB) January meeting minutes showed that policymakers widely agreed to look through the energy-driven recent upturns in headline inflation and sought patience as they judged that the Euro area economy required a substantial amount of monetary stimulus to bring price growth to target. They also added that this will help offset potential political risks in the Euro-zone and around the world.

Euro-zone new car registrations in EU 28 countries advanced in January

New car registrations in the EU 28 countries in the Euro-zone recorded a rise of 10.20% on a YoY basis, in January. In the prior month, new car registrations in the EU 28 countries had climbed 3.00%.

French ILO unemployment rate fell in 4Q 2016

In France, ILO unemployment rate eased to 10.00% in 4Q 2016, higher than market expectations of a drop to a level of 9.80%. In the previous quarter, ILO unemployment rate had registered a revised reading of 10.10%.

Italian trade surplus dropped in December

Italy has posted (EU countries) trade surplus of €0.12 billion in December, compared to a revised trade surplus of €0.22 billion in the prior month.

Italian trade surplus widened in December

(Non-EU countries) trade surplus in Italy rose to €5.67 billion in December. Italy had reported a trade surplus of €3.97 billion in the previous month.

US initial jobless claims climbed in the last week

The seasonally adjusted initial jobless claims in the US climbed to 239.00 K in the week ended 11 February 2017, lower than market expectations of a rise to a level of 245.00 K. Initial jobless claims had registered a level of 234.00 K in the prior week.

US Philadelphia Fed manufacturing index unexpectedly climbed in February

In February, Philadelphia Fed manufacturing index in the US registered an unexpected rise to a level of 43.30, compared to market expectations of a fall to 18.00. In the prior month, Philadelphia Fed manufacturing index had registered a level of 23.60.

US housing starts slid in January

In January, housing starts in the US fell 2.60%, on MoM basis, to an annual rate of 1246.00 K, higher than market expectations of 1226.00 K. Housing starts had registered a level of 1279.00 K in the previous month.

US continuing jobless claims eased in the last week

In the week ended 04 February 2017, the seasonally adjusted continuing jobless claims dropped to 2076.00 K in the US, compared to a revised reading of 2079.00 K in the previous week. Markets were expecting continuing jobless claims to drop to a level of 2050.00 K.

US building permits advanced in January

Building permits in the US climbed 4.60%, on monthly basis, to an annual rate of 1285.00 K in January, compared to a revised level of 1228.00 K in the previous month. Markets were anticipating building permits to rise to 1230.00 K.

Japanese machine tool orders rose in January

On a YoY basis, the final machine tool orders in Japan recorded a rise of 3.50% in January. In the previous month, machine tool orders had recorded a rise of 4.40%. The preliminary figures had also recorded a rise of 3.50%.

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Fri, 17 Feb 2017 08:38:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/27124/market-briefing-us-markets-closed-mostly-lower-yesterday-led-by-a-drop-in-energy-and-consumer-discretionary-shares-27124.html
Hotly Disputed, but No Longer Unthinkable: Could France be Ready for President Le Pen? http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27123/hotly-disputed-but-no-longer-unthinkable-could-france-be-ready-for-president-le-pen-27123.html Hotly Disputed, but No Longer Unthinkable: Could France be Ready for President Le Pen?

I have used the headline from Ambrose Evans-Pritchard’s article as shown in The Telegraph, in preference to the sensationalist online headline.  Here is the opening:

If Marine Le Pen wins France's presidential elections in May, all talk of punishing Britain for the outrage of Brexit will become irrelevant.

French diplomacy will pirouette overnight under a National Front (FN) leader. The Élysée Palace will seek an Entente Cordiale with the British, offering a bilateral alliance on new foundations.

It will then be the European Union that faces an existential choice: whether to reinvent itself as a loose federation of nation states, or succumb to galloping disintegration

"What is the point in punishing a country? It is senseless, unless you think the EU is a prison, and you are condemned if you escape. I want to rebuild our damaged relations with the United Kingdom," she told the Daily Telegraph.

"A people decides its own destiny. You cannot force a country to do something that is against its own interests, or against the democratic process," she said.

It is a far cry from the language of President François Hollande, who told Europe that Britain must "pay a price" to deter any other country from toying with temptation.

Whether she has a chance of winning is hotly-disputed, but it is no longer unthinkable and the consequences are epochal. Bookmakers have lifted the odds to one in three as of February 13, an "alarming" development says Oxford Economics.

"France is the political heart of Europe, and the moment we leave the euro the whole project collapses," said Ms Le Pen. She leans across the table in her tiny office in the European Parliament with a glint of mischief.

French pollsters note her imperturbable serenity as the pillars of the French political system crumble around her, and the coronation of ex-premier François Fillon goes horribly awry. "She has established herself as an anchor of stability on the political landscape," says Frédéric Dabi from the polling group Ifop.

The latest L'Express poll found that she trails Mr Fillon by just 44 to 56 in a run-off election, nearing the margin of error in this ferbrile climate. The tabou of voting for the Front National is not what it was, and Britain's referendum shock has played into her hands.

"Brexit has been a powerful weapon for us. In the past our adversaries have always been able to say that there is 'no alternative' but now we have had Brexit, and then Trump, and Austria," she said.

"A whole psychological framework is breaking down. I think 2017 is going to be the year of the grand return of the nation state, the control of borders and currencies," she said.

 

David Fuller's view

Most articles mentioning Marine Le Pen dismiss her chances in this year’s elections because they are written for or quoted from the French establishment.  I think Ambrose Evans-Pritchard has a better perspective, partly because he is an original thinker and also a Francophile who is fluent in the language.

While the consensus view is that Le Pen cannot win the Presidency in this year’s elections, I think she will at least do better than the polls suggest.  Why?

 

Tillerson Forced to Stay at Sanatorium in German Village for G-20.

Here is the opening of this report by Bloomberg:

On his first trip abroad as U.S. secretary of state, Rex Tillerson was forced to stay at a sanitarium in a German village known for its hot springs, 30 minutes from where other world leaders gathered. Diplomatic security agents mingled in the parking lot with elderly people in wheelchairs arriving for spa treatments.

Tillerson, the former head of Exxon Mobil Corp., was at the sanitarium because Bonn’s hotels were all booked by the time he confirmed his attendance at this week’s Group of 20 meeting. Counterparts including U.K. Foreign Secretary Boris Johnson had to make a trek out to meet him.

The unusual diplomatic debut continued during an awkward encounter with Russian Foreign Minister Sergei Lavrov. After Lavrov delivered some perfunctory opening remarks alongside Tillerson, U.S. aides quickly ushered reporters from the room. “Why did they shush them out?” Lavrov asked.

And:

The curious start to his first foreign trip may demonstrate little more than the adjustment Tillerson is making after years of traveling with a small entourage as chief executive officer of Exxon to being a highly sought-after Cabinet member in President Donald Trump’s administration. Two weeks after winning confirmation, Tillerson has yet to lay out his most urgent foreign policy priorities and hasn’t had a news conference.

The lack of outreach to the media extends to the State Department briefing room in Washington, where a spokesman’s normally daily question-and-answer exchanges with reporters have yet to resume since Trump took office almost four weeks ago. Tillerson also continues to lack a deputy secretary, who could help manage day-to-day issues at the department.

The few remarks Tillerson has made reflect the changed circumstances of his new job. In his meeting Thursday with Saudi Foreign Minister Adel al-Jubeir, the two bantered about Tillerson’s flight from the U.S., which arrived late Wednesday night.

"I’m not used to traveling like that you know,” Tillerson said. “I’m used to getting on at night, spending the night on the plane and then going to work. It’s quite civilized."

 

David Fuller's view

What a childishly petty snub by the EU, most likely from an unelected bureaucrat who will hide behind his anonymity in connection with this incident. 

 

Email of the day 1

On a small world:

David, I sincerely wish you a speedy recovery to full health. I have been a subscriber since I believe 1984 and met you at your second to last Chart Seminar in May 2006 and have truly benefitted from the service. My middle son works for Richard Chandler and is presently with Eoin at the seminar in Dubai. Again my best wishes and thanks.

 

David Fuller's view

Many thanks for your kind words and interest in this service over so many years.

I met your fine son and two of his colleagues at a lunch when they visited London around yearend 2016, to talk about the current seminar in Dubai.  He will certainly learn from Richard Chandler – an imposing leader, legendary investor and dedicated trainer of his team.

I met the remarkable Chandler brothers when they attended one of my European 2-day workshops on behavioural technical analysis in autumn of 1987, a few days before the Crash.  I always worked with current market examples, as does Eoin.  Needless to say, delegates were able to identify plenty of behavioural and technical warning signals at that important time.   

 

Jim Cramer: You Do Not Want to Be in Retail Stocks

Here is this short article from The Street:

The stock market has continued to churn out record high after record high, putting together the best record-breaking streak since the early 1990s.

While the broader indices have been climbing, retail has been stagnant, with a number of these stocks acting just "dreadful," TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's "Stop Trading" segment Thursday.

Cramer highlighted a recent research report from JPMorgan analyst Matthew Boss. Boss "slashed numbers very big" for Macy's (M), Nordstrom (JWN) and J.C. Penney (JCP), Cramer pointed out.

Macy's has been talked about as a takeover target, but with its fundamentals in decline, that may warrant a lower takeover price, Cramer reasoned. Boss's research report lays out a "chilling" situation of the mall, he added.

But it's not just the big department stores, either. Stocks like Abercrombie & Fitch (ANF), Gap (GPS) and L Brands (LB) have been impacted, too. These stocks are not the place to invest, Cramer said, explaining that the truth is simple: consumers are staying home, playing video games, ordering deliveries and playing on their iPhone.

That's where the money has been flowing, Cramer said, to at-home entertainment, not the mall.

 

David Fuller's view

Yes, fewer people are visiting the malls.  The real reason, which Cramer certainly knows but may have felt he should not mention, is that people are buying from Amazon, the most brilliant and efficient retail system ever invented. 

 

Email of the day 2

On behavioural TA and pharmacology:

Neither have I had the pleasure of meeting you face to face, but having met Eoin at now 2 chart seminars, and read your comments from time to time as a subscriber, I have a mental picture of the sort of person you might be.

I find your measured response to financial and political comments and news (in which we drown on occasions) is one of the main reasons I keep coming back. The world does not always make the same sense as say nature, mathematics or physics. Perhaps another reason I have endured here is a growing appreciation of the behavioural aspect of financial analysis, and how well it has been articulated by you and Eoin.

I was going to side step comment on your recent illness because it is a personal matter and I couldn't think of anything useful to add, except of course to add my best wishes for your recovery. Fatigue following a respiratory infection can be a real problem.

I enjoyed the anecdote about amoxycillin used for canine RTI and your pun in response. Dry. It reminded me of a series of articles on antibiotic resistance discussed a few months ago by Eoin. We are fortunate to live in an era (end of an era?) in which the majority of common bacterial infections are still sensitive to something (at least where I live). This aspect of pharma has been so successful in the past that they appear to have stopped developing new products. Are we living on credit?

 

David Fuller's view

Thank you for this thoughtful, interesting and varied email.

Re behavioural technical analysis – the description for my field which I have used since the mid-1970s – is easily explained.  Don’t tell the market what to do because it probably isn’t listening. Instead, remember that the market eventually responds to fundamentals but will more often be volatile in the manner of a crowd.  So remain calm.  Watch the market by looking mainly at weekly and monthly charts, in the manner of David Attenborough peering through the reeds and observing a herd on the African plains.  The herd will mostly mill about, as price charts mainly range, before suddenly taking off.  Don’t stand in the way but run with the herd, at least until it clearly stops.

Re antibiotics, we have every reason to be grateful for them, not least because they have approximately doubled average life expectancy over the last hundred and fifty years or so, while wars have become less frequent and smaller. However, the bugs (germs) don’t stand still.  They adapt and come back.  The most vulnerable are young children, the unhealthy and the old.  Antibiotics may have extended my life recently, and I am still on them.  However, I will try to avoid a similar illness over the next several years, because the combination of antibiotics, including penicillin, may not be as effective for me anytime soon.     

 

It Does Not Matter Whether the Trump Base Liked His Press Conference

Here is the opening of this topical article from Business Insider:

As media Twitter had a field day with how unhinged President Donald Trump seemed in Thursday's press conference, there was the usual response from the Real America Whisperers that "his base eats this up" and that, to a lot of people, Trump looked like he was winning by dressing down the media.

All of this is beside the point.

Like any president, Trump has a large base of people who will always like him and a large base of people who will always hate him. In Trump's case, the latter group may be larger than normal. But neither of these is the groups that will decide his fate.

Trump's presidency lies in the hands of the Trump-curious: The approximately 15% of Americans who dislike him but tell pollsters they think he might do a good job. A lot of these are people who voted for Trump despite having an unfavorable view of him.

With these voters on his side, Trump can wield a fearsome coalition that will help him retain Congress in two years and persuade Republicans and Democrats in Congress to bend to his agenda in the meantime. Without them, he is unpopular and ridiculous.

The Trump-curious do not "eat up" whatever Trump does. They are guardedly optimistic about him (or were, a month ago) and hope that he will deliver positive change in their lives.

I doubt Thursday's press conference did much to move public feelings about Trump either way. The Trump we saw is one we've seen a lot before. But it also wasn't a brilliant strategy to remind the Trump-curious why they voted for him.

If Thursday's performance imposed a cost on Trump, it was because it did little to convey the messages that he is busily working to create good-paying jobs for Americans, or that he is breaking the logjams that have made Washington look so dysfunctional to so many, or that he is restoring whatever voters feel is lost in their communities.

Put another way, the biggest problem is not what he said, but what he didn't say.

He still has time to deliver on the hopes of the voters who took a chance on him. But the idea (either triumphant or defeatist) that Trump can build the public support he needs simply by attacking the media and playing on his hard-core voter base's resentments is incorrect.

 

David Fuller's view

I don’t like Trump’s public persona, but I am less happy about the mutually destructive baiting game which we are witnessing.  As President of the United States, I wish him well, because that would be good for the global economy.

Please note: I will be away on Friday but Eoin will be back.

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Fri, 17 Feb 2017 08:21:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/27123/hotly-disputed-but-no-longer-unthinkable-could-france-be-ready-for-president-le-pen-27123.html
Beaufort Securities Breakfast Alert http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27122/beaufort-securities-breakfast-alert-27122.html "The leaks are real, the news is fake". Donald Trump's press meeting last night appeared to re-boot his campaign formula, making vitriolic claims along with inaccurate, unscripted statements. Not that his unusual presidential manner is worrying the investors too much just yet; they are judging him on his promises, rather than his soundbites - and, so far, he is delivering. One of the big 'market pleasers', of course, is expected to be delivered with his State of the Union address on 28th February, when he could outline proposed deep cuts to US corporation taxes. Nevertheless, having seen world stock indices climbed to their highest since 2015 and the S&P-500 make its all-time high for a fifth consecutive session, the overnight markets decided to pause for reflection. While US stocks and government bonds have gained this week on data showing a robust consumer, improving production and an uptick in inflation, a hint of 'looking too good to be true' amongst equity traders prompted some to take a little money 'off the table', locking in recent profits on financials while energy shares also retreated as oil prices fell back. The US$ also marginally weakened relative to the international basket, following a two-day winning streak. Along with the recent travails amongst Trump's administration, a finger has also pointed at the European Central Bank's latest minutes for dampening the tone, with yesterday's minutes recognising the need to "remain patient and maintain a 'steady hand'" given a "a high level of uncertainty" in the wake of the IMF's warning of Greece's possible expulsion from the Eurozone and the France's Right Wing National Front leading the polls ahead of its Presidential election in April. US equities accordingly closed fractionally mixed while Asia were more convincingly down, with the Nikkei leading the way in response to safe-haven buying of the Yen as the region's other bourses trailed behind. UK macro releases this morning includes January Retail Sales data, while the EU also contributes its Retail Sales and Current Account figures. There are no significant UK corporates due to provide earnings or trading updates today, although some second-liners including Essentra (ESNT.L), Kingspan Group (KGP.L), Millennium & Copthorne (MLC.L) and Tern (TERN.L) are scheduled. London equities are seen opening in a rather lacklustre mood this morning, with the FTSE-100 seen 5 points either side of unchanged in early trading.

- Barry Gibb, Research Analyst

 

Markets

Europe

The FTSE-100 finished yesterday's session 0.34% lower at 7,277.92, whilst the FTSE AIM All-Share index fell 0.01% to stand at 906.66. In continental Europe, the CAC-40 finished down 0.52% at 4,899.46 whilst the DAX was 0.31% lower at 11,757.24.

Wall Street

In New York last night, the Dow Jones added 0.04% to 20,619.77, the S&P-500 lost 0.09% to 2,347.22 and the Nasdaq fell 0.08% to 5,814.9.

Asia

In Asian markets this morning, the Nikkei 225 had fallen 0.59% to 19,233.28, while the Hang Seng eased 0.6% to 23,963.94.

Oil

In early trade today, WTI crude was up 0.15% to $53.44/bbl and Brent was up 0.2% to $55.76/bbl.

 

Headlines

ONS figures show UK spending less on alcohol and tobacco

Families in the UK are becoming more clean-living, with less money being spent on cigarettes and alcohol, but more being spent on going out to restaurants. But the Family Spending Survey from the Office for National Statistics shows little change in spending overall. In the year to the end of March 2016, families spent an average of £528.90 a week, the same as the previous year. The ONS said growth in consumer confidence had levelled off in 2015-16. The figures show that spending on alcohol and cigarettes continued to fall over the period, to £11.40 a week. At the start of the 2000s, families were typically spending nearly £20 a week on such items.

Source: BBC News

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Fri, 17 Feb 2017 08:08:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/27122/beaufort-securities-breakfast-alert-27122.html
Donald presses on http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27121/donald-presses-on-27121.html FTSE 100 Index called to open +5pts at 7280, holding a trend of falling highs since Wednesday’s Feb peak which, along with 5-day rising lows, means a narrowing pattern into 7270. Bulls want to see falling highs at 7280 overcome to open the door for a rally back to 7300. Bears need overnight lows at 7273 give way so the index can fall back to test support at 7265. Watch levels: Bullish 7285, Bearish 7270.

Calls for tepid European start to the final session of the week come after a mixed close on Wall street as the Trump trade appeared to lose steam heading into a long weekend following a record run and rather lively presidential press conference. This morphed into a down day for Asia overnight despite the USD finding support to quell yesterday’s currency strength hindrance among peers (GBP, EUR, JPY), something that hampered equity sentiment yesterday..

Japan’s Nikkei is underperforming despite welcome Yen weakness, but beware a potential USD/JPY bearish flag that could mean the Yen strengthens again to create a fresh headwind. Declines for Toshiba (troubled nuclear business) and Softbank (US acquisition being badly digested) are clearly outweighing any currency benefit.

Australia’s ASX is struggling with 5830 Jan highs as base metals prices hinder Miners (copper, zinc and lead continuing to give up ground, aluminum peaked) and Oil looks undecided as US production and inventories rise but talk of deeper OPEC cuts keeps the recovery story alive.

The winning streak for US equity markets came to an end yesterday as the S&P 500 and the Nasdaq edged back from Wednesday’s highs, although the blue-chip Dow Jones narrowly avoided breaking its run of closing highs. The Energy sector weighed across all indices, leading both the S&P and Nasdaq 0.1% lower, while Cisco outperformed having reported Q2 earnings, helping the Dow to close 0.05% stronger.

Crude Oil prices have recovered from yesterday afternoon’s sell off based upon US production concerns, to trade slightly stronger overnight. Brent is bouncing from one month rising support as it looks to mount a fourth challenge of $56.20 resistance this week, while US Crude is already challenging resistance at $53.50 having recovered more strongly than its global counterpart.

Gold price has been boosted by the weaker USD dollar, although was unable to overcome last week’s highs of $1245 overnight as the greenback managed to find support. FX movements again are likely to act as a catalyst for further price movements as the precious metal looks to post its third consecutive weekly gain.

In focus today - another light one for macro data - will be UK Retail Sales growth, forecast to have rebounded to positive in January although the annual pace likely continued to slow from October’s 10yr peak. This would add to hotter inflation data and slower wages growth earlier in the week, suggestive of a weaker GBP beginning to bite via higher import prices.

Meanwhile, day two of the G20 meeting of Foreign Ministers (Bonn, Germany) may elicit further commentary as US Secretary of State Rex Tillerson finds his feet within the diplomatic arena. In Berlin, German Chancellor Merkel will host Canadian Prime Minister Trudeau at a joint conference shortly after midday

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Fri, 17 Feb 2017 08:06:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/27121/donald-presses-on-27121.html
Today's Market View - Gem Diamonds Minera IRL Limited http://www.proactiveinvestors.co.uk/columns/sp-angel/27120/today-s-market-view-gem-diamonds-minera-irl-limited-27120.html Gem Diamonds (LON:GEMD) – Q3 Results – Placing the Ghaghoo diamond mine on care  maintenance

Minera IRL (LON:MIRL) Suspended – Final Assay Results show increasing gold resource at the Ollachea project in Peru

 

Base Metals head towards deficit

Rising demand and significant production cuts in Chile, Indonesia and the Philippines are pushing base metals markets increasingly into deficit

Add to this the impact of further stimulus in China and the potential for Donald Trump to stimulate construction activity in the US.

The need by manufacturers to carry increased inventory in case of a trade war within china may also add to the deficit as producers move to protect and strengthen supply chains.

 

Dow Jones Industrials  +0.52% at 20,612 

Nikkei 225   -0.47% at 19,348 

HK Hang Seng   +0.47% at 24,108 

Shanghai Composite    +0.52% at 3,230 

FTSE 350 Mining   -0.30% at 17,138

AIM Basic Resources   +0.49% at 2,740 

 

Economic News

Mongolia – votes to nationalise Erdenet copper mine

• Mongolian parliament votes to nationalise the Erdenet copper mine following a ruling declaring the $400m sale of the mine by Rostec (Russia) to Copper Copper Corp, a little known local firm.

• The mine produces 530,000t of copper concentrate grading 23-25% for around 127,200tpa of copper and 4,500t of moly concentrate containing 2,205tpa of molybdenum metal.  The mine is a major contributor to the Mongolian economy and has been a significant to the economy of Mongolia through its 38 year history.

• The complex sale is reported to have used multiple shell companies controlled by the Trade and Development Bank and its staff and to have used borrowed funds from the Mongolian Central Bank.  Me thinks there is more to this than meets the eye?

• Mongolia is the world’s seventh largest exporter of copper concentrates just behind Canada and Peru.

 

Australia – mining boom clean-up could cost taxpayers billions says Australian institute (Guardian)

• The Guardian, a paper which would have us all back in the dark ages reading papyrus by candlelight reports on a paper by the Australian Institute which warns that many sites may not be successfully rehabilitated.

• The report suggests there are over 60,000 abandoned mining sites in Australia which may need attention.

 

China - China’s reserves have dipped below US$3 trillion falling to US$2.998 trillion in January

• The lowest level since early 2011 according to Standard & Poors. The “reserves are more than ample to meet its external needs and liabilities” according to S&P

 

Philippines – the Philippine Inquirer sports the headline “Industry outraged over cancellation of 75 mining deals”

• We applaud the ministers of mines the minister of the environment and the president for taking action to close 23 mines, suspend five others and cancel 75 mining contracts.

• Most of the projects are said to be nickel laterite ore exporters based in delta areas.  We are sure many if not all of these do not meet western style environmental standards risking the long-term health and livelihoods of local communities.  We do not support the export of nickel laterite ores neither should the Philippine government in our view.

• The Chinese authorities should also be grateful as the production of nickel pig iron at smelters in China is a filthy, polluting business and a cheap way of undermining the good work done by nickel producers which have invested billions in the development of facilities for the production of nickel in a more environmentally controlled manner.

 

Lloyds of London, the insurance and reinsurance market has banned drinking at lunchtime

• Stories of insurance brokers’ drinking habits are legendary in city circles.

• The move will be a welcome relief for young insurance brokers with the new generation drinking and smoking far less than their elders.

• Lloyd’s ban is almost certainly a reaction to the excessive drinking done by a few exuberant insurance brokers and while it may upset some of the old boys it does show that this last bastion of traditional city life is willing to evolve albeit slowly.

 

Currencies

US$1.0625/eur vs 1.0558/eur yesterday.  Yen 113.77/$ vs 114.49/$.  SAr 12.930/$ vs 13.016/$.  $1.249/gbp vs $1.246/gbp. 

0.771/aud vs 0.768/aud.  CNY 6.859/$ vs 6.868/$.

 

Commodity News

Precious metals:         

Gold US$1,236/oz vs US$1,226/oz yesterday

   Gold ETFs 58.6moz vs US$58.4moz yesterday

Platinum US$1,012/oz vs US$999/oz yesterday

Palladium US$791/oz vs US$781/oz yesterday

Silver US$17.99/oz vs US$17.88/oz yesterday

           

Base metals:   

Copper US$ 6,033/t vs US$6,032/t yesterday

Aluminium US$ 1,906/t vs US$1,892/t yesterday

Nickel US$ 10,905/t vs US$10,800/t yesterday

Zinc US$ 2,859/t vs US$2,901/t yesterday

Lead US$ 2,312/t vs US$2,359/t yesterday

Tin US$ 19,920/t vs      US$20,040/t yesterday

           

Energy:           

Oil US$55.9/bbl vs US$55.7/bbl yesterday

Natural Gas US$2.927/mmbtu vs US$2.946/mmbtu yesterday

Uranium US$25.90/lb vs US$25.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$86.6/t vs US$87.7/t

Chinese steel rebar 25mm US$536.8/t vs US$535.9/t

Thermal coal (1st year forward cif ARA) US$67.3/t vs US$66.2/t yesterday

Premium hard coking coal Aus fob US$154.8/t vs US$154.8/t

 

Tungsten - APT European prices $196-205/mtu vs $194-200/mtu

 

Company News

Gem Diamonds (LON:GEMD) 115 pence, Mkt Cap £159.1m – Q3 Results – Placing the Ghaghoo diamond mine on care  maintenance

• Gem Diamonds reports that the Ghaghoo diamond mine in Botswana is being placed on care and ,maintenance as a result of the fall in the prices for its diamonds from US$210/carat to US$142/carat.

• The mine, which has been developed to the point where it “has now reached the point where it will shortly be In a position to commence full commercial production” will cost an annualised US$3m to maintain until “a time when commencing full production would make economic sense.”

• In August 2016, the company’s interim results statement disclosed that the prices received for Ghaghoo production was US$157/carat and it would therefore appear that prices have continued to weaken. We assume that the imposition of monetary restraints in India, which has historically been an important market for lower value diamonds, will have been a contributory factor in the continued decline in prices.

• The mine was initially brought into production at a capital cost, for phase 1 operations of about 150,000 carats per year, of around US$85m in mid 2014 and has been ramping up since. Ghaghoo did not reach the planned levels of output with 2016 production of 40,976 carats – a reduction on the 91,499 carats produced in 2015 as the mine responded to difficult pricing and trading conditions by downsizing its operations.

Conclusion: The decision to suspend operations at Ghaghoo is a pragmatic response to low diamond prices while the company concentrates on its Letseng mine in Lesotho which is building a reputation for producing large high value diamonds including a 12.3carat pink diamond which realised US$109,677/carat and a 56.48 carat stone valued at US$53,451/carat.

 

Minera IRL (LON:MIRL) – Final Assay Results show increasing gold resource at the Ollachea project in Peru

• Minera IRL has released final assays from its Minapampa Far East drill program, at the Ollachea gold project in Puno, Peru.

• The results show gold mineralisation continues >500m to the east and remains open to the east and at depth.

• 23 drill holes cover 5,421m of drilling and outline a zone of 370,000-550,000oz of gold grading 3.1-4.6mt grading 2.9-4.3g/t gold

• The team reckon the Ollachea Project is still significantly underexplored, with considerable potential to add to the >1moz reserve.

• Significant drill hole intercepts from the program are:

o DDH16-T06 8 m downhole @ 3.69 g/t from 122 meters of depth

o DDH16-T07 13 m downhole @ 6.34 g/t from 143 meters of depth

o DDH16-T10 4 m downhole @ 11.23 g/t from 217 meters of depth

o DDH16-T11 21 m downhole @ 3.61 g/t from 96 meters of depth

o DDH16-T12 18 m downhole @ 3.4 g/t from 122 meters of depth

o DDH16-T14 22 m downhole @ 2.41 g/t from 176 meters of depth

o DDH16-T16 4 m downhole @ 16.8 g/t from 294 meters of depth

o DDH16-T18 10 m downhole @ 2.59 g/t from 186 meters of depth

o DDH16-T18 10 m downhole @ 2.65 g/t from 198 meters of depth

o DDH16-T19 19 m downhole @ 2.96 g/t from 188 meters of depth

o DDH16-T24 18 m downhole @ 2.1 g/t from 190 meters of depth

o DDH16-T24 7 m downhole @ 4.05 g/t from 213 meters of depth

Cut-off grade 1 g/t gold.

• The results will go towards the production of an updated NI-43-101 technical report.

Conclusion:  It is good to see Minera IRL returning to more normal operations following the removal of members of the board who seemed more intent on feathering their own nests than serving the interests of the company’s long suffering investors.  We hope we never see the name of Daryl Hodges and his merry men again.

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Thu, 16 Feb 2017 10:27:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/27120/today-s-market-view-gem-diamonds-minera-irl-limited-27120.html
Breakfast News - AIM Breakfast : Chariot Oil and Gas, Fitbug Holdings, Jarvis Securities Plc, MTI Wireless, Proxama PLC, Simigon, Solo Oil PLC, Versarien Plc, Zytronic http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/27119/breakfast-news-aim-breakfast-chariot-oil-and-gas-fitbug-holdings-jarvis-securities-plc-mti-wireless-proxama-plc-simigon-solo-oil-plc-versarien-plc-zytronic-27119.html What’s cooking in the IPO kitchen?

Saffron Energy—Schedule One update. Raising £2.5m, expected Mkt Cap £7.7m. Admission due 24 Feb. Italian Oil & Gas Play

Guinness Oil & Gas Exploration—Publication of prospectus. Seeking to raise £50m and invest in 15 exploration companies at launch, with plans to grow the portfolio to 30 positions during its lifetime.  Issue closing 23 Feb.

Arix Bioscience — Intention to float on the main market from the  global healthcare and life science Company supporting medical innovation. Raised £52m in Feb 16 with investors including Woodford Investment Management

  
 
Breakfast buffet

Zytronic (LON:ZYT) 385p £61.3m

AGM Trading update from the developer and manufacturer of a unique range of internationally award winning interactive touch sensor overlay products for use with electronic displays in industrial, self-service and public access equipment.

Further to the outlook statement given in December 2016, revenue and trading year to date has continued to be ahead of the equivalent period and remains in line with management's expectations. FYSep17E £21.9m rev and £5.4m PBT 16.56p div.

Fitbug Holdings (LON:FITB) 0.17p £2.9m

Insights and findings from a recent case study, following a pilot wellness programme with MTR Crossrail. The pilot was rolled out in collaboration with Olympic gold medallist Sally Gunnell, OBE, (the partnership which was announced in December 2016) to a select group of about 100 MTR Crossrail employees over a period of three months. Over the course of the programme, participants walked 72% more than the average person in the UK. Activity levels gradually increased from week one to week four. Some individuals improved their step activity by 177% over the course of the programme. 60% of employees who participated in the post-programme survey thought that the programme had a positive impact on office morale.

Cronin Group (LON:CRON) 2.37p £11.17m

Th Company with a business activity of the digitization of chemical space notes that an experiment designed by its scientific founder is to be carried out on a DIDO2 nano-satellite, successfully launched yesterday on an Indian Space Research Organisation rocket. Cronin owns the commercial rights to intellectual property from the University of Glasgow to develop the Chemputer™, which intends to open up chemistry to a wide user-base via digitization. “It's exciting to see digital chemistry being trialled in space for the first time.  Low and zero-gravity offer a range of new opportunities for performing chemical reactions which I believe will only be able to be performed routinely using a digital chemistry platform.”

Versarien (LON:VRS) 15p £18.2m

The advanced materials group has signed heads of terms regarding a distribution agreement with Lansdowne Chemicals Plc for its recently launched new graphene brand Nanene. Lansdowne Chemicals, a member of the Overlack Group, is a chemical distribution, manufacturing and marketing company with two UK sites and operations in Europe, Asia and the USA.  The agreement, which will be for an initial six months and thereafter terminable on three months notice, will help accelerate Versarien's route to market for Nanene by enabling Lansdowne Chemicals to target customers which Versarien currently has no relationship with.

Proxama (LON:PROX) 0.37p £7.94m

The mobile commerce Company specialising in payments and proximity marketing, announced the immediate appointment of Kelvin Harrison as Non-Executive Chairman, with David Bailey moving to Deputy Chairman.  Kelvin Harrison joins Proxama with a proven track record of leading and scaling companies, specialising in fast growth technology and services business. Kelvin is currently Chairman of Traveltek, Atlas Cloud and Clixfix and holds various other Non-Executive Director positions. He has previously held Non-Executive Director positions with NetDespatch, TotalSoft and UBC Media. Kelvin is former Chairman of Maxima Holdings and former CEO of Symbionics Group.

MTI Wireless Edge (LON:MWE) 20.25p £10.5m

FYDec16 results from the specialist  in the manufacture of flat panel antennas for fixed wireless broadband and a wireless irrigation solution provider. Revenue + 19% to $23. Generated over $1.2m of cash from operation (2015: $0.2m). Profit before tax remains strong at $1.2m (2015: $1.4m). Dividend of $0.01 per share declared with a scrip dividend alternative. ‘We enter 2017 with confidence in the growth prospects of our business and its ability to increase its revenues and generate cash.’

Simigon (LON:SIM) 20.25p £10.4m

FY Dec16 trading update from the specialist  in providing simulation training solutions. Must recognise additional costs relating to major $6.7m contract and has had delays on Israeli Air Force contract. Results to be below market expectations. The Company expects to report revenues of approximately $6 million and adjusted net profit before tax will be at least $0.3 million. The Company remains optimistic in its outlook and confident in its existing forecasts for the current financial year ending 31 December 2017. The revenue and profit which could not be recognized in the Period will be incremental to those existing expectations for the years ending 31 December 2017 and 2018. Cash strong. Proposing share buy back.

Solo Oil (LON:SOLO) 0.61p £42.62m

Placing of £2m at 0.5p. The net proceeds from the Placing will be used to fund the Company's share of the imminent well testing programme for the recently drilled Ntorya-2 appraisal in Tanzania and the analysis of future development options for the Ntorya discovery, where Aminex plc is the operator.  Solo holds a 25% working interest in the Ruvuma Petroleum Sharing Agreement and in the Ntorya gas and condensate discovery.

Chariot Oil & Gas (LON:CHAR) 9.93p £26.6m

The Atlantic margins focused oil and gas exploration Company, announced that its wholly owned subsidiary, Chariot Oil & Gas Investments (Morocco) Limited, has been awarded a 75% interest and operatorship of the Kenitra Offshore Exploration Permit ("Kenitra"), Morocco in partnership with the Office National des Hydrocarbures et des Mines ("ONHYM") which holds a 25% carried interest. Kenitra, with an area of approximately 1,400km2 and in water depths ranging from 200m to 1,500m, was formerly part of the Rabat Deep Offshore Exploration Permits I-VI ("Rabat Deep"), in which the Company now has a 10% interest and a capped carry on the RD-1 well which is anticipated to be drilled in early 2018.

Jarvis Securities (LON:JIM) 409p £44.9m

FYDec16 results from the provider of retail and outsourced financial services. 7% increase in profit before tax to £3.6m.  8% increase in EPS to 26.45p. Div up 6%. Reports strong trade volumes following lack of Brexit market crash.  ‘Looking forward into 2017 and beyond I am confident we will continue to grow the business and further improve our financial results. Market conditions are currently excellent for our own retail client activity, we have a strong pipeline of new Custodian and Model B business, and cash under administration is at record levels. Even modest increases in interest rates which now seem as though they may materialise in the shorter term will significantly increase profitability.’

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Thu, 16 Feb 2017 08:52:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/27119/breakfast-news-aim-breakfast-chariot-oil-and-gas-fitbug-holdings-jarvis-securities-plc-mti-wireless-proxama-plc-simigon-solo-oil-plc-versarien-plc-zytronic-27119.html
In the Papers - Nationwide, Goldman Sachs, Stagecoach, Danone http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/27118/in-the-papers-nationwide-goldman-sachs-stagecoach-danone-27118.html Newspaper Summary

The Times

Nationwide snubs fair banking survey again: Nationwide has refused to take part in an independent assessment of which financial products are good for customers for the second year running.

Brexit ‘must not mean upheaval in nuclear power’: The government must start urgently to lay out how it plans to leave the European body overseeing nuclear co-operation to avoid scuppering the new nuclear programme, engineers have said.

Eurozone’s trade surplus at record high: The Eurozone’s trade surplus rose to a record high in 2016 with exports rising towards the end of the year when the euro fell against the dollar.

Soaring U.S. prices lift odds of a rate rise: Inflation soared to a five-year high in the United States last month, far more than economists expected, boosting the chance that the Federal Reserve will raise interest rates next month.

EU approves landmark trade deal with Canada: Almost all tariffs on trade with Canada are set to be scrapped after MEPs voted through the European Union’s most ambitious trade agreement.

Defence contractor on target to make £100 million: Shares in QinetiQ touched record levels as the defence contractor and military technology research company said that it was on track to make profits of about £106 million this financial year.

Buyers submit final bids for B&B book: Bidders including Paragon and Prudential as well as U.S. investors have submitted final bids for £12.5 billion of Bradford & Bingley mortgages being sold by the government.

Anglo ditches mine to complete revamp: Anglo American is to sell its Union platinum mine in South Africa in a move that finally completes its withdrawal from older, less profitable operations in the Rustenburg region.

Vet supplier sees healthy year ahead: Animalcare, the veterinary medicine supplier, has reported a 12% rise in half-year revenue to £8 million.

Atomico delivers confidence vote: A London-based investment company set up by the Founder of Skype has raised one of Europe’s largest venture capital funds to invest in the continent’s most promising technology start-ups.

The Independent

Goldman shares hit ten-year high as Trump fills team with bankers: Goldman Sachs has had a phenomenal run since Donald Trump’s November election victory.

Global stocks hit a more than 20-month high: Stocks around the world rose to a more than 20-month high on Wednesday, according to Reuters, and the dollar climbed too, a day after U.S. Federal Reserve Chairwoman Janet Yellen signalled that the central bank could raise interest rates as early as March.

Investors unite against Trump’s climate change denial: The world’s biggest investors are joining forces to unite against Donald Trump in the fight against climate change.

Amazon’s business rate to be cut: Online retail giant Amazon will see its business levy slashed at most of its warehouses across the U.K. in the next financial, as nearly half a million other businesses across the country will be slapped with an increase in rates.

City of London business rates projected to increase by £1.4 billion: A projected increase in business rates faced by those occupying offices within London’s Square Mile could hamper the City’s bid to remain a banking hotspot after Brexit.

George Soros buys new stake in Goldman Sachs: Soros Fund Management, the firm that invests the personal fortune of billionaire investor and philanthropist George Soros, took a handful of new positions in financial stocks during the fourth quarter as the sector was buoyed by Donald Trump’s Presidential victory.

Greece ‘may ditch euro in favour of the dollar’: The man tipped to be Donald Trump’s ambassador to the European Union has said that Greece is contemplating leaving the euro in favour of the U.S. dollar.

U.K. start-ups are thinking of relocating to Europe as EU departure looms: One in five U.K. start-ups is considering establishing a European outpost in the wake of last year’s Brexit vote, and some have already decided to move their headquarters out of the U.K.

The Daily Telegraph

Toshiba seeks stay of execution from banks as financial woes deepen: The embattled Toshiba group has asked its banks to extend a stay of execution for a second time this year after multi-billion pound writedowns put the group in danger of violating its loan agreements.

Amazon on the brink of launching own U.K. fashion label: Amazon is close to launching its own fashion label in the U.K. as part of the online giant’s efforts to corner the $3 trillion global fashion market.

Amazon Prime revenues hit £5.2 billion as online giant publishes details for the first time: Amazon’s revenues from its Prime subscription service have grown steadily in the past three years, but still lag behind the company’s retail and web services, recent figures reveal.

‘Give Vauxhall same support as Nissan’, demands union as car workers’ jobs come under threat: Car workers at Vauxhall’s plants must be given the same support the Government promised to Nissan to keep it in the U.K., according to unions.

The Questor Column:

The market fears the worst for pubs – so buy shares in well-run Greene King: Greene King, the brewer and pubs group, we may now be right at the point of maximum pessimism. Crucially, all the negative sentiment concerns the economic backdrop, not the company itself. Investors have sold the shares and driven the price to earnings ratio down into single figures because of a series of problems facing the pubs and restaurant sector. But, says Chris Hutchinson, who recently bought Greene King for the Unicorn Outstanding British Companies fund, all these negative factors are already reflected in the shares’ low valuation, while the stock’s fundamentals are more positive. He said debts of about £2 billion were manageable, while the dividend was covered twice by profits. Cash generation was also excellent, with a free cashflow yield of 6.7% and a return on capital of 10% well above the firm’s cost of capital of about 6%. Questor says ‘Buy’.

Update: RWS: In December we tipped RWS, describing the patent translation firm as unique. Our tip, at 301p, has already produced returns of 17.2% and the company announced its latest acquisition, the $82.5 million (£66.2 million) purchase of Luz, an American rival. We based our tip on RWS’s inclusion in the strongly performing SDL U.K. Buffettology fund, run by Keith Ashworth-Lord. He told Questor: “Luz looks like an excellent fit with CTi, which RWS acquired in 2015.  Though I always worry about large acquisitions, RWS very successfully integrated CTi and this is a shrewd management that is not prone to making errors.  Questor says ‘Hold, buy on weakness’.

The Guardian

Debenhams tops government’s shame list for underpaying staff: The government has named and shamed a record 350 firms for underpaying their staff, with the list of offenders topped by Debenhams after nearly 12,000 of the department store’s workers were short-changed.

U.K. employment growth driven by foreign nationals, figures show: The vast majority of employment growth was driven by non-U.K. nationals in the final three months of 2016 compared with a year earlier, the latest official figures on the labour market revealed.

Lingerie brand Agent Provocateur could be heading for administration: Lingerie brand Agent Provocateur could be headed for administration after the appointment of restructuring firm AlixPartners to lead a sale process.

Tata Steel workers agree to pension cuts to save 8,000 jobs: Tata Steel U.K. workers have voted in favour of proposals to turn around the struggling business, potentially saving 8,000 jobs but also leading to cuts to their pension benefits.

Daily Mail

As Dutch brewer closes in on 1,900 British pubs... Landlord fury over Heineken takeover: Brewing giant Heineken was rocked by a backlash from pub landlords as the company toasted a near-10% rise in profits. The Dutch firm is poised to buy 1,900 pubs from Punch Taverns in a £1.8 billion deal – sparking fears it will stock the bars with its own beer.

Billionaire investor Warren Buffett makes huge bet on Apple while dumping almost all of his stock in Asda owner Walmart: Billionaire investor Warren Buffett has made a huge bet on Apple while dumping almost all of his stock in Asda owner Walmart. The 86-year-old nearly quadrupled his stake in Apple late last year, raising his company’s holding from 15.2 million shares to 57.4 million.

Activia yogurt maker Danone warns of ‘steep rise’ in milk prices - as shoppers face being hit at the till: Activia yogurt maker Danone warned of a ‘steep rise’ in milk prices – as shoppers face being hit at the till.

New Australian owner of DIY chain Homebase suffers £28 million loss in U.K.: The new Australian owner of DIY chain Homebase suffered a £28 million loss in the U.K. Retail giant Wesfarmers, which snapped up Homebase in a £340 million deal last year, said the half-year loss came as it counted the cost of a restructure and launched its ‘Always Low Prices’ pledge.

Daily Express

U.S. and U.K. share prices hit record highs as weak pound benefits business: Share prices hit record highs on both sides of the Atlantic on prospects for robust U.S. economic growth and U.K. companies continuing to benefit from a weaker pound.

Italian banks on brink of running dry: Rome forced to bend EU rules in emergency bailout: Italy is plotting another multibillion rescue of its beleaguered banking system, as two struggling lenders come dangerously close to running out of money.

EU hints at end for Greece as commissioner says nation needs ‘light at end of tunnel’: Debt-ravaged Greece must see an end to its suffering, a top Brussels bureaucrat has admitted, after the Eurozone has already pumped in billions of pounds in bailout funds.

Pound to dollar: Sterling falls as U.S. Fed rate rise looms amid inflation jump: The pound fell further against the dollar on Wednesday, after U.S. inflation increased at a faster than expected rate in January.

The Scottish Herald

Scottish trade deficit is forecast to widen: Scotland’s trade deficit in the third quarter of 2016 was up by £111 million on the same period a year earlier, at £3.001 billion, the latest national accounts show.

Bowleven ramps up defence against call for Director cull: Shares in Bowleven have surged by more than 5% after it ramped up its defence against the activist investor which has called for a boardroom purge at the Edinburgh-based oil and gas company.

Profits slide at Hargreaves as coal division winds down: Hargreaves Services, which owns the rump of Scotland’s coal mining industry, has reported a 72% fall interim profits.

Ellis Whitham opens Glasgow office with £1 million investment in city: Business support firm Ellis Whittam has invested £1 million opening an office in Glasgow, creating 35 jobs.

RBS offers fast lending: Royal Bank of Scotland is set to launch a digital platform that it said would allow small and medium sized businesses to quickly obtain unsecured loans of up to £150,000.

The Scotsman

Whisky helps exports to Japan hit record £100 million mark: Scottish food and drink exports to Japan have hit record levels, with the thirst for whisky helping the value reach almost £100 million.

Ex-Grand Theft Auto supremo leads Krotos funding deal: Leslie Benzies, one of the key figures in Scotland’s video game industry, has backed a six-figure funding round by an Edinburgh-based audio technology specialist.

Stagecoach sells stake in New York tour bus venture: Transport operator Stagecoach has offloaded its stake in a U.S. joint venture that operates sightseeing bus services in New York City.

CKD flags brisk residential property trade in Galloway: Property consultancy CKD Galbraith has reported a solid start to 2017 in Dumfries and Galloway, with both residential sales and buyer activity on the rise.

Scotland says konnichiwa to growing business and cultural links with Japan: They might be more than 5,600 miles apart, but the links between Scotland and Japan date back 150 years to a time when Scots engineers helped the Pacific nation kickstart its own industrial revolution.

City A.M.

Firms are wising up on the need to reform Executive pay: To mere mortals, Executive pay can sometimes seem out of this world. Vast payouts under controversial long-term incentive plans (LTIPs) were one reason why shareholder protests over Executive pay reached a five-year high in 2016. BP, Reckitt Benckiser, and Anglo American were among the other big companies to experience a backlash from investors.

Big five banks run up £100 billion bill in bad loans and legal costs over the last five years: The U.K.’s big five banks, which report full-year results next week, have run up a bill of nearly £100 billion over the last five years for a toxic mix of fines and bad loans according to a new analysis.

Under-fire Deutsche Boerse Boss set for grilling on insider trading probe and London location of stock exchange headquarters: Deutsche Boerse Chief Executive Carsten Kengeter is set to endure some tough questioning as he appears before investors, analysts and the media.

Tripadvisor’s shares fall after it misses revenue estimates: Shares in TripAdvisor have fallen in after-hours trading after a disappointing set of results from the company.

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Thu, 16 Feb 2017 08:44:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/27118/in-the-papers-nationwide-goldman-sachs-stagecoach-danone-27118.html
Market Briefing - UK markets finished in positive territory yesterday driven by gains in financial sector stocks http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/27117/market-briefing-uk-markets-finished-in-positive-territory-yesterday-driven-by-gains-in-financial-sector-stocks-27117.html UK Market Snapshot

UK markets finished in positive territory yesterday, as the FTSE 100 index reached one-month high, driven by gains in financial sector stocks following hawkish comments by the US Federal Reserve (Fed) Chairwoman, Janet Yellen. Banks, Lloyds Banking Group, Barclays, Royal Bank of Scotland Group and Standard Chartered advanced 1.5%, 1.7%, 2.1% and 2.4%, respectively. Ashtead Group climbed 2.5%, after a leading broker commented that the company’s earnings would significantly jump due to the US President Donald Trump’s promised tax reforms and also upgraded its target price to 2,000.0p from 1,620.0p. Anglo American added 0.3%, after its subsidiary, Anglo American Platinum swung to a profit in 2016 helped by years of restructuring and assets sales. The FTSE 100 advanced 0.5%, to close at 7,302.4, while the FTSE 250 rose 0.2%, to settle at 18,827.2.

US Market Snapshot

US markets ended in the green yesterday, with the major indices closing at a record high level for the fifth consecutive session, as investor sentiment remained buoyed by President Donald Trump’s promise for a massive tax plan in the near future. Pharmaceutical firms, Pfizer, Gilead Sciences and Mylan advanced 2.3%, 3.3% and 4.2%, respectively. Procter & Gamble climbed 3.7%, amid news that Trian Fund Management had acquired more than $3.0 billion stake in the company to become a major shareholder. Bucking the trend, American International Group plunged 9.0%, after the insurer posted a bigger than expected loss for the fourth quarter. H&R Block shed 0.8%, after Trump commented that the company would not be happy with his tax reforms. The S&P 500 gained 0.5%, to settle at 2,349.3. The DJIA rose 0.5%, to settle at 20,611.9, while the NASDAQ advanced 0.6%, to close at 5,819.4.

Europe Market Snapshot

Other European markets closed higher yesterday, supported by a rally in banking sector stocks. Credit Agricole jumped 4.8%, after the bank’s French LCL consumer-banking division posted higher profit for the fourth quarter. Peers, BNP Paribas, Deutsche Bank and Banco Bilbao Vizcaya Argentaria advanced 1.3%, 2.0% and 3.2%, respectively. ABN AMRO Group edged 2.6% up, after the lender reported upbeat profit for the fourth quarter due to higher net interest income and lower provisions for risky loans. Heineken climbed 3.7%, after its earnings rose for 2016 and it forecasted a growth in its sales and profit for the current year. The FTSEurofirst 300 index gained 0.4%, to close at 1,465.1. Among other European markets, the German DAX Xetra 30 rose 0.2%, to close at 11,793.9, while the French CAC-40 advanced 0.6%, to settle at 4,924.9.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning. In Japan, Toshiba has dropped 3.0%, extending its previous session losses, amid report that the company might delay the sale of its prized flash-memory chip unit as it is struggling for cash due to losses in its US nuclear unit. Auto exporters, Nissan Motor, Toyota Motor, Mazda Motor and Honda Motor have declined 0.7%, 1.1%, 1.2% and 1.4%, respectively, following a stronger Japanese Yen. In Hong Kong, financial sector stocks, HSBC Holdings and Bank of China have risen 0.7% and 1.3%, respectively. In South Korea, Samsung Fire & Marine Insurance has tumbled 5.7%, while SK Hynix has advanced 2.8%. The Nikkei 225 index is trading 0.5% lower at 19,334.5. The Hang Seng index is trading 0.4% up at 24,092.3, while the Kospi index is trading 0.2% lower at 2,080.6..

Key Corporate Announcements Today

AGMs

Watkin Jones, Zytronic

EGMs

ITM Power

Final Ex-Dividend Date

Avon Rubber, Blackrock Income And Growth Investment Trust, Blackrock Throgmorton Trust, Brewin Dolphin Holdings, CC Japan Income & Growth Trust, Henderson Opportunities Trust, Impax Asset Management Group, Imperial Brands, Mobeus Income & Growth 4 Vct, Treatt, Zytronic

Final Dividend Payment Date

Baring Emerging Europe, Cardiff Property, easyHotel

Interim Ex-Dividend Date

AstraZeneca, Fair Oaks Income Fund Limited, Ground Rents Income Fund, Henderson Smaller Companies Inv Trust, Jarvis Securities, Mattioli Woods, Motorpoint Group, Mountview Estates, Puma VCT 10, Puma Vct 8, Puma VCT 9, PZ Cussons, Seneca Global Income & Growth Trust, The Renewables Infrastructure Group Limited, TwentyFour Select Monthly Income Fund Limited, UK Commercial Property Trust

Interim Dividend Payment Date

OPG Power Ventures

Special Ex-Dividend Payment Date

EIH Plc

Quarterly Ex-Dividend Date

BP, M Winkworth, MedicX Fund Ltd., Raven Russia Ltd. Cum Red Pref Shares, Royal Dutch Shell 'A', Royal Dutch Shell 'B'

Key Corporate Announcements for Tomorrow

Final Dividend Payment Date

Blackrock Frontiers Investment Trust, Catco Reinsurance Opportunities Fund Ltd (DI), Catco Reinsurance Opportunities Fund Ltd (DI) C shares, Scottish Inv Trust, Shaftesbury, TUI AG Reg Shs (DI), Victrex plc

Interim Dividend Payment Date

Consort Medical, Fletcher King, Investment Company, Jupiter Dividend & Growth Trust, Jupiter Dividend & Growth Trust Common, Murray International Trust, NB Global Floating Rate Income Fund Ltd GBP, North American Income Trust (The), Starwood European Real Estate Finance Ltd

Special Dividend Payment Date

Halfords Group, Scottish Inv Trust

Key Economic News

Number of unemployment benefits claimants in the UK dropped unexpectedly in January

In the UK, number of unemployment benefits claimants registered an unexpected drop of 42.40 K in January, compared to a revised fall of 20.50 K in the previous month. Markets were anticipating number of unemployment benefits claimants to advance 0.50 K.

Employment in the UK increased in the October-December 2016 period

The UK advanced by 37.00 K in the October-December 2016 period, compared to market expectations of an advance of 22.00 K. Employment had recorded a decline of 9.00 K in the September-November 2016 period.

UK ILO unemployment rate remained steady in the October-December 2016 period

In the October-December 2016 period, the ILO unemployment rate remained unchanged at 4.80% in the UK, meeting market expectations.

UK average earnings including bonus rose less than expected in the October-December 2016 period

In the UK, the average earnings including bonus climbed 2.60% in the October-December 2016 period, less than market expectations for a rise of 2.80%. The average earnings including bonus had registered a rise of 2.80% in the September-November 2016 period.

UK average earnings excluding bonus rose less than expected in the October-December 2016 period

In the October-December 2016 period, the average earnings excluding bonus advanced 2.60% on a YoY basis in the UK, less than market expectations for an advance of 2.70%. In the September-November 2016 period, the average earnings excluding bonus had climbed 2.70%.

UK claimant count rate eased unexpectedly in January

The claimant count rate in the UK dropped unexpectedly to a level of 2.10% in January, lower than market expectations of a steady reading. The claimant count rate had recorded a reading of 2.30% in the previous month.

Euro-zone trade surplus widened in December

The Euro-zone has posted the seasonally adjusted trade surplus of €24.50 billion in December, compared to a revised trade surplus of €22.20 billion in the prior month. Market anticipation was for a trade surplus of €22.00 billion.

Euro-zone trade surplus widened in December

In December, the non-seasonally adjusted trade surplus in the Euro-zone rose to €28.10 billion, from a trade surplus of €25.90 billion in the previous month. Markets were expecting the region to register a trade surplus of €26.00 billion.

Spanish HICP index declined more than expected in January

On a MoM basis, the final harmonised consumer price (HICP) index fell 1.00% in Spain, in January, compared to a rise of 0.50% in the prior month. The preliminary figures had recorded a drop of 0.90%. Market expectation was for the HICP to drop 0.90%.

Spanish CPI advanced as expected in January

On a YoY basis in Spain, the final consumer price index (CPI) registered a rise of 3.00% in January, meeting market expectations. The CPI had climbed 1.60% in the previous month. The preliminary figures had also indicated an advance of 3.00%.

Spanish CPI declined as expected in January

On a MoM basis, in Spain, the final CPI dropped 0.50% in January, in line with market expectations. The preliminary figures had also recorded a drop of 0.50%. In the previous month, the CPI had recorded a rise of 0.60%.

Spanish HICP index advanced less than expected in January

The final HICP registered a rise of 2.90% in Spain on a YoY basis in January, compared to a rise of 1.40% in the previous month. Markets were expecting the HICP to climb 3.00%. The preliminary figures had recorded a rise of 3.00%.

Fed’s Rosengren anticipates three or more rate increases this year

The Federal Reserve (Fed) Bank of Boston President, Eric Rosengren, indicated that the Fed might need to raise interest rates a bit more aggressively than the thrice-per-year pace forecast, as the US economy finds firmer footing.

Fed's Harker expects three rate hikes this year

The Philadelphia Fed President, Patrick Harker stated that three interest rate hikes in 2017 is expected to be the appropriate path for the Fed’s monetary policy, assuming that the US economy stays on track. He further added that US inflation is likely to rise to the Fed's 2.0% target sometime this year or next.

US CPI (ex-food & energy) advanced more than expected in January

On an annual basis, the CPI (ex-food & energy) recorded a rise of 2.30% in January, in the US, compared to an advance of 2.20% in the previous month. Markets were expecting the CPI (ex-food & energy) to advance 2.10%.

US mortgage applications slid in the last week

In the US, mortgage applications slid 3.70% in the week ended 10 February 2017 on a weekly basis. Mortgage applications had climbed 2.30% in the previous week.

US housing market index declined unexpectedly in February

The housing market index recorded an unexpected drop to a level of 65.00 in the US, in February, compared to a reading of 67.00 in the previous month. Markets were expecting the housing market index to record a steady reading.

US retail sales Control Group advanced more than expected in January

Retail sales Control Group in the US advanced 0.40% in January on a monthly basis, more than market expectations for a rise of 0.30%. In the previous month, retail sales Control Group had registered a revised similar rise.

US Total net TIC flows eased in December

In December, total net TIC flows dropped to $42.80 billion in the US. Total net TIC flows had registered a revised reading of $30.20 billion in the prior month.

US manufacturing production rose as expected in January

In the US, manufacturing production rose 0.20% in January on a MoM basis, at par with market expectations. In the prior month, manufacturing production had registered a similar rise.

US capacity utilisation dropped in January

In January, capacity utilisation in the US dropped to 75.30%, compared to market expectations of a fall to a level of 75.40%. In the previous month, capacity utilisation had recorded a revised level of 75.60%.

US CPI (ex-food & energy) advanced more than expected in January

The CPI (ex-food & energy) in the US registered a rise of 0.30% in January on a MoM basis, more than market expectations for a rise of 0.20%. In the prior month, the CPI (ex-food & energy) had recorded a rise of 0.20%.

US CPI rose in January

The non-seasonally adjusted CPI in the US recorded a rise of 0.60% on a monthly basis, in January. CPI had recorded an unchanged reading in the prior month.

US net TIC long term purchases declined in December

Compared to a revised reading of $34.40 billion in the previous month net treasury international capital (TIC) long term purchases fell to a level of $12.90 billion in the US, in December.

US industrial production unexpectedly slid in January

On a MoM basis, industrial production unexpectedly fell 0.30% in the US, in January, lower than market expectations for an unchanged reading. Industrial production had recorded a revised rise of 0.60% in the prior month.

US business inventories advanced as expected in December

In December, business inventories rose 0.40% on a monthly basis in the US, at par with market expectations. Business inventories had registered a revised rise of 0.80% in the prior month.

US CPI advanced more than expected in January

On an annual basis in January, the CPI advanced 2.50% in the US, compared to a rise of 2.10% in the previous month. Market expectation was for the CPI to advance 2.40%.

US NY Empire State manufacturing index rose in February

In February, the NY Empire State manufacturing index in the US advanced to 18.70. The NY Empire State manufacturing index had registered a reading of 6.50 in the previous month.

US mortgage foreclosures fell in 4Q 2016

Mortgage foreclosures eased to 1.53% in the US, in 4Q 2016. In the previous quarter, mortgage foreclosures had registered a level of 1.55%.

US advance retail sales rose more than expected in January

In January, advance retail sales climbed 0.40% in the US on a MoM basis, compared to a revised advance of 1.00% in the prior month. Market anticipation was for advance retail sales to climb 0.10%.

US core CPI advanced in January

The seasonally adjusted core CPI recorded a rise to 250.78 in the US, in January, compared to a revised reading of 250.01 in the previous month.

US retail sales (ex-auto & gas) rose more than expected in January

In the US, retail sales (ex-auto & gas) advanced 0.70% in January on a MoM basis, compared to a revised rise of 0.10% in the prior month. Markets were anticipating retail sales (ex-auto & gas) to advance 0.30%.

US CPI advanced in January

In the US, the non-seasonally adjusted CPI recorded a rise to 242.84 in January, compared to a level of 241.43 in the prior month. Market anticipation was for the CPI to rise to 242.48.

US CPI advanced more than expected in January

In January, on a monthly basis, the CPI climbed 0.60% in the US, compared to an advance of 0.30% in the previous month. Market anticipation was for the CPI to rise 0.30%.

US retail sales ex-autos rose more than expected in January

Retail sales ex-autos registered a rise of 0.80% on a MoM basis in January, in the US, compared to a revised rise of 0.40% in the prior month. Markets were expecting retail sales ex-autos to advance 0.40%.

US mortgage delinquencies rose in 4Q 2016

In 4Q 2016, mortgage delinquencies in the US registered a rise to 4.80%. Mortgage delinquencies had registered a level of 4.52% in the prior quarter.

Canadian manufacturing shipments rose more than expected in December

Manufacturing shipments in Canada advanced 2.30% on a monthly basis in December, higher than market expectations for an advance of 0.30%. In the prior month, manufacturing shipments had registered a revised similar rise.

Canadian existing home sales eased in January

Existing home sales registered a drop of 1.30% on a MoM basis in Canada, in January. Existing home sales had risen 2.20% in the prior month.

Foreign investors turned net buyers of Japanese stocks in the previous week

Foreign investors turned net buyers of ¥175.60 billion worth of Japanese stocks in the week ended 10 February 2017, from being net sellers of a revised ¥247.80 billion worth of Japanese stocks in the previous week.

Japanese investors remained net sellers of foreign bonds in the previous week

Japanese investors remained net sellers of ¥297.40 billion worth of foreign bonds in the week ended 10 February 2017, as compared to being net sellers of a revised ¥126.40 billion worth of foreign bonds in the prior week.

Japanese investors turned net sellers of foreign stocks in the previous week

Japanese investors turned net sellers of ¥96.70 billion worth of foreign stocks in the week ended 10 February 2017, from being net buyers of a revised ¥332.90 billion worth of foreign stocks in the previous week.

Foreign investors turned net sellers of Japanese bonds in the previous week

That foreign investors turned net sellers of ¥99.20 billion worth of Japanese bonds in the week ended 10 February 2017, from being net buyers of a revised ¥244.40 billion worth of Japanese bonds in the prior week.

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Thu, 16 Feb 2017 08:32:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/27117/market-briefing-uk-markets-finished-in-positive-territory-yesterday-driven-by-gains-in-financial-sector-stocks-27117.html