column http://www.proactiveinvestors.co.uk Proactiveinvestors column RSS feed en Sun, 22 Jan 2017 10:05:46 +0000 http://blogs.law.harvard.edu/tech/rss Genera CMS action@proactiveinvestors.com (Proactiveinvestors) action@proactiveinvestors.com (Proactiveinvestors) Mining hits new highs, as world awaits Trump http://www.proactiveinvestors.co.uk/columns/jackhammer/26932/mining-hits-new-highs-as-world-awaits-trump-26932.html Fri, 20 Jan 2017 14:25:00 +0000 http://www.proactiveinvestors.co.uk/columns/jackhammer/26932/mining-hits-new-highs-as-world-awaits-trump-26932.html Commodities Week in a Minute: It’s his big day. Also ACA, AAU, LOM & POLY http://www.proactiveinvestors.co.uk/columns/the-commodities-week-in-a-minute/26931/commodities-week-in-a-minute-its-his-big-day-also-aca-aau-lom-poly-26931.html Commodities
 

Diamonds and precious stones

An interesting update from De Beers this week announcing that its Auction Sales business is to begin piloting fixed-price forward contracts. These contracts will offer the opportunity for Auction Sales customers to guarantee access to future supply with certainty over the price to be paid when the contract reaches maturity. The first event takes place on 16 February and I would imagine buyers would expect a discount to “spot” right now, but price certainly on both sides of the equation can have its positives. This is certainly an initiative worth keeping an eye on.

Elsewhere I hear the company continues to accommodate buyers suffering from the fallout of the Indian demonetisation decision. One can only imagine that given the number of goods being withdrawn due to lack of buyers at this time, independent producers that have a production profile tilted towards lower value goods, will be under considerable pressure. I was interested to hear Rappaport note that some buyers are favouring HPHT synthetics instead of lower-quality natural diamonds.

But at least retailers are now starting their restocking programmes…

 

Precious metals

Gold’s going up!

Well that’s what you could conclude if one considered the performance of the yellow metal in the year marking an inauguration. Bullion has averaged an 11% gain and risen in five of the seven years. Compare that to the S&P where the gains were four out of seven and the average performance was -0.9%.

How’s about that for fundamental analysis?

Given the backdrop of what promises to be some significant political change, geopolitical risk, A.50 and the continued debasement of currencies, one could reasonably see that statistic supported once more. Oh and Chinese Junk bonds are yielding a shade over 6% whilst outstanding repayments are set to jump 25% to $31bn in ‘17…

Following on from last week, ETF buyers have returned to the SPDR, “the professionals choice” (must be said in the style of a 1980’s cigarette advert) adding 0.4% or 100koz.

Bulk commodities
 

Coking coal: Zero to hero and back again – that 200dma looks a little like a rabbit caught in headlights.

I have to say I was rather surprised to hear that one unnamed Wall Street behemoth changed their coking coal forecasts from $135/t to $274/t and then back to $161/t this month. In fairness, it does emphasis the difficulty in forecasting future prices when speculation becomes rampant, especially from parties that have no need or even interest in the underlying asset.  

 

Company announcements/news/meetings:

Acacia Mining, (Hold): Ok, but maybe the market was hoping for more…

Acacia Mining's Q4/FY2016 production report confirmed our suspicions the company would again exceed market guidance and as such announced results largely in line with our expectations. Nevertheless this should not detract from the solid improvements management have made throughout the year. We maintain our Hold recommendation and 459p target price following the solid price performance of late”

Ariana Resources*, (Buy): Interesting targets identified at Salinbaş

Building upon Ariana’s consolidation of the Salinbaş asset, the company has identified thirty-seven target areas within the Salinbaş Project area following a thorough analysis of all previous data, with several areas prioritised for additional work. Given that Salinbaş is a mere 8km from the Hot Maden project and located within the catchy “Hot Gold Corridor”, we are optimistic this region will be soon be on the lips of plenty of investors once the company starts to publish the results of its follow up work.

Lucapa Diamond*, (Buy): Exploration update

Company updated shareholders on exploration activities during the week and whilst the primary target, L259 is yet to deliver the knockout result we are all hoping for given the size of the target, but given the drill programme only reached an average depth of 35m, the company now plans to utilise the Hanjin drill rig with a capability to drill to 2,000m undertake a more comprehensive programme alongside the two other drill rigs. Targets L18 and L171 have intersected near-surface kimberlite as has L248 which interestingly is located between the current production blocks 6 and 8.

Elsewhere the alluvial resource programme continues to demonstrate tangible improvements with a new JORC Resource slated for the March quarter whilst bulk sampling of a new alluvial area at Mining Block 28, 4km south of MB8 has already recovered two >20ct diamonds with one type IIa D-colour weighing in at 24cts and continuing the vein of high quality production.

Polymetal, (n/c): Interesting acquisition for the future…

Polymetal has made an interesting acquisition this week, as it buys into the Prognoz silver deposit in Yakutia, Russia through the 50% owner Polar Silver Resources, eventually  allowing Polymetal to acquire up to 50% in Prognoz.

Why? Well, Prognoz is the largest undeveloped primary silver deposit in Russia, with JORC-compliant Indicated and Inferred Resources of 292 Moz at 586 g/t silver over a mining and exploration area of 56 km². Polymetal is acquiring a 5% indirect interest in Prognoz for $3 million in cash through the purchase of 10% of Polar’s share capital. Poly will spend around $10 million pa during FY 2017-2019 to complete a technical study and reserve estimate. Polymetal then has an option to increase its effective share in Prognoz to 50%. The consideration for the remaining 45% stake will be determined at the time of the option exercise. It will depend, among other things, on spot silver prices and the size of estimated reserves.

Interestingly CEO Vitaly Nesis noted “The transaction structure gives us an inexpensive opportunity to de-risk the asset before considering a sizeable investment decision. Prognoz is unique in terms of size and grade. It may, in time, succeed Dukat as one of the largest primary silver deposits in the world”.

 

]]>
Fri, 20 Jan 2017 12:10:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-commodities-week-in-a-minute/26931/commodities-week-in-a-minute-its-his-big-day-also-aca-aau-lom-poly-26931.html
In The News - Peak Resources http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/26930/in-the-news-peak-resources-26930.html In the news: Peak Resources

FROM THE BROKING DESK

Several members of our team attended a talk at the Association of Mining Analysts earlier this week. This was called ‘Critical Raw Materials: Redefining for Green Energy’, and was presented by Robert Baylis from Roskill. Due to population growth and the increasing global focus on energy efficiency and CO2 emission reductions, Robert highlighted that demand is shifting towards technologies such as wind turbines, batteries and energy storage systems.

The specific elements he highlighted were: lithium, cobalt, graphite and neodymium. It’s worth noting that not all rare earth metals are ‘created equal’. Whilst phosphors are seeing declining usage as LED technology replaces incandescent lighting, neodymium use (as we wrote in Issue 28 of The Alchemist) is accelerating with the increased adoption of wind power, EVs and hybrid vehicles. At the moment, neodymium production is highly concentrated in China, but this is often from illegal mining that the government is trying to crack down on. This Chinese supply bias presents a significant risk for Western auto and wind turbine manufacturers; outside China (and, indeed, within it), neodymium mine production is often reliant on the economics of a basket of REEs that have a less favourable outlook than those aligned to the emergence of the ‘green economy’.

Critical Raw Materials as Identified by the US Department of Energy


This is where Peak Resources comes in. The company’s Ngualla Rare Earth Project in Tanzania is heavily weighted towards neodymium and praseodymium (NdPr), which are key elements in the manufacture of high-efficiency permanent magnets, the outlook for which is positive due to growth in demand for electric cars and bikes (and wind power generation). The provision of high-capability battery power is undergoing huge growth amid a potential multi-year expansion (witness last year in the lithium space). In terms of scale, grade, product output and development stage, Ngualla (where a fully-funded BFS is almost complete) is a potentially globally significant strategic asset.

Increasing NdPr Demand


 

]]>
Fri, 20 Jan 2017 11:36:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/26930/in-the-news-peak-resources-26930.html
Today's Market View - Antofagasta Plc, Birimian, SolGold plc http://www.proactiveinvestors.co.uk/columns/sp-angel/26929/today-s-market-view-antofagasta-plc-birimian-solgold-plc-26929.html Antofagasta (LON:ANTO) – Transfer of 40% interest in Alto Maipo in return for cheaper power

Birimian Limited (ASX:BGS) – No word yet on the receipt of A$10.75m deposit from Shandong Mingrui Group

Solgold* (LON:SOLG) – Investors anticipate further copper, gold discovery at Cascabel

 

Strategic minerals

President Putin has just ordered the reopening of one of the Soviet Union’s tungsten mines

The move may well be motivated by raised potential for a trade war between the US and China which may see China restrict the export of strategic minerals such as tungsten, lithium, rare earth metals etc..

China restricted supplies of rare earth metals to Japan over a territorial dispute and it is likely that similar tactics may be employed again

If the world enters a new era of ‘Cold War’ trade tactics then more governments may feel the need to stimulate the construction of new mines and processing plants to protect local industries from being cut out of the supply chains which they have so long taken for granted.

 

Miners come off on weaker iron ore and coal prices.

The US$ index is flat ahead of the Trump inauguration ceremony.

Gold is off slightly this morning and on course of a fourth weekly increase (+0.9% from the previous week).

Chinese equities climb on the back of an acceleration in the Q4 GDP growth rate with the annual number coming in line with estimates.

Brent is up trading around $54.8/bbl; although, losses recorded earlier in the week suggest oil is on course for a second consecutive weekly drop.

Iron ore Dalian futures fall the most in a month following steel prices lower.

 

Dow Jones Industrials  -0.37% at 19,732 

Nikkei 225   +0.34% at 19,138 

HK Hang Seng   -0.71% at 22,886 

Shanghai Composite    +0.70% at 3,123

FTSE 350 Mining   -1.28% at 16,219

AIM Basic Resources   -0.59% at 2,515 

 

Economic News

US – Janet Yellen said the Fed is close to reaching the full employment level supporting the case for a gradual tightening of the monetary policy during her speech to the Stanford Institute for Economic Policy Research yesterday.

On the other hand, Yellen highlighted there are no signs the economy is overheating given only modest growth in wages with the manufacturing sector operating well below capacity.

Economic growth “seems unlikely to pick up markedly in the near term” on the back of weak overseas demand and planned moderate increases in interest rates.

 

China – FY16 GDP growth totalled 6.7%, in line with estimates and marking a 0.2pp slowdown from the previous year.

The annual growth number came in the middle of the state-targeted 6.5-7.0% range.

Growth consolidation is coming at the at the expense of expanding credit with total debt to GDP is estimated to have climbed to 264% from 247% in 2015, Bloomberg Intelligence estimates.

BI forecasts growth to further slowdown to 6.3% with risks shifted to the downside. On the other end of the spectrum, the IMF estimates growth to stabilise at 6.7% next year.

On a separate note, investments slowed in Dec as a decline in the state-led FAIs (-1.5pp) outweighed modest gains in the private sector (+0.1pp). Government share in FAI ended the year at 35.7%, the highest level since Feb/11, reflecting a stimulus-oriented government stance this year.

GDP (YTD %yoy): 6.7 in Q4 v 6.7 in Q3 and 6.7 forecast.

Industrial Production (YTD %yoy): 6.0 in Dec v 6.0 in Nov and 6.0 forecast.

Retail Sales (YTD %yoy): 10.4 in Dec v 10.4 in Nov and 10.4 forecast.

FAI (YTD %yoy): 8.1 in Dec v 8.3 in Nov and 8.3 forecast. 

 

Eurozone – The ECB left the pace of the QE programme unchanged, in line with estimates, yesterday highlighting core inflation pressures remain weak.

Despite the headline inflation number nearly doubling to 1.1% in Dec from the previous month and marking the strongest level since 2013, Draghi argued the move is attributable to changes in oil prices.

Core inflation climbed only slightly to 0.9% with no clear uptrend.

Risks to growth “remain tilted to the downside and relate predominantly to global factors”, Draghi said.

The euro fell 0.7% against the US$ on the announcement.

The latest ECB survey of professional economists showed inflation is expected grow at a faster rate than estimated in 2016.

Latest estimates point to a 1.4% inflation rate this year, up from +1.2% forecast earlier.

 

Germany – Producer prices growth accelerated in Dec/16hitting the highest level in nearly four years.

This was the second consecutive month with a positive reading after remaining in deflation for the last three years.

The reading matched a strong acceleration in consumer prices and is likely reflects the effect of higher oil prices.

For the full year prices posted a negative 1.7% change.

PPI (%yoy): 1.0 v 0.1 in Nov and 1.0 forecast.

 

UK – Dec core retail sales underperform expectations following strong Nov numbers and as accelerating inflation weighs on consumer sentiment.

Despite a slowdown in Dec, a total for Q4 posted a solid 5.6%yoy growth.

The pound lost nearly 0.7% against the US$ on the news.

Retail Sales ex Fuel (%mom): -2.0 v 0.2 in Nov and -0.4 forecast.

Retail Sales ex Fuel (%yoy): 4.9 v 6.4 in Nov and 7.5 forecast.

 

Currencies

US$1.0668/eur vs 1.0626/eur yesterday.   Yen 114.80/$ vs 115.27/$.   SAr 13.523/$ vs 13.599/$.   $1.234/gbp vs $1.230/gbp.  

0.755/aud vs 0.754/aud.   CNY 6.876/$ vs 6.872/$.

 

Commodity News

Shanghai warehouse stock moves:

Copper stocks rose 1.3% (2,182t) to 172,979t this week with a further 8,202t coming on warrant adding 64,540t of warrants for the week

Aluminium stocks rose +0.3% (316t) to 118,551t this week with a further 11,859t on warrant to 40,313t

Zinc stocks fell 0.1% (178t) to 159,091t this week with 494t coming off warrant to 76,516t

Lead stock rose 7.7% (3,026t) to 42,097t this week with a further 8,437t on warrant to 35,885t

Nickel stocks fell 1.1% (957t) to 89,609t this week with 1,557t coming off warrant to 82,306t

Tin stocks fell 6.4% (247t) to 3,599t this week with 349t coming off warrant bringing the weeks change to 2,860t

 

Precious metals:         

Gold US$1,204/oz vs US$1,203/oz yesterday

   Gold ETFs 57.1moz vs US$57.0moz yesterday

Platinum US$959/oz vs US$963/oz yesterday

Palladium US$753/oz vs US$750/oz yesterday

Silver US$16.94/oz vs US$16.98/oz yesterday

           

Base metals:   

Copper US$ 5,720/t vs US$5,773/t yesterday

Aluminium US$ 1,821/t vs US$1,827/t yesterday

Nickel US$ 9,805/t vs US$1,090/t yesterday

Zinc US$ 2,731/t vs US$2,749/t yesterday

Lead US$ 2,270/t vs US$2,291/t yesterday

Tin US$ 20,450/t vs US$21,075/t yesterday

           

Energy:           

Oil US$54.6/bbl vs US$54.5/bbl yesterday

Natural Gas US$3.302/mmbtu vs US$3.330/mmbtu yesterday

Uranium US$22.75/lb vs US$22.75/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$78.0/t vs US$79.8/t

Chinese steel rebar 25mm US$499.5/t vs US$499.9/t - US affirms finding of China steel plate dumping, subsidies

Thermal coal (1st year forward cif ARA) US$67.6/t vs US$68.7/t yesterday

Premium hard coking coal Aus fob US$172.6/t vs US$175.9/t

           

Other:

Tungsten - APT European prices $191-200/mtu vs $187-198/mtu - Putin orders the resumption of tungsten production (Investor Intel)

Vladimir Putin has decreed that tungsten production should resume in Russia to ensure its regular supply for domestic industrial production.

Production will restart at the Tyrnyauz tungsten-molybdenum plant at Kabardino-Balkaria in southern Russia.

The capital cost of the restart is estimated to be around US$250m for 1mtpa of ore

The Tyrnyauz field contains around 360mt of ore reserves and previously had a process plant capacity of 6.6mt.

Another Russian miner has also announced plans to invest around $60m in a tungsten project in Buryatia to produce some 2,800tpa of tungsten concentrates.

Strategically we wonder if Russia is concerned about more sanctions from Trump or China restricting the market for this strategic metal.  Tungsten is important as a military metal due to its high strength.

 

Company News

Antofagasta (LON:ANTO) 747.5p, Mkt Cap £7.37bn – Transfer of 40% interest in Alto Maipo in return for cheaper power

Antofagasta has announced that its subsidiary Minera Los Pelambres “has agreed with Gener that it will transfer its 40% interest in Alto Maipo SpA (“Alto Maipo”) to Gener and the electricity price applicable to the Power Purchase Agreement with Alto Maipo is reduced.”

Los Pelambres has been in partnership with Gener in the Alto Maipo project “to develop, construct, own and operate two run of river hydroelectric power stations located in the upper section of the Maipo River, approximately 50 kilometres to the south-east of Santiago, with a total installed capacity of 531MW.”

In October last year, the companies announced that they expected the project, which is to provide 110MW to the Los Pelambres mine under a 20 year power-purchase agreement, would incur a cost overrun of 10-20%. At that time, the company also pointed out an “expected significant decrease in long term energy prices in Chile, resulting from the growing contribution of solar and wind power generation”.

The original rationale for Los Pelambres’ involvement in the project was “to ensure that Los Pelambres would be able to access a reliable source of electricity at competitive prices. We are now close to fulfilling this objective at an improved price and to ensure a clean, stable and long-term energy supply for Los Pelambres” commented the Antofagasta CEO, Ivan Arriagada.

The company adds that the carrying value of Los Pelambres share of the project is US$356m.

Conclusion: The company does not quantify the magnitude of the cost savings it has negotiated on the power purchase agreement, though presumably this needs to be offset against the carrying value of the project. The transaction does, however, provide the secure long term supply of power to the mine which the company required at the outset.

 

Birimian Limited (ASX:BGS) A$0.30, mkt cap A$59.7m – No word yet on the receipt of A$10.75m deposit from Shandong Mingrui Group

Birimian agreed to sell its Bougouni ‘Goulamina’ lithium project in Mali to a Chinese group for A$107.5m in cash to Shandong Mingrui Group ‘Mingrui’.

Mingrui singned a Letter of Intent ‘LOI’ which included a condition for the receipt of a deposit for A$10.75m on or before 20th January.

http://www.birimian.com/pdfs/LetterOfIntentForSaleOfTheBougouniLithiumProject03Jan17.pdf

Birimian has yet to report confirmation of the receipt of the deposit into a solicitor’s interest bearing account in Australia.

China recently imposed additional currency controls restricting the movement of funds out of China which we have reason to believe is causing problems for Chinese companies who wish to move cash overseas.

We speculate that Chinese companies may still be able to continue to invest in certain key sectors like rare earths and energy materials and that this should enable Chinese companies to continue to buy up lithium, rare earths, energy-related and other specialty commodity minerals as well as processing companies in these sectors.

Genfeng Lithium, a major Chinese lithium producer also signed an investment agreement with Lithium Americas for a US$174m investment for the development of its Cauchari-Olaroz lithium project in Jujuy, Argentina.  Given Genfeng’s status in China we would expect this deal to go through.

It may also be possible that the movement of funds are delayed out of China as permission is sought from the authorities for such transfers.

We also wonder what happens to the escrowed funds should the deal fail to consummate.  Would those funds then be repatriated to China or could they remain in place.

We note that major shareholder ‘The Gas Super PTY LTD ATF the Gas Super Fund has reduced its holding in Birimian to 6.3% from 9.16% through the sale of 5.1m shares indicating their level of confidence in the Chinese offer.

“The Deposit is not refundable except in the event that any consent or approval required by Birimian cannot be obtained or waived as follows:

a) any third party, regulatory, shareholder, tax consents or required approvals (if any) being received on terms satisfactory to both parties;

b) no legislation or regulation being proposed or passed that would prohibit or materially restrict the participation of either party in the Transaction.

Within 45 days of confirmation of receipt of the Deposit, Mingrui agrees to place the balance of the cash consideration (being $ AUD 96,750,000 plus any applicable taxes) in the Stakeholder Account to be held in trust pending completion. If all conditions are not satisfied or waived on or before 31 March 2017 (or such other date which is mutually agreed in writing by the Parties) then the LOI will terminate.”

Birimian’s lithium project at Goulamina is estimated to host 15-18mt of rock grading 1.8-2.2% lithium (Li2O) for 229,000t of contained lithium metal.

The new JORC resource contains 15.5mt grading 1.48% Li2O for 229,000t of contained lithium oxide

High grade near surface should allow for early cash flow generation.

Further drilling is expected to add to the resource through resource extensions with 1.67% seen in the West Zone

A second phase, 10,000 metre drilling program at Goulamina remains on track for completion by late-January 2017 alongside initial assay results. The current schedule provides for an updated resource estimate later in the March Quarter, leading to a pre-feasibility study and maiden reserve reporting in the June Quarter. 

The resource grade ranks Bougouni grade as the fifth highest on our list of known hard rock lithium resources and no. 15 in terms of resource size though it looks like it will become a larger project.

See full details of the JORC resource below along with pictures of the block model, cross sections, plan views and a particularly grade/tonnage curve. See:  http://www.birimian.com/pdfs/MaidenResourceAtGoulaminaConfirmsLithiumDeposit27Oct16.pdf

 

Solgold* (LON:SOLG) 30p, Mkt Cap £429m – Investors anticipate further copper, gold discovery at Cascabel

SolGold shares are seeing increasing investor interest based on the Cascabel copper gold discovery in Ecuador.

Investors are buying stock based on expectations for further kilometre-long intersections of mineralisation at the Alpala prospect, Cascabel.

While these huge intersections generally run from around 400-600m down hole they run for >1km and may join with a much larger mineralised body at greater depth.

Geophysical analysis of other targets within the Cascabel license area suggests that Alpala is not on its own and that further mineralised bodies should lie within easy reach of initial Alpala discovery.

Trenching and sampling of surface mineralisation offers tantalising clues of what might lie below these targets but only drilling can reveal their true scale.

Drilling of these targets should hopefully prove the hypothesis for a number of very large mineralised masses extending toward the surface from a much larger feeder zone at around 2km depth.

The geological and drilling teams are clearly excited by the prospects of pulling out such long sections of mineralised material and the implications of the potential to repeat the Alpala discovery on other targets.  Their enthusiasm comes across in the company’s latest explanatory video.

The team have identified a total of 14 targets within the licence area and the crews should start drilling some more prospective sites as new rigs arrive.

The deployment of additional drilling equipment is set to ramp up through the year with a fourth rig working on Alpala from next month and a fifth rig to be assigned to the Alpala South area, approximately 1km southeast of the current area in March.

Newcrest have bought into SolGold for the discovery at Cascabel and as experts in block caving are interested in the economic potential the discovery presents.

BHP were also sufficiently interested in Cascabel’s Alpala discovery to submit an offer though Newcrest gained a first mover advantage in their funding.

Codelco, the giant Chilean copper miner, are also back in Ecuador with a joint venture with Enami EP to explore an estimated $200bn worth of untapped copper reserve at the Llurimagua deposit just 70km south of Cascabel.

Ecuador, once seen as a pariah state in Latin America alongside Venezuela is now joining the ranks of reforming nations in Latin America after the realisation that Economic rationalism seems to lead to a better outcome for all.

The President and Minister of Mines have been working on significant improvement to the current mining legislation through tax reforms and incentives.  The state recently agreed an investment protection agreement with Lundin Gold which will pay advance royalties of $65m to the government of Ecuador.  Key areas are capital depreciation, tax shields and deferrals, import duties, VAT recover and most importantly windfall taxes which are now only paid after a full return of capital and only applies to copper prices of >$4/lb.

SolGold have a form of first mover advantage in its discovery at Cascabel with its activities closely followed by Lundin Mining who acquired the multi-million ounce Fruta del Norte gold project from Kinross when they sold out in 2014.

Solgold have conducted a nation wide prospectivity review leading to the identification of numerous other targets on which the company will supply its powerful exploration and discovery blueprint.

SolGold have more work to do to produce a JORC or Canadian NI 43-101 compliant resource at Alpala and may continue to evaluate the prospect for some time before working through the economic parameters required by the new JORC code for a detailed resource estimate.

Geologically fractures in the Andean plate has enabled the creation of large scale porphry mineralisation at points from Patagonia through to Panama and Mexico.  A disproportionate number of the world’s largest copper mines lie on these structures many more yet to be discovered.  The geologies of Chile and Peru are well known but the politics of Ecuador, Colombia and Panama mean that much remains to be discovered in these regions.

The Alpala discovery is interesting from a bulk-scale block caving perspective with its huge column of higher-grade copper, gold mineralisation.  The mineralisation could be accessed via a long adit using the topography of the land to drive into a point close to the base of the current drilling.  Alternatively a shaft could be sunk for access.  Both methods have the advantage of minimising the footprint of the mine and limiting its environmental impact.

Newcrest are developing the $2.3bn Wafi-Golpu project in PNG in joint venture with Harmony Gold Mining.  Wafi-Golpu has a large mineral resource of 8.6mt copper and 18.6moz of gold with planned peak production of 150,000tpa of copper and 320,000ozpa gold in 2025.  Newcrest reported a year ago an NPV for stage one of the Wafi-Golpu project at US$1.1bn and an IRR of 15%.

Some investors reckon Cascabel could become another Grasberg based on the scale of the mineralisation.  Grasberg is the world’s tenth largest copper mine according to a list on ‘Mining Technology’.  A resource of sufficient scale to rank close to the world’s top ten copper mines would be of great interest to the major mining companies and could lead to a bidding war for the asset among the major players.

See 2017 corporate video for a good representation of the Cascabel project  http://www.solgold.com.au/videos/

A new company presentation is also available:

https://static1.squarespace.com/static/560a5feee4b0a63bf47c76f5/t/58765899e6f2e1ab23aab391/1484150944798/SOLGOLD_January_2017.pdf

Conclusion:   For now investors are looking for Cascabel to become the next big copper discovery in Latin America.  SolGold is well funded with $43m of cash to advance its discovery at Alpala and to test other targets within the Cascabel license area.  The team are excited about the potential to make further Alpala-like discoveries which at Moran, Alpala and Alpala south east could connect at depth.  There is also potential for some near-surface copper, gold mineralisation to provide for a near-term development proposal.

*SP Angel acts as Nomad and Broker to SolGold; An SP Angel analyst has previously visited the Cascabel project.

]]>
Fri, 20 Jan 2017 10:45:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/26929/today-s-market-view-antofagasta-plc-birimian-solgold-plc-26929.html
Breakfast News - AIM Breakfast : Abzena plc, Avacta Group Plc, Biome Technologies, Brainjuicer, Character Group, Elecosoft, Midatech Pharma Plc, Mysale Group PLC, Pacific Industrial & Logistics REIT plc http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26928/breakfast-news-aim-breakfast-abzena-plc-avacta-group-plc-biome-technologies-brainjuicer-character-group-elecosoft-midatech-pharma-plc-mysale-group-plc-pacific-industrial-logistics-reit-plc-26928.html What’s cooking in the IPO kitchen?

SuperAwesome — The London based specialist in e-compliance is considering an IPO in its home town according to City A.M.

Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas  exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise.

Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.

 

Breakfast buffet

MySale Group (LON:MYSL) 125.5p £189.54m

HYDec16 trading update from the online retailer.  A strong first half with underlying EBITDA up 100% to c.A$3.0m (H1 FY16: A$1.5m). Maintaining recently upgraded full year guidance. Online revenue increased 18% to A$126.5m. Strong balance sheet with net cash balance increased to A$29.1m from A$27.5m at end of June 2016 and A$23.4m at 31 December 2015 . The group is pleased to confirm it has launched a strategic partnership with US online retailer gilt.com, part of the Hudson's Bay Company, which represents another important step in the development of the group's retail marketplace platform. 

Abzena (LON:ABZA) 35.75p £79.02m

The life sciences group providing services and technologies to enable the development & manufacture of biopharmaceutical products, has signed a

licensing agreement with a San Diego-based biopharmaceutical company for Abzena's

novel site specific ThioBridge™  anti­body drug conjugate (ADC)

linkertechnology. ThioBridge™ links antibodies and other proteins to drugs. The technology platform is unique in its ability to maintain the stability of the antibody and a consistent Drug-to-Antibody Ratio (DAR), which provides a more homogeneous product.  The value of the agreement to Abzena has the potential to reach over $300m in licence and milestone payments plus royalties on any products eventually approved.

Elecosoft (LON:ELCO) 30p £23.13m

FY 31 December trading statement from the specialist international provider of software and related services to the architectural, engineering, construction, retail and digital marketing industries. The Board expects that profit before tax for the year will be significantly ahead of market expectations before costs associated with the acquisition of Integrated Computing and Office Networking Limited (ICON).   Record sales due principally to substantial growth in sales of its Asta Powerproject® software applications and its Bidcon® estimating software together with corresponding increases in training and consultancy revenues. Sales benefited in the latter half of 2016 from the currency effect resulting from the Brexit vote.  Bullish outlook on 2017. FY16E revenue £17.3m, PBY £1.4m.

Character Group (LON:CCT) 520p £109.9m

Trading update from designers, developers and international distributor of toys, games and giftware. “Whilst we are confident that the market expectation for the 2017 financial year shall be achieved, we expect the results for the first half to be lower than those reported in the comparative period last year. In the four months to December 2016, sales were marginally lower than the same period last year and as expected UK gross margin was adversely affected by the devaluation of sterling.  The steps taken to mitigate the reduction in margin are currently starting to take effect and will be fully implemented in the second half.  We are expecting both our international and domestic sales to grow.” Balance sheet continues to strengthen. Maintaining progressive dividend policy. FYAug17E rev £126m and PBT £15.4m.

Avacta Group (LON:AVCT) 73p £49.9m

AGM update from the developer of Affimer® biotherapeutics and research reagents. Custom Affimer order book grown 70% yoy. Half year revenue, operating losses and cash balances are in line with market forecasts.  Multiple paid-for technology evaluations and collaborations now ongoing with: 4 out of the top 10 global large pharma and more than 10 other biotech and pharma companies; 8 research tools companies; and several diagnostics companies including 1 of the top 3. Several technology evaluations underway that could lead first reagents license deals in 2017. In-house immune-oncology programme making progress. FYJul17E rev £2.95m, and LBT £7.61m.

Midatech Pharma (LON:MTPH) 144p £70.13m

FyDec16 trading update from  the international specialty pharmaceutical Company focused on developing and commercialising products in oncology. “With a diversified strategy, multiple sources of revenue and an innovative R&D pipeline, Midatech continues to make good progress across the Group. Reported total revenues for the twelve months ended 31 December 2016 are expected to be approximately £9.0m (2015: £1.4m).” vs consensus forecasts of £8.58m.

BrainJuicer Group (LON:BJU) 595p £72.6m

FYDec16 trading update from the marketing and brand consultancy with solutions based on behavioural science. BrainJuicer traded strongly during 2016, regaining momentum after the modest growth of the 2 previous years.  For the 12 month period, gross profit, “our main top line indicator”, increased by some 27% to approximately £25.6m, driven primarily by continued strong progress by the US business and an encouraging recovery in Continental Europe.  Excluding the FX the increase in gross profit was some 15 %.  Even after a much higher level of bonus payments, compared with a negligible pay out in 2015, Pre-tax profit for 2016 is expected to be some 37% higher at around £6.2m.

Biome Technologies (LON:BIOM) 107.5p £2.52m

FYDec16 trading statement. Group revenues for the year were £4.6m, slightly behind the 2015 revenues of £4.9m. Revenues in the Bioplastics division were £1.6m, a decrease of 15% on the 2015 turnover of £1.9m due to the lower levels of campaign runs in the first half of 2016. The second half of 2016 saw sales of £1.0m which is 18% higher than the 2015 comparative.  The second half of the year also saw some initial quantities of the new BiomeMesh filter product sold. The RF division finished the year strongly and achieved full year revenues of £3.0m, which is the same as the 2015 revenues of £3.0m.  Cash of £1.5m. EBITDA loss in line with 2015. 2017 started encouragingly.  There are no market forecasts.

Bonmarché Holdings (LON:BON) 79p £39.5m

13 and 39 week trading statement to 24 December from one of the UK's largest women's value retailers. Sales for the 13 weeks ended 24 December 2016 increased by 3.3% against the corresponding period in FY16, and store LFL sales increased by 0.8%. Sales for the 39 weeks ended 24 December 2016 decreased by 1.3% and store LFL sales decreased by 5.3%. A less promotional stance was taken throughout the quarter and whilst this impacted overall sales volumes it resulted in stronger gross margin performance, with product gross margin in the quarter 2.2% higher than in last year's corresponding period.  FYMar17E PE 9.2x and 8.8% yield.

Pacific Industrial and Logistics REIT(LON:PILR) 119.5p £25.6m

The real estate investment trust focused on sub £10m lot size industrial and logistics properties, has completed the acquisition of a site at Park Road, Holmewood Industrial Park, Chesterfield for a total consideration of £4.8m . The acquisition has been financed by the proceeds of the placing of 11.1m new ordinary shares in the Company at a price of 100 pence per share announced on 9 November 2016. It will be refinanced under terms agreed with the Company's debt facility provider at a loan-to-value of 45%. Adjusted NAV/share 123.87p @ 20 Sep 2016.

]]>
Fri, 20 Jan 2017 09:27:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26928/breakfast-news-aim-breakfast-abzena-plc-avacta-group-plc-biome-technologies-brainjuicer-character-group-elecosoft-midatech-pharma-plc-mysale-group-plc-pacific-industrial-logistics-reit-plc-26928.html
Northland Capital Partners View on the City - Premier African Minerals Ltd http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26927/northland-capital-partners-view-on-the-city-premier-african-minerals-ltd-26927.html Premier African Minerals (LON:PREM) – CORP: Corporate update

Market Cap: £5m; Current Price: 0.25p

From yesterday: Russel Swarts joins as Non-Exec and AgriMinco Loan settled

Russel Swarts, a director of AgriMinco, is appointed as a Non-Executive Director of Premier African Minerals.

The net balance of the Loan Facility with AgriMinco owed by Premier is US$65,343.51. Premier will repay the loan in four equal instalments of US$12,335.88 from 15 March 2017, with an initial amount of US$16,000 on execution of the settlement agreement. Premier appointed as a strategic advisor to AgriMinco.

Darwin has subscribe for an additional 20 loan notes that have a gross value of £500,000 to support the completion of the XRT installation and re-commencement of production during Q117. Darwin will be issued with 42,857,143 warrants at 0.35 pence per warrant as part of the subscription.

NORTHLAND CAPITAL PARTNERS VIEW: Premier African Minerals believes its appointment as a strategic advisor to AgriMinco provides it with an opportunity to consider additional opportunities in association with AgriMinco. AgriMinco is a Canadian Public Corporation and has a significant tax loss. The installation of the XRT machine at RHA should result in a significant improvement in recovery.

]]>
Fri, 20 Jan 2017 09:09:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26927/northland-capital-partners-view-on-the-city-premier-african-minerals-ltd-26927.html
In the Papers - IBM , Oxfam, Moneysupermarket, Royal Mail http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26926/in-the-papers-ibm-oxfam-moneysupermarket-royal-mail-26926.html Newspaper Summary

The Times

Top investors to demand answers from Rolls-Royce: One of the City’s most influential investor groups is set to intervene again at Rolls-Royce to help investors obtain answers as to how the jet maker was able to get away with decades of systematic corruption and bribery.

Poor sales put Pets at Home in doghouse: Pets at Home, a retailer of pet food, accessories, veterinary and grooming services, said that subdued trading in its merchandise division, where revenues were flat compared with the previous year at £177.4 million, held it back in the vital third-quarter.

Viva la Revolución expansion: A chain of Cuban cocktail bars is wowing revellers from Manchester to Milton Keynes and its owner is on the hunt for further sites.

China lashes out at ‘protectionist’ Trump: Beijing has hit back at claims by the incoming U.S. commerce Chief that it is the “most protectionist” among large economies.

Miner electrified by the search for Cornish lithium: It is a picturesque county that has been better known for its tin mines, but Cornwall could soon become more famous for a different metal if a City miner has its way.

Strewth! Vegemite goes back down under: As national events go, it is akin to bringing home the Ashes. Vegemite is back in Australian hands after Mondelez, the American consumer giant, agreed to sell the salty, Marmite-pretender spread to Bega Cheese.

Zodiac tells Safran to pull up a chair: President Hollande hailed the €8.5 billion deal between Safran, the engine-maker, and Zodiac, the aircraft seat manufacturer, to form the world’s third largest aerospace supplier.

U.S. economy continues to strengthen: Americans filed fewer new claims for unemployment benefits than at any point in the past four decades, figures showed, as a slew of economic data pointed to continued strengthening in the U.S. economy.

British Land remains upbeat on occupancy: Hopes that demand for commercial property would not be damaged by the Brexit vote were boosted when British Land reported its occupancy rate had declined only slightly in the third quarter.

Toshiba seeks help as losses are revealed: Toshiba is seeking help from a state-owned bank after disclosing huge new losses which potentially exceed the net value of the company.

Price rises in mix for Finsbury Food: Finsbury Food has warned further price rises are inevitable as it battles to limit the impact of spiralling costs.

BHP agrees date for mine settlement: BHP Billiton has moved closer to drawing a line under financial liabilities for the Samarco dam disaster, reaching an agreement with Brazilian authorities to settle civil claims by June.

Halfords moves up a gear after revenues surge: Halfords has recovered from a disappointing first half after reporting a stronger third quarter and announcing a £20 million dividend for shareholders.

The Independent

New York ‘already a gainer’ from Brexit says Goldman CEO Blankfein: Goldman Sachs Chief Executive Lloyd Blankfein said New York is “already a bit of a gainer” from Brexit as the Wall Street firm slows its previous policy of moving operations to London.

Barclays CEO: Post-Brexit U.K. likely to be ‘financial lungs of Europe’: The Chief Executive of Barclays has said that – even after a hard Brexit –the U.K. will most likely continue to represent “the financial lungs for Europe.”

Samsung Boss arrest warrant dismissed but bribery probe continues: A South Korean court on Thursday dismissed an arrest warrant against the head of Samsung, the country’s largest conglomerate, amid a corruption scandal that has led to the impeachment of President Park Geun-hye.

The dollar is rising again on the prospect of higher interest rates: The U.S. dollar surged against a range of currencies overnight and remained steady in early London trading on Thursday after U.S. Federal Reserve Chairwoman Janet Yellen suggested that interest rates in the U.S. could rise quickly this year.

Toyota examining ‘how to survive’ in post-Brexit Britain after Theresa May’s Single Market announcement: Japanese automotive manufacturer Toyota has warned it is examining “how to survive” in a post-Brexit U.K. just days after Prime Minister Theresa May said that Britain would leave the single market as part of the divorce from the bloc.

RBS considers accepting multi-billion-pound legal hit over mortgage bond mis-selling probe: Royal Bank of Scotland is considering taking a multi-billion-dollar settlement over a U.S. mortgage securities probe, that would give an indication of the size of the full settlement, according to people with knowledge of the matter.

The Daily Telegraph

Hammond delights business leaders with pledge to ‘do whatever is necessary’ to ensure the U.K.’s competitiveness: Philip Hammond has vowed to make the U.K. as competitive as possible on the world stage, describing the challenge as “an existential necessity”.

World’s top bankers excited over Trump presidency: The Bosses of some of the world’s biggest financial institutions have spoken in glowing terms about Donald Trump’s presidency ahead of his inauguration in Washington DC.

Ofgem warns big six not to increase energy bills: Ofgem has warned the big six energy companies against hiking household bills, despite experiencing a 15% rise in their costs.

Glaxo’s pharmaceuticals Boss walks away as new Chief prepares to take the helm: One of GlaxoSmithKline’s most senior Directors is leaving the company as incoming Boss Emma Walmsley moves to refresh her team.

Bank of Cyprus joins the London stock market: The Bank of Cyprus has moved its shares to the London market in the hope of tapping into global investors, marking the latest step in the company’s recovery since a bailout four years ago.

N Brown credits online shift for rise in festive sales: N Brown, the retailer behind the niche Simply Be, Jacamo and JD Williams fashion brands, posted an upbeat sales performance after recording the biggest surge in sales of its ladieswear ranges for eight years.

Fresh doubts surface over £3 billion opening up of water market: Plans by the water utilities to tap the £2.9 billion business water market could be hampered by low awareness and limited interest from the companies who will soon be eligible to shop around for cheaper deals.

The Questor Column:

Costly debt and shrinking shareholder base make Scottish Investment Trust one to avoid: Everyone loves a turnaround story, and Scottish Investment Trust is attempting to deliver that. The trust is almost a year into a restructure, which has brought in a new Chief Executive and new fund manager Alasdair McKinnon. The £720 million trust has also focused heavily on cost cutting. The trust cut its 11 investment staff down to four as part of the overhaul, and has reduced the ongoing charges figure from 0.68% in 2014 to 0.49% now. Mr. McKinnon thinks this is about as low as costs can go. The trust has also turned around performance, with 31% share price return in 2016, compared to 17% on the FTSE All Share and 26% for the MSCI World index, which looks more globally. The compares starkly with its longer-term performance, having returned 39% on a net asset value basis over the past three years, compared to 19% for the FTSE All Share and 49% for the FTSE All World. Much of the impact of this depends on the exit that Aviva strikes, but it marks too much uncertainty for us to consider. Particularly when other trusts operate in the same space and with a steadier track record. At 9%, the discount is too great to sell, so hold. Questor says ‘Hold’.

The Guardian

Companies must share benefits of globalisation, Theresa May tells Davos: Theresa May has told the world’s biggest companies they need to start paying their taxes and treat their workers more fairly in order to address the concerns of those who feel left behind by globalisation.

Oxfam attacks failing global tax avoidance battle: Efforts to tackle global tax avoidance are being undermined by a “race to the bottom” on corporate tax rates led by Britain and the U.S., the World Economic Forum heard on Thursday.

Goldman Sachs stalls plan to move jobs to U.K. amid Brexit uncertainty: Goldman Sachs has suspended plans to move key operations from the U.S. to London because of the uncertainty created by the vote to leave the EU. The Wall Street firm – in the midst of building a new £350 million London headquarters – had been preparing to shift more of its global operations and IT activities from New York, but now appears to have embarked on a hiring freeze.

Rolls-Royce lobbied Ministers to weaken anti-bribery proposals: Rolls-Royce, which this week agreed to pay £671 million in penalties after admitting it had engaged in corruption, lobbied Ministers to weaken proposed curbs on bribery a decade ago.

Daily Mail

Footsie in the red as traders countdown to Donald Trump’s inauguration; pound at $1.23: The FTSE 100 closed down 39.17 points at 7208.44 as traders awaited the arrival of Donald Trump in the White House.

Royal Mail share price falls to lowest level for a year as junk mail leads fall in letters posted: Royal Mail shares were suffering after it revealed a six% drop in the number of letters being sent in the nine months to Christmas. Blaming ‘overall business uncertainty in the U.K.’, Royal Mail said business letters and ‘advertising’ - or junk mail - had seen the biggest declines.

Moneysupermarket share price shrugs off TV ad controversy as comparison website posts 20% rise in revenue: Moneysupermarket’s shares jumped more than 6% after the price comparison site giant posted a 19% rise in revenue for the final three months of last year.

Daily Express

Merkel’s Finance Chief warns Theresa May not to compete with EU over Brexit: Britain must not reduce corporate taxes to gain a competitive advantage over the European Union (EU) as the U.K. gears up to leave the bloc, German Finance Minister Wolfgang Schaeuble has warned.

‘Germany has benefitted’ Euro bank Boss defends policies amid furious German criticism: Mario Draghi has been forced to defend his monetary policies from an onslaught of criticism in Germany, as the two sides continue to bicker over the best way to save the Eurozone economy.

EU will fail if leaders don’t sort post-Brexit Eurozone, JP Morgan Boss Jamie Dimon warns: Europe is close to falling apart because political leaders are not fixing the problems that caused Britain to vote out of the European Union (EU), the Boss of one of Wall Street’s biggest banks has warned.

Pound leaps against euro as ECB Boss sticks by money-printing to save the Eurozone: The pound has jumped against the euro, after Mario Draghi hinted the European Central Bank (ECB) could increase the size and length of its already huge money-printing programme.

The Scottish Herald

Tyre firm thrives in tough conditions: Mcconechy’s, one of Scotland’s biggest independent car tyre firms, has revealed that operating profits have more than doubled after driving up margins in difficult market conditions.

Ian McConnell: Banks must respond to Brexit but they do not have to close branches: The big banks have delivered a most unfortunate amount of drama in the last decade. And Wednesday proved, while we might have crawled painfully away from the darkest days of the global financial crisis, there is still plenty to unfold in the big-budget banking sector soap opera.

Overseas investors show faith in North Sea oil: A North Sea-focused oil and gas firm backed by a Bermuda private equity operation has announced plans to explore in the wilds of the outer Moray Firth in an encouraging sign for the industry.

Work gets underway on social building project: Social enterprise Glasgow Together has lined up enough property renovation projects to keep between 10 and 15 ex-offenders in full-time employment.

P&O freight volume hits a five-year high: Freight services on P&O Ferries Cairnryan to Larne service have reached their highest volume for five years.

Aviva Europe Chief Executive McMillan quits group as it merges U.K. insurance businesses: David McMillan, the Chief Executive of Aviva Europe and Chairman of Aviva Global Health Insurance has left the business.

Arria rolls out SME product as it leaves AIM list: Ahead of the cancellation this morning of its shares on the London stock exchange in preparation for a primary listing in New Zealand, data technology and artificial intelligence firm Arria NLG has launched a business reporting tool for the U.K.

Lochside hotel to spend £1 million: Cameron House has revealed plans to invest a further £1 million under continuing renovation work at the Loch Lomond resort.

Saltire scheme is under way: Entrepreneurial Scotland has launched its Saltire Fellowship programme for 2017/18. The six-month leadership development scheme, which is run with Boston’s Babson College, aims to equip participants with the skills to build an enterprise of scale and gain an understanding of global business.

The Scotsman

Clydesdale reveals list of 40 Scottish branches set to close: The owner of Clydesdale Bank has published a list of 40 Scottish branches which are to be axed. Parent company CYBG will also shut a number of Yorkshire Bank branches, bringing the total number of closures across the U.K. to 79.

Airdrie Savings Bank to close its doors with 70 jobs lost: Airdrie Savings Bank, the last survivor of Britain’s independent savings banks, is to close. Staff were told in a meeting in the Lanarkshire town that the headquarters will shut, along with the remaining two branches in Bellshill and Coatbridge.

FreeAgent inks accounting software tie-up with RBS: FreeAgent, the Edinburgh-based accounting software specialist, has fought off competition from more than 30 rivals to land a deal with Royal Bank of Scotland.

Edinburgh entrepreneurs share £24,000 to spark growth: A clutch of Edinburgh’s most promising start-ups have shared £24,000 in prize money to fuel further growth at their firms.

Brewer Innis & Gunn promotes Esther Binnie to Finance Chief: Craft beer firm Innis & Gunn has promoted Esther Binnie to its board as Finance Director as it targets a doubling of turnover within the next three years.

City A.M.

Brexit hit to operations expected by institutional investors but they will continue to hold U.K. assets, according to “Brexometer”: Big institutional investors think Brexit will change their operating models but are determined to hold on to U.K. assets despite fears of a slowdown, according to a new survey.

New senior manager rules could mean fewer bumper fines for City watchdog and more days in court: New rules to hold top Bosses accountable for wrongdoings on their watch may have weakened the City watchdog’s negotiating stance if it tries to swoop in for bumper settlements.

Owner of New York Jets to become U.S. ambassador to the U.K.: The owner of the the New York Jets, Woody Johnson, will be the next U.S. ambassador to the U.K.

JP Morgan Chase reveals Chief Executive Jamie Dimon gets $28 million pay package: JP Morgan Chase Directors paid the bank’s Chief Executive Jamie Dimon $28 million (£22.7 million) in total compensation for last year, the group said.

Freezing Londoners’ travelcards would have cost City Hall £132 million a year: Expanding London Mayor Sadiq Khan’s controversial fares freeze to include Londoners’ travelcards would cost City Hall a total of £132 million a year.

IBM beats estimates but revenues fall: IBM beat estimates with its fourth-quarter results, but its shares fell in after-hours trading as it posted its 19th drop in revenues in a row.

]]>
Fri, 20 Jan 2017 08:34:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26926/in-the-papers-ibm-oxfam-moneysupermarket-royal-mail-26926.html
Market Briefing - US markets closed lower yesterday, as caution prevailed amongst investors ahead of the presidential inauguration of Donald Trump http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26925/market-briefing-us-markets-closed-lower-yesterday-as-caution-prevailed-amongst-investors-ahead-of-the-presidential-inauguration-of-donald-trump-26925.html UK Market Snapshot

UK markets finished in negative territory yesterday, weighed down by losses in housing sector stocks, after RICS survey showed a slower than expected growth in UK house prices in December. Homebuilders, Persimmon, Taylor Wimpey and Barratt Developments dropped 1.0%, 1.3% and 2.1%, respectively. Royal Mail tumbled 6.0%, after the company reported a fall in its UK sales in the nine months to 25 December. Miners, Randgold Resources, Anglo American and Fresnillo slipped 1.1%, 3.1% and 3.4%, respectively, tracking a decline in metal prices. Peer, BHP Billiton shed 0.6%, after the company and its joint venture partner, Vale, agreed to pay $47.5 billion to settle a civil claim with Brazil’s federal prosecutors. On the contrary, Moneysupermarket.com Group jumped 8.0%, as it expects to report robust results for the full year. The FTSE 100 declined 0.5%, to close at 7,208.4, while the FTSE 250 fell 0.5%, to settle at 18,223.7.

US Market Snapshot

US markets closed lower yesterday, as caution prevailed amongst investors ahead of the presidential inauguration of Donald Trump. Target declined 2.2%, following a broker downgrade on the stock to ‘Sell’ from ‘Neutral’. Navient dropped 1.2%, after a lawsuit was filed against the company by the Consumer Financial Protection Bureau for mistreating borrowers. On the positive side, CSX rallied 23.4%, amid news that Canadian Pacific Railway CEO, Hunter Harrison, is stepping down from his post to partner with an activist investor in order to shake up the company’s management. Netflix advanced 3.9%, after it posted better than expected results for the fourth quarter and an increase in its subscribers. Union Pacific edged 2.4% up, as its earnings for the fourth quarter surpassed market estimates and it provided an upbeat outlook for 2017. The S&P 500 slipped 0.4%, to settle at 2,263.7. The DJIA shed 0.4%, to settle at 19,732.4, while the NASDAQ slid 0.3%, to close at 5,540.1.

Europe Market Snapshot

Other European markets ended in the red yesterday. Rhoen-Klinikum lost 1.8%, as the company’s new internal findings showed that there would be significant structural burdens on the results for fiscal 2017. Pharmaceutical firms, Actelion and Novartis declined 0.9% and 1.5%, respectively. Bucking the trend, Zodiac Aerospace soared 22.9%, after Safran, down 5.4%, reached a deal to acquire the company for about $9.0 billion to create the world’s third-largest aerospace supplier. Remy Cointreau jumped 6.4%, after its revenue for the third quarter surpassed market expectations following a surge in Remy Martin cognac shipments ahead of Chinese New Year. The FTSEurofirst 300 index declined 0.1%, to close at 1,432.2. Among other European markets, the German DAX Xetra 30 slid marginally, to close at 11,596.9 while the French CAC-40 shed 0.3%, to settle at 4,841.1.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning. In Japan, Takeei has jumped 5.4%, after the company announced that it will buy back up to 500,000 shares of its common stock. Kirin Holdings has added 1.7%, after reports surfaced that the company has agreed to sell its Brazilian beer operations to Heineken for around $869.0 million. Panasonic has risen 1.0%, after the company announced that it is extending its partnership with Tesla. In Hong Kong, Orient Overseas International has plunged 7.9%, amid reports citing an alleged internal email from the company and its CEO, Andy Tung, stated that he was not aware of any acquisition deal. In South Korea, Samsung Electronics and POSCO have declined 0.5% and 1.4%, respectively. The Nikkei 225 index is trading 0.2% higher at 19,108.1. The Hang Seng index is trading 0.6% down at 22,907.9, while the Kospi index is trading 0.2% lower at 2,067.8.

Key Corporate Announcements Today

AGMs

Avacta Group, Character Group, Redefine International

EGMs

PJSC Megafon GDR (Reg S)

Final Dividend Payment Date

Cambria Automobiles, Scottish Oriental Smaller Companies Trust

Interim Dividend Payment Date

BlackRock Commodities Income Inv Trust, Charles Stanley Group, Greene King, Halfords Group, Octopus AIM VCT, Sirius Real Estate Ltd., Solid State, Stobart Group Ltd., United Carpets Group, Vertu Motors

Quarterly Payment Date

Real Estate Investors

Trading Announcements

Close Brothers Group, Record, Bonmarche

Key Corporate Announcements for Monday

AGMs

easyHotel, Kimberly Enterprises NV

EGMs

Datang International Power Generation Co Ltd.

Final Dividend Payment Date

Proactis Holdings

Interim Dividend Payment Date

Bonmarche Holdings

Trading Announcements

Petra Diamonds Ltd.(DI)

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.41% or $0.22 higher at $54.38 per barrel, ahead of Baker Hughes weekly oil rig count data, scheduled to release later in the day. Yesterday, the contract climbed 0.45% or $0.24, to settle at $54.16 per barrel, after the International Energy Agency stated that oil markets were tightening even before production cuts promised by OPEC and other producers. Meanwhile, the Energy Information Administration reported that US crude inventories climbed by 2.35 million barrels for the week ended 13 January 2017.

Gold

At 0430GMT today, Gold futures contract is trading 0.46% or $5.50 higher at $1207.00 per ounce. Yesterday, the contract declined 0.87% or $10.60, to settle at $1201.50 per ounce, registering its largest one-day loss of the month, as the greenback held onto gains against its peers following strong US economic releases and support from Federal Reserve Chair, Janet Yellen, for higher interest rates.

Currency

At 0430GMT today, the EUR is trading 0.16% higher against the USD at $1.0680, ahead of Germany’s producer price index for December due to release in a few hours. Yesterday, the EUR strengthened 0.31% versus the USD, to close at $1.0663, after the Euro-zone’s current account surplus expanded more than expected in November.

At 0430GMT today, the GBP is trading 0.11% higher against the USD at $1.2355, ahead of UK’s retail sales data for December slated to release today. Investors will also look forward to Donald Trump’s swearing-in ceremony, scheduled to be held later today. Yesterday, the GBP rose 0.69% versus the USD, to close at $1.2341. Meanwhile, economic data showed that the US weekly initial jobless claims unexpectedly dropped.

Fixed Income

In the US, long term treasury prices fell and pushed yields higher, after a string of upbeat US economic data further strengthened the prospects for the Fed to raise interest rates at a faster pace. Yesterday, yield on 10-year notes jumped 5 basis points to 2.47%, while yield on 2-year notes gained 2 basis points to 1.25%. Meanwhile, 30-year bond yield advanced 4 basis points to 3.04%.

Key Economic News

ECB kept key interest rate on hold, Draghi says no ‘convincing’ sign of inflation rise

The European Central Bank (ECB) held benchmark interest rate and bond-buying program steady, as widely expected. The ECB President, Mario Draghi, indicated that underlying inflation pressures in the Euro-zone remain subdued and that a very substantial degree of monetary policy accommodation is needed for Euro area inflation pressures to build up and support headline inflation in the medium term. He also added that the central bank’s governing body stands ready to intervene further, if conditions worsen.

Euro-zone current account surplus expanded in November

The seasonally adjusted current account surplus in the Euro-zone rose to €36.10 billion in November, following a revised current account surplus of €28.30 billion in the prior month.

Euro-zone current account surplus rose in November

The non-seasonally adjusted current account surplus in the Euro-zone rose to €40.50 billion in November, compared to a revised current account surplus of €32.60 billion in the prior month.

Italian current account surplus dropped in November

Current account surplus in Italy dropped to €4.64 billion in November. Italy had registered a current account surplus of €6.09 billion in the previous month.

Swiss producer and import price index advanced as expected in December

The producer and import price index rose 0.20% on a monthly basis in Switzerland, in December, compared to a rise of 0.10% in the previous month. Markets were anticipating the producer and import price index to advance 0.20%.

Swiss producer and import price index remained flat in December

On a YoY basis, in December, the producer and import price index remained flat in Switzerland, less than market expectations for a rise of 0.10%. In the prior month, the producer and import price index had dropped 0.60%.

US Philadelphia Fed manufacturing index rose unexpectedly in January

In the US, Philadelphia Fed manufacturing index advanced unexpectedly to 23.60 in January, compared to market expectations of a fall to 15.30. In the previous month, Philadelphia Fed manufacturing index had registered a revised reading of 19.70.

US continuing jobless claims registered a drop in the last week

The seasonally adjusted continuing jobless claims dropped to 2046.00 K in the week ended 07 January 2017, in the US, compared to market expectations of a fall to a level of 2075.00 K. In the previous week, continuing jobless claims had recorded a revised reading of 2093.00 K.

US building permits unexpectedly dropped in December

Building permits unexpectedly fell by 0.20%, on monthly basis, to an annual rate of 1210.00 K in December, in the US, compared to a revised reading of 1212.00 K in the prior month. Markets were expecting building permits to advance to 1225.00 K.

US initial jobless claims recorded an unexpected drop in the last week

In the week ended 14 January 2017, the seasonally adjusted initial jobless claims fell unexpectedly to 234.00 K in the US, lower than market expectations of an advance to 252.00 K. Initial jobless claims had recorded a revised level of 249.00 K in the previous week.

US housing starts climbed in December

Compared to a revised level of 1102.00 K in the prior month, housing starts registered a rise of 11.30%, on monthly basis, to an annual rate of 1226.00 K in the US, in December. Markets were expecting housing starts to climb to 1188.00 K.

Foreign investors remained net buyers of Canadian securities in the previous month

Foreign investors were net buyers of C$7.24 billion worth of Canadian securities in November, as compared to being net buyers of C$15.80 billion worth of Canadian securities in the previous month.

Canadian investors turned net sellers of foreign securities in the previous month

Canadian investors turned net sellers of C$7.87 billion worth of foreign securities in November, as compared to being net buyers of C$2.10 billion worth of foreign securities in the prior month.

Canadian manufacturing shipments advanced more than expected in November

In Canada, manufacturing shipments climbed 1.50% in November on a monthly basis, higher than market expectations for an advance of 1.00%. In the previous month, manufacturing shipments had dropped by a revised 0.60%.

Japanese machine tool orders advanced in December

The final machine tool orders rose 4.40% on an annual basis in Japan, in December. In the prior month, machine tool orders had fallen 5.60%. The preliminary figures had also indicated a rise of 4.40%.

Chinese industrial production (YTD) advanced as expected in December

Industrial production (YTD) advanced 6.00% in China, on a YoY basis in December, meeting market expectations. In the prior month, industrial production (YTD) had registered a similar rise.

Chinese GDP advanced as expected in 4Q 2016

On a quarterly basis, gross domestic product (GDP) advanced 1.70% in China, in 4Q 2016, compared to a rise of 1.80% in the prior quarter. Market anticipation was for GDP to rise 1.70%.

Chinese real GDP (YTD) advanced in 4Q 2016

On a YoY basis, real GDP (YTD) advanced 6.80% in China, in 4Q 2016. Real GDP (YTD) had advanced 6.70% in the previous quarter.

Chinese retail sales rose more than expected in December

On an annual basis, retail sales registered a rise of 10.90% in China, in December, compared to a rise of 10.80% in the prior month. Market anticipation was for retail sales to advance 10.70%.

Chinese retail sales (YTD) advanced as expected in December

Retail sales (YTD) in China recorded a rise of 10.40% in December on a YoY basis, meeting market expectations. In the prior month, retail sales (YTD) had registered a similar rise.

Chinese fixed assets investment excl. rural YTD rose less than expected in December

On an annual basis in December, fixed assets investment excl. rural YTD registered a rise of 8.10% in China, less than market expectations for an advance of 8.30%. In the previous month, fixed assets investment excl. rural YTD had climbed 8.30%.

Chinese GDP advanced more than expected in 4Q 2016

On a YoY basis, GDP advanced 6.80% in China, in 4Q 2016, compared to a rise of 6.70% in the prior quarter. Market anticipation was for GDP to rise 6.70%.

Chinese industrial production advanced less than expected in December

In December, on an annual basis, industrial production rose 6.00% in China, lower than market expectations for an advance of 6.10%. Industrial production had climbed 6.20% in the prior month.

]]>
Fri, 20 Jan 2017 08:31:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26925/market-briefing-us-markets-closed-lower-yesterday-as-caution-prevailed-amongst-investors-ahead-of-the-presidential-inauguration-of-donald-trump-26925.html
European Ideological Civil War Laid Bare In Davos http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26924/european-ideological-civil-war-laid-bare-in-davos-26924.html European Ideological Civil War Laid Bare In Davos

Here is the opening of this informative report by Ambrose Evans-Pritchard for The Telegraph:

Europe's leaders lashed out at each other in Davos in an inflamed dispute over how to stop the EU collapsing, laying bare the festering divisions that will plague the European project long after British withdrawal.

"The whole idea of an ever-closer Europe has gone, it's buried," said Dutch premier Mark Rutte, dismissing calls for full political union as a dangerous romantic fantasy.

"The fastest way to dismantle the EU is to continue talking about a step-by-step move towards some sort of superstate," he said at the World Economic Forum.

His comments went to the heart of a fierce battle under way for control over the EU project, and provoked an impassioned counter-attack from Martin Schulz, the European Parliament's president.

Mr Schulz called it profoundly misguided to give up the dream of political union and retreat to the nation state. "If it's Angela Merkel, or Mark Rutte, or whoever else, they must have the courage to say that we need ever-closer union more than ever in the 21st century, and without it the EU has no future," he said.

Mr Schulz accused Europe's ministers of subverting the EU in a "double game", agreeing to measures behind closed doors in the EU's council of ministers and then denying any responsibility once they return home. "This is destroying the European spirit."

He accused prime ministers of arriving for meetings at the Justus Lipsius Building in Brussels and proclaiming before they even enter the door that they are there only to protect their own narrow interest.

"We have some members sitting inside the European Parliament trying to destroy the EU from within. They are drawing EU salaries, and one of them is running for the presidency of France," he said.

Frans Timmermans, the European Commission's vice-president, said there was a "fundamental ideological confrontation going on in our EU". He called on Europe's leaders to stop hiding behind subterfuge and pick their side, rather than blaming Brussels for everything. "You need to show your cards, show where you stand," he said.

David Fuller's view

The masks of EU solidarity have clearly fallen away at Davos.  This will have shocked delegations from a number of other countries, particularly American readers of The New York Times and The Washington Post, and also anyone influenced by President Obama’s view of the EU and Angela Merkel.

This item continues in the Subscriber’s Area, where a PDF of AEP’s report is also posted.

 

Bankers in Davos See Trump Making Wall Street Great Again

Here is the opening of this topical article from Bloomberg:

Wall Street’s high-flyers in Davos, basking in their firms’ strong fourth-quarter earnings, said they’re confident Donald Trump’s incoming administration will loosen regulatory constraints on financiers -- even if it leaves Barack Obama’s signature Dodd-Frank Act largely intact.

Bank executives, speaking on condition of anonymity at events around the Swiss ski resort, said they’re not counting on Trump to overturn Dodd-Frank. Instead, they expect the federal agencies that enforce the rules to ease up on them and support bankers’ efforts to limit how much capital and liquidity their companies need to pay bills or absorb losses in a crisis.

The bankers said they recognize that changing or overturning the 2010 Dodd-Frank Act would require support in the U.S. Senate that Republicans may lack. Instead they’re counting on Trump’s team to dial back how supervisory agencies enforce and interpret rules. Led by Federal Reserve Governor Daniel Tarullo, U.S. regulators have adopted an extra-strict version of the global standards on capital and liquidity set by the Basel Committee on Banking Supervision in the aftermath of the 2008 financial crisis.

“Legislation, obviously that’s harder to do than just changing regulations,” JPMorgan Chase & Co. Chief Executive Officer Jamie Dimon said in a Bloomberg Television interview with John Micklethwait on Wednesday. “Regulators can change a lot of things easily about compliance, about costs, certain rules about lending, how you use your liquidity, how you use your capital. I would like to see some of those looked at and maybe modified a bit, and I think it would be good for the economy.”

At a panel discussion on the global banking outlook in Davos Thursday morning, JPMorgan asset-management CEO Mary Callahan Erdoes echoed that view.

“It’s going to be a great several years,” Erdoes said. “It’s going to be very positive for businesses in the U.S., which should cascade to businesses around the world.”

David Fuller's view

There has always been a cycle to bank regulation.  When excessive speculation by banks ends in a crash, as we last saw in 2008, and many of them have to be rescued, there is always a call for new, much tougher regulations.  These are designed to significantly boost cash reserves, limit leverage and also punish the offending banking industry.

As a consequence, it is more difficult for the economy to recover because banks are unable to provide the liquidity required by their customers, as we have seen since the 2008 credit crisis recession. Eventually, anger towards banks subsides and governments commence easing tight regulations, as we are about to see with the incoming Trump administration. This will help the banking industry and also the US economy.

Some people worry that this will soon lead to another banking crisis.  Those concerns are premature because banks are not about to repeat the same mistakes at the first opportunity.  On average, it usually takes at least a generation before banks lose their discipline and contribute to another financial crisis.    

 

The Evolution of Theresa May Sets Brexit Britain On Course for a Bright Global Future

Here is the opening and also the last paragraph of this topical article by Fraser Nelson for The Telegraph:

By her standards, Theresa May was relatively restrained at the Davos summit.  She loves enemies, and not in the Christian way. In front of her stood a congregation of the very people she holds up to ridicule: the plutocratic masters of the global economy, or, as she calls them, “citizens of nowhere”. On another day, she might have delivered one of the machine-gunnings that she reserves for the Police Federation or Boris Johnson. But this time she had another mission: to position Britain as the new global leader in free trade and reintroduce her country to the world.

The result was nothing short of a manifesto for a new British foreign policy and one of the best speeches given by a Prime Minister in recent years. It was a landmark not only in the evolution of her approach to Brexit, but in the development of her own political identity. It shows how far she has travelled in just a few months.

The traditional Davos speech involves clichés about the world’s ills and abstract nonsense like the “fourth industrial revolution”. The Prime Minister preferred to talk plainly. Rather than join them in lamenting populism, she sought to explain it: if people’s legitimate grievances aren’t addressed by established political parties, voters turn to insurgents. She could have added that Britain, virtually alone in Europe, has no problem with populism: the BNP dead, Ukip in crisis. And why? Because we had Brexit. It was not a Trump-style disruption; Brexit was how Britain avoids Trump-style disruption.

This is the point that European leaders find hard to understand. From Sweden to Sardinia, they are facing Eurosceptic insurgents whom they portray as barbaric and xenophobic. So they tell themselves (and their voters) that Britain has succumbed to a similar malady and is now sinking into a pit of hate crime, nativism and isolationism. This is not an anti-British agenda, necessarily, just the panic of politicians who can’t think of other ways to fend off new challengers. Mrs May came to offer some gentle advice: if you respond to people’s concerns, populism tends to go away. As Britain’s recent mini-revolution has just demonstrated.

Still, the Prime Minister has arrived rather late to all this. One of the great risks of Brexit was that the vote would be portrayed as a once-great country in meltdown, retreating from the world. Such concerns needed to be answered clearly, calmly and repeatedly. Had Boris Johnson become Tory leader he would have done this from day one. But Mrs May arrived in office implementing what seemed to be a far meaner version of Brexit than the one compellingly articulated by the Vote Leave campaign. We heard about EU nationals as bargaining chips, companies drawing up lists of foreigners, and new rules making it harder for foreigners to buy British companies.

And:

In her speech, she quoted Edmund Burke, to the effect that if a state cannot change, it cannot survive. That good governments do not become wedded to mistakes, but scour the horizon for opportunities and adapt with the times. As she has worked out, the same is true of prime ministers.

 

David Fuller's view

I am relieved.  OK, the Prime Minister and her Cabinet were thrown in at the deep end but they were not providing the kind of Brexit that I voted for.  Fortunately this has changed dramatically in little over a week.

How did that happen?  Was it a tactical decision to appear to have turned inwards, to lull the Brexit opposition and EU into a false sense of security before striding boldly and positively forward?  I hope not and I don’t think so.

Was it a simultaneous eureka moment By Theresa May and Chancellor of the Exchequer Philip Hammond, or did they receive some very helpful advice?  I suspect it is the latter although we may never know.  However, I do recall mentioning shortly after Theresa May became Prime Minister that she could always get some sound advice from The Telegraph’s editorial team.  While very much on her side, they had become a little more critical in the last several weeks, but no more as we see with the article above.

Whatever, Theresa May and Philip Hammond have reassured their supporters.  They have also seized the initiative on Brexit and are determined to set their own agenda with a divided EU which is in disarray.  Good luck to them.

 

Bond Guru Who Called Last Bear Market 40 Years Ago Says Go Long

This article by Andrea Wong for Bloomberg may be of interest to subscribers. Here is a section:

Money velocity isn’t a bullet-proof economic indicator. Financial innovation, and the rise of shadow banking, have made it hard to measure exactly how much money is floating around in the financial system. And some would say that "money" itself is going through an identity crisis these days.

Hunt isn’t the only one seeing the record-low pace as an ominous sign. The fact that money velocity declined rapidly during years of near-zero interest rates may signal aggressive monetary easing actually led to deflation instead of inflation, economists at the St. Louis Fed wrote back in 2014.

"In this regard, the unconventional monetary policy has reinforced the recession by stimulating the private sector’s money demand through pursuing an excessively low interest rate policy," economists Yi Wen and Maria A. Arias wrote.

"I know I’m the minority here,” Hunt said. “I’m just trying to see the world as I think it should be seen.”

 

Eoin Treacy's view

I have long argued that the disintermediation associated with the internet and technological innovation is a major contributor in the decline in the velocity of money. The downtrend in the data from 1997 offers a graphic representation of the deflationary influence of technology. It also helps to explain why the surge in the quantity of money associated with quantitative easing has not resulted in high inflation.

 

Email of the day on Canadian cannabis stocks

Pot luck... If the Canadian government continue to support AND passes legislation favorable to the development of the cannabis industry, some companies may have exponential growth, My pick has been Canopy on the TSX and I will continue to hold it.

 

Eoin Treacy's view

Thank you for highlighting Canopy Growth Corp which as you point out is one of Canada’s most popular vehicles for expressing a view on cannabis. Canada is home to a significant number of recreational cannabis and cannabis related pharmaceutical start-ups, which as you say. would benefit from favourable legislation. You never know before the bull market ends there may be calls to exchange the maple leaf for something even more commercial than maple syrup.

]]>
Fri, 20 Jan 2017 08:23:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26924/european-ideological-civil-war-laid-bare-in-davos-26924.html
Trump to seal a FTSE & Dow correction? http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26923/trump-to-seal-a-ftse-dow-correction-26923.html FTSE 100 Index called to open flat at 7210, unable to better 7220 overnight as early Jan resistance-turned-support reverts to resistance following yesterday’s breakdown. This maintains Monday’s trend of falling highs and also confirms a bearish head and shoulders top reversal that could take the index back to 7070. Bulls need a breakout to 7230 to overcome with week’s downtrend. Bears require a breach of yesterday’s 7190 lows . Watch levels: Bullish 7225, Bearish 7185.

Calls for a flat open come after small losses on Wall St last night and a mixed picture in Asia overnight. Investors are looking ahead to this afternoon’s inauguration of the 45th US President, even solid overnight Chinese GDP failing to provide any meaningful positive impetus overnight. If anything, it is a weaker USD having most impact, after a slightly less hawkish tone from Yellen, the stronger resulting GBP and EUR hindering FTSE and DAX sentiment.

Japan’s Nikkei is posting gains in spite of Yen strength (weak USD or safe haven seeking?) and a weak Energy sector while China bounces back from yesterday’s losses thanks to its solid overnight GDP and Retail Sales print, even if Industrial Production and Fixed Asset Investment were a touch light. Australia's ASX is the regional underperformer as Financials and the commodity space (energy in particular after yesterday’s US Oil inventory build) hold it back.

US equity markets closed lower across the board as markets digested comments from Fed Chair Janet Yellen and investors reposition themselves ahead of tonight’s inauguration. The Dow Jones posted its fifth straight negative session (-0.4%) as Financials once again led losses on concerns Trump may not follow through with sector deregulation. Real Estate led the S&P lower, also by 0.4% while the Nasdaq again outperformed, albeit still 0.3% lower as profit taking hampered markets.

Crude Oil prices continue to hover around 2017 lows as US inventory data yesterday showed a larger than expected draw and reports Chinese demand for the commodity could fall in 2017. Non-OPEC supply concerns (most notably in the US as markets see shale making a comeback in 2017) continue to place downward pressure on crude markets, especially given yesterday’s data, as the OPEC supply cut deal attempts to rebalance global supply.

Gold price has recovered from yesterday’s sub-$1200 level as safe haven marginally increases and the USD falls back from yesterday’s highs in anticipation of this evening’s inauguration in Washington. A close above $1200 will mark a fourth straight week of gains for the precious metal, in what would be its longest run since July.

In focus today will be the inauguration of Donald Trump as the 45th President of the United States, with investors hoping that his speech comprehensively outlines his policy plans for the next four years in a scripted rather than lively off the cuff affair. Financial deregulation, infrastructure spending and tax reforms will be the key policy topics markets will be hoping receive some dedicated airtime this evening.

Data-wise, UK Retail Sales at 9:30am are forecast to provide a mixed bag, with the monthly headline and core figures seen falling back into negative territory for the first time since Junes while the YoY figure is seen improving to approach October’s 13 year highs. Note following a strong Christmas performance from UK Retailers (Next excluded) there is some potential for upside surprise this morning.

Away from Washington, speakers of note include the Fed’s Harker and Williams this afternoon following on from overnight comments by their boss Chair Yellen that seemed to strike a less hawkish tone than her Wednesday night address suggesting rate hikes steadily through to 2019.

]]>
Fri, 20 Jan 2017 08:22:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26923/trump-to-seal-a-ftse-dow-correction-26923.html
Beaufort Securities Breakfast Alert: Cyan Holdings PLC, Finsbury Food Group, Royal Mail http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26922/beaufort-securities-breakfast-alert-cyan-holdings-plc-finsbury-food-group-royal-mail-26922.html Today's edition features:

CyanConnode Holdings (LON:CYAN)

Finsbury Food Group (LON:FIF)

Royal Mail (LON:RMG)

 

"Today is Trump's day. While the world at large may have been shocked by his confrontation attitude, sneered at his apparent lack of sophistication, dismissed his aggression and criticized obvious conflicts of interest, global markets still have to ask themselves whether in fact he is their corporate saviour? Were the UK's Brexit vote and Trump's US victory actually flashing red lights as to prospective disintegration within the fabric of western society? Was the President-elect the only one smart enough to understand that a US crisis, possibly more obviously moral than economic, as deep as the great depression that faced Roosevelt back in the late 1920s is looming and, more to the point, that he is the only one with the courage to fix it? Time will tell but, of course, getting his revolutionary agenda - which includes the creation of 25m new jobs, more than halving corporation and personal taxes, applying swinging border and import controls, while throwing out the bulk of Federal regulation - through is now the giant challenge. Whether he eventually achieves this through a mixture of threats, coercion, bribery and possibly even charm, or finds himself so bamboozled by Congress that he simply walks off in a huff halfway through his first term in office, for sure Donald Trump is already assured that he will be more than just a footnote in American history. Contemplating all this last night, the principle US indices all struggled to make headway ending slightly down, with some considering the markets had become rather overbought in their push to see the Dow Jones break through the 20,000 marker. Traders gleaned little new from either of Janet Yellen or Theresa May's speeches yesterday, although US Treasuries still suffered their biggest sell-off in four weeks as investors became increasingly resolved to the idea of the Fed kicking off its round of rate hikes sooner rather than later. Asia ended mixed, with the Shanghai Composite making a reasonable gain on news that Chinese economic growth for 2016 came out at 6.7%, comfortably within Beijing's target range and providing relief given evidence of slow industrial activity during the fourth quarter; the Hang Seng and ASX just followed the US market lead into modest losses. Today, the UK Prime Minister is scheduled to meet with senior executives from Wall Street, while London is also due to publish December Retail Sales data along with earnings or trading updates from a few UK second-liners like Bonmarche (BON.L), Brainjuicer (BJU.L) and Midatech Pharma (MTPH.L) and, later this afternoon, a few US majors including General Electric and Procter & Gamble are expected to publish their quarterlies. In reality, however, all this will fade into the background with the new President takes to the microphone afternoon. Awaiting this, London is seen opening in a quiet, contemplative mood 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 0.54% lower at 7,208.44, whilst the FTSE AIM All-Share index closed 0.09% down at 872.31. In continental Europe, the CAC-40 finished 0.25% lower at 4,841.14 whilst the DAX was 0.02% lower at 11,596.89.

Wall Street

In New York last night, the Dow Jones slid 0.37% to 19,732.4, the S&P-500 dropped 0.36% to 2,263.69 and the Nasdaq eased 0.28% to finish the session at 5,540.08.

Asia

In Asian markets this morning, the Nikkei 225 had gained 0.53% to 19,173.51 and the Hang Seng lost 0.57% to 22,918.42.

Oil

In early trade today, WTI crude was up 0.31% to $51.53/bbl and Brent was ahead 0.44% to $54.40/bbl.

 

Headlines

China's economy grows 6.7% in 2016

China's economy grew by 6.7% in 2016, compared with 6.9% a year earlier, according to official data, marking its slowest growth since 1990. The figure is in line with Beijing's growth target of between 6.5% and 7%. But the news comes just a couple of days after the leader of one Chinese region admitted GDP data was faked. China is a key driver of the global economy and a growth slowdown is a major concern for investors around the world.

Source: BBC News

 

Company news

CyanConnode Holdings (LON:CYAN, 0.20p) – Speculative Buy

CyanConnode, the world leader in narrowband radio mesh networks yesterday released a trading update for the 12 months ended 31 December 2016. Management confirmed trading for the period had remained in line with its expectations, with revenues of approximately £1.8 million, which is an increase of 560% compared to the same period last year. Cash, as of 31 December 2016, was £3.9 million. It went on to note that a significant portion of revenue growth was underpinned by the PVVNL and CESC deployments in India and that the long-term nature of subsequent contract wins provides improved visibility going forward, with order backlog from existing contracts in multiple regions going into 2017. The Board also went on to underscore its confidence following the acquisition of Connode, declaring it to be transformational to the business plan by significantly expanding the Group's geographic reach while enhancing the product suite with a full standards-based (IPv6/6LoWPAN) technology platform. It considers the enlarged Group is now well-placed to build its presence in new markets and to cross sell to existing customers. There was also positive news on the contracts front: 2016's key win was the £10 million purchase order for smart metering from Micromodje in Iran, which is expected to move into the delivery phase during 2017. In November 2016, the UK Data Communications Company also announced the official go-live of the UK smart metering project with the data centre now active for communication between consumers and the utilities with rollout due to commence this year. Having successfully delivered all 2016 project milestones for the UK smart metering contract, CyanConnode software license and support fees revenue is expected to be £25 million over the life of the contract. Furthermore, it continued to strengthen relationships in India, highlighted by the third smart metering order with Larsen & Toubro; this order for 4,700 additional smart meters is part of a larger framework agreement between Tata Power Mumbai and L&T, and follows previous orders of 10,000 consumer meters in Mumbai. Management understands that the Indian Ministry of Power remains committed to installing a majority of the planned 35 million smart meters by 2019 and are pushing the local smart metering suppliers to accelerate their readiness for volume deployments. The Board is also encouraged by the Group's entry into the market in Thailand, where the local distribution partner has now invested £4 million into CyanConnode equity, based on both the Thai and global opportunities.

Our view: A genuinely global business with market leading technology on the cusp of a dramatic expansion. Smart metering, which provides unique solutions to problems faced by energy suppliers in both the developing and developed world, is just commencing its long-term installation phase. As with all new technologies, first mover advantage, together with a cost-effective but comprehensive solution, is key to capturing and retaining the opportunity. This is exactly what CyanConnode is now providing, as evidenced by its participation in the world's largest and most sophisticated projects, such as the UK's smart metering project and the National Smart Metering Program of Iran. Having established the scale of the opportunity (see Beaufort's publication 'The Future is Smart!' that was released on 21 September 2016), the coming 24 months will see CyanConnode's branded offering occupy the position of 'industry standard' for the sector. This will enable it to add significantly to the already impressive backlog from India, Iran and the UK both with repeat orders and new large, long-term and exceptionally sticky customers. Despite using a chunk of the £12.6m (gross) raised through last summer's Placing and Subscription to acquire Connode and build up working capital, it still holds a significant cash reserve as it heads into 2017. CyanCannode's business model is maturing while its business opportunity remains in its infancy. Recognising the Group's lead in this giant developing opportunity, Beaufort reiterates its Speculative Buy recommendation and price target of 0.6p/share.

Beaufort Securities acts as corporate broker to CyanConnode Holdings plc

 

Finsbury Food Group (LON:FIF, 109.50p) – Buy

Finsbury Food Group ('Finsbury Food'), the UK speciality bakery manufacturer of cake, bread and morning goods for the retail and foodservice channels, yesterday provided a pre-close trading update for the half year ended 31 December 2016 ('H1 FY2017'). The Group said Christmas trading was "solid" and H1 performance is in line with management's expectations. During the period, revenues remained flat at £156.6m; comprised of -2.9% fall in the UK Bakery division and +31.7% growth in the overseas division (Group's 50% owned European business), against the comparable period (H1 FY2016). The Group have invested £5m in capital projects during H1. As noted before, the Board reiterated that the scale of the current cost inflation is such that despite such internal initiatives (e.g. investment in product innovation and continue to improve efficiency and productivity), further cost recovery will be required and will become inflationary in the second half and beyond.

Our view: Finsbury Food delivered a resilient result for H1 FY2017 against what was an exceptionally strong comparative. Although revenues remained flat at £156.6m, that was against H1 FY2016 which saw +46% growth year-on-year. The flat outcome resulted from a -2.9% fall in the UK Bakery division (FY2016: 88% of revenue), slightly eased from -4.0% seen for the first 4 months, which was then offset by strong growth in its oversea division (FY2016: 12% of revenue) of +31.7%. The growth for oversea division has further accelerated from that seen last year, at +18.8% (or +36.5% for the first 4 months of FY2017). As with last trading update, no LFL sales performance was provided. The market, however, appeared more cautious about persistent cost pressure faced by the Group as a result of weaker Sterling-led commodity price inflation (input costs are globally priced in dollars or euros) and the planned National Living Wage increases, which means the Group will have to do more to protect against margin erosion. We believe consumer staples tend, in any case, to be generally resilient, while the growing overseas division will benefit from translations of weaker Sterling. The consumer confidence in the UK also remain relatively firm, witnessed from recent strong UK major supermarket sales growth. At a forward 11.5x P/E multiple, 6.4x EV/EBITDA together with a 2.6% dividend yield for the current year, the shares remain cheap for such a quality business. Yesterday's share price overreaction created more buying opportunities. Beaufort repeats its Buy recommendation with a price target of 140p per share.

 

Royal Mail (LON:RMG, 422.50p) – Hold

Royal Mail, the UK's designated universal postal service provider, yesterday provided a trading update for the 9 months ended 25 December 2016. During the period, Group revenue remained flat, due to -2% fall in UKPIL (UK Parcels, International & Letters, 83% of revenue in FY2016), offset by +9% growth in GLS (General Logistics Systems, 17% of revenue in FY2016). For UKPIL, parcels revenue increased by +3%, supported by +3% growth in volumes, while letter revenue declined by -5% due to -6% fall in addressed letter volumes. GLS saw volume growth of +8%, benefitted from the timing of Easter and other public holidays across Europe. Looking ahead, the Group said its cost avoidance programme remains on track to deliver c.£225m of UKPIL operating costs in FY2017, while it continues to target a reduction of up to -1% in underlying UKPIL operating costs before transformation costs. The Group confirmed that total net cash investment will be no more than £500m this year and next. Royal Mail's CEO, Moya Greene commented "Our postmen and women delivered a great service at Christmas, even better than last year, with 138m parcels handled in December alone. Our comprehensive planning, which started much earlier this year, enabled us to deliver this service for our customers right across the UK." The Group will announce its full year result ending 26 March 2017 on 18 May 2017.

Our view: Royal Mail's result remain disappointing, continue to be affected by the challenging market conditions. Addressed letter volumes, particularly advertising and business letters, continue to decline in the UK, while competition surrounding its parcels business remains intense. UK letters and parcels volume tends to be correlated with movements in GDP, and therefore to the general health of the UK economy. While this is true, we also believe the volume of addressed letters are unlikely to improve as consumers fundamentally and irrevocably switch to electronic communications, deserting in the process traditional paper delivery. Companies are likely to increasingly adopt electronic direct mailing for advertising as well, which will be cheaper, delivered immediately while having the capability to observe statistical data/behaviour of the receivers. With a 4-6% decline per annum of addressed letter volumes expected by the management, GLS is now the only driver of revenue growth for Royal Mail. The Group's entry into premium B2C business and the recent partnership with a Chinese e-Commerce company is an interesting move to capture the growth, but the parcels market itself remains highly competitive as Amazon Logistics and a myriad of other me-too players compete for market share. With a difficult UK economic outlook complicated with pension affordability, wage inflation and Union issues to confront, we consider the Group's current FY2017E and FY2018E P/E multiples of 10.9x and 10.7x, with dividend yield of 5.4% and 5.6%, respectively, fairly values the shares. Beaufort reiterate its Hold rating on Royal Mail.

]]>
Fri, 20 Jan 2017 08:13:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26922/beaufort-securities-breakfast-alert-cyan-holdings-plc-finsbury-food-group-royal-mail-26922.html
VSA Capital Market Movers - Mariana Resources Ltd, Shanta Gold Limited http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26921/vsa-capital-market-movers-mariana-resources-ltd-shanta-gold-limited-26921.html In the news: Mariana Resources, Shanta GOLD, West African Resources, Base Resources & The Alchemist

FROM THE BROKING DESK

We have a few items of news today. In the Companies section we have a review of the amazingly robust results of a Preliminary Economic Assessment into the development of the Hot Maden Project in Turkey, in which Mariana Resources† has a 30% interest. The study delivered a post-tax NPV8 of US$1.4bn for the whole project and an IRR of 153%. We also review the quarterly production report from Shanta Gold, a company that is building a solid reputation for delivery from its New Luika operations in Tanzania.

You might have missed this on West African Resources (we did!). The company has now received the mining permit for its lead project in Burkina Faso; this has been renamed Sanbrado (it was formerly Tanlouka). With this significant milestone passed, the company is now focused on the delivery of the definitive feasibility study for the project, which is scheduled to be completed by the end of 1Q17.

Just to remind you about our latest publications. Jim Taylor put out Base Resources*† — December Quarterly Activities Report, 17 January 2017. The company’s latest quarterly figures show it continuing to offer quality exposure to improving mineral sands markets. Production was largely stable, with guidance for 2017 largely unchanged.

We also published our latest edition of The Alchemist. This was focused on zinc, which should benefit from rising commodity prices, production cuts, minimal new mine development and growth in demand. The piece looks at where investors can obtain exposure to zinc miners. It can be viewed here.

 

COMPANIES

MARIANA RESOURCES

LON:MARL| £0.835 | US$128m

Stellar Economics Highlighted in the Hot Maden PEA

Mariana Resources has announced the results of its Preliminary Economic Assessment (PEA) of the 30%-owned Hot Maden gold-copper project in Turkey. Headline figures includes a base case of 1.0Mtpa mined, a nine-year mine life producing 2.6Moz Au and 142,000t Cu, an IRR of 153% and an NPV8 of US$1.4bn.

COMMENT: The Hot Maden PEA assumes very low operating costs and a low upfront capital intensity from a sizeable underground mining operation. The economics showing a post-tax NPV8 of US$1.4bn and an IRR of 153% highlight why Mariana’s stock price has quintupled over the last 12 months. The pace of development has been fast, with no sign of letting up. The current programme includes a further 10,000m of drilling, with the next milestone the planned publication of a pre-feasibility study in 3Q17. Subject to financing and permitting, we suggest that this could see the completion of a DFS and the project construction completed by the end of 2018.

Mariana’s flagship asset is the Hot Maden Project in Turkey — Hot Maden is a gold-copper project in north-eastern Turkey. It is a joint venture, of which Mariana owns 30%. The JV partner owning 70% is Turkey-based Lidya Madencilik Sanayi ve Ticaret AS (Lidya), the mining arm of Çalık Holding, a private Turkish conglomerate with operations in energy, construction, mining, textile, finance and telecommunications. The company’s 30% interest was acquired as part of its acquisition of Aegean Metals Group (announced in September 2014). Drilling commenced in December 2014 and was performed (and fully funded) by Lidya in order to earn its 70% interest.

Very low capital intensity is key to driving IRR — Upfront capex is expected to be US$169m, which equates to US$51/oz AuEq over life-of-mine. Total capex (upfront + sustaining) is expected to be US$261m, which equates to US$79/oz AuEq life-of-mine.

Low-cost underground mining adds to the positive economics — The mine plan assumed in the PEA is an all underground operation using transverse and longitudinal long-hole open stoping. The base rate for mining and processing is 1.0Mtpa, with an assumed mineable quantity of 7Mt at 11 g/t gold and 1.9% Cu over a nine-year mine life. Mining costs are assumed to be low at US$31.05/t.

The gravity and flotation process delivers high recoveries — Metallurgical testing to date has been done through flotation and concentration, and indicated high recoveries of both copper and silver. The assumed recoveries vary based on grade, but the life-of-mine weighted averages are 88% Au and 90% Cu. The flow sheet for the PEA assumes the production of one standard copper-gold concentrate, and a second gold-bearing pyrite concentrate for sale to smelters. Processing these concentrates is assumed to cost US$15.13/t.

Economics highlight a low-cost operation with a very high NPV — In calculating the NPV, the company assumed a gold price of US$1,250/oz and a copper price of US$2.75/lb. Royalties on the property include a 2.6% state royalty and a 2% NSR to pay to Sandstorm. The PEA highlights an NPV of US$1.4bn using an 8% discount rate, and an IRR of 153%.

The fast pace of development is expected to continue — Lidya and Mariana will continue to advance this project rapidly in order to capitalise on what appears to be a highly cash-generative asset. This went from early drill results to PEA in 20 months, and is expected to move to PFS by 3Q17. The PFS is expected to consider the economics of the hanging-wall zinc zone (2.8Mt at 4.0% Zn), which was not considered in the PEA. The study will be conducted concurrently with a 20,000m drill programme planned for this year, including exploration drilling aimed at the discovery of new resources south of the Main Zone in the area of the old Russian mine.

SHANTA GOLD

LON:SHG | £0.11 | US$81m

December Quarterly Production and Operational Update

Shanta Gold has announced that 4QFY16 production from New Luika in Tanzania was 18,897oz (-8% QoQ). Cash costs were US$486/oz (+26% QoQ) and AISC US$747/oz (+20% QoQ). For the full year, production was 87,713oz (+7% YoY) and AISC were US$661/oz (-22%).

At 15,285oz, gold sales for the quarter were 81% of the total produced over the period. This, and a lower gold price received of US$1,187/oz, contributed to cashflow from operations going from US$11m in 3QFY16 to an outflow of US$0.1m in 4QFY16. Capex of US$13m and the receipt of US$5m in cash from a silver streaming deal led to a US$5m increase in net debt QoQ to US$43m (debt of US$58m and cash of US$15m).

Production and cost guidance for FY17 was 80,000–85,000oz at AISC of US$800-850/oz. Production is expected be lower during 1H17, when the ramp-up of higher-grade underground ore is scheduled to commence, than in 2H17.

COMMENT: Annual production was a record for the operation and was ahead of guidance for the year of 82,000-87,000oz. Also, AISC for the year of US$661/oz were lower than guidance of US$690-740/oz, further building the current management team’s growing reputation for delivery. This was reinforced by statements that the all-important, fully-funded transition to underground operations is on budget and on schedule to deliver first ore by mid-year.

With respect to the future; an updated mine plan is planned to be completed by the end of 1Q17, which we expect to increase the planned mine life by two years (to 2023). The project retains considerable local and regional exploration potential, on which the company is now re-focusing its attention.

Encouragingly, the company also stated that its net debt will continue to decline in 2017, despite the completion of the underground development programme in 1H17.

In summary, the outlook for Shanta looks positive.

Production has been stable and costs have fallen — Commercial production was declared at the 100%-owned New Luika gold mine in south-west Tanzania in 2Q13. The company produced 64,000oz in 2013, 8,000oz in 2014 and 82,000oz in 2015; it has now delivered 88,000oz in 2016. Over each of these years, All-in Sustaining Costs (AISC) declined YoY (from US$1,049/oz to US$941/oz, to US$834/oz and to US$661/oz in 2016).

Much of cashflow hitherto has been re-invested in the project — A large proportion of the healthy cashflow generated by New Luika since coming on-stream has been reinvested in the operation. Between 2013 and 2016, Shanta’s operating cashflow totalled US$140m; over the same three-year period, a total of US$115m of this was reinvested in the operations (mainly on retrofitting the plant), resulting in net cashflow before finance over the four years of US$25m. In spite of the planned capex in 2017 of US$33m, much of which will be spent in 1H17, the company has stated that it expects to reduce net debt over the coming year.

New Luika commenced transition to underground in 2016 — Operations currently comprise production from two open pits — Ilunga and Jamhuri (which contained 39,000oz of gold reserves) — and from stockpiles. A further three small deposits (with total reserves of 49,000oz) are planned to be mined by open pit until the end of 2021. Under the current plan (‘Base Case Mine Plan’ of September 2015), production from underground mining operations is planned to commence at the Bauhinia deposit in early 2017, and at the Luika deposit by mid-2017. This plan included total production of 310,000oz from 2016 to early 2022, at average AISC of US$640/oz and pre-production capex of US$38m (excluding working capital). Assuming throughput of 600,000tpa, recoveries of 90% and a head grade of 4.8 g/t, the Base Case Mine Plan forecast average production of 84,000oz pa between 2016 and 2020.

New mine plan to be published in 1Q17 — The company plans to announce a new mine plan in 1Q17 that will update the previous ‘Base Case Mine Plan’ of September 2015. The new plan is expected to include a modest increase in reserves at the Elizabeth Hill deposit, and also the incorporation of a third planned underground operation at the Ilunga deposit. We expect that this will extend the mine life by two years (until mid-2023).

To date, development of the first underground operation at Bauhinia is on time and budget — The decline has now intersected the first ore levels and the first stope is planned to be in production by July 2017, with full production from Bauhinia to be reached by 1Q18. We anticipate first production from Luika underground by the end of 2017 and full production around mid-2018.

Current EV of US$124m — Net debt at the end of 2016 was US$43m, comprising US$15m of cash and US$58m of gross debt. We estimate that this comprised:

• US$3m of promissory notes, repayable April 2017

• US$37m loan from Investec (Libor +4.5%, repayable over four years)

• US$15m of convertible loan notes (maturing April 2019, 13.5% interest, convertible at US$0.47/share (equivalent to £0.38/share))

• US$3m of equipment finance and lease finance

At the company’s current share price and with 583m shares outstanding, the current market cap is equivalent to US$81m. With net debt at end-December of US$43m, the estimated enterprise value is therefore US$124m.

 

]]>
Thu, 19 Jan 2017 14:25:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26921/vsa-capital-market-movers-mariana-resources-ltd-shanta-gold-limited-26921.html
Today's Market View - Acacia Mining, Hummingbird Resources Ltd, Lithium Americas, Orosur Mining Inc, Rambler Metals and Mining PLC, Shanta Gold Limited, SolGold plc http://www.proactiveinvestors.co.uk/columns/sp-angel/26920/today-s-market-view-acacia-mining-hummingbird-resources-ltd-lithium-americas-orosur-mining-inc-rambler-metals-and-mining-plc-shanta-gold-limited-solgold-plc-26920.html Acacia Mining (LON:ACA) –Exceeds updated production guidance in 2016 for record gold output

Cornish Lithium – (private company) – secures rights to explore for lithium in Cornwall

Hummingbird Resources (LON:HUM) – Yanfolila progress report

Lithium Americas (TSX:LAC) – reports US$174m strategic investment by Ganfeng Lithium

Orosur Mining (LON:OMI) – Anza gold exploration project

Rambler Metals (LON:RMM) – Metallurgical results from Ming

Shanta Gold (LON:SHG) – New Luika Gold Mine operations beat guidance in 2016

Solgold* (LON:SOLG) – Investors anticipate further copper, gold discovery at Cascabel

 

What can Plato teach us about Dondad Trump?

• BBC Newsnight video – absolute brilliance

• https://www.youtube.com/watch?v=cnzo9qXLFUo

 

121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2016

Located in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel

• Investors go for free.  Please ask for conference brochure

 

Dow Jones Industrials  -0.11% at 19,805 

Nikkei 225   +0.94% at 19,072 

HK Hang Seng   -0.21% at 23,050 

Shanghai Composite    -0.38% at 3,101

FTSE 350 Mining   +0.36% at 16,684

AIM Basic Resources   -0.19% at 2,530 

 

Economic News

US dollar stronger on Fed Chair, Janet Yellen comments that US economy can stand higher interest rates

 

ECB meeting later today – the ECB is likely to leave the pace of QE unchanged

 

UK - Teresa May reckons UK will lead the world on free trade, echoing sentiments made by President Xi of China

• The irony is that the world’s largest communist party is extoling the virtues of free trade and capitalism while the US is advocating a more insular form of protectionism

 

HSBC – plans to move 1/3rd of activities to Paris. 

• But remember HSBC was threatening to move its entire HQ out of the UK last year and that didn’t happen either

• SP Angel has no plans to move any staff out of London and plans to continue to grow within the UK so if there is anyone really good left at HSBC then please feel free to apply

 

Currencies

US$1.0662/eur vs 1.0696/eur yesterday. Yen 114.58/$ vs 113.16/$. SAr 13.553/$ vs 13.538/$.  $1.232/gbp vs            $1.234/gbp.

0.755/aud vs 0.756/aud. CNY 6.868/$ vs 6.834/$.

 

Commodity News

Precious metals:         

Gold US$1,203/oz vs US$1,214/oz yesterday

Gold ETFs 57.0moz vs US$57.0moz yesterday

Platinum US$963/oz vs US$975/oz yesterday

Palladium US$750/oz vs US$746/oz yesterday

Silver US$16.98/oz vs US$17.15/oz yesterday

           

Base metals:   

Copper US$ 5,773/t vs US$5,782/t yesterday

Aluminium US$ 1,827/t vs US$1,802/t yesterday

Nickel US$ 10,090/t vs US$10,195/t yesterday

Zinc US$ 2,749/t vs US$2,755/t yesterday

Lead US$ 2,291/t vs US$2,310/t yesterday

Tin US$ 21,075/t vs US$21,140/t yesterday

           

Energy:           

Oil US$54.5/bbl vs US$55.7/bbl yesterday - Brent is up this morning on the back of the news US crude stockpiles declined last week.

• Prices fell nearly 3% yesterday driven by the higher US$ index and reports that OPEC estimates point to more aggressive output cuts required to balance the market.

 

Natural Gas US$3.330/mmbtu vs US$3.384/mmbtu yesterday

Uranium US$22.75/lb vs US$22.90/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$79.8/t vs US$79.1/t - The HK stock exchange plans to launch a dollar-denominated, cash-settled iron ore futures contract

• The exchange is considering listing a hot-rolled coil steel contract on the LME and is keen to build on growing volumes in the LME's steel scrap and rebar contracts

Chinese steel rebar 25mm US$499.9/t vs US$502.7/t

Thermal coal (1st year forward cif ARA) US$68.7/t vs US$69.0/t yesterday – Colombian coal exports rise 9% to 88mt

• China giving permission for coal mines to raise production of coal till the end of the winter heating season

• The authorities are allowing coal mines to work for 330 days this year from the 276 day restriction previously put in place to enable greater coal generation and to help bring down thermal and coking coal prices.

Premium hard coking coal Aus fob US$175.9/t vs US$180.0/t –           

Other:

Tungsten - APT European prices $191-200/mtu vs $187-198/mtu

 

Company News

Acacia Mining (LON:ACA) 415 pence, Mkt Cap £1.7bn –Exceeds updated production guidance in 2016 for record gold output

Acacia Mining reports that fourth quarter gold production of 212,954 ounces has “resulted in record full year production of 829,705 ounces, almost 100,000 ounces ahead of 2015 and above already increased guidance.”

Preliminary estimates show a 14% reduction in all-in-sustaining costs during 2016 to US$958/ ounce sold. Cash costs for the are reported to be US$640/oz,17% lower than the US$772/oz in 2015.

Full year gold sales of 816,743 ounces represent a 13% increase on the 2015 results.

The company’s net cash position increased to US$219m.

Chief Executive, Brad Gordon, commented that “2016 was the fourth consecutive year of production growth at Acacia, which was driven by a record production year at North Mara and the highest production year at Bulyanhulu since 2006.”

The company has also announced that it will extend mining at its Buzwagi mine by a further six months until the end of 2017 and that it expects to continue processing operations for a further 2 years as it treats stockpiled material. The extension of mining is expected to “lead to an increase in production compared to 2016 [161,830 oz] at the operation.”

 

Cornish Lithium – (private company) – secures rights to explore for lithium brines in Cornwall

Jeremy Wrathall, a well known city analyst, has decided to follow Captain Poldark into mining in Cornwall.

Wrathall, ceo of Cornish Lithium, today reports the company has secured rights to explore for lithium brines and has entered into definitive mineral rights agreements with Strongbow Exploration which is exploring the potential redevelopment of the historic South Crofty tin mine.

Having worked in the Cornish tin industry we can confirm the presence of hot springs and brine solutions in the old Cornish mines and it’s interesting to hear of their lithium content.

The company’s PR tells us that lithium grades run at around 130ppm lithium which makes the prospect of Cornish lithium sound interesting though we are sure this is either an historic or a very preliminary estimate.

The British Geological Survey has previously published a lithium brine grade of 118ppm from brine tested at South Crofty in December 1977.

There are also lithium bearing micas in Cornwall which are reported to grade up to 2.5% (2500ppm) lithium though the extraction of lithium from micas is still seen as a difficult and probably uneconomic business.

We note that the lithium brine resource at the Salar de Olaroz in the new Orocobre project in Argentina run at 632mg/L (ppm) for their stated ‘measured resource’.  The highest known lithium brine grades are seen in the Salar de Atacama which has a 6.3mt lithium resource in Chile grading an estimated 0.14% (1400ppm).  Lithium x quotes a NI 32-101 lithium brine resource component of 195kt lithium grading 501mg/l (ppm)

The press release tells us that new technology now offers the potential to extract lithium from these hot spring brines and that high levels of lithium is due to the interaction between .

Very sensibly the company is also looking to utilise geothermal energy contained in the hot springs to generate power and reduce processing costs.

Wrathall’s budget contemplated a £5m spend in the exploration phase alongside a London listing.

Conclusion:  While we wish Wrathall every success with the proving and extraction of lithium from brines in Cornwall and we look forward to the development of the ‘Salar de South Crofty’ though we have to wonder how rates of solar evaporation will compare with projects in the Atacama and hope the recovery of geothermal energy proves to be sufficient to make up for the Cornish climate.

 

Hummingbird Resources (LON:HUM) 23.5p, Mkt Cap £80.7m – Yanfolila progress report

The company reports that plant construction at its Yanfolila development project in Mali remains on course and that a number of key items of construction equipment, including a tower crane, and process plant equipment including pre-rolled CIL [carbon-in-leach] tanks have now arrived on site.

The company also reports that it has started to drill a de-watering borehole in preparation for pre-mining dewatering of the pit.

Hummingbird has also announced that its civil engineering contractor, IMAGARI-SARL, has also been awarded the contract for structural, mechanical, piping and plate work during construction.

Conclusion: Hummingbird continues to progress the Yanfolila development. The appointment of the same civil engineering contractor to undertake additional key structural and mechanical engineering tasks should help streamline project management on site.

 

Lithium Americas (TSX:LAC) – reports US$174m strategic investment by Ganfeng Lithium

Lithium Americas Corp. has signed an investment agreement with Ganfeng Lithium (GFL International Co., Ltd.) for funding to advance the construction of the Cauchari-Olaroz lithium project in Jujuy, Argentina.

Ganfeng has agreed to finance US$174m and the right to buy a fixed portion of the lithium carbonate production from the Cauchari-Olaroz project as well as a US$125m project debt facility.

Ganfeng is buying 75,000,000 new shares at C$0.85/s for C$64m (US$49m) for 19.9% of the Company.

The Project Debt Facility has a term of six years, with an interest rate of 8.0% for the first three years that increases to 8.5% in year four, 9.0% in year five and 9.5% in year six;

Offtake: Ganfeng has agreed to purchase of up to 70% of Lithium Americas' share of Cauchari-Olaroz Stage 1 lithium carbonate production at market prices.

Ganfeng group is the largest integrated lithium producer in in China, with a total capacity of around 30,000 tonnes per annum of LCE.

Ganfeng also owns a 43.1% interest in the Mount Marion lithium spodumene project with Mineral Resources Ltd. (43.1%) and Neometals Ltd. (13.8%).

 

Orosur Mining (LON:OMI) 17.1 pence, Mkt Cap £17.1m – Anza gold exploration project

The company reports that a review of approximately 17,400m of drilling in 53 holes completed historically at its Anza gold project in the mid-Cauca gold belt of Colombia has outlined a potential exploration target estimated at between 1.6 to 2.3m tonnes at grades between 3.2 to 3.7g/t gold. We calculate that this target would represent between 165,000-275,000oz of contained gold.

The company, which has been assisted by the Reno-based consulting firm, Mine Development Associates, points out that this target covers a 2km strike length of a target, which is known to extend laterally both to the north and south and at depth, within a larger project of approximately 105 sq km. “The APTA [Aragon-Pastorera Trend Area] deposit is up to 200m wide and at least 2.5km long, with soil geochem showing gold content along the entire 7km Aragon fault. The Deposit is open on strike, at surface and down-dip”.

The Cauca Belt is host to a number of significant gold deposits, including Continental Gold’s Burtica deposit (4.7m oz), Red Eagle’s San Ramon deposit, located 70km from Anza (479 koz) and Metminco’s Miraflores deposit (840,000 oz).

Orosur plans to undertake a further 15-30,000 metres of drilling during 2017 with a view to establishing a maiden NI-43-101 compliant resource at Anza and also to test possible extensions and “nearby untested and highly prospective targets”.

“The site has environmental permits enabling both underground and open-pit mining operations.” The project contains two small scale gypsum mines, historically operated by a third party contractor. The company is currently assuming operatorship with a view to expanding the operations and fast-tracking the permitting for future gold mining.

Conclusion: The planned drilling should enable Orosur to establish a formal resource estimate for the Anza project in Colombia later this year. With the possibility of fast-tracking the permitting process as a result of the existing permits for industrial minerals production within the licence area, a successful resource drilling campaign could well see Orosur move rapidly towards establishing gold production.

 

Rambler Metals (LON:RMM) 9 pence, Mkt Cap £37.7m – Metallurgical results from Ming

Rambler Metals reports results of metallurgical testing to establish the use of dense-media-separation (DMS) technology as a pre-concentration step prior to milling at its Ming copper/gold mine in Canada.

Tests on approximately 2200 tonnes of low grade ore averaging approximately 0.8% copper was successfully upgraded to 1457 tonnes averaging 1.14% copper while recovering 93.6% of the contained copper.

The results are said to be consistent with similar test work during 2015 and also with smaller scale tests conducted previously by external experts including Lakefield Research.

The company “is now focussing its efforts on determining the economics of installing and operating a commercially sized DMS plant at the Ming Mine site in order to further optimise the economics of its mining and milling complex … DMS and shaft rehabilitation could further enhance project economics over the short and long term.”

The results of the company’s deliberations are expected in “a full analysis during the fall of 2017.”

Conclusion: Rambler Metals is implementing a series of innovations at its Ming mine in order to increase production through mining the Lower Footwall Zone. The shaft rehabilitation is aimed at increasing production to 2000tpd in the longer term and the DMS results provide encouragement that pre-milling concentration of lower grade ore is technically viable. We look forward to the results of the economic analysis on the benefits of these technical innovations.

 

Shanta Gold (LON:SHG) 10.5p, Mkt Cap £61m – New Luika Gold Mine operations beat guidance in 2016

Gold production totalled 18.9koz (Q3/16: 20.6koz; Q4/15: 29.1koz) reflecting the processing of lower grade material from stockpiles amid progressing underground development works at Bauhinia Creek.

The NLGM plant processed 152kt of ore (in line with its capacity) at 4.3g/t (Q3/16: 145kt at 4.9g/t; Q4/15: 156kt at 6.5g/t).

Q1 gold sales were 15.3koz at $1,187/oz (Q3/16: 23.4koz at $1,301/oz; Q4/15: 29.2koz at 1,087/oz).

Quarterly C1 and AISC came in at $486/oz and $747/oz, respectively (Q3/16: $387/oz and $621/oz).

Annual production was 87.7koz coming closer to the upper end of the guidance 82.0-87.0koz.

Annual average C1 and AISC costs came in at $433/oz and $661/oz (2015: $595/oz and $845/oz), beating guidance for $690-740/oz.

Net Debt reduced to $42.9m (Q3/16: $38.4m; 2015:$41.0m) with the closing cash balance of $15m (Q3/16: $25.8m).

Bauhinia Creek underground development works remain on target for the start of commercial production in Q2/17.

Feasibility Study works on the Ilunga deposit as well as an update of the mining plan is due for completion this quarter.

Annual guidance for 2017 released: 80-85koz in production at $800-850/oz AISC.

2017 production is expected to be weighed towards the H2/17 as the contribution from the high grade underground ore increases.

21koz in forward gold sales is outstanding from Jan to Aug at an average price of $1,318/oz.

Conclusion: Q4 rounded up a good year with the NLGM operations beating production and costs management guidance. Underground development operations continue on schedule with the management highlighting that the position and orientation of the ore matches design works. 2017 grades are likely to come down slightly as higher grade material from Bauhinia Creek is to start come in Q2/17 accelerating through H2/17. As such H2/17 should come in better than an average for the year in production and costs terms. An updated NLGM mining plan is due in Q1/17 which is due to extend the NLGM LoM with the addition of the Ilunga and new Elizabeth Hill reserves. Post the peak capex year in 2016, 2017 is expected to post a reduction in net debt given stable production levels and below average operating costs.

 

Solgold* (LON:SOLG) 30.5p, Mkt Cap £436m – Investors anticipate further copper, gold discovery at Cascabel

SolGold shares are seeing increasing investor interest based on the Cascabel discovery at Cascabel in Ecuador.

Investors are buying stock based on expectations for further kilometre-long intersections of mineralisation at the Alpala prospect, Cascabel.

While these huge intersections generally run from around 400-600m down hole they run for >1km and may join with a much larger mineralised body at greater depth.

Geophysical analysis of other targets within the Cascabel license area suggests that Alpala is not on its own and that further mineralised bodies should lie within easy reach of initial Alpala discovery.

Trenching and sampling of surface mineralisation offers tantalising clues of what might lie below these targets but only drilling can reveal their true scale.

Drilling of these targets should hopefully prove the hypothesis for a number of very large mineralised masses extending toward the surface from a much larger feeder zone at around 2km depth.

The geological and drilling teams are clearly excited by the prospects of pulling out such long sections of mineralised material and the implications of the potential to repeat the Alpala discovery on other targets.  Their enthusiasm comes across in the company’s latest explanatory video.

The team have identified a total of 14 targets within the licence area and the crews should start drilling some more prospective sites as new rigs arrive.

The deployment of additional drilling equipment is set to ramp up through the year with a fourth rig working on Alpala from next month and a fifth rig to be assigned to the Alpala South area, approximately 1km southeast of the current area in March.

Newcrest have bought into SolGold for the discovery at Cascabel and as experts in block caving are interested in the economic potential the discovery presents.

BHP were also sufficiently interested in Cascabel’s Alpala discovery to submit an offer though Newcrest gained a first mover advantage in their funding.

Codelco, the giant Chilean copper miner, are also back in Ecuador with a joint venture with Enami EP to explore an estimated $200bn worth of untapped copper reserve at the Llurimagua deposit just 70km south of Cascabel.

Ecuador, once seen as a difficult state in Latin America now joins the ranks of reforming nations in Latin America after the slow realisation that Socialism/Communism only seems to enrich the ruling elite and that Capitalism, for its many flaws seems to lead to a better outcome for all.

The President and Minister of Mines have been working on significant improvement to the current mining legislation through tax reforms and incentives.  The state recently agreed an investment protection agreement with Lundin Gold which will pay advance royalties of $65m to the government of Ecuador.  Key areas are capital depreciation, tax shields and deferrals, import duties, VAT recover and most importantly windfall taxes which are now only paid after a full return of capital and only applies to copper prices of >$4/lb.

SolGold have a form of first mover advantage in its discovery at Cascabel with its activities closely followed by Lundin Mining who acquired the multi-million ounce Fruta del Norte gold project from Kinross when they sold out in 2014.  But, the team has more work to do to produce a JORC compliant resource at Alpala and may continue to evaluate the prospect for some time before working through the economic parameters required by the new JORC code for a detailed resource estimate.

Geologically fractures in the Andean plate has enabled the creation of large scale porphry mineralisation at points from Patagonia through to Panama and Mexico.  A disproportionate number of the world’s largest copper mines lie on these structures many more yet to be discovered.  The geologies of Chile and Peru are well known but the politics of Ecuador, Colombia and Panama mean that much remains to be discovered in these regions.

The Alpala discovery is interesting from a bulk-scale block caving perspective with its huge column of higher-grade copper, gold mineralisation.  The mineralisation could be accessed via a long adit using the topography of the land to drive into a point close to the base of the current drilling.  Alternatively a shaft could be sunk for access.  Both methods have the advantage of minimising the footprint of the mine and limiting its environmental impact.

Newcrest are developing the $2.3bn Wafi-Golpu project in PNG in joint venture with Harmony Gold Mining.  Wafi-Golpu has a large mineral resource of 8.6mt copper and 18.6moz of gold with planned peak production of 150,000tpa of copper and 320,000ozpa gold in 2025.  Newcrest reported a year ago an NPV for stage one of the Wafi-Golpu project at US$1.1bn and an IRR of 15%.

Some investors reckon Cascabel could become another Grasberg based on the scale of the mineralisation.  Grasberg is the world’s tenth largest copper mine according to a list on ‘Mining Technology’.  A resource of sufficient scale to rank close to the world’s top ten copper mines would be of great interest to the major mining companies and could lead to a bidding war for the asset among the major players.

See 2017 corporate video for a good representation of the Cascabel project  http://www.solgold.com.au/videos/

A new company presentation is also available:

https://static1.squarespace.com/static/560a5feee4b0a63bf47c76f5/t/58765899e6f2e1ab23aab391/1484150944798/SOLGOLD_January_2017.pdf

Conclusion: For now investors are looking for Cascabel to become the next big copper discovery in Latin America.  SolGold is well funded with $43m of cash to advance its discovery at Alpala and to test other targets within the Cascabel license area.  The team are excited about the potential to make further Alpala-like discoveries and for the potential for these to connect at depth.  There is also potential for some near-surface copper, gold mineralisation to provide for a near-term development proposal.

]]>
Thu, 19 Jan 2017 11:08:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/26920/today-s-market-view-acacia-mining-hummingbird-resources-ltd-lithium-americas-orosur-mining-inc-rambler-metals-and-mining-plc-shanta-gold-limited-solgold-plc-26920.html
Sound Energy http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26919/sound-energy-26919.html A flash blog on Sound this morning but a genuine keynote deal to mention let alone a very good EWT reported by the company.

The EWT has clearly been a significant success and in line, or better than the company had expected. Just under 1 BCF was produced in 56 days of continuous flow and they have now started the final pressure build up phase. This is consistent with pre-test estimates and confirms good deliverability of the TAGI reservoir, it justifies the horizontal well and shows ‘significant potential’. Flow rates were were limited to 40% draw-down to preserve completion integrity and good average rates were achieved over decreasing choke sizes. With no formation water and no indication of barriers detected Sound will now check pressures at TE-5 and TE-6 for connectivity. The last piece of this jigsaw for now is the TE-8 well for which a fair bit of valuation lies, civil works are under way some 12km away from TE-7  and the company are expecting to spud next month.

In another announcement this morning the company has proposed that they acquire OGIF’s interests in Eastern Morocco for shares at what seems like an attractive discount. OGIF is a Moroccan fund owned by six large local institutions including the largest Bank and Pension Fund amongst others. The influence and access to capital in country should not be dismissed lightly and I suspect that the interest that OGIF may have in getting involved in the infrastructure solutions may help identify these with such help from the new shareholder.

The deal gives Sound and its shareholders a very strong position, by buying in before the outpost well is drilled gets an early start and the 30% discount to core NAV might achieve even more. This is hugely accretive to Sound and delivers scale on an impressive basis (75% gross, 47.5% net of Tendrara and 75% gross of Meridja), should this asset prove to be as big as some expectations, then it prepares the way for a classic asset sale if a suitor with deep pockets were to come along. These are exciting times for faithful retail holders, supportive Continental, and now OGIF who bring a local interest to the play engineered by Sound’s strong and enterprising management.

]]>
Thu, 19 Jan 2017 10:42:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26919/sound-energy-26919.html
Breakfast News - AIM Breakfast : AFH Financial Group, Aggregated Micro Power Holdings plc, Cello Group plc, Cyan Holdings PLC, EU Supply, Orosur Mining Inc, PowerHouse Energy, Portmeirion, Mission (the) Marketing Group plc http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26918/breakfast-news-aim-breakfast-afh-financial-group-aggregated-micro-power-holdings-plc-cello-group-plc-cyan-holdings-plc-eu-supply-orosur-mining-inc-powerhouse-energy-portmeirion-mission-the-marketing-group-plc-26918.html What’s cooking in the IPO kitchen?

SuperAwesome — The London based specialist in e-compliance is considering an IPO in its home town according to City A.M.

Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas  exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise.

Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.

   
Breakfast buffet

Powerhouse Energy Group (LON:PHE) 0.83p £5.02m

The holding Company of the G3-UHt System Ultra High Gasification waste to energy systems has entered into an agreement to raise gross proceeds of £250,000 via a placing at 0.7p with Yady Worldwide. Keith Allaun, Executive Chairman of PowerHouse said: “We welcome Yady Worldwide as a significant investor in PowerHouse. Yady Worldwide’s commitment to the burgeoning Hydrogen Economy, as well as waste-to-energy sector, is underscored by its investments in both Waste2tricity plc and AFC Energy plc. We look forward to having them on board to assist with our commercial roll-out and growth.”

Orosur Mining (LON:OMI) 17.125p £17.1m

Exploration update from the South American-focused gold producer, developer and explorer. Orosur has completed a preliminary geological model for the Aragon-Pastorera Trend Area (APTA) of the Anzá project, based predominantly on 17,408m of existing diamond core drilling data from 53 holes previously drilled. 3,000m of this core has been re-logged, with special attention given to the lithology, alteration suites, structural trends and grade distribution. A geological estimate of an exploratory gold potential of a portion of the APTA has been prepared with the assistance of Mine Development Associates of Reno, Nevada. The resulting potential ranges between 1.6 M - 2.3 M tonnes averaging between 3.2 - 3.7g/t Au. This estimate is based on current drilling and is expected to grow as future exploration drilling is conducted.

The Mission Marketing Group (LON:TMMG) 45p £37.85m

The marketing    

communications and advertising group, today issued a FYDec16 trading update. Strong second half, and accordingly the Company expects 2016 to be a year of further growth, both in terms of operating income (revenue) and profitability. Headline profit before tax for the year to 31 December is expected to be 8% higher, at £7.0m.  The Company's balance sheet remains strong and, despite settling over £3m of acquisition obligations during the year, gearing and debt leverage ratios are expected to be lower than those of 2015 and comfortably within the Board's target.

CyanConnode Holdings(LON:CYAN) 0.2p £31.6m

FYDec16 trading update from the specialist in narrowband radio mesh networks. Trading for the period was in line with management's expectations with revenues of approximately £1.8m, which is an increase of 560% compared to the same period last year. Cash, as of 31 December 2016, was £3.9m. Importantly, a significant portion of revenue growth was underpinned by the PVVNL and CESC deployments in India and the long-term nature of subsequent contract wins provides improved visibility going forward, with order backlog from existing contracts going into 2017.

Cello Group (LON:CLL) 99.85p £87.14m

The healthcare focused strategic marketing group, today announced a FYDec16 trading statement.   The Group has delivered an encouraging trading performance in the year, with gross profit and headline profits in line with consensus market expectations. Good like-for-like gross profit growth at Cello Health. US remains  key growth driver. Strong like-for-like growth in gross profit and improved double digit operating margins by Signal. Excellent performance from Cello's growing suite of software-enabled products providing increased future gross profit visibility. Strong balance sheet, despite settlement of VAT liability, reflecting solid cash flow conversion. Increased dividend pay-out in line with intention to distribute c.40% of headline  earnings. FY16E PE 11.9x.

TMT Investments* $1.7 $47.2m

The venture capital company investing in high-growth, internet-based companies across a variety of core specialist sectors yesterday announced that its portfolio company Pipedrive, Inc. has completed a US$17m Series B equity financing round, led by Atomico, with participation from Bessemer Venture Partners and Rembrandt Venture Partners.
The transaction represents a revaluation uplift of approximately US$4.08m (or 132%) in the fair value of TMT's investment in Pipedrive, compared to the previous announced amount as of 30 June 2016, and is equivalent to approximately 14.7 cents in additional net asset value per TMT share last announced as US$1.91 as at 20 June 2016.

AFH Financial Group (LON:AFHP) 162.5p £39.2m

The financial planning led wealth management firm, announced the acquisition of the assets of Aberdeen Wealth Management Limited, an Aberdeenshire based IFA, and Shield Direct, a Devon based IFA.  The maximum consideration for Aberdeen is £556.5k and £520k for Shield. The acquisitions are AFH's second and third corporate transactions of the current financial year and will add approximately £44m to group Funds under Management.

EU Supply (LON:EUSP) 12p £8.1m

The e-procurement software provider, has entered into a contract with Vest-Agder County Council in southern Norway for up to 35 local authorities and other public sector bodies to use EU Supply's CTMTM platform. The contract is expected to generate total revenues of approximately £250k over 8 years, including licenses and support, implementations and integrations, of which approximately £65k of revenues is anticipated to be received in 2017. In addition, EU Supply has entered into three new contracts for customer-paid enhancements of its CTMTM platform with two existing customers, which are expected to generate over £80k in revenues in 2017. Likely to move revenue and costs ahead of FY17E (£3.3m) with profitability in line (£1.15m PBT loss.)

Aggregated Micro Power Holdings (LON:AMPH) 68p £25.7m

The specialist in the sale of wood fuels and the development of distributed energy projects has secured £14.1m of funding for the financing of its first peaking plant project Ashford Power Limited. The project is situated on the Kingsnorth Industrial Estate in Kent and is for 21MW of natural gas reciprocating engines selling power to the grid at times of peak demand.  The project  will begin construction immediately with commercial operations expected to start before 1st October 2017.  Finance was provided from funds managed by Triple Point Investment Management LLP and Triple Point Lease Partners.

Portmeiron Group (LON:PMP) 947.5p £102m

The manufacturer and worldwide distributor of high quality homewares under the Portmeirion, Spode, Royal Worcester and Wax Lyrical brands confirmed that it expects profit before taxation for the year to 31 December 2016 to be slightly ahead of market expectations (FY16E £7.5m).  The Group expects to report record revenues for the year ended 31 December 2016 of over £76m, an increase of at least 11% above the previous year

]]>
Thu, 19 Jan 2017 09:47:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26918/breakfast-news-aim-breakfast-afh-financial-group-aggregated-micro-power-holdings-plc-cello-group-plc-cyan-holdings-plc-eu-supply-orosur-mining-inc-powerhouse-energy-portmeirion-mission-the-marketing-group-plc-26918.html
VSA Capital Market Movers - Acacia Mining http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26917/vsa-capital-market-movers-acacia-mining-26917.html Acacia Mining (LON:ACA)

Acacia Mining (LON:ACA) has announced strong production results for Q4 2016. Production of 213koz was up 6% YoY resulting in record full year production of 830koz, up 13% YoY. Higher throughput and stronger recoveries offset a marginal YoY decline in grade driving cash costs down by 7% YoY whilst AISC were down 5% YoY to US$952/oz. For the full year AISC of US$958/oz, down 14% YoY, indicates strong free cash flow generation, which given the stronger gold price for much of the year, resulted in net cash rising from US$114m to US$219m.

Although full year guidance was not provided at this time, ACA indicated that production at Buzwagi would be extended by six months to the end of 2017 before two years of stockpile processing. This will likely result in an increase in annual production from 162koz in 2016 at Buzwagi.

It was announced recently that ACA is in talks to merge with TSX listed Endeavour Mining (EDV CN). EDV has assets in Mali, Ghana and Ivory Coast. EDV produces less gold per annum at below 625koz, however, this at a lower AISC of less than US$920/oz. EDV is currently capitalised at C$2.17bn (£1.3bn) versus ACA at £1.78bn. The merger would create a geographically diversified Sub-Saharan gold producer with significant growth potential from EDV’s Hounde project in Burkina Faso. With the gold price likely to be volatile in 2017, the strong cost position of both firms places them in a strong position.

]]>
Thu, 19 Jan 2017 08:41:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26917/vsa-capital-market-movers-acacia-mining-26917.html
In the Papers - Credit Suisse, EE, Goldman Sachs, Premier Foods http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26916/in-the-papers-credit-suisse-ee-goldman-sachs-premier-foods-26916.html Newspaper Summary

The Times

Corporate Britain takes a pounding: Troubles abroad, soaring commodity prices, rising wages and the slump in the pound hit corporate Britain hard, with some of its biggest companies issuing profit warnings.

EE fined £2.7 million for continental drift:  the mobile telecoms company was hit with a £2.7 million fine and forced to offer a grovelling apology to the 32,000 customers affected, as well as hading over full refunds, after admitting to the error, which occurred between July 1, 2014, and July 20 last year.

Burberry’s best of British is back in vogue: The weak pound that has lured shoppers from all over the world to London has paid off handsomely for Burberry.

400 jobs go as Clydesdale and Yorkshire banks cut branches by third: Clydesdale Bank and Yorkshire Bank are to close one third of their branches this year with the loss of 400 jobs and potential inconvenience to tens of thousands of account-holders.

Australia raises hopes of Brexit deals for trade without barriers: Britain is ideally placed to secure a services-based trade agreement with Australia, the country’s trade Minister said.

Rolls-Royce Bosses face bribery charges: The Serious Fraud Office is within weeks of bringing criminal prosecutions against individuals caught up in the Rolls-Royce bribery scandal, one of the biggest corruption cases in British corporate history.

French lift stakes again for Lavendon: The takeover battle for Lavendon has hit new heights, with the latest bid for the aerial platform plant hire group valuing it at £459 million, more than double where the shares were at the start of the struggle nearly three months ago.

Ivy creeping to all corners of the capital: The Ivy may be celebrating its centenary this year, but the billionaire owner of the Covent Garden institution is not resting on his laurels. Richard Caring has opened six restaurants in London and one in Bristol, all based on the celebrity haunt. Another eight are in the pipeline for the next six months.

The Independent

Signs of slowdown in house sales in latest RICS survey: There was a drop in house sales activity in December according to the latest Royal Institution of Chartered Surveyors survey, suggesting that the overall housing market might be slowing.

Goldman Sachs and Citigroup toast Donald Trump profits windfall: Goldman Sachs and Citigroup both reported fourth-quarter profit that surpassed analysts’ estimates as a bond-trading revival spurred by Donald Trump’s surprise victory lifted earnings across Wall Street.

Fewer than half of small businesses predict they will grow in 2017: Fewer than half of the U.K.’s small and medium-sized businesses believe they will grow in 2017, new research has revealed.

Trump a ‘bizarre’ reflection of people’s discontent with inequality: Lawrence Summers, the former U.S. Treasury Secretary, said the U.S. has just elected “the world’s biggest example of conspicuous consumption.”

IMF’s Lagarde says ‘I told you so’ on populist backlash: The managing Director of the International Monetary Fund said that she experienced a fierce backlash from leading economists when she first warned on the impact of rising equality some four years ago.

More signs of cooling in jobs market after Brexit vote: The numbers in employment slipped for a second successive month in the quarter to November in a tentative sign of the labour market slowing in the wake of last June’s Brexit vote.

Economists criticise May for trying to ‘have her cake and eat it’: Top economists and strategists have warned that Theresa May’s vision of Brexit lacks credibility and clarity, a day after the Prime Minister delivered an agenda-setting speech on Britain’s future outside the EU.

Deutsche Bank agrees to pay £5.8 billion fine over role in subprime crisis: Deutsche Bank agreed to pay $7.2 billion (£5.4 billion) in the U.S. for its illegal conduct and “irresponsible lending practices” before the financial crisis, the Justice Department said on Tuesday.

The Daily Telegraph

Fallon under pressure as Pearson shareholders back board to oust him in wake of fifth profit warning: Pearson Chief Executive John Fallon is under mounting pressure as investors in the education giant backed its board to oust him if necessary in the wake of a profit warning that sent the shares plunging to their lowest level in 14 years.

Yellen signals further rate rises as U.S. economy storms ahead: Janet Yellen, the chairman of the U.S. Federal Reserve, said the economy had come a long way in recovering from the 2008 financial crisis and that she and her colleagues expect the central bank to raise interest rates “a few times a year” until 2019.

Moody’s warns on House of Fraser outlook: House of Fraser’s recent upbeat festive trading hasn’t convinced credit rating agency Moody’s which lowered its outlook for the department store chain.

Premier Foods’ shares tank on profit warning and rising costs: Premier Foods’ shares have crashed by 16% after the Mr. Kipling maker warned that its profits would be 10% lower than it had hoped.

Deutsche Bank takes the axe to staff bonuses: Deutsche Bank announced massive cuts to its annual bonus scheme on Wednesday, as it looks to absorb the impact of a record $7.2 billion (£5.6 billion) fine in the U.S.

Ladbrokes Coral profits on track despite wrath of ‘sporting gods’: Ladbrokes Coral is on track to hit its profit targets for 2016, despite a series of sporting upsets in late December. The newly formed gambling giant said its profits for the year would be in the range expected by the market at between £275 million - £285 million, with £179 million of that coming from Ladbrokes and £101 million from Gala Coral.

The Questor Column:

It’s not cheap, but this unique Aim stock boasts great growth potential: Despite high valuations, there are companies whose growth prospects are strong enough to warrant a look, particularly if investors are prepared to hold stocks for several years. Pet treatments are, as in the world of human medication, becoming more comprehensive, complex and costly. Animal owners will pay through the nose for vaccinations, surgery, accessories and even cemetery spaces, while spending is sustained at the expense of discretionary items during downturns or periods of rising inflation. Mark Slater, of the eponymous investment company, is one major fan. CVS now accounts for 4.4% of Mr. Slater’s £400 million MFM Slater Growth portfolio and is the third-largest holding. This has been one of the top-returning British-invested funds in recent years, doubling investors’ cash over the past five. CVS is expanding rapidly – it acquired 68 surgeries in 2016 alone – and just last month secured £30 million of new spending to fuel expansion both here and in the Netherlands, a market it entered last year. While over 90% of its revenue comes from its 380 practices, income from its portfolio of crematoria doubled over its last financial year and its laboratory division pulled in 13% more cash than in 2015. In September last year, Questor had CVS as a hold at its price of 945p. It is higher now, closing up 10p at £10.82, but is a speculative buy for investors prepared to wait. Questor says ‘Speculative Buy’.

The Guardian

Middle classes in crisis, IMF’s Christine Lagarde tells Davos 2017: The head of the International Monetary Fund, Christine Lagarde, has called for urgent action to tackle a “middle-class crisis” hitting working people as she warned that inequality, distrust and a lack of hope were fuelling growing populism.

Top Trump adviser says post-Brexit trade deal feasible within a year: Teresa May’s hopes of striking a trade deal with the incoming Donald Trump administration have been given a boost after a leading adviser to the President-elect said a new accord could be achieved within six to 12 months.

Royal Albert Hall called a ‘national disgrace’ over members’ ticket resales: Royal Albert Hall members have exchanged detailed advice on how to sell their seats on ticket touting sites, prompting the venue’s former President to label its stewardship a “national disgrace”.

Pearson profit warnings wipe almost £2 billion off its value: Almost £2 billion was wiped from the stock market value of Pearson after the beleaguered FTSE 100 company issued profit warnings for the next two years and said it would cut its payout to shareholders.

Daily Mail

Fitness tech firm Fitbug forced to suspend trading as share price quadruples after it announces major new customer: Fitness tech firm Fitbug was forced to suspend trading after its share price quadrupled when it announced it had won a major new customer. Shares started the day at 0.17p and climbed as high as 1.07p in the afternoon before easing off.

World’s largest oil company could join London stock market in major boost to Britain following Brexit vote: The world’s largest oil company could join the London stock market in a major boost to Britain following the Brexit vote. At the World Economic Forum in Davos, state-owned Saudi Arabian Oil Company, commonly known as Saudi Aramco, told how it was planning the biggest-ever stock market listing that could value the firm at £1.9 trillion.

New Boss of troubled outsourcing firm Mitie cleans decks as firm issues its third profit warning since September: The new Boss of troubled outsourcing firm Mitie has cleaned the decks as the firm issued its third profit warning since September. Phil Bentley, former Boss of British Gas, has sacked a number of staff in the firm’s cleaning division, and let the finance Boss go as he seeks to rescue Mitie.

Daily Express

Tim Martin blasts establishment’s ‘semi-religious’ belief in EU and calls for free-trade: Establishment experts and politicians have a “semi-religious” belief in the European Union (EU) that will lead them to repeat judgement errors over the economy and trade amid Brexit negotiations, Wetherspoon Boss Tim Martin has warned.

Theresa May to meet with Wall Street bankers in Davos and outline hard Brexit vision: Theresa May is to meet Bosses from some of Wall Street’s biggest firms after banks threatened to move jobs out of the U.K. amid a so-called hard Brexit.

Brexit boom: Wages UP and unemployment falls proving doom-mongers wrong again: Wages were rising in the months after the Brexit vote while unemployment fell, as Britain’s strong economy continued to prove doom-monger Remain warnings wrong, official data revealed.

Savers warned about risks of absolute return funds: Older investors and pensioners may be putting their savings in jeopardy by investing in supposedly low-risk absolute return funds. Millions of hard-pressed savers have been advised to invest in targeted absolute return funds, which aim to deliver a higher return than cash, but with less volatility than the stock market.

The Scottish Herald

‘Co-op is back’ after revealing surge in sales during Christmas period: The Co-operative Group declared it was “back” after cheering surging sales in its Christmas quarter, boosted by a push to sign up more customer members.

UBS wealth managers eye growth in Scotland: The head of UBS’s wealth management business in Scotland, Debjani Raffan, says it sees plenty of room to grow in the country and shrugged off concerns about the possibility of another independence referendum.

Pound slips back after surge following Theresa May’s Brexit speech: The pound lost its footing on Wednesday as the dollar strengthened and investors backtracked on initial enthusiasm around Prime Minister Theresa May’s Brexit speech.

HSBC set to shift 1,000 jobs to Paris over U.K. departure from single market: The Boss of HSBC has said the bank is on course to move 1,000 jobs from its London business to Paris after Prime Minister Theresa May confirmed Britain will scrap its single market membership after Brexit.

The Scotsman

Farming industry anger after PM signals single market exit: If a quick and comprehensive trade deal giving U.K. farmers continued access to their European markets cannot be achieved, transition arrangements that avoid the Brexit “cliff edge” will be vital to allow the industry time to adapt, farming leaders have argued.

Lettings market tipped for return to growth this year: Residential rentals are forecast to rise this year in the wake of an “uncharacteristic” dip at the end of 2016.

Graham’s targets fitness fans with protein-packed snack: Graham’s The Family Dairy has secured supermarket shelf space for its latest product, a protein-packed snack aimed at health-conscious consumers.

Offshore firms ‘lock out’ local traders from Google ads: The Boss of an Edinburgh-based digital marketing agency has hit out at overseas companies that he claims are “distorting” online competition for local tradespeople.

Scots retailers boosted by 4.3% rise in festive sales: Retail sales north of the Border increased 4.3% in December, providing a boost for businesses over the vital Christmas period.

City A.M.

JP Morgan Chase to fork out $55 million to settle mortgage discrimination claims: JP Morgan Chase has agreed to pay $55 million (£44.9 million) to put to bed claims that it charged borrowers from minority backgrounds more for mortgages.

These peer-to-peer platforms lent nearly £3 billion in 2016: Nearly £3 billion was lent across the U.K.’s biggest peer-to-peer platforms last year, new figures out showed.

Theresa May is expected to launch a consultation on her flagship industrial strategy next week: Prime Minister Theresa May is expected to launch a consultation on her much-heralded industrial strategy early next week.

Goldman Sachs predicts healthcare M&A flurry, helped by Donald Trump: Wall Street giant Goldman Sachs is predicting a mergers and acquisitions (M&A) flurry in the healthcare sector this year, helped by Donald Trump.

U.K. wages grow at fastest rate since September 2015, while unemployment rate retains 11-year low: Wages grew faster than expected at the end of 2016, while unemployment stayed steady at 4.8%, as the U.K. labour market showed little sign of any short-term Brexit effect.

Now it’s Credit Suisse’s turn to sign off on its Department of Justice fine for $5.3 billion: Credit Suisse has finalised its agreement to settle for $5.3 billion (£4.3 billion) with the U.S. Department of Justice (DoJ) for mis-selling mortgage-backed securities in the lead-up to the financial crisis.

]]>
Thu, 19 Jan 2017 08:34:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26916/in-the-papers-credit-suisse-ee-goldman-sachs-premier-foods-26916.html
Market Briefing - UK markets finished in positive territory yesterday, helped by gains in consumer goods and basic material shares http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26915/market-briefing-uk-markets-finished-in-positive-territory-yesterday-helped-by-gains-in-consumer-goods-and-basic-material-shares-26915.html UK Market Snapshot

UK markets finished in positive territory yesterday, helped by gains in consumer goods and basic material shares. Burberry Group advanced 3.6%, following better than anticipated retail sales growth for the third quarter, boosted by a return to growth in the Asian-Pacific markets. Hikma Pharmaceuticals climbed 2.2%, after its US subsidiary, Roxane Laboratories, received approval from the US Food and Drug Administration for its narcolepsy drug. HSBC Holdings edged 1.8% up, after the bank stated that it would have to move 1000 London jobs to its Paris office on account of Brexit. On the losing side, Pearson sank 29.1%, after the company trimmed its profit outlook for 2017 and warned about a dividend cut amid decline in its North American business. The FTSE 100 advanced 0.4%, to close at 7,247.6, while the FTSE 250 rose 0.4%, to settle at 18,312.8.

US Market Snapshot

US markets closed mostly higher yesterday, led by gains in banking sector stocks. JP Morgan Chase, Morgan Stanley and Bank of America climbed 0.5%, 1.7% and 2.6%, respectively. CoLucid Pharmaceuticals rallied 32.5%, after Eli Lilly, up 0.9%, announced that it will acquire the company for about $960.0 million. Apollo Global Management added 0.8%, after media reported that the company is preparing to take Chuck E. Cheese public. On the flipside, Cameco sank 18.2%, after the company projected a net loss for 2016 due to continued weak markets and announced that it would cut 10.0% of its workforce. Mallinckrodt fell 5.9%, following news that the Federal Trade Commission is preparing to file charges against the company for using its monopoly to raise the prices of a drug. The S&P 500 gained 0.2%, to settle at 2,271.9. The DJIA shed 0.1%, to settle at 19,804.7, while the NASDAQ advanced 0.3%, to close at 5,555.7.

Europe Market Snapshot

Other European markets ended mostly higher yesterday, with investors digesting a number of corporate updates. ASML Holding jumped 6.7%, after it reported upbeat results for the fourth quarter and its forecast for the first quarter surpassed market estimates. Gerresheimer climbed 6.3%, following a broker upgrade on the stock to ‘Buy’ from ‘Hold’. Deutsche Bank added 0.9%, after the bank agreed to pay $7.2 billion in a settlement with the US Justice Department over the mortgage misconduct allegations. Sanofi advanced 0.5%, as the company received marketing authorisation for its drug ‘Suliqua’ in Europe by the European Commission.  Bucking the trend, Novozymes tumbled 4.7%.  The company posted upbeat fourth quarter results but revealed its plan to cut 198 jobs. The FTSEurofirst 300 index gained 0.2%, to close at 1,434.0. Among other European markets, the German DAX Xetra 30 rose 0.5%, to close at 11,599.4, while the French CAC-40 shed 0.1%, to settle at 4,853.4.

Asia Market Snapshot

Markets in Asia are trading mostly higher this morning. In Japan, exporters, Honda Motor and Sharp have gained 2.6% and 6.0%, respectively, amid a weaker Japanese Yen. However, Toshiba has plunged 19.1%, on the back of reports that loss at its US nuclear business could be around $6.1 billion and the company was mulling a spin-off of its semiconductor business. In Hong Kong, Cathay Pacific Airways has tumbled 4.4%, after its strategic review lacked details about its plans to cut jobs and flights to save money. Trinity has declined 1.7%, after news emerged that the company is closing its last factory in Hong Kong. In South Korea, Samsung Electronics and POSCO have risen 0.7% and 3.7%, respectively. The Nikkei 225 index is trading 0.7% higher at 19,029.4. The Hang Seng index is trading 0.6% down at 22,962.0, while the Kospi index is trading marginally higher at 2,070.6.

Key Corporate Announcements Today

AGMs

Cardiff Property

EGMs

Industrial Mlulti Propety Trust

Final Ex-Dividend Date

Baring Emerging Europe, Compass Group, Dewhurst, Shaftesbury, Third Point Offshore Investors Limited, Third Point Offshore Investors Ltd. GBP Shares, UDG Healthcare Public Limited Company

Interim Ex-Dividend Date

Aberdeen Asian Income Fund Ltd., Alcentra Euorpean Floating Rate Income Fund Ltd Red Ord Shs, Amedeo Air Four Plus Limited, Ashtead Group, Bilby, Consort Medical, Coral Products, Doric Nimrod Air One Ltd, Doric Nimrod Air Three Limited Red Ord Pref Shs Npv, Doric Nimrod Air Two Ltd Pref Shs Npv, Ediston Property Investment Company, Empiric Student Property, Fletcher King, London & St lawrence Inv Co., North American Income Trust (The), SSE, Supergroup, Twentyfour Income Fund Limited Ord Red, TwentyFour Select Monthly Income Fund Limited, UK Mortgages Limited

Interim Dividend Payment Date

Crystal Amber Fund Ltd., Electra Private Equity, JPMorgan Global Markets Emerging Income Trust

Quarterly Ex-Dividend Date

Custodian Reit

Trading Announcements

Halfords Group, Revolution Bars Group, British Land, Brown (N), Evraz, Moneysupermarket.com, Pets at Home, Royal Mail, Workspace, Acacia Mining

Key Corporate Announcements for Tomorrow

AGMs

Avacta Group, Character Group, Redefine International

EGMs

PJSC Megafon GDR (Reg S)

Final Dividend Payment Date

Cambria Automobiles, Scottish Oriental Smaller Companies Trust

Interim Dividend Payment Date

BlackRock Commodities Income Inv Trust, Charles Stanley Group, Greene King, Halfords Group, Octopus AIM VCT, Sirius Real Estate Ltd., Solid State, Stobart Group Ltd., United Carpets Group, Vertu Motors

Quarterly Payment Date

Real Estate Investors

Trading Announcements

Close Brothers Group, Record, Bonmarche

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.82% or $0.44 higher at $54.36 per barrel, ahead of the Energy Information Administration weekly crude stockpiles data in the US, scheduled to be released later today. Yesterday, the contract declined 2.79% or $1.55, to settle at $53.92 per barrel, amid expectations that US producers would boost their crude output. Meanwhile, the American Petroleum Institute reported that US crude oil inventories dropped by 5.0 million barrels for the week ended 13 January 2017.

Gold

At 0430GMT today, Gold futures contract is trading 0.79% or $9.60 lower at $1202.50 per ounce. Yesterday, the contract slid 0.07% or $0.80, to settle at $1212.10 per ounce, as the US Dollar gained ground against its major peers following the US Federal Reserve Chairwoman, Janet Yellen’s comments regarding interest rate hikes this year.

Currency

At 0430GMT today, the EUR is trading 0.08% higher against the USD at $1.0638, ahead of the European Central Bank’s (ECB) interest rate decision, scheduled for today. Additionally, market participants will monitor the Euro-zone’s current account data for November, slated to release in a few hours. Yesterday, the EUR weakened 0.77% versus the USD, to close at $1.0630.

At 0430GMT today, the GBP is trading 0.13% higher against the USD at $1.2273. Investors will look forward to the US initial jobless claims data for the week ended 13 January 2017, Philadelphia Fed manufacturing survey for January along with housing starts and building permits data for December, set to release later in the day. Yesterday, the GBP fell 1.26% versus the USD, to close at $1.2257. Meanwhile, economic data showed that the US consumer price index rose as expected in December, further strengthening the case for an aggressive rate hikes in 2017.

Fixed Income

In the US, long term treasury prices fell and pushed yields sharply higher, after reports showed that US consumer prices climbed as expected in December, indicating signs of rising inflation. Yesterday, yield on 10-year notes surged 9 basis points to 2.42%, while yield on 2-year notes jumped 6 basis points to 1.23%. Meanwhile, 30-year bond yield soared 7 basis points to 3.00%.

Key Economic News

Number of unemployment benefits claimants in the UK recorded a rise in December

In the UK, number of unemployment benefits claimants recorded an increase of 2.30 K in December, following a gain of 2.40 K in the previous month. Market expectation was for number of unemployment benefits claimants to rise 5.00 K.

UK average earnings excluding bonus rose more than expected in the September-November 2016 period

In the September-November 2016 period, the average earnings excluding bonus in the UK registered a rise of 2.70% on an annual basis, compared to an advance of 2.60% in the August-October 2016 period. Markets were expecting the average earnings excluding bonus to climb 2.60%.

UK ILO unemployment rate remained flat in the September-November 2016 period

The ILO unemployment rate in the UK remained steady at 4.80% in the September-November 2016 period, meeting market expectations.

UK claimant count rate steadied in December

In December, the claimant count rate remained flat at a level of 2.30% in the UK, at par with market expectations.

Employment in the UK registered a drop in the September-November 2016 period

In the UK, employment recorded a drop of 9.00 K in the September-November 2016 period, less than market anticipations of a decline of 35.00 K. Employment had recorded a decline of 6.00 K in the August-October 2016 period.

UK average earnings including bonus rose more than expected in the September-November 2016 period

On an annual basis, the average earnings including bonus registered a rise of 2.80% in the September-November 2016 period, in the UK, compared to a revised rise of 2.60% in the August-October 2016 period. Market anticipation was for the average earnings including bonus to advance 2.60%.

UK house price balance recorded a surprise drop in December

In December, house price balance in the UK fell unexpectedly to a level of 24.00 %, compared to market expectations of a rise to a level of 30.00 %. In the prior month, house price balance had registered a revised level of 29.00 %.

Euro-zone construction output recorded a rise in November

On a MoM basis, the seasonally adjusted construction output advanced 0.40% in November, in the Euro-zone. Construction output had registered a revised similar rise in the previous month.

Euro-zone core CPI advanced as expected in December

In December, the final core consumer price index (CPI) rose 0.90% in the Euro-zone, on a YoY basis, at par with market expectations. The core CPI had registered a rise of 0.80% in the prior month. The preliminary figures had also recorded a rise of 0.90%.

Euro-zone CPI rose as expected in December

The CPI rose 0.50% on a monthly basis in December, in the Euro-zone, at par with market expectations. In the previous month, the CPI had fallen 0.10%.

Euro-zone CPI advanced as expected in December

On a YoY basis, the final CPI rose 1.10% in the Euro-zone, in December, at par with market expectations. The preliminary figures had also recorded a rise of 1.10%. The CPI had advanced 0.60% in the prior month.

German CPI rose as expected in December

The final CPI in Germany climbed 1.70% in December on an annual basis, in line with market expectations. The preliminary figures had also recorded a rise of 1.70%. In the prior month, the CPI had risen 0.80%.

German HICP rose as expected in December

In December, the final harmonised consumer price index (HICP) climbed 1.00% on a MoM basis in Germany, in line with market expectations. The preliminary figures had also recorded a rise of 1.00%. The HICP had recorded a flat reading in the previous month.

German HICP rose as expected in December

In December, on an annual basis, the final HICP rose 1.70% in Germany, compared to a rise of 0.70% in the prior month. The preliminary figures had also indicated a rise of 1.70%. Market anticipation was for the HICP to advance 1.70%.

German CPI advanced as expected in December

On a monthly basis, the final CPI in Germany, rose 0.70% in December, at par with market expectations. The preliminary figures had also recorded an advance of 0.70%. In the prior month, the CPI had recorded a rise of 0.10%.

Fed's Beige Book: US economy continued to expand at modest pace

According to the Federal Reserve’s (Fed) Beige Book report, the US economy continued to expand at a modest pace across most regions through the end of last year and firms expressed optimism about growth in 2017. Most districts indicated that wages increased modestly and prices pressures intensified during the period from late November 2016 through January 9th 2017. Further, manufacturers in most of the Fed’s 12 regions reported increased sales during the period.

Fed’s Yellen: Expect central bank to gradually hike rates over next 3 years

The US Fed Chairwoman, Janet Yellen, in a speech at the Commonwealth Club of California in San Francisco, stated that she and other Fed policymakers expect to lift the key benchmark interest rate "a few times a year" through 2019, putting it near the long-term sustainable rate of 3.0%. She also acknowledged the fact that since the US economy is now close to full employment and that inflation is headed towards the central bank’s 2.0% goal, it makes sense to gradually lift interest rate. However, she also warned that rate hike expectations will change as the economic outlook changes.

US housing market index declined surprisingly in January

The housing market index fell unexpectedly to a level of 67.00 in January, in the US, compared to a revised reading of 69.00 in the prior month. Markets were expecting the housing market index to record a steady reading.

US CPI (ex-food & energy) advanced as expected in December

The CPI (ex-food & energy) in the US registered a rise of 0.20% on a monthly basis in December, in line with market expectations. In the previous month, the CPI (ex-food & energy) had registered a similar rise.

US CPI remained steady in December

The non-seasonally adjusted CPI in the US remained steady on a MoM basis, in December. CPI had fallen 0.20% in the prior month.

US manufacturing production rose less than expected in December

On a MoM basis, manufacturing production in the US rose 0.20% in December, compared to a drop of 0.10% in the prior month. Markets were expecting manufacturing production to advance 0.40%.

US CPI (ex-food & energy) rose as expected in December

The CPI (ex-food & energy) in the US advanced 2.20% on a YoY basis in December, compared to an advance of 2.10% in the prior month. Market expectation was for the CPI (ex-food & energy) to rise 2.20%.

US mortgage applications recorded a rise in the last week

Mortgage applications advanced 0.80% on a weekly basis, in the week ended 13 January 2017, in the US. Mortgage applications had advanced 5.80% in the previous week.

US CPI recorded a rise in December

In the US, the non-seasonally adjusted CPI registered a rise to 241.43 in December, lower than market expectations of a rise to a level of 241.51. The CPI had registered a level of 241.35 in the prior month.

US Total net TIC flows climbed in November

Total net treasury international capital (TIC) flows climbed to $23.70 billion in the US, in November. In the previous month, total net TIC flows had recorded a revised reading of $20.60 billion.

US CPI advanced as expected in December

In the US, the CPI rose 2.10% on a YoY basis in December, at par with market expectations. In the prior month, the CPI had climbed 1.70%.

US core CPI climbed in December

In the US, the seasonally adjusted core CPI climbed to 249.93 in December, higher than market expectations of a rise to a level of 249.75. The core CPI had registered a reading of 249.36 in the previous month.

US CPI rose as expected in December

On a MoM basis in the US, the CPI advanced 0.30% in December, meeting market expectations. The CPI had advanced 0.20% in the prior month.

US Redbook index slid in the last week

On a MoM basis, the seasonally adjusted Redbook index in the US registered a drop of 3.40% in the week ended 13 January 2017. In the prior week, the Redbook index had registered a drop of 3.10%.

US capacity utilisation rose in December

Compared to a revised level of 74.90% in the previous month capacity utilisation in the US rose to a level of 75.50% in December. Markets were anticipating capacity utilisation to climb to a level of 75.40%.

US net TIC long term purchases rose in November

In November, net TIC long term purchases rose to a level of $30.80 billion in the US, compared to a revised reading of $9.30 billion in the previous month.

US industrial production rose more than expected in December

Industrial production advanced 0.80% on a monthly basis in the US, in December, more than market expectations for an advance of 0.60%. In the prior month, industrial production had fallen by a revised 0.70%.

US Redbook index registered a rise in the last week

The Redbook index in the US advanced 0.30% in the week ended 13 January 2017 on a YoY basis. In the previous week, the Redbook index had risen 0.90%.

BoC held interest rate, considered rate cut an option amid concern over Trump policies

The Bank of Canada (BoC) kept benchmark interest rate unchanged at 0.5%. The BoC Governor, Stephen Poloz warned that an interest rate cut remains in play as the country’s economy braces to take a “material” hit from a much more protectionist United States under Donald Trump. Additionally, the central bank released its Monetary Policy Report that sets out its latest forecasts for Canada’s economic growth. The bank predicts Canada’s economy to grow by 2.1% in each of 2017 and 2018 and that it would return to full capacity around mid-2018.

Foreign investors remained net buyers of Japanese bonds in the previous week

Foreign investors were net buyers of ¥517.00 billion worth of Japanese bonds in the week ended 13 January 2017, from being net buyers of a revised ¥624.10 billion worth of Japanese bonds in the previous week.

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

Foreign investors remained net buyers of ¥246.50 billion worth of Japanese stocks in the week ended 13 January 2017, from being net buyers of ¥346.80 billion worth of Japanese stocks in the prior week.

Japanese investors became net buyers of foreign bonds in the previous week

Japanese investors remained net buyers of ¥332.10 billion worth of foreign bonds in the week ended 13 January 2017, as compared to being net buyers of a revised ¥207.90 billion worth of foreign bonds in the previous week.

Japanese Tokyo condominium sales recorded a rise in December

In December, on an annual basis, Tokyo condominium sales in Japan climbed 13.20%. Tokyo condominium sales had recorded a drop of 22.70% in the previous month.

Japanese investors became net buyers of foreign stocks in the previous week

Japanese investors remained net buyers of ¥49.80 billion worth of foreign stocks in the week ended 13 January 2017, as compared to being net buyers of ¥234.20 billion worth of foreign stocks in the previous week.

]]>
Thu, 19 Jan 2017 08:28:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26915/market-briefing-uk-markets-finished-in-positive-territory-yesterday-helped-by-gains-in-consumer-goods-and-basic-material-shares-26915.html
Dimon Says Euro Zone May Not Survive Without Change in Direction http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26914/dimon-says-euro-zone-may-not-survive-without-change-in-direction-26914.html Dimon Says Euro Zone May Not Survive Without Change in Direction

Here is the opening of this common sense assessment by one of the contemporary world’s most successful bankers, written for Bloomberg:

The euro region could break up if political leaders don’t get to grips with the discontent that’s spurring support for populist leaders across the continent, JPMorgan Chase & Co. Chief Executive Dimon said he had hoped European Union leaders would examine what caused the U.K. to vote to leave and then make changes. That hasn’t happened, and if nationalist politicians including France’s Marine Le Pen rise to power in elections across the region “the euro zone may not survive,” Dimon, 60, said in a Bloomberg Television interview with John Micklethwait.

“What went wrong is going wrong for everybody, not just going wrong for Britain, but in some ways it looks like they’re kind of doubling down,” Dimon said in the interview Wednesday at the annual meeting of the World Economic Forum in Davos, Switzerland. Unless leaders address underlying concerns, “you’re going to have the same political things about immigration, the laws of the country, how much power goes to Brussels.”

Officer Jamie Dimon said.

Dimon’s remarks on Europe were unusually pessimistic, coming in a wide-ranging interview in which he also criticized regulations that he said stunt economic growth. But he reiterated optimism for President-elect Donald Trump. Minutes later, Goldman Sachs Group Inc. Chief Executive Officer Lloyd Blankfein also expressed concern about Europe, telling CNBC that leaders are facing a backlash in the midst of a long, complicated process to create an economic bloc.

 

David Fuller's view

Many people have said this for some time, including in this service, but Jamie Dimon’s view will attract more attention.

Eurozone leaders provide a classic example of arrogant groupthink.  They speak mainly to each other, in the comfort of their palatial headquarters in Brussels and Strasbourg, financed by beleaguered taxpayers, and agree that they know what’s best.  Yes, “they’re kind of doubling down,” as Dimon says.

 

Just Like In the 1980s, Theresa May Faces Chaos From Militant Unions. And Just Like Margaret Thatcher, She Must Not Flinch

Here is a latter section of this significant column by William Hague for The Telegraph:

Philip Hammond has rightly warned the EU that “we will do whatever we have to do”. So, in addition to pursuing trade agreements around the globe, what could we actually do, to convince the world that we have good enough plans for them to start buying pounds?

Here are five ideas:

1. Establish Free Ports. My very talented successor as MP for Richmond, Yorkshire, Rishi Sunak, has pointed out how Free Ports could bring a major boost to the economy, manufacturing and the north. This would allow goods to be imported, manufactured and re-exported without any duties or taxes because they would not officially enter the UK. The jobs created could run into tens of thousands, and the merchandise handled into hundreds of billions of pounds.

2. Give tax incentives to key global industries. Special tax relief for the film industry has been a huge success: major new studios have been built in Britain, over 200 films a year are being made here and we have 260,000 jobs thriving on the back of them. Every £1 of tax relief is meant to bring £12 back into the economy. We could give similar carefully targeted incentives to other creative, scientific and high-technology businesses, helping aerospace, biotechnology and others to see the UK as especially attractive.

 

David Fuller's view

Philip Hammond’s comment that “we will do whatever we have to do” was the perfect response to the EU, and from a former Remainer who previously sounded very pessimistic.   

Here are my brief responses to William Hague’s five ideas:

“Establish Free Ports.”  I had not thought of this but it makes sense to me.

“Give tax incentives to key global industries.”  I would favour across the board tax cuts which could be revenue neutral or even positive if the UK economy grew sufficiently as a consequence.  Special tax relief did create a booming film industry in the UK and helping the scientific and high-technology businesses is certainly a very good idea since they represent the future.  However, less glamorous industries are also important for a diversified economy and why cherry pick?  We do not want to create unnecessary resentment and damage other contributing industries.

This item continues in the Subscriber’s Area where a PDF of William Hague’s article is also posted.

 

Email of the day

On Monday’s Markets Now:

I just wanted to say how much I agreed with the subscriber email 2 yesterday on the ‘huge difference’ you & Eoin make with your service.

Give me the Markets Now over Davos any day of the week.

The financial services industry needs more people with competence & integrity like Iain Little & Bruce Albrecht. David Brown’s laser sharp intellect (& I suspect more ‘right brained’ judgement) knocks spots off so many of the city talkers I come across. 

I would have really enjoyed the ‘pub’ afterwards but I had to be home early. I find it best not to irritate my wife by getting home too late & the dog is always there waiting for his walk.

With best regards

 

David Fuller's view

Thank you so much.  It was good to see you again, looking so well, and I enjoyed our chat as we were approaching the Club.  There is no better audience than veteran subscribers and I learn something new at every session of Markets Now.

I sympathise with your wife and patient dog, and am sure your early arrival back home was welcomed.

 

Behind China's Bond Selloff, a Risky Twist on the Repo Trade

This article by Shen for the Wall Street Journal may be of interest to subscribers. Here is a section:

As much as 12 trillion yuan ($1.73 trillion) in bonds—or 19% of the country’s $9 trillion bond market—could be subject to such repurchase agreements, according to an estimate by Shui Ruqing, president of bond clearing-house China Central Depository & Clearing Co., cited last month in China’s influential Caixin Magazine. Traders say the deals are so opaque that even estimates are hard to make.

Banks sometimes use the “dai chi” agreements to move risky assets temporarily off their books during earnings periods or audits, the people said. Brokers like Sealand typically use them to borrow quickly and flexibly—leveraging their investments many times over, they said.

Until last year, Chinese financial regulators had largely ignored the practice, beyond saying they opposed it during a bond-market crackdown in 2013. But the informal nature of dai chi also meant the trades could be difficult to enforce when conditions worsened.

“Because it’s not really an official business, agreements aren’t legally binding,” said the executive who had bought bonds from Sealand.

Sealand’s problems became apparent on Dec. 15, when the southern China-based company announced that two of its traders had forged dai chi agreements worth 16.5 billion yuan ($2.4 billion), a move that market participants interpreted as meaning the broker didn’t intend to honor the deals.

The amount was more than five times what Sealand had declared in its Sept. 30 financials as its financial assets under official repurchase agreements, and more than seven times its disclosed bond-holdings.

 

Eoin Treacy's view

China has developed extraordinarily quickly from a closed backwater into a massive financially significant hub. While the pace of development has been blistering the evolution of regulatory standards of governance has been much more moderate. The single party system where cronyism, nepotism and the modern equivalent of simony combine to ensure just about anything is permissible, provided your social standing is within the correct circle, and only exacerbates the situation.

 

Goldman, Citi Beat Estimates as Trading Buoys Wall Street

This article by Dakin Campbell for Bloomberg may be of interest to subscribers. Here is a section:

Citigroup Chief Executive Officer Michael Corbat and Goldman Sachs CEO Lloyd Blankfein have been cutting costs and restructuring management to adjust to stricter capital requirements and a revenue downturn since the financial crisis. Goldman Sachs’s 2016 revenue was the lowest in five years, though investors and analysts are speculating the firm’s trading operations could be one of the biggest beneficiaries of Trump’s policies.

“The benefits from higher interest rates, accelerating capital deployment and historically low credit costs have been evident throughout the large-cap U.S. bank earnings releases,” Marty Mosby, an analyst at Vining-Sparks IBG, said in a note. “The fundamental story remains intact.”

 

Eoin Treacy's view

Bond trading profits are dominating headlines among the major banks but hide the fact that most have seen their businesses contract over the last few years as the high cost of complying with regulation bit into the size and scope of their businesses.

 

Pot Industry Exhales (a Little) After Trump's Attorney General Pick Testifies

This article by Polly Mosendz for Bloomberg may be of interest to subscribers. Here is a section:

Dayton said Sessions "may be against marijuana policy reform, but he is not stupid. He knows that these cannabis laws are hugely popular, not just among Americans in red and blue states, but with his boss who campaigned in favor of these laws."

While his responses, on their face, were hardly a coup for the cannabis industry, Sessions didn't morally condemn pot smokers either.

"The United States Congress has made the possession of marijuana in every state, and distribution of it, an illegal act," he testified. "If that ... is not desired any longer, Congress should pass a law to change the rule."

The Drug Policy Alliance, an organization opposed to the war on drugs, called the testimony "wishy-washy at best." The group's senior director of national affairs, Bill Piper, added: "It is clear that he was too afraid to say the ‘reefer madness’ things he said just a year ago, and that’s progress. But he made it clear throughout the hearing that he will enforce federal law."

 

Eoin Treacy's view

While a good many politicians have made statements condemning cannabis use “evolution” of their views on the topic are increasingly required as an ever increasing number of states legalise recreational or at least medical use. That has created a bull market in supply of the herb, not least because it grows like a weed. Wholesale prices have contracted considerably as operations initiated following Colorado’s legalisation reach commercial scale. That has resulted in mixed performance for the related shares.

]]>
Thu, 19 Jan 2017 08:22:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26914/dimon-says-euro-zone-may-not-survive-without-change-in-direction-26914.html
Beaufort Securities Breakfast Alert: Burberry Group, Hummingbird Resources Ltd, Pearson, Watkin Jones http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26913/beaufort-securities-breakfast-alert-burberry-group-hummingbird-resources-ltd-pearson-watkin-jones-26913.html Today's edition features:

Hummingbird Resources (LON:HUM)

Burberry Group (LON:BRBY)

Pearson (LON:PSON)

Watkin Jones (LON:WJG)

"One day ahead of Donald Trump's inauguration, today's market focus is likely to fall on the European Central Bank which is due to hold its first policy meeting of 2017, with formal release of its interest rate decision due at 12:45hrs GMT. Not that anyone is expecting the benchmark to be moved, but they do look for hints from the President, Mario Draghi, regarding a possible target date for tapering of the QE programme to start and, perhaps, his acceptance that inflationary pressures are now finally creeping back into the system. Other than reminding investors that she would 'take action' should Trump's expansionary fiscal policies threaten some form of pricing shock Fed Chair, Janet Yellen, said little new in her speech yesterday. The US accordingly ended fractionally mixed, with the Dow Jones suffering from mild profit taking on the likes of Goldman Sachs and United Health. Asia was slightly more active although it closed similarly mixed with the Nikkei, as usual, pivoting on Yen:US$ sentiment to end up almost 1%, led by financials, as the Dollar gained on belief that the first of the Fed's proposed rate hikes cannot be far away given that near full employment has been achieved and inflation is now close to target; elsewhere, Chinese equities closed down, despite the central bank having already injected a record 1.04tr RMB liquidity into the market this week, while the ASX trod water. London traders will be keen to review the latest RICs Housing Price Balance data - a key indicator of consumer confidence - that suggests slowing demand in December with quarterly expectations falling to +24% against +29% in reported November, breaking a four-month rising trend. Given the focus on tomorrow's appointment of its 45th President, macro data from the US, which includes Housing Starts, Jobless Claims and the Pliladelphia Fed Manufacturing Survey, is unlikely to capture the market's attention. This leaves just soundbites form the World Economic Forum in Davos, where Theresa may is due to speak today, to potentially steal the headlines. UK corporates due to release earnings or trading updates today include British Land (BLND.L), CyanConnode (CYAN.L), Finsbury Foods (FIF.L), Halfords (HFD.L), Pets at Home (PETS.L), Royal Mail (RMG.L) and Van Elle (VANL.L). London equities are expected to have a rather lacklustre start, with the FTSE-100 seen rising around 5 points during opening trade, although US majors like IBM and American Express that are due to report this afternoon could potentially generate a flurry of additional activity."

- Barry Gibb, Research Analyst

 

Markets

Europe

The FTSE-100 finished yesterday's session 0.38% higher at 7,247.61, whilst the FTSE AIM All-Share index closed 0.10% better-off at 873.06. In continental Europe, the CAC-40 finished 0.13% lower at 4,853.40 whilst the DAX was up 0.51% at 11,599.39.

Wall Street

In New York last night, the Dow Jones fell 0.11% to 19,804.72, while the S&P-500 gained 0.18% to 2,271.89 and the Nasdaq improved 0.31% to finish at 5,556.66.

Asia

In Asian markets this morning, the Nikkei 225 had risen 1.08% to 19,099.03, while the Hang Seng lost 0.55% to stand at 22,971.53.

Oil

In early trade today, WTI crude was down 0.8% to $51.49/bbl and Brent was down 0.85% to $54.38/bbl.

 

Headlines

Lagarde warns UK of pain ahead as Brexit approaches

The head of the International Monetary Fund has warned the UK there is still likely to be "pain" ahead as Theresa May prepares to trigger the UK's departure from the European Union. She said that although the UK economy had performed more strongly than the IMF had predicted, uncertainty over the terms of the deal "is always a risk". Any deal with the EU will "not be as good" as membership, she said. "When you belong to a club, whatever that is, the members of the club have a degree of affinity and particular terms under which they operate," Ms Lagarde told me at the World Economic Forum in Davos. "Someone outside the club has different access." I asked her if she agreed with the Prime Minister of Malta, Joseph Muscat, that any future UK/EU agreement "necessarily needs to be inferior to membership". Malta presently holds the rotating presidency of the EU.

Source: BBC News

 

Company news

Hummingbird Resources (LON:HUM, 23.50p) – Speculative Buy

Hummingbird Resources, the gold exploration and development company with assets in Mali and Liberia, announced today an update from its 2.2Moz Yanfolila gold project in Mali where mine construction is currently underway. Following the appointment of IMAGRI-SARL as civil works contractor, IMARGI-SARL has been awarded the Structural, Mechanical, Plate work and Piping (SMPP) contract. IMARGI-SARL is a leading specialist of building, mining and industrial infrastructure in Mali. Much of the mechanical equipment has been ordered and items are now being delivered to site including a tower crane and pre-rolled CIL tanks. Drilling of bore holes has also commenced ahead of pre-mining pit dewatering, which is scheduled to start in Q2 2017. Plant construction remains on track with planned completion in Q4 2017 ahead of first gold pour by year end.

Our view: Having secured project funding, mining and construction contractors, Hummingbird can now focus on full-scale construction at Yanfolila. We are encouraged with the progress being made and look forward to further developments as the construction phase proceeds towards production by the end of 2017. In the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Hummingbird Resources plc

 

Burberry Group (LON:BRBY, 1,650.00p) – Hold

Burberry, a UK based international luxury fashion and beauty brand, yesterday provided a trading update for the 3 months ended 31 December 2016 ('Q3 FY2017'). During the period, retail revenue advanced by +4% to £735m at underlying basis (up +22% at reported currency basis), while on a like-for-like ('LFL') basis, sales increased by +3%, against the comparable period (Q3 FY2016). The Group said fashion has yet again outperformed replenishment, while outperformance in Accessories has led by strength in bags. On the operational front, its engagement with festive campaign has resulted total film views more than double to over 22 million, represented strength of its brand. The Group said it is on track to deliver its planned cost savings of c.£20m in FY2017. The Group has returned £43m during Q3, taking total of £77m completed to date of its £150m share buyback programme. Burberry's CEO (and Chief Creative Officer), Christopher Bailey, commented "With a record number of views of our festive film and strong demand for new products in our collections, this third quarter improvement reflects early progress from our plans to drive Burberry's performance for the long term. We continue to take action to position the business for growth over time and our plans to enhance efficiency are on track."

Our view: Burberry performed strongly in Q3 with LFL sales growth surpassing consensus expectations by +1.6%. In mainland China, despite the evolution of the store portfolio in Beijing, the territory's largest regional market, saw LFL sales growth accelerate to a "high single-digit percentage" in the Q3 from "mid-single-digit percentage" during Q2. Together with improvement in Hong Kong to a low single-digit percentage decline, Asia Pacific has returned overall growth to a low single-digit percentage. In EMEIA, UK continue to see exceptional demand with LFL sales growing by c.+40%, fuelled by both travelling luxury customers and domestic customers. Continental Europe, on the other hand, remained weak with France on able to report modest improvement in the final quarter. Overall, the EMEIA region recorded double-digit percentage growth. In the Americas, domestic and travelling luxury customer demand remained uneven, which resulted in a low single-digit percentage decline. Looking ahead, the Group reiterated its revenue outlook for retail (low single-digit percentage growth), wholesale (down by a mid-teens percentage in H2) and licensing (down by about £20m). Adjusted pre-tax profit for full year is expected to be in line with consensus at £440m, based on a slightly lower foreign currency translational benefit of £115m (based on 31 December rates). The share price has performed well recently, however, the macroeconomic environment remains challenging, with the luxury market expected to grow on average by just a low single-digit annual percentage at constant exchange rates over the next five years. With valuation of FY2017E and FY2018E P/E multiple of 21.5x and 20.0x along with dividend yield of 2.3% and 2.5% respectively, we continue to monitor activity for more evidence of strategic initiatives, which may become evident shortly with the anticipated CEO and CFO appointments. Beaufort reiterates its Hold rating on the shares.

 

Pearson (LON:PSON, 573.00p) – Hold

Pearson, the world's leading education company providing products and services to institutions, governments and direct to individual learners, yesterday provided a trading update for the full year FY2016. The Group expect revenue to drop by c.-8% in underlying basis due primarily to continued weakness in North American higher education courseware business, which saw net revenue fell by -30% in Q4, taking full year decline to -18%. The challenging environment was driven by inventory correction in the channel, accelerated impact from rental in the secondary market and lower enrolment. Beside this, the Group said its other businesses in aggregate have performed in line with expectations. Adjusted operating profit for the full year is expected at c.£630m, in line with guidance, resulting adjusted earnings per share to be around 57p. The Group's tight management of discretionary cost resulted to accrue c.£55m less than originally planned for its 2016 staff incentive programme. On the operational front, the Group has fully delivered its 2016 restructuring program and said the financial benefits are slightly above the expectation. The Board proposed a final dividend of 34p per share, bringing full year dividend to 52p per share, in line with its guidance. Looking ahead into FY2017, the Group has revised down its expectation for North American higher education courseware market and said downward pressures will continue. Within the announcement, Pearson has outlined some actions to accelerate its digital transition in higher education, to manage the decline in print, and to reshape its portfolio. For the digital transition, the Group will increase its investment by £50m to enable faster product innovation, accelerate product roadmap by 2 years and drive faster adoption of institution-wide Digital Direct Access for Pearson courseware. The Group will also increase its presence in the courseware rental market. For the portfolio reshaping, the Group intend to sell its 47% stake in Penguin Random House or recapitalising the business and extract a dividend. The proceeds will be used to maintain its strong balance sheet, investment and return excess capital to shareholders whilst retaining an investment grade credit rating. The Group will continue to reduce its exposure to large scale direct delivery services and focus more on scalable online, virtual, and blended services, across its portfolio. Pearson will announce its preliminary results on 24 February 2017.

Our view: Pearson's full year trading update was rather shocking. In its Q3 trading update (announced on 17 October 2016), the Group said inventory correction in North American Higher Education courseware business had improved in September and was continuing into October. Despite indicating these "improving trends", the Group reported Q4 FY2016 net revenue from this business fallen by -30%, opening a wide gap with the full year consensus expectation. Moreover, the announcement confirmed that the North American higher education courseware market is set for further decline in FY2017 against the "stable" expectation that was previously guided, with the remaining of business areas expected only to perform broadly in line with the trends seen in FY2016. Given that the challenging environment persists, despite meeting its guidance for the FY2016 at around the middle of the range boosted by favourable exchange rates (2015: just c.5% of revenue generated from the Eurozone), the Group issued a stark profit warning for the FY2017. Underlying profitability will now be c.-£180m lower than previously guided, with operating profits now expected to be in the rage of £570m-£630m, quite significantly lower than the consensus analyst's expectation of £682m and resulting in adjusted earnings per share of in a lower 48.5p-55.5p range. The Group also detailed its intension to rebase its dividend for FY2017, while scrapping its 2018 goal to deliver adjusted operating profit at or above £800m, given portfolio changes together with challenging and uncertain markets. The shares fell by -29% yesterday (at London close), an enormous hit for one of the main index's constituents, a status that could potentially now be threatened. While it would be realistic to anticipate some rebound today, as oversold positions are closed, confidence in the management's steering of the operation has been severely knocked. Beaufort accordingly takes Pearson off its Buy list, moving down to Hold, until confidence is reasserted.

 

Watkin Jones (LON:WJG, 129.50p) – Speculative Buy

The leading UK developer and constructor of multi occupancy property assets, with a focus on the student accommodation sector, yesterday announced its maiden annual results for the year ended 30 September 2016. The Board reported a successful trading in line with its expectations. Strong revenue growth and record operating profit, before exceptional IPO costs, were driven by student accommodation developments. Robust cash performance, with a net inflow (from operating activities but before exceptional IPO costs) of £41.7 million (2015: £28.4 million). Year-end net cash of £32.2 million (2015: £39.1 million) came after exceptional IPO cash costs of £26.6 million, £14.5 million cash cost of acquiring Fresh Student Living ('Fresh') and £10.0 million dividend to existing shareholders prior to IPO. Watkin Jones development pipeline remains strong, with 9,469 student beds across 27 sites, with 15 forward sold and seven more forward sales in legal negotiation. Of these, 2017 deliveries alone already include nine student developments (2,860 beds) sold and one operational asset (590 beds) with the remaining 454 beds in legal negotiations. Having paid an interim dividend of 1.33 pence per share in June, the Board has recommended a final dividend of 2.67 pence per share, giving a total dividend of 4.0 pence per share. With Admission having taken place towards the end of the first half of the financial year, this total dividend represents two thirds of the full year equivalent, giving an initial yield of 6% based on the placing price of £1 per ordinary share. This is in line with management's stated intention at the time of the IPO. The dividend will be paid on 28 February 2017 to shareholders on the register at close of business on 27 January 2017. The shares will go ex-dividend on 26 January 2017.

Our view: An excellent business model delivering strong maiden results. Confidence is underscored by an exceptional pipeline while delivering gross margins for the year on student accommodation developments of 20.5%, compared to 18.2% for FY 2015. This improvement reflects both the move to sole development of own projects and away from lower margin contracting work for other developers. The Group's 'forward sale' model means that FY 2017 will also benefit from progress on schemes delivering in later years, including the eleven that look to complete in FY 2018, of which ten have planning consents while planning has been submitted on the remaining one. Some of its larger 2019 schemes will also contribute to FY 2017 performance, in particular the 511-bed scheme in Stratford for the University of London, which in terms of its development value is Watkin Jones' largest ever project. Investment interest in this asset class remains strong while offering good medium-term visibility. Growth in the student accommodation management business 'Fresh' also continues, with 44 schemes under management and 61 already contracted for 2020. While there appears no need for Beaufort to adjust its current forecasts for either 2017E or 2018E, the shares still appear to be undervalued on the basis of earnings multiples of 9.3x and 8.6x for the two years, a dividend yield of 5% along with exceptional FCF yield of 13.3%. At this time, Beaufort does not take some media suggestions that the decision to leave the EU could result in international students deserting the UK in coming years, but recognises this concern will need to be dispelled before its price target of 190p/share for Watkin Jones can be achieved.

]]>
Thu, 19 Jan 2017 08:12:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26913/beaufort-securities-breakfast-alert-burberry-group-hummingbird-resources-ltd-pearson-watkin-jones-26913.html
Janet flaps her hawkish wings http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26912/janet-flaps-her-hawkish-wings-26912.html FTSE 100 Index called to open flat at 7250, with overnight resistance at 7260 keeping a lid on yesterday’s bounce from 7220 support. This rekindles the trend of falling highs from Monday’s record 7365 peak which could usher the index back for another test of 7220 which, if breached, could extend this week’s correction to below 7200. This sideways range could be a bearish flag. Bulls need to see a breakout to 7270 to kill off the downtrend. Bears need to see 7220 support give way. Watch levels: Bullish 7265, Bearish 7235.

Calls for a flat open come after a mixed US finish and in spite of a largely positive session where benefit was derived from local currency weakness fuelled by hawkish comments from Fed Chair Yellen (“three rate hikes this year”) that sent the USD higher, offsetting Trump’s “Dollar too strong”. This is not, however, benefiting the FTSE with GBP surprisingly  firm overnight. Keep an eye on housebuilders after the UK RICS House Price balance fell back from last month’s 7-month highs although British Land (BLND) had a positive Q3 driven by lettings and renewals.

Japan’s Nikkei is outperforming again thanks to weakness in the Japanese Yen boosting shares prices of exporters although Toshiba suffered another profits warning. Australia’s ASX is positive as Oil prices regain poise and a stronger USD fails to derail the commodity space (excl. precious), although gains are tempered by a stronger AUD after inflation expectations jumped, and jobs data disappointed. Hong Kong and China both in the red.

A mixed session overnight for US equity markets saw the Dow Jones fall further from 20k, while its peers finished in the green. Falling oil prices saw energy names comprising the lower end of markets , although this did not stop both the S&P 500 and the Nasdaq both finishing higher (+0.2% and +0.3% respectively) thanks to a mix of Financial strength and the continuation of an impressive earnings season that has seen companies topping expectations across the board.

Having fallen to one week lows overnight, Crude Oil prices are cautiously recovering as investors gear up for tonight’s US official government inventories data. After industry data yesterday showed a 5m barrel drawdown, significantly larger than the 300k draw expected, bargain hunting from investors has seen a steady recovery rally in Asia, while OPEC commentary will also continue to impact markets.

Gold price has fallen once again, this time falling below $1200 in reaction to Fed Chair Yellen’s hawkish comments made last night. The non-yielding safe haven asset reacts negatively to rising interest rates, something the central bank head hinted rate-setters could continue to do until 2019 in order to achieve a natural rate of around 3%. Subsequent USD strength is also hurting the precious metal.

In focus today will be our first major central bank of the year (sorry BoC!)  as the European Central Bank (ECB) updates on monetary policy for the region’s single currency.

No change is expected to headline rates or its QE bond-buying stimulus programme (12.45pm). The latter remains in full swing after last month’s extension to Dec 2017, albeit with purchases at a slower pace from April. However, any hints about the path for QE would be welcome (1.30pm Draghi press conference), given the quasi-taper we saw last month especially in light of solid growth and confidence readings, although inflation remains worryingly weak and political risk rife, thus supporting an accommodative stance until at least year end.

he most significant data comes from the US today with Housing Starts and Building Permits seen holding firm in December, the same true for the last jobless claims print before Trump’s inauguration on Friday. The Philly Fed manufacturing Index may have pulled back from a 2yr high while US Oil Inventories could echo API data last night with a reversal of last week’s build and a bigger than expected drawdown.

]]>
Thu, 19 Jan 2017 08:07:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26912/janet-flaps-her-hawkish-wings-26912.html
Oil price, Faroe, SDX Energy, And finally... http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26910/oil-price-faroe-sdx-energy-and-finally-26910.html Oil price

Both the Saudi Oil Minister and the head of Saudi Aramco were on their hind legs at Dav-oh yesterday, the former saying that the US supply infrastructure was ‘decimated’ and the latter confirming that the oil market would have re-balanced by the end of the first half. He also snuck in that the IPO would aim to raise around $100bn.

Faroe

Faroe has announced that it has received four new licences in the recently announced APA round. Three are in the Norwegian North Sea of which one looks very like a possible Brasse extension, one is the Pabow prospect east of Shango and one is the Goanna prospect. They have also received one licence in the Norwegian Sea which contains the Canela project. These awards being in the APA round, ie Awards in Pre-defined Areas, mean that Faroe are able to pinpoint such areas and adds exploration as well as concentrating on consolidating near Brasse for example. With few commitments Faroe have been wise to pick up these blocks which underscores my favourable valuation  for the future and will surely remain in the bucket list come the end of January…

SDX Energy

My weekly VoxMarkets Podcast was about SDX Energy where management have announced that they are looking at parts of Circle Oil and an equity raise to go with it. The link is below:

VOX Markets podcast: includes Malcy on SDX Energy

And finally…

Sensational news from down under this morning where Brit Dan Evans has beaten the No 7 seed Marin Cilic…

In the FA Cup replays there was indeed giant killing going on as Sutton beat Wimbledon and Lincoln beat the Tractor Boys.

Tonight in the cup, the HubCap Stealers go to Plymouth, the Magpies welcome Birmingham City and  the Canaries visit the Saints.

]]>
Wed, 18 Jan 2017 11:39:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26910/oil-price-faroe-sdx-energy-and-finally-26910.html
Today's Market View - Ariana Resources plc, Bluerock Diamonds Plc, Central Asia Metals Ltd, Edenville Energy, Golden Star Resources, Hochschild Mining http://www.proactiveinvestors.co.uk/columns/sp-angel/26909/today-s-market-view-ariana-resources-plc-bluerock-diamonds-plc-central-asia-metals-ltd-edenville-energy-golden-star-resources-hochschild-mining-26909.html Ariana Resources (LON:AAU) – Update on Salinbas targets

BlueRock Diamonds* (LON:BRD) – Plant upgrade and plans for new contractor to restart mining on track

Central Asia Metals (LON:CAML) – DFS on Copper Bay tailings project

Edenville Energy (LON:EDL) -  Second stage ESIA completed

Golden Star Resources (TSX:GSC) – Raising C$30m

Hochschild Mining (LON:HOC) – Record production in 2016 and increased guidance for 2017

 

European equities are relatively mute today ahead of the ECB meeting due tomorrow.

The pound is off (-0.6%) after climbing nearly 3% yesterday despite May confirming expectations for the government readiness to exit the single market as part of Brexit.

The US$ index is up slightly this morning following a 1.3% decline on Tuesday and hitting the lowest level in a month.

Iron ore futures are lower following weaker Chinese steel futures prices.

Brent is weaker as the IEA highlighted that US shale production response to higher prices will be “significant”. At $56-57/bbl, “a lot of shale plays in the US would make perfect sense to produce”, the IEA head said at Davos.

 

Lithium – Chile invites bids to add value to the nation’s lithium resources

The Chile state organisation CORFO, ‘Corporation for the Promotion of Production’ is to hold a tender in April to encourage companies to better utilise Chile’s lithium resources.

The nation is looking for companies to add value through further processing towards battery quality material and potentially even to manufacture batteries within Chile.

Chinese battery maker Vision Group and Kanhoo which produces rare earth metals is reported to have put forward a proposal for a lithium hydroxide plant and a lithium battery plant in Chile.

We suspect many other lithium miners will be put off by the cost of meeting these sort of commitment and that if Chile presses for terms which are too tough then this may serve to hold back the industry.

Alternatively it may be that Chinese, state sponsored, lithium companies are the only companies which are financially able to meet the new commitments effectively barring new entrants into the Chilean lithium scene.

 

121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2016

Located in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel

Investors go for free.  Please ask for conference brochure

 

Dow Jones Industrials  -0.30% at 19,827 

Nikkei 225   +0.43% at 18,894 

HK Hang Seng   +1.13% at 23,098 

Shanghai Composite    +0.14% at 3,113

FTSE 350 Mining   +0.15% at 16,384

AIM Basic Resources   -0.52% at 2,534 

 

Economic News

US – The dollar climbed as San Francisco Fed President John Williams said the labour market hit the central bank’s goals with continuing tightening to be appropriate.

 

China – Property prices cycle is starting to reverse with the growth pace in 70 major cities slowing for the first time in 2016.

The average selling price climbed 12.4%yoy in Dec, down 0.2pp from the Nov reading.

On a month-on-month basis, prices increased in 46 of 70 cities and fell in 20, with nine additional cities posted a decline versus the previous month.

 

Germany – Inflation was confirmed at 1.7%yoy in Dec marking the strongest reading in three years.

 

UK – Unemployment held at a more than decade low of 4.8% in three months to Nov.

Jobless rate kept unchanged as a decline in unemployment claims was compensated by the number of people leaving the workforce.

Low unemployment rate led an acceleration in earnings rate which beat market estimates.

Theresa May unveiled the Brexit plan in her speech yesterday saying Britain to leave the single market but highlighting the importance of negotiating a new trade agreement beneficial for both parties.

The government hopes to maintain partial membership of the EU customs union.

The Parliament will vote on the final version of the Brexit deal once it has been agreed.

The pound rallied nearly three percent yesterday with many attributing the move to a reduction in uncertainty over the Brexit plan, as well as stronger inflation data released previously suggesting the BoE might be looking at raising rates soon.

Employment Change (3m v previous 3m): -9k v -6k in 3m through Oct/16 and -35k forecast.

Unemployment Rate (%): 4.8 v 4.8 in 3m through Oct/16 and 4.8 forecast.

Av Weekly Earnings (3m %yoy): 2.8 v 2.6 (revised from 2.5) in 3m through Oct/16 and 2.6 forecast.

 

Italy – The European Commission is demanding the Italian government step up austerity measures bring the budget deficit below current estimates for a 2.3% shortfall (of GDP).

The Commission agreed Italy to post a 1.8% deficit this year; although, updated estimated point to an expanded shortfall.

The government argued worse data account for the proposed local lenders’ bailout, earthquake damages and the refugee crisis related costs.

 

Currencies

US$1.0696/eur vs 1.0660/eur yesterday.   Yen 113.16/$ vs 113.13/$.   SAr 13.538/$ vs 13.479/$.   $1.234/gbp vs $1.213/gbp.  

0.756/aud vs 0.753/aud.   CNY 6.834/$ vs 6.865/$.

 

Commodity News

Precious metals:         

Gold US$1,214/oz vs US$1,214/oz yesterday

   Gold ETFs 57.0moz vs US$57.0moz yesterday

Platinum US$975/oz vs US$991/oz yesterday

Palladium US$746/oz vs US$751/oz yesterday

Silver US$17.15/oz vs US$16.99/oz yesterday

           

Base metals:   

Copper US$ 5,782/t vs US$5,770/t yesterday - Pan Pacific sets first Tc/Rc of the new year at $92.5/t and 9.25c/lb indicating an ongoing shortage of copper concentrates.

Aluminium US$ 1,802/t vs US$1,785/t yesterday

Nickel US$ 10,195/t vs US$10,140/t yesterday

Zinc US$ 2,755/t vs US$2,693/t yesterday

Lead US$ 2,310/t vs US$2,243/t yesterday

Tin US$ 21,140/t vs US$21,015/t yesterday

           

Energy:           

Oil US$55.7/bbl vs US$55.8/bbl yesterday

Natural Gas US$3.384/mmbtu vs US$3.480/mmbtu yesterday

Uranium US$22.90/lb vs US$23.00/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$79.1/t vs US$79.8/t – Iron ore prices weakening ahead of Chinese new year

Chinese steel rebar 25mm US$502.7/t vs US$500.1/t

Thermal coal (1st year forward cif ARA) US$69.0/t vs US$66.5/t yesterday

Premium hard coking coal Aus fob US$180.0/t vs US$180.0/t

           

Other:

Tungsten - APT European prices $191-200/mtu vs $187-198/mtu

 

Company News

Ariana Resources (LON:AAU) 1.7p, Mkt Cap £14.5m – Update on Salinbas targets

Ariana Resources reports that a review of the recently acquired Salinbas  project in north-east Turkey has identified thirty-seven target areas for potential follow up exploration during 2017.

The targets include areas with previous drilling requiring additional exploration as well as  “Numerous significant rock-chip and soil geochemical anomalies … which have not been drill tested [and] also require follow-up”

The licences, which were acquired from Eldorado Gold and already contain “an approximately 10Mt Indicated and Inferred JORC resource, with an average grade of 2.0 g/t Au and 10.2 g/t Ag (for 650,000 oz gold and 3.2Moz of silver)” are located north of Mariana Resources’ Hot Maden project and include the Salinbas gold/silver deposit, the Ardala copper/gold/molybdenum porphyry and the Hizarliyayla gold/silver system “among several other prospects.”

Conclusion: The company recently raised additional funds and is starting to assign exploration priorities to the Salinbas project. We await news of the exploration as it proceeds later in the year.

 

BlueRock Diamonds* (LON:BRD) 5.75p, Mkt Cap £3.2m – Plant upgrade and plans for new contractor to restart mining on track

BlueRock Diamonds report progress is in-line with their budget and expectations in preparation for a restart early next month.

Overhaul of the process plant is now complete and should increase capacity, efficiency and hopefully recoverability.  Testing of the plant started in December and is now largely complete.

The new primary crusher is expected to reduce costs and a pre-screening circuit is expected to help expand capacity and improve efficiency.

The new contractor is on site and preparing for their first blast next week.  They should provide consistent run of mine material

Heavy rainfall in recent weeks is welcome in the region as it breaks the drought and provides ample water for the process plant though it may restrict safe access to some areas of the open pit.

Conclusion:  BlueRock should be up and running with the next few weeks with the refurbished plant hopefully showing better throughput diamond recovery rates.

*SP Angel acts as Nomad & Broker to BlueRock Diamonds

 

Central Asia Metals (LON:CAML) 238 pence, Mkt Cap £266m – DFS on Copper Bay tailings project

Central Asia Metals reports that the definitive feasibility study (DFS) on its 75% owned Copper Bay tailings project in Chile shows a seven year life delivering an average annual copper production of 8,640 tonnes at a cash cost of $1.37/lb.

An initial capital investment of $88.5m is expected to deliver an after tax NPV of $34.1m at a discount rate of 8% and generate an after tax IRR of 19.1% based on a copper price of $3/lb.

The historic tailings, thought to be as much as 250m tonnes, originating from the Potrerillos and El Salvador copper mines are located on the beach at Chanaral Bay and the company has outlined a mineable resource of 34.8m tonnes at a grade of 0.24% copper within an overall measured/indicated/inferred resource of 53.4m tonnes grading 0.24% copper. Approximately 73% of the resource is classed as measured and indicated.

The DFS envisages dredging the tailings to supply an SXEW plant producing cathode copper as well as a flotation plant to recover a copper concentrate for sale to smelters.

We note the comment by Gavin Farrar, Business Development Director, who after highlighting the addition of value as a result of the DFS commented that “Given the current uncertainty with regard to the near and medium term expectations for copper, the CAML Board has recommended that the project remains in our development pipeline while we review our options.”

Conclusion: The DFS on the Copper Bay project outlines the financial and technical features of a possible development, however the Board is considering the options and has yet to give a go-ahead for project development.

 

Edenville Energy (LON:EDL) 0.8 pence, Mkt Cap £6.2m -  Second stage ESIA completed

Edenville Energy reports that it has completed the second stage of its Environmental and Social Impact Assessment (ESIA) and the documents are currently being approved by the National Environment Management Council in Tanzania.

The final stage of the ESIA, comprising “extensive data and consultation with the local community and stakeholders, is to be completed in parallel with the Bankable Feasibility Study for the power plant.

The company is aiming to ensure that “all necessary technical, environmental and social considerations are taken into account when completing these specific areas.”

Conclusion: It appears that there has been significant progress on the environmental and permitting of Edenville’s coal to power project at Rukwa. Although the company has not detailed its expected permitting timetable at this stage, which is probably largely in the control of the Tanzanian authorities, we look forward to updates in due course.

 

Golden Star Resources (TSX:GSC) C$1.10, Mkt Cap C$362m – Raising C$30m

Golden Star reports that it is raising C$30m through the issue of 27.3m new shares at C$1.10/share.

The funds are to be used to progress the company’s exploration projects; to help fund capital expenditures at the Wassa and Prestea gold mines and to redeem part of the company’s 5% convertible debenture which stood at C$13.1m on 30th September 2016.

The company recently indicated that it expected to increase gold output by 31-44% in 2017 as it ramps up underground production at its Wassa gold mine and commences underground production at Prestea in the middle of 2017.

Conclusion: Golden Star is attracting investor support as it makes the transition towards higher grade underground mining at its operations in Ghana and increases gold output as a result.

 

Hochschild Mining (LON:HOC) 236 pence, Mkt Cap £1.2bn – Record production in 2016 and increased guidance for 2017

Hochschild Mining reports that it achieved record attributable production in 2016 with 17.3m oz of silver and 246 koz of gold representing 35.5m equivalent ounces of silver -  a 31% increase on the 27.0m oz of attributable equivalent oz achieved in 2015.

The company is indicating that all in sustaining costs for 2016 are “expected to be between $11.0 and $11.5” per silver equivalent ounce.

Hochschild Mining is guiding the market to expect another record production year in 2017 with  a target of 37m oz of silver equivalent, “exceeding previous guidance of 35.0 million ounces.” Cost guidance is for $12.2-12.7 per silver equivalent ounce. The company is also indicating that it expects to spend $120-130m on development and sustaining capital in 2017.

Production during the first full year of production at the Immaculada mine exceeded the company’s original forecast at 16.9m ounces of silver equivalent or around half of the group’s attributable output. The company expects Immaculada to produce around 17m oz of silver equivalent in 2017.

The company reports a strengthening of its financial position as a result of the increased production levels, with a halving of net debt to $183m during the year and increased cash of $56m leaving Hochshild Mining with a cash balance of $140m at the end of 2016.

Conclusion: The impact of Immaculada is delivering increased production, strengthening the company’s financial position and company forecasts show this continuing into 2017.

 

]]>
Wed, 18 Jan 2017 10:55:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/26909/today-s-market-view-ariana-resources-plc-bluerock-diamonds-plc-central-asia-metals-ltd-edenville-energy-golden-star-resources-hochschild-mining-26909.html
Northland Capital Partners View on the City - Edenville Energy, Mariana Resources Ltd., Motif Bio Plc, Thor Mining http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26908/northland-capital-partners-view-on-the-city-edenville-energy-mariana-resources-ltd-motif-bio-plc-thor-mining-26908.html Mariana Resources (LON:MARL) – BUY*: PEA Results

Market Cap: £106m; Current Price: 85.5p; Target Price: Under review

From yesterday: IRR of 153% and NPV of US1.37bn

Mariana Resources has received the results of its Preliminary Economic Assessment of its 30%-owned ultra-high-grade Hot Maden Copper-Gold Project, located in Turkey. The project has a post-tax NPV8 of US$1.37bn and a post-tax IRR of 153%.

The total capex for the project including sustaining capital is US$261m. The mine will have a life of nine years and will produce 2.6moz Au and 142,000t of Cu.

Forecasts and price target under review until the PEA is filled on SEDAR within 45 days. BUY rating maintained.

NORTHLAND CAPITAL PARTNERS VIEW: Mariana Resources has produced an exceptional Preliminary Economic Assessment at its 30%-owned ultra-high-grade Hot Maden Copper-Gold Project. With a post-tax NPV8 of US$1.37bn and a post-tax IRR of 153%, investors will find it difficult to find another mining junior with a significant interest in a project with comparable metrics. The underground mine will produce an average of 288,000oz of gold and 15,800t of copper per year which would result in average revenue per annum of c. US$443m (£351m) at current metal prices, which would be c. US$133m (£108m) in net revenue to Mariana Resources per annum, more than the Company’s current market cap.

 

Motif Bio Plc (LON:MTFB) – BUY*: Appointment of CFO

Market Cap: £49m; Current Price: 25p; Target Price: 90p

Robert Dickey appointed as Chief Financial Officer

Motif announced that Robert Dickey IV has been appointed as Chief Financial Officer.

Mr Dickey is an accomplished financial professional with senior leadership experience in private and public healthcare companies.

Prior to joining Motif, he was CFO at Tyme Technologies Inc., a NASDAQ-listed clinical stage oncology company.

Robert previously held senior leadership positions at NeoStem, Inc. (now known as Caladrius Biosciences Inc.), Hemispherx BioPharma Inc., Stemcyte Inc., Locus Pharmaceuticals Inc. and Protarga Inc.

NORTHLAND CAPITAL PARTNERS VIEW: Robert is a strong addition to the Motif team, particularly due to his considerable experience in the biotech sector. Also, his NASDAQ experience will prove useful to the Company given its recent dual-listing on the market.

 

Edenville Energy (LON:EDL) – CORP: ESIA update

Market Cap: £6.3m; Current Price: 0.83p

Completion of the second stage of the ESIA

Edenville Energy has completed the second stage of the Environmental and Social Impact Assessment (EISA) for its integrated coal to power project, located in Tanzania, with the relevant documents approved by the Tanzanian National Environment Management Council (NEMC).

The final stage of the EISA is the completion of the EISA report which will then be submitted to NEMC for approval. This final stage will be completed in parallel with the Bankable Feasibility Study (BFS) for the power plant.

NORTHLAND CAPITAL PARTNERS VIEW: Edenville Energy is continuing to advance its Rukwa Coal to Power Project alongside its near-term focus on cash flow generation from coal mining to supply the local market. This strategy should provide the Company with stable income as it focuses on the larger scale power generation project.

 

Thor Mining (LON:THR) – CORP: Outlook for 2017

Market Cap: £1.7m; Current Price: 0.55p

Exploration programmes planned to move the Company forward

In 2017 Thor Mining is expecting to commence its first drill programme at the Pilot Mountain Tungsten Project in February 2017 with a focus on extending the high-grade copper-zinc-silver-tungsten mineralisation. A follow up drill programme is planned for 2017.

At the Molyhil Tungsten Project, Thor will continue to explore alternatives for increasing the size of the resource and mine life.

At the Dundas Gold Project, an air core drill programme is scheduled for the first half of 2017 to test previously defined gold anomalies.

The Company also expects to receive the A$1.5m from the sale of the Spring Hill Gold Project.

Thor continues to assess a range of opportunities in mainstream commodities including tungsten.

NORTHLAND CAPITAL PARTNERS VIEW: Thor Mining has announced its 2017 exploration programme for a number of its projects as the Company seeks to make strides forward during the course of the year. Thor is expecting to receive A$1.5m from the sale of the Spring Hill Gold Project this year, which will be used towards funding the exploration programme in 2017.

]]>
Wed, 18 Jan 2017 09:13:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26908/northland-capital-partners-view-on-the-city-edenville-energy-mariana-resources-ltd-motif-bio-plc-thor-mining-26908.html
VSA Capital Market Movers - Hochschild Mining http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26907/vsa-capital-market-movers-hochschild-mining-26907.html Hochschild Mining (LON:HOC)

Production numbers for Q4 and the full year show a robust growth in output of both gold and silver for Hochschild (HOC). Total silver equivalent ounces for the year rose 31% to 35.5m ounces on the back of a rise in gold output to 246kozs while silver output rose to 17.3mozs.  AISC costs per equivalent ounce of Ag are looking to come in at $11/oz-$11.50/oz.  Cash grew by almost US$60m to US$140m over the year.

Forward guidance is rather conservative with growth of 2mozs to a 37moz target.  AISC costs are predicted to rise about $1/oz to above US$12/oz due to increased exploration budgets and capex on the Pablo vein development.

We see Inmaculada mine is proving its production worth for the company but also is its corporate vulnerability; being its flagship operation and significant source of cashflows.  It will be interesting to see what HOC may do with its rising cash on M&A opportunities in coming months.

]]>
Wed, 18 Jan 2017 09:08:00 +0000 http://www.proactiveinvestors.co.uk/columns/vsa-capital-market-movers/26907/vsa-capital-market-movers-hochschild-mining-26907.html
Breakfast News - AIM Breakfast : Christie Group plc, Deltex Medical Group plc, Fitbug Holdings, Global Energy Development, Mercia Technologies PLC, Plant Health Care, Tribal Group plc, Hydrogen Group, Midwich Group Plc http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26906/breakfast-news-aim-breakfast-christie-group-plc-deltex-medical-group-plc-fitbug-holdings-global-energy-development-mercia-technologies-plc-plant-health-care-tribal-group-plc-hydrogen-group-midwich-group-plc-26906.html What’s cooking in the IPO kitchen?

Global Energy Development (LON:GED) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb.

Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas  exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise.

Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.

 

 
Breakfast buffet

Fitbug Holdings* (LON:FITB) 0.17p £2.03m

The digital wellness technology provider for corporate organisations, announced a customer win with a global financial services group in Asia. The customer will use Fitbug's digital wellness services to help maximise employee performance, with the end goals of improving employee engagement, and reducing absenteeism and risk of chronic illness.

Fitbug has secured an initial 1-year corporate wellness programme, which includes ongoing service revenue, together with an order for 14,000 devices. The devices were shipped in December and the programme is rolling out early this year. The client wishes to remain anonymous at this time.

Christie Group (LON:CTG) 89p £23.47m

The provider of Professional Business Services and Stock & Inventory Systems & Services to the leisure, retail and care markets, announced that Christie & Co, its specialist provider of agency and advisory services, has successfully brokered the sale of Magic Nurseries to Les Petits Chaperons Rouges, France's leading private nursery chain.  "When the time came for us to consider the sale of our business, Courteney Donaldson at Christie & Co was our first and only port of call."  No financial details were provided.

Tribal Group (LON:TRB) 64.75p £126.5m

FY Dec 16 trading update from the provider of products, services and software to the international higher education, further education, training and vocational learning markets.  Following a good second half, the Board anticipates that Group revenues will be in line with its expectations for the year to 31 December 2016 and the performance of the Group will be materially ahead. Annualised cost savings of £8.5m have been delivered by the year end and further efficiency savings are expected in 2017.   The Group's balance sheet remains strong following the fund raising and sale of the Synergy business early in the year. The Group ended the year with £8.8m of cash, up from the £5.7 at the end of the half year.  FY16E revenue £88.7m and £2.28m PBT.

Plant Health Care (LON:PHC) 15.5p £22.9m

FYDec16 trading and research update from the provider of novel patent-protected biological products to the global agriculture markets. Revenue of approximately $6.3 million; sales in the United States decreased by approximately $1.1 million, due to the decision to reduce in-market inventories. Growth outside the United States was 15% in constant currency. Cash and equivalents $10.1m.  New distribution agreements signed in H2 show potential for growth in Commercial sales during 2017. Innatus™ 3G  trials continued to show good results.
Two new PREtec peptide platforms: T-Rex 3G and Y-Max 3G have been presented to industry players with initial agreements signed.

Deltex Medical (LON:DEMG) 4p £11.4m

FYDec16 trading update from the specialist in oesophageal Doppler monitoring. Group revenues for 2016 expected to be £6.3m (2015: £6.2m: £6.4m including research barter sales). US+40%.  Run-rate going into 2017 c 50% higher than at same stage in 2016 with continuing growth anticipated in 2017, both from existing and new accounts (two platform accounts announced separately today). International up 20%. UK down 26% but  positive market reception to new probes and new clinical evidence leading to improving trend in probe consumption in H2. Cash of £0.6m. £30k monthly cost savings in 2017 from in-house production. Substantially reduced cash burn in H2 2016 reflecting full effect of approximately £1m of annualised cost savings and growth in high margin US probe sales.

Mercia  Technologies(LON:MERC) 50.2p £106.8m

The investment group focused on the creation, funding and scaling of innovative technology businesses with high growth potential from the UK regions, announced a new direct investment of up to £1.9 million in Faradion Limited, a company focused on the development and commercialisation of advanced, low-cost battery materials. Mercia's investment is part of a syndicated investment round of up to £3.2 million .The current investment round will be used to commercialise Faradion's lead product, a novel, low-cost sodium-ion battery technology from which Mercia believes significant value will be derived over time.

Draper Esprit (LON:GROW) 347p £141.4m

The venture capital firm involved in the creation, funding and development of high-growth digital technology businesses,  has doubled its equity stake in TrustPilot, investing a further $6.9 million (£5.5 million). Draper Esprit first invested in Trustpilot in 2013, with a follow on investment in 2015 and including this current investment, has now invested £11 million. Founded in 2007, Trustpilot is a global, multi-language review community. Trustpilot has customers in 65 countries.

Midwich (LON:MIDW) 224.75p £178.56m

FYDec16 trading update from the specialist audio visual and document solutions distributor to the trade market. The Group's trading momentum continued in  H2 and it also benefited from the continued weakness in Sterling.  Growth was seen across all of the Group's divisions, in particular its overseas businesses, and it has seen a better than expected contribution from its most recent UK acquisition, Holdan. Now expects to report revenue of approximately £370m, +c.18%.  FX accounts for c.3% of this growth.  Gross margin improvement in line with the Board's expectations.  The Board now anticipates reporting adjusted profit before tax for 2016 comfortably ahead of its previous expectations. FY16E PE 14.1 x.

NAHL Group (LON:NAHL) 135.5p £61.45m

In-line FYDec16 trading update from marketing and services business focused on the UK consumer legal market. Ministry of Justice response to consultation regarding Personal Injury claims now due to be published in April. “Fitzalan and Bush, the Group's Conveyancing and Critical Care divisions, are unaffected by this consultation and we expect both to continue to make good progress in 2017.” The Group intends to propose a final dividend, payable in May 2017. FY16E £50.3m and EPS of 29.6p. Div 19.15p. 14.2% yield!

Hydrogen Group (LON:HYDG) 36.5p £8.74m

FYDec16 trading update from global specialist recruitment business. The Board expects to report net fee income for the year of c.£17.8m and a return to profitability generating a PBT of c.£0.75m as a result of the Group's strategy and a renewed focus on building market leading niches within the Group. The Group's balance sheet remains strong with net cash expected to be £2.0m (2015: £2.6m) with the reduction in cash primarily due to an increase in trade debtors. The business has a strong contractor base, a diversified client base internationally and is well positioned to take advantage of opportunities in 2017.

]]>
Wed, 18 Jan 2017 08:57:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26906/breakfast-news-aim-breakfast-christie-group-plc-deltex-medical-group-plc-fitbug-holdings-global-energy-development-mercia-technologies-plc-plant-health-care-tribal-group-plc-hydrogen-group-midwich-group-plc-26906.html
Theresa May Brexit Speech: PM reveals UK Will Leave Single Market, Flags Australia Trade Deal http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26905/theresa-may-brexit-speech-pm-reveals-uk-will-leave-single-market-flags-australia-trade-deal-26905.html Theresa May Brexit Speech: PM reveals UK Will Leave Single Market, Flags Australia Trade Deal

I think it is good to get the Australian perspective on this and here is The Sydney Morning Herald’s article on Mrs May’s speech:

London: British prime minister Theresa May has flagged a trade deal with Australia as a priority for a "new global Britain".

In a historic, detailed speech, Mrs May dashed the hopes of Remainers and delighted Brexiteers by setting out a vision of an independent UK – a "trading nation" that will look beyond Europe to "new friends and old allies".

She confirmed the UK would leave the European single market and instead would negotiate a new free trade deal with the European Union.

She was less clear on the UK's role in Europe's customs union, saying Britain would not be part of the common commercial policy or external tariffs, but could remain a "signatory to elements" in order to lower barriers to trade.

She emphasised the British people had voted to regain control of immigration, though she wanted European citizens already in the UK to retain their right to work there.

She revealed that the final Brexit deal would be presented to the British parliament for a vote before it comes into force – though she did not discuss what would happen if it was voted down, saying instead she was confident it would be approved.

Mrs May concluded with a barely-veiled threat to Europe: that if they sought a "punitive" Brexit then it would be "an act of calamitous self-harm" as the UK would retaliate by lowering its tax rates below Europe's to draw companies and investors from the continent.

She also admonished Europe for "trying to hold things together by force, tightening a vice-like grip that ends up crushing into tiny pieces the very things you want to protect".

But she said it was "overwhelmingly and compellingly in Britain's national interest that the EU should succeed".

Mrs May's speech drew a rapturous reception from those who had campaigned for Brexit, with UKIP leader Nigel Farage commenting "I can hardly believe that the PM is now using the phrases and words that I've been mocked for using for years. Real progress."

But it is likely to be less welcome in Europe.

European ambassadors were present in the room for the speech, and Fairfax understands few if any applauded the conclusion.

Some were seen shaking their heads when it came to the threat of Britain becoming a tax haven.

In a deliberate irony the speech took place at Lancaster House in London, where Margaret Thatcher set out her plan for the UK's membership of the single market in April 1988.

Mrs May began by saying she wanted the country to be "a truly global Britain", a "best friend and neighbour" to Europe but one that "goes out into the world to build relationships with old friends and new allies alike ... a great global trading nation respected around the world".

She said the UK would begin by adopting EU laws, then modifying them, to allow a smooth transition and certainty for business.

Mrs May also spent some time reassuring Ireland that there would be a "practical solution" that balanced the common travel area with Northern Ireland with the need to protect the UK's new immigration controls.

"Nobody wants to return to the borders of the past," she said.

On immigration, she said the UK would "get control" of the number of people coming to Britain from the EU, but would guarantee the rights of EU citizens already in Britain as an "important priority", preferably before the rest of the Brexit deal was done.

On trade, she said "as a priority, we will pursue a bold and ambitious free trade agreement with the European Union.

"This agreement should allow for the freest possible trade in goods and services between Britain and the EU's member states. It should give British companies the maximum freedom to trade with and operate within European markets – and let European businesses do the same in Britain.

"But I want to be clear. What I am proposing cannot mean membership of the single market."

This agreement might take in elements of the current single market as it "makes no sense to start again from scratch", she said.

But the UK needs to leave the single market and key elements of the customs union, Mrs May said, in order to strike its own trade deals.

"We want to get out into the wider world, to trade and do business all around the globe."

"Countries including China, Brazil, and the Gulf states have already expressed their interest in striking trade deals with us. We have started discussions on future trade ties with countries like Australia, New Zealand and India. And President-elect Trump has said Britain is not 'at the back of the queue' for a trade deal with the United States, the world's biggest economy, but front of the line."

 

David Fuller's view

Well done Theresa May and her team.  This speech has ended much uncertainty and also frustration on the part of Brexit supporters, who’s numbers have increased following the historic vote.

Importantly, even the Chancellor Philip Hammond has come to his senses following a dreary Autumn Statement on 23rd November.  

As for EU spokesmen, I have heard some more lame “cherry picking” comments in response to Theresa May’s speech today.  No, the government is not cherry picking – we are leaving the EU.

 

Dominic Lawson: Why Our Cautious Chancellor Just Dropped a Brexit Bomb On Berlin

Here is a section of this apt article by Margaret Thatcher’s former chancellor Dominic Lawson for the Daily Mail:

It’s not enough for Theresa May to say that if she doesn’t get a bespoke UK/EU free trade deal outside the Single Market and the Customs Union, she will walk away and risk the imposition of tariffs on both sides. She has to mean it — and be believed.

Such rough talk from her supposedly ultra-cautious Chancellor gives her much greater credibility in such a stand-off.

But Mr Hammond’s change of tone is not just a negotiating ploy. As he also pointed out to his German interviewers: ‘Since the referendum, we have seen, on the European side, movement away from the UK positions . . . to things that are anathema to the UK: more political integration.’

Some of that ‘movement’ would now be causing political mayhem in the UK, if we had not already voted to leave. Here are just four examples.

Last week, details leaked of an EU White Paper suggesting Brussels be allowed to impose taxes directly on member states, to include a levy on CO2 emissions, an electricity tax and an EU-wide corporate income tax.

Last month, the European Court of Justice ruled that British laws allowing the security services retention of bulk data on calls and emails would not be allowed to stand as they ‘exceeded what is strictly necessary’.

Also last month, Brussels ruled that all members of the Single Market had to impose a requirement that every off-road vehicle — every quadbike, every golf-cart — had to be covered by insurance for ‘third-party injury and damage’. Our own Department for Transport said that it ‘opposed measures which impose an unreasonable burden on the public’ but that it would have to abide by the new rule until Britain exits the EU.

And, only a few days ago, Brussels ruled that even motorists who break the law by driving without insurance should be protected if their car is damaged — so law-abiding drivers face an increase in insurance bills to cover that cost.

It is only because we are leaving the EU that these four power-grabs — proposing new EU-wide taxes; adversely affecting MI5’s ability to protect the British people; creating a totally new overhead for farmers and families playing around with quadbikes; and driving up the costs of running a car — have not caused an even sharper spike in the British people’s hostility to our membership.

 

David Fuller's view

That is what the bureaucratic EU does – it makes silly nanny state rules which damage free enterprise, slow GDP growth and increase unemployment. 

 

Email of the day 1, as I catch up

On the vetting of Rex Tillerson for US Secretary of State:

I spent much of the afternoon watching the live coverage of Rex Tillerson’s senate confirmation hearings.  I was very impressed with his responses, and found that some of the questions he was asked were entirely inappropriate for a public hearing as they would reveal possible ploys for dealing with the Russians.  The most petty moments were the grandstanding questions of Rubio, who appeared adolescent in contrast to a pro like Tillerson. How fortunate for all that Rubio was eliminated early on in the campaign.

Regrettably there was an overlap and I had to leave that coverage to watch The Donald.  There is clearly something wrong with that man on a personal level, but he has a very good case for the attempted vilification by certain segments of the media.  I loved his rebuff of CNN by refusing to accept any questions from their correspondent.  His comments re Buzzfeed were predictable, NYT, Vanity Faire, Streep pettiness, but that group is a joke anyway.  For me the most impressive moment was the time on stage of his attorney, who detailed the alleged efforts he has made to separate his past business ventures from his future job.  She was excellent, but I did wonder just how many blank pages there were in those stacks of documents lying on the table to her right.  Perhaps the rebuffed CNN reporter will have had a quick look.

 

David Fuller's view

Thanks for your thoughts on this important confirmation hearing.  I saw a brief section of the Rex Tillerson hearings over the weekend and was impressed.  He was very articulate, knowledgeable and reassuring on a range of subjects.

In fact, I would not have minded if he had just become the president elect.  I also maintain that Trump has selected the most capable business team of any president during my lifetime.  I think that will be good for the USA and I hope to see more successful people from the private sector nominated for senior governmental roles in the UK and any other democracies. 

(See also: If Rex Tillerson Is Confirmed By The Senate, What Does That Mean For XOM?, by Martin Tillier for Nasdaq)

 

Whisper It, But This Could be a Good Year for Growth

Here is a latter section of this excellent column by Roger Bootle for The Telegraph:

A third major factor making for a stronger world economy is not directly related to the financial crisis. At the beginning of last year the markets and many commentators managed to get themselves extremely worked up over the damage supposedly done to the world economy by low oil prices. By contrast, it seemed to me that low oil prices had to be a good thing. But the losses from low oil prices were highly concentrated and visible in the short term; by contrast, the gains were more widely distributed and might only become evident to the beneficiaries after a period of time. Accordingly, it was likely that there would be a short-term hit to the global economy, offset by a longer-term gain. We are now into that longer term.

Meanwhile, the recovery from ultra-low oil prices has brought a further benefit, namely the easing of the pressure on hard-pressed companies and countries. Russia, for instance, should emerge from recession this year. Even so, oil consuming companies and individuals are still facing much lower prices than they were two years ago. The result is that the world should now be experiencing a substantial net dividend from lower oil prices.

The upshot of all of this is that world growth this year is set to be higher than last year. Not only that, but it may well be a good deal stronger than almost anyone expects.  Of course, in the world of forecasting you have to be prepared for surprises. Over the last few years we have all been exceedingly well prepared for downside surprises. What I am about to say is decidedly risky but I will say it nevertheless: I have a hunch that we now need to be prepared for surprises on the upside.

 

David Fuller's view

I have been making many of these points for a while, so I agree with Roger Bootle.

Businessman Trump will certainly want to improve the US economy and he has selected a highly experienced and business savvy cabinet to help him achieve this goal.  There is a risk that he might trigger a trade war with China, but I think he is too smart for that lose-lose mistake.

Trump is fed-up with what he saw as Obama’s passivity.  He wants China to know that the US will now compete, and also cooperate, on a level playing field.  The same goes for Russia and any other country, although I think he could be particularly helpful towards the UK, as thanks for Brexit which Trump believes helped him to win the Presidential Election.  He holds little affection for the EU, having heard more about it from Nigel Farage, and having seen some of the whopping legal settlements and fines imposed on US corporations.  He probably views the EU as a rival rather than a friend, and he knows it has seldom paid its 2% of GDP per country NATO fees.

This item continues in the Subscriber’s Area, where a PDF of Roger Bootle’s column is also posted.

 

Email of the day 2

On Fuller Treacy Money and Markets Now:

I just wanted to say again 'thank you'. I know it feels hard work at times but you make a huge difference to many lives with your efforts at Fuller Treacy Money and Markets Now.  Please keep going. I will support you all I can. It is a real pleasure to know you.

 

David Fuller's view

Thank you for this thoughtful email.

I have learned a great deal from my subscribers over the decades.  They include some of the nicest and most knowledgeable people, sometimes from very different professions, that I have ever met. 

 

Stocks Could Post Limited Gains in 2017 as Yields Rise

Thanks to a subscriber for this transcript of Barron’s annual roundtable. Here is a section:

Gundlach: People have forgotten the mood regarding stocks and bonds in the middle of 2016. Investors embraced the idea that zero interest rates and negative rates would be with us for a very long time. People said on TV that you should buy stocks for income and bonds for capital gains. This is when 10-year Treasuries were yielding 1.32%. Someone actually said rates would never rise again. When you hear “never” in this business, that usually means what could “never” happen is about to happen. I told our asset-allocation team in early July that this was the worst setup I’d seen in my entire career for U.S. bonds. It occurred to me that the bond-market rally was probably very near an end, and fiscal stimulus would soon become the order of the day.

Schafer: People were also worried about deflation back then.

Gundlach: Based on a comparison in July of nominal Treasuries to Treasury Inflation-Protected Securities, or TIPS, the bond market was predicting an inflation rate of 1.5%, plus or minus, for the next 30 years. Now, that is implausible, and kind of proves the efficient-market hypothesis is wrong. More likely, the inflation rate would increase not in five or 10 years, but one year, because commodity prices had already bottomed. The Federal Reserve Bank of Atlanta’s wage-growth tracker is now up 4%, year over year. Oil prices have doubled since January 2016, to around $52 a barrel, which likely means that headline CPI [the consumer-price index] will be pushing 3% in April.

I expect the history books will say that interest rates bottomed in July 2012, and double-bottomed in July 2016. At some point, the backup in rates will create competition for stocks. Bonds could rally in the short term, but once the yield on the 10-year Treasury tops 3%, which could happen this year, the valuation argument for equities becomes problematic. When the long bond [the 30-year Treasury] was at 2%, bonds had a P/E of 50. Compared with that, a P/E of 20 on stocks didn’t look all that bad. But if the 10-year yield hits 3%, you could be talking about 4% on the 30-year, which implies a P/E of 25.

Something else happened in 2016: The Fed capitulated, as I predicted a year ago. The Fed gave up on its forecast for higher interest rates and lowered its dot projections for 2017, just when it might have been right. [The Fed’s so-called dot plot shows the interest-rate projections of the individual members of its policy-setting committee.] In December, the Fed had to reverse itself and raise rates.

Priest: For the first time in years, the Fed didn’t lower its forecast for GDP [gross domestic product] growth in coming years. Central banks and the International Monetary Fund have been dead wrong for years with their annual forecasts for world GDP growth. The danger now is that pressure on P/E multiples will be negative. Unless we get tax reform and more growth in the real economy, the chances of a down stock market aren’t insignificant this year.

Gundlach: Fed Chair Janet Yellen suggested a few months ago that running a “hot” economy might not be such a bad idea. But when unemployment is low, wages are rising, and significant fiscal stimulus is likely, inflation could exceed consensus expectations. Jim Grant, the founder of Grant’s Interest Rate Observer, wrote a fantastic article a few years ago likening the current environment to the 1940s and ’50s. Short-term interest rates were at 3/8s in the late 1940s, and long rates were around 2%-2.5%. Inflation was running at 2%. Everyone had been predicting higher inflation rates, but after a long period of 2%, they gave up. Then inflation spiked to 8%. It came out of the blue.

Gabelli: Does the strength of the dollar change your thinking?

Gundlach: A strong dollar keeps inflation lower. It is helpful to the bond market. A weak dollar isn’t helpful to the bond market. However, I brought along a quote from President-elect Trump today because it makes me think. He said, “While there are certain benefits to a strong dollar, it sounds better to have a strong dollar than it actually is.” Is it really a given that Trump will bring us a strong dollar if he is supposed to be helping the forgotten middle class.

 

 

Eoin Treacy's view

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

Bonds sold off very aggressively following the November election result and the Dollar surged. The news flow has been sensational and Twitter has probably never been so popular but the reality is that both of these overextended short-term moves are unwinding.

 

Iron ore price: China imports top 1 billion tonnes for first time

This article by Frik Els for Mining.com may be of interest to subscribers. Here is a section:

Forging more than half the world's steel, Chinese imports of iron ore for the full year 2016 topped one billion tonnes for the first time. The 1.024 billion tonnes constitute a 7.5% increase over the annual total in 2015 and is indicative to what extent exporters from Brazil and Australia has been able to displace domestic producers struggling with low grades and high costs.

The total value of cargoes climbed to just under $58 billion, with the average import price over the course of 2016 at $56.50 per tonne. The all-time record in terms of dollar value was set in January 2014, when the country imported $111.3 billion worth of iron ore back when prices were firmly in triple digit territory.

 

Eoin Treacy's view

Iron-ore prices have not quite broken out to new recovery highs but have sustained last year’s breakout from a well-defined base formation and the upside can be given the benefit of the doubt provided that remains the case.

 

Alibaba jumps ahead of Amazon with Maersk tie-up

This article by Sam Chambers for splash247 may be of interest to subscribers. Here it is in full:

Alibaba’s move to partner with Maersk Line should be seen as a game of one-upmanship with US rival Amazon, a leading name in online logistics has said.

Chinese customers will now be able to book space on Maersk ships, a first for the industry and one that potentially removes many freight forwarders as middlemen.

Dr Zvi Schreiber, CEO and founder of logistics technology Freightos, offered his perspective on the bigger picture and what this deal means for online shoppers and Alibaba’s rival, Amazon.

“Maersk is testing the waters of digital sales with one of the world’s largest ecommerce companies while threatening forwarder business. But for Alibaba, this is a direct challenge to global retailers like Amazon. Beyond drones and futuristic supermarkets, Amazon opted to get licensed as a forwarder. Alibaba one-upped them by going directly to the world’s largest ocean liner. Point, Alibaba.”

 

Eoin Treacy's view

There is a great deal of speculation going on at present relating to the implications of a Trump presidency on global trade. Certainly an America first manufacturing policy would have profound implications for low cost, high population countries’ ability to compete against what would in all likelihood be a highly automated US attempt to re-shore. Nevertheless even with the most ambitious timetable that kind of initiative could take years to unfold.

]]>
Wed, 18 Jan 2017 08:39:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26905/theresa-may-brexit-speech-pm-reveals-uk-will-leave-single-market-flags-australia-trade-deal-26905.html
In the Papers - Citigroup, Apple, Deliveroo, ExxonMobil http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26904/in-the-papers-citigroup-apple-deliveroo-exxonmobil-26904.html Newspaper Summary

The Times

Global giants answer call to invest in U.S.: Four multinational companies have promised to spend billions of dollars and create thousands of jobs in the United States in an apparent attempt to curry favour with Donald Trump.

Tiffany rues the nightmare next door: Sales at the famous store fell by 14% over the holiday period, Tiffany said as it blamed “post-election traffic disruptions” for some of the decline. The jeweller said in late November that it had begun to experience “some adverse effect” from the Trump Tower circus.

East Anglia deal opens a route for HS2 bid: Mitsui has become the first Japanese company to join the increasingly international list of operators with their hands on the controls of Britain’s railways by buying a 40% stake in the East Anglia train franchise.

Ultra-low interest rates ‘boost house prices’: House price growth showed no sign of slowing in November as official figures showed an annual increase of 6.7% and a jump of £2,000 from October.

Confidence grows as Britons shrug off worries over Brexit: A quarter of Britons expect to be better off in 2017 than last year, despite rising inflation and fears of a “hard” Brexit, according to PwC002E

City firm crashes as lawyers rush to exit: The London office of King & Wood Mallesons went into administration after months of partner defections at the City law firm and with at least £35 million owed to its bank.

MoD gives supplier nuclear power boost: One of the biggest service providers to Britain’s nuclear industry has been awarded a £35 million contract by the Ministry of Defence.

Iron will and discipline pay off for Rio Tinto: Rio Tinto reported an 8% jump in iron ore shipments as commodities prices continue to recover.

Big news for future of Little Chef: It was once a feature of many British roadsides, with hundreds of restaurants across the country., with 70 outlets remaining, Little Chef looks set to change hands again. Kout Food Group, which bought the chain for £15 million in August 2013, is said to be in talks with Euro Garages about selling the brand and its outlets.

The Independent

William Hague is joining one of Wall Street’s biggest banks: William Hague, the U.K.’s former foreign secretary, will be joining Wall Street giant Citigroup as senior adviser.

Oil-giant Saudi Arabia reveals $50 billion plan to become ‘solar powerhouse’: Saudi Arabia, one of the world’s biggest oil producers, is seeking up to $50 billion (about £40.1 billion) of investment in solar and wind energy, while also drawing up plans for the country’s first nuclear power stations.

Bank of America Boss urges government clarity on Brexit: The chairman and Chief executive of Bank of America says major companies like his need clear rules before deciding how much business to maintain in Britain after it quits the European Union.

Apple prices rocket because of post-Brexit pound slump: Apple is pushing up the price of apps by 25% to make up for the plunging value of the pound.

Business elite failed to predict Trump because they are in a ‘bubble’: The world’s business elite failed to predict Brexit and Donald Trump’s election victory because the top decision-makers and executives talk to each other in a Davos “bubble”, Sir Martin Sorrell said in his speech on the opening day of the World Economic Forum.

The Daily Telegraph

City figures give stoic welcome to May’s plans for EU single market exit: Business figures have cautiously welcomed the Prime Minister’s pledge to withdraw the U.K. from the single market.

Deliveroo to hire hundreds of engineers at London HQ: Deliveroo plans to employ hundreds of new staff at a new London headquarters, trebling its current engineering headcount.

ExxonMobil doubles U.S. shale assets in £5.32 billion deal: ExxonMobil will double its presence in the shale-rich Permian oil basin in Texas with a $6.6 billion (£5.32 billion) deal to buy a string of family-owned oil companies.

Discount retailer Pep&Co to raise prices to cover loss-making £1 t-shirts: Pep & Co, the discount fashion retailer, has warned it is under pressure to raise prices as it is losing money on £1 t-shirts following the sterling slump.

North Sea explorers focus on African fields in quest for low-cost oil: North Sea oil companies Cairn Energy and Tullow Oil are both planning to tap low-cost African oil fields this year to take full advantage of the rising price of crude oil.

Jump in bond trading during U.S. election helps Morgan Stanley beat forecasts: Morgan Stanley has sailed through the turbulent markets triggered by the U.S. election to deliver better-than-expected earnings, with bond trading soaring in the past three months.

The Questor Column:

Serco shows renewed health as turnaround plan lifts profits and cuts debt: After a strong 2016 support services group Serco is slowly rehabilitating itself. Fresh progress toward Chief executive Rupert Soames’ revenue growth and profit margin targets could lead to further share price gains for patient investors. According to analysts’ forecasts sales may have bottomed last year at around £3billion and, although only minor improvements are expected in 2017 on the revenue front, profits are already on the rise. Return on sales reached 3.3% at the first-half results, on an underlying basis. December’s 10-year framework contract from the Barts Health NHS Trust suggests the company may finally be emerging from the Government’s doghouse after the criminal tagging overcharging fiasco. Further big deals would be a further assertion of Serco’s return to health. However, President Donald Trump’s plans to repeal and replace America’s Affordable Care Act, or ObamaCare, must be watched, as Serco does work for the scheme. Finally, net borrowing fell to just £120 million at the end of the first half compared with £682 million when Mr. Soames took over, owing to 2015’s rights issue and the self-help programme. Serco is not without its risks and the profit targets may only be met in two to three years’ time but Serco looks to be on the way back. Questor says ‘Buy’.

Wm Morrison: A 2.9% increase in like-for-like sales (excluding fuel and VAT), dubbed the company’s best performance in seven years by Boss David Potts, leaves us with a solid early gain in Morrisons. As part of its festive trading update last Tuesday Morrisons added that underlying pre-tax profit for its whole financial year would exceed market expectations – reaching between £330 million and £340 million. That would mark the first increase in profits since 2011. At first glance the shares do not look unduly cheap, on around 21 times forecast earnings. This is a big premium to the broader market, which trades on nearer 15 times. However, value investors will be intrigued to see that the company’s market cap and net debt come to £6.9 billion while tangible fixed assets on the balance sheet are £7.1 billion. The supermarkets still face fierce competition but expectations are low, debt is falling and the stock still looks cheap on an asset basis. Questor says ‘Buy’.

The Guardian

Rolls-Royce apologises in court after settling bribery case: The engineering giant Rolls-Royce has apologised after it was found to have paid bribes including a luxury car and millions of pounds’ worth of cash to middlemen to secure orders in six countries, including Indonesia, Russia and China.

Xi Jinping signals China will champion free trade if Trump builds barriers: China’s premier, Xi Jinping, has delivered a strong defence of globalisation, serving notice to Donald Trump that Beijing will seek to usurp America’s traditional role as the champion of free trade and open markets.

Top Trump adviser says post-Brexit trade deal feasible within a year: Teresa May’s hopes of striking a trade deal with the incoming Donald Trump administration have been given a boost after a leading adviser to the President-elect said a new accord could be achieved within six to 12 months.

Daily Mail

PM’s Brexit speech boosts pound but sends FTSE plunging 1.46% -  its sharpest fall since June: The pound rallied as Prime Minister Theresa May took a hard line on Brexit, sending the stock market to its sharpest fall since June. The FTSE 100 dropped 1.46%, or 106.8 points, to 7220.4.

Standard Chartered shares jump on news it has completed three shipping deals worth £1.3 billion: Standard Chartered shares jumped after it revealed it had completed three shipping finance deals worth more than £1.3billion.

U.S. Boss to take helm at Micro Focus after tie-up with HP Enterprise: Micro Focus has announced its Boss will come from HP Enterprise following the British tech giant’s takeover of the American company’s software arm.

Insurer Legal & General to be first U.K. company to publish how much more Bosses earns than other employees: Legal & General is planning to become the first major U.K. company to disclose how much more its Chief executive earns than rank-and-file employees.

Daily Express

House prices in the South-East fall amid Southern Rail chaos: The South East saw the biggest house price falls in the country, as Southern Rail strikes and train chaos hits the market.

Gold prices soar ahead of May’s Brexit speech as markets set for usual panic: The price of gold has jumped by more than one% as nervous traders pile into the investment safe haven ahead of a speech by the Prime Minister.

World’s largest tobacco firm formed by BAT £40.8 billion takeover of U.S. rival Reynolds: Dunhill and Lucky Strike firm British American Tobacco has agreed a £40.8 billion ($49.4 billion) takeover of U.S. rival Reynolds in a deal creating the world’s largest listed tobacco company.

Cost of living jumps to two-year high as inflation hits 1.6%: The cost of living in Britain has jumped to its highest level in two and a half years, thanks to the rising price of food and air fares.

The Scottish Herald

Prentice to lead Hampden team: Hampden & Co, the Edinburgh-based private bank, has snapped up sector veteran Mark Prentice to lead its banking team in Scotland.

Cheer for Hotel Chocolat: Hotel Chocolat has notched up an impressive 16.2% rise in second quarter sales as it benefited from a strong Christmas.

GA cites low price of oil as it makes a loss: Dundee-based GA Engineering has cited the downturn in activity in the oil and gas sector due to the low price of Brent Crude as it recorded a loss in its latest accounts.

Bus firm facing headwinds: Highland Country Buses, a division of Stagecoach, has reported a fall in profits – and warned it faces headwinds from ongoing economic weakness and the effect of government spending cuts on local authorities.

Four-strong Ross Harper team appear at tribunal: Four former partners of collapsed firm Ross Harper were this week up before a Scottish Solicitors Discipline Tribunal hearing that could ultimately see them struck off the solicitors roll.

Profits shoot up from low base at Anderson Strathern’s wealth management arm: Profits at the wealth management arm of Anderson Strathern were 140 times higher in the year to August 2016 than in the previous 12 months after the business cut out a chunk of costs.

Retailers buoyed by festive boost to food sales: Scottish retail sales value rose in the key trading month of December at the sharpest underlying year-on-year pace since January 2014, underpinned by strength in the grocery sector, the latest industry figures reveal.

West of Shetland in focus as exploration interest grows: Big oil and gas companies will increase exploration drilling in North Sea frontier areas such as West of Shetland this year amid an improvement in industry conditions and record mergers and acquisitions activity off the U.K., experts have predicted.

Experts warn hard Brexit will increase insolvencies: More than three-quarters of U.K. insolvency and restructuring experts believe a hard Brexit will lead to more firms going to the wall.

Maclay seals insurance deal for pensions: Maclay Murray & Spens offloaded its final-salary pension scheme in the past financial year, potentially to get rid of the liability ahead of a possible merger deal.

Enermech lands deal to acquire Australian firm EPS: Enermech, the Aberdeen- based engineering services specialist, has acquired Australia’s EPS Group, marking its first move into the electrical and instrumentation (E&I) sector.

The Scotsman

Record year for Edinburgh Airport as millions pass through in 2016: Edinburgh Airport has broken a new annual record for passengers at any Scottish airport after it confirmed 12,366,498 flew through the airport in 2016.

Greggs sales boosted by demand for healthier snacks: Sausage roll maker Greggs has reported stellar fourth-quarter trading as it prepares to refresh its drinks menu with the likes of vanilla latte and green tea.

Strathclyde Uni chosen for high-tech farming initiative: Academics from a Scottish university are to spearhead a multi-million-pound international research project looking to bring the farming industry firmly into the 21st century.

Social beer brand gets funding injection: Brewgooder, the not-for-profit craft beer brand, is looking to get into more pubs and off licences after benefiting from a new funding package.

Edinburgh hotel changes hands in £18 million deal: One of Edinburgh’s biggest and busiest city centre hotels has changed hands for almost £18 million as buyers are sought for two further Scottish establishments. The 161-bedroom Holiday Inn Express on the capital’s Picardy Place had been caught up in the collapse of Aberdeen-based European Development Company (EDC), which fell into administration in November. Founded in 2007, EDC owned the Edinburgh site as well as two Holiday Inns in the Granite city.

Edinburgh tech firm Craneware eyes healthy rise in earnings: Craneware, the Edinburgh-based software company, said it was on track to deliver a 15% rise in revenues and underlying earnings for the first six months of its financial year.

City A.M.

640,000 jobs in the sciences to be filled by 2023: The number of jobs in science, research, engineering and technology (STEM) will grow at double the rate of other careers, providing an additional 142,000 new jobs in the U.K. between now and 2023.

Deutsche Bank agrees $7.2 billion settlement with U.S. Department of Justice over mortgage-backed securities: Deutsche Bank has agreed to pay the U.S. Department of Justice $7.2 billion (£6 billion) over misleading investors with sales of mortgage-backed securities in the run-up to the financial crisis.

Provident Financial Boss rebuffs Brexit doom-mongering: The Boss of subprime lender Provident Financial said post-Brexit economic doom-mongering has been proven to be wrong and is quietly confident about what 2017 will bring.

Patisserie Valerie owner nears takeover of upmarket chain founded by Raymond Blanc: The owner of Patisserie Valerie is nearing a deal to take over an upmarket bakery chain founded by celebrity chef Raymond Blanc.

]]>
Wed, 18 Jan 2017 08:28:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26904/in-the-papers-citigroup-apple-deliveroo-exxonmobil-26904.html
Market Briefing - UK markets closed in the red yesterday, after UK’s Prime Minister, Theresa May, stated that Britain would leave the European Union’s single market. http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26903/market-briefing-uk-markets-closed-in-the-red-yesterday-after-uks-prime-minister-theresa-may-stated-that-britain-would-leave-the-european-unions-single-market-26903.html UK Market Snapshot

UK markets closed in the red yesterday, after UK’s Prime Minister, Theresa May, stated that Britain would leave the European Union’s single market. British American Tobacco dropped 3.8%, after the company announced that it would acquire remaining 57.8% shares in US peer Reynolds American for $49.4 billion. Mining firms, Anglo American, BHP Billiton and Vedanta Resources slipped 2.3%, 2.9% and 3.8%, respectively, on lower metal prices. Intertek Group declined 3.2%, following a broker downgrade on the stock to ‘Underperform’ from ‘Neutral’. On the contrary, Rolls-Royce Holdings advanced 4.4%, amid news that the company would settle corruption allegations brought by UK and US authorities by paying £671.0 million. Standard Chartered gained 2.8%, after the bank stated that it had completed three shipping finance deals worth more than $1.6 billion in recent months. The FTSE 100 declined 1.5%, to close at 7,220.4, while the FTSE 250 fell 0.4%, to settle at 18,241.0.

US Market Snapshot

US markets closed lower yesterday, after comments from President-elect, Donald Trump, that the strong US Dollar is hurting the US economy and as financial and healthcare stocks slumped. Banks, JP Morgan Chase, Bank of America and Comerica dropped 3.6%, 4.2% and 6.5%, respectively. Merck, Gilead Sciences and Celgene declined 1.4%, 1.6% and 2.2%, respectively, after Trump vowed to address drug pricing issues. Tiffany lost 2.5%, after the company reported disappointing holiday season sales results. On the positive side, Clayton Williams Energy rallied 39.7%, after Noble Energy, up 7.1%, agreed to acquire the company in a cash-and-stock deal valued at $2.7 billion. Reynolds American advanced 3.1%, after British American Tobacco announced that it would buy the remaining stake in the company for $49.4 billion. The S&P 500 slipped 0.3%, to settle at 2,267.9. The DJIA shed 0.3%, to settle at 19,826.8, while the NASDAQ slid 0.6%, to close at 5,538.7.

Europe Market Snapshot

Other European markets finished in negative territory yesterday, after British Prime Minister, Theresa May, outlined her Brexit plans. Zalando tumbled 5.8%, after it posted downbeat results for the fourth quarter. Alstom slipped 0.9%, despite reporting a growth in its sales for the third quarter. Bucking the trend, Cicor Technologies surged 11.1%, after the company reported a significant increase in its order intake for 2016. Chocoladefabriken Lindt & Spruengli jumped 4.8%, following better than expected organic sales growth in 2016. Beiersdorf added 0.1%, after the company’s group sales for 2016 surpassed market estimates. The FTSEurofirst 300 index declined 0.3%, to close at 1,430.9. Among other European markets, the German DAX Xetra 30 slid 0.1%, to close at 11,540.0, while the French CAC-40 shed 0.5%, to settle at 4,859.7.

Asia Market Snapshot

Markets in Asia are trading mostly lower this morning, mirroring overnight losses on Wall Street. In Japan, banks, Sumitomo Mitsui Financial Group, Mizuho Financial Group and Mitsubishi UFJ Financial Group have lost 1.0%, 1.3% and 1.6%, respectively. Major exporters, Canon, Sony and Panasonic have declined 0.4%, 1.2% and 1.4%, respectively, amid a stronger Japanese Yen. In Hong Kong, lenders, Industrial and Commercial Bank of China and Bank of East Asia have gained 0.8% and 1.6%, respectively, ahead of the final policy address from Hong Kong’s Chief Executive, Leung Chun-ying. In South Korea, Hyundai Motor and LG Electronics have gained 1.0% and 1.9%, respectively, while SK Hynix has fallen 1.6%. The Nikkei 225 index is trading 0.1% lower at 18,801.3. The Hang Seng index is trading 1.1% up at 23,101.4, while the Kospi index is trading 0.1% lower at 2,070.1.

Key Corporate Announcements Today

AGMs

Diploma, Game Digital, Majedie Investments, Guscio

Final Dividend Payment Date

Focusrite, Northamber

Interim Dividend Payment Date

British Smaller Companies VCT, Circle Property, Ventus VCT D Shs, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus 2 VCT D Shs, Ventus VCT, Ventus VCT 'C' Shares

Special Dividend Payment Date

British Smaller Companies VCT

Quarterly Payment Date

Assura

Trading Announcements

Ladbrokes Coral Group, Burberry, Diploma, Experian, Hochschild Mining, Premier Foods, JD Wetherspoon, Watkin Jones

Key Corporate Announcements for Tomorrow

AGMs

Cardiff Property

EGMs

Industrial Multi Property Trust

Final Ex-Dividend Date

Baring Emerging Europe, Compass Group, Dewhurst, Shaftesbury, Third Point Offshore Investors Limited, Third Point Offshore Investors Ltd. GBP Shares, UDG Healthcare Public Limited Company

Interim Ex-Dividend Date

Aberdeen Asian Income Fund Ltd., Alcentra Euorpean Floating Rate Income Fund Ltd Red Ord Shs, Amedeo Air Four Plus Limited, Ashtead Group, Bilby, Consort Medical, Coral Products, Doric Nimrod Air One Ltd, Doric Nimrod Air Three Limited Red Ord Pref Shs Npv, Doric Nimrod Air Two Ltd Pref Shs Npv, Ediston Property Investment Company, Empiric Student Property, Fletcher King, London & St lawrence Inv Co., North American Income Trust (The), SSE, Supergroup, Twentyfour Income Fund Limited Ord Red, TwentyFour Select Monthly Income Fund Limited, UK Mortgages Limited

Interim Dividend Payment Date

Crystal Amber Fund Ltd., Electra Private Equity, JPMorgan Global Markets Emerging Income Trust

Quarterly Ex-Dividend Date

Custodian Reit

Trading Announcements

Halfords Group, Revolution Bars Group, British Land, Brown (N), Evraz, Halfords, Moneysupermarket.com, Pets at Home, Royal Mail, Workspace, Acacia Mining

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.34% or $0.19 higher at $55.66 per barrel, ahead of the American Petroleum Institute weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 0.70% or $0.39, to settle at $55.47 per barrel, after a monthly report by the Energy Information Administration indicated that US shale production would rise by 41,000 barrels per day in February from current month.

Gold

At 0430GMT today, Gold futures contract is trading 0.13% or $1.60 higher at $1214.50 per ounce. Yesterday, the contract climbed 1.40% or $16.70, to settle at $1212.90 per ounce, reaching a 2-month high level, amid mounting concerns surrounding Brexit and as the US Dollar lost ground against its peers following Trump’s comments.

Currency

At 0430GMT today, the EUR is trading 0.18% lower against the USD at $1.0693, ahead of the Euro-zone and German consumer prices for December, slated to release in a few hours. Moreover, the US Federal Reserve (Fed) Chairwoman, Janet Yellen’s speech along with Fed’s Beige Book report, due later in the day, will grab investors’ attention. Yesterday, the EUR strengthened 1.06% versus the USD, to close at $1.0712, after the German ZEW current situation index jumped more than expected in January, marking its highest level since July 2011.

At 0430GMT today, the GBP is trading 0.63% lower against the USD at $1.2335, ahead of UK’s ILO unemployment rate for the three months till November, set to release in the day. Additionally, the US consumer price index for December, scheduled to release today, will be closely assessed by traders. Yesterday, the GBP advanced 3.07% versus the USD, to close at $1.2413, after UK’s Prime Minister, Theresa May, announced that the final Brexit deal would be put to both Houses of Parliament for a vote.

Fixed Income

In the US, long term treasury prices rose and pushed yields significantly lower, as Donald Trump disapproved House Republicans’ border tax plan stating that it is too complicated. Yesterday, yield on 10-year notes plunged 7 basis points to 2.33%, while yield on 2-year notes lost 4 basis points to 1.17%. Meanwhile, 30-year bond yield tumbled 6 basis points to 2.93%.

Key Economic News

Theresa May outlined clean break for Britain

During a speech at Lancaster House in London, the British Prime Minister, Theresa May, laid out her vision for a cleaner break from Europe. May confirmed that Britain would leave the European Union (EU) single market, which guarantees the free movement of goods, services and people within the bloc. The Prime Minister made it clear that her fundamental aim was to regain full control of immigration and lawmaking -- and that leaving the single market was the inevitable consequence. Further, she hopes to complete a final deal with the EU by March 2019 and it would be voted on by both houses of Parliament.

UK house price index rose more than expected in November

On an annual basis, the house price index climbed 6.70% in the UK, in November, higher than market expectations for a rise of 6.10%. The house price index had recorded a revised rise of 6.40% in the prior month.

UK core CPI advanced more than expected in December

In December, on a YoY basis, the core consumer price index (CPI) advanced 1.60% in the UK, more than market expectations for a rise of 1.40%. In the previous month, the core CPI had registered a rise of 1.40%.

UK PPI core output rose less than expected in December

In the UK, the non-seasonally adjusted producer price index (PPI) core output climbed 2.10% in December, on a YoY basis, less than market expectations for an advance of 2.20%. In the prior month, PPI core output had climbed by a revised 2.30%.

UK output PPI advanced less than expected in December

The non-seasonally adjusted output PPI in the UK registered a rise of 0.10% in December on a MoM basis, lower than market expectations for an advance of 0.40%. In the prior month, output PPI had registered a revised similar rise.

UK input PPI advanced more than expected in December

On a YoY basis, the non-seasonally adjusted input PPI registered a rise of 15.80% in the UK, in December, higher than market expectations for a rise of 15.50%. Input PPI had advanced by a revised 13.30% in the previous month.

UK input PPI advanced less than expected in December

In the UK, the non-seasonally adjusted input PPI rose 1.80% in December on a monthly basis, less than market expectations for a rise of 2.40%. In the previous month, input PPI had fallen by a revised 0.60%.

UK CPI advanced more than expected in December

In the UK, the CPI climbed 0.50% in December on a monthly basis, more than market expectations for an advance of 0.30%. The CPI had climbed 0.20% in the previous month.

UK retail price index advanced more than expected in December

On an annual basis, the retail price index in the UK rose 2.50% in December, more than market expectations for an advance of 2.30%. The retail price index had registered a rise of 2.20% in the previous month.

UK retail price index ex-mort int. payments rose more than expected in December

On a YoY basis, the retail price index ex-mort int. payments climbed 2.70% in December, in the UK, more than market expectations for a rise of 2.50%. The retail price index ex-mort int. payments had advanced 2.50% in the previous month.

UK output PPI rose less than expected in December

The non-seasonally adjusted output PPI in the UK rose 2.70% in December on a YoY basis, compared to a revised advance of 2.40% in the prior month. Market expectation was for output PPI to rise 2.90%.

UK CPI rose more than expected in December

In December, the CPI rose 1.60% on a YoY basis in the UK, compared to an advance of 1.20% in the previous month. Market expectation was for the CPI to climb 1.40%.

UK PPI core output remained unchanged in December

The non-seasonally adjusted PPI core output remained unchanged on a MoM basis in the UK, in December, less than market expectations for an advance of 0.20%. PPI core output had registered a revised rise of 0.10% in the prior month.

UK retail price index registered a rise in December

In December, the retail price index registered a rise of 0.60%, on monthly basis, to a level of 267.10 in the UK, compared to a level of 265.50 in the prior month. Markets were anticipating the retail price index to climb to a level of 266.70.

Euro-zone economic sentiment index climbed in January

The economic sentiment index registered a rise to 23.20 in January, in the Euro-zone, compared to a level of 18.10 in the previous month.

Euro-zone new car registrations in EU 28 countries registered a rise in December

In the Euro-zone, new car registrations in the EU 28 countries climbed 3.00% on a YoY basis, in December. In the prior month, new car registrations in the EU 28 countries had advanced 5.80%.

German economic sentiment index recorded a rise in January

The economic sentiment index recorded a rise to 16.60 in January, in Germany, compared to market expectations of an advance to a level of 18.40. The economic sentiment index had recorded a level of 13.80 in the prior month.

German current situation index registered a rise in January

The current situation index recorded a rise to 77.30 in Germany, in January, higher than market expectations of a rise to a level of 65.10. In the prior month, the current situation index had recorded a reading of 63.50.

Italian trade surplus dropped in November

In November, (EU countries) trade surplus in Italy narrowed to €0.24 billion, compared to a revised trade surplus of €0.45 billion in the previous month.

Italian trade surplus widened in November

Italy has registered (non-EU countries) trade surplus of €3.97 billion in November, compared to a trade surplus of €3.80 billion in the prior month.

US NY Empire State manufacturing index registered a surprise drop in January

The NY Empire State manufacturing index dropped unexpectedly to a level of 6.50 in January, in the US, lower than market expectations of a rise to a level of 8.50. The NY Empire State manufacturing index had recorded a revised reading of 7.60 in the previous month.

Japanese industrial production advanced in November

On an annual basis, the final industrial production registered a rise of 4.60% in November, in Japan. Industrial production had recorded a drop of 1.40% in the prior month. The preliminary figures had also recorded a rise of 4.60%.

Japanese industrial production rose in November

The final industrial production in Japan climbed 1.50% in November, on a monthly basis. Industrial production had registered a flat reading in the prior month. The preliminary figures had also indicated a rise of 1.50%.

Japanese capacity utilisation advanced in November

In Japan, capacity utilisation registered a rise of 3.00% on a monthly basis, in November. Capacity utilisation had risen 1.40% in the prior month.

Chinese house price index rose in December

On a YoY basis, the house price index climbed 12.40% in December, in China. The house price index had recorded a rise of 12.60% in the prior month.

]]>
Wed, 18 Jan 2017 08:15:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26903/market-briefing-uk-markets-closed-in-the-red-yesterday-after-uks-prime-minister-theresa-may-stated-that-britain-would-leave-the-european-unions-single-market-26903.html
Beaufort Securities Breakfast Alert: AstraZeneca, Dekeloil Public Ltd, Evgen Pharma, Hotel Chocolat Group http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26902/beaufort-securities-breakfast-alert-astrazeneca-dekeloil-public-ltd-evgen-pharma-hotel-chocolat-group-26902.html Today's edition features:

DekelOil Public Limited (LON:DKL)

AstraZeneca (LON:AZN)

Evgen Pharma (LON:EVG)

Hotel Chocolat (LON:HOTC)

"While advanced media notice of key aspects from Theresa May’s speech took the sting out of the event itself, Sterling undertook its biggest rally since 2008 on the basis of her exacting presentation and the fact that UK corporates can now at least plan for a formal exit from the single market. Most commentators thought the PM was demanding both to have her cake and eat it, while injecting veiled threats should the EU decide to adopt a hard line for good measure but, in reality, this has to be her starting point. Considering the two or three months of ground preparation needed following the enacting of Article 50, plus the 4 or 5 months required to gain approval from all the EU’s national parliaments, the remaining 16 to 18 months barely looks enough to get a comprehensive framework in place, particularly given that it will also be subject to approval here by both MPs and Peers. To hope that the process will also have been sufficiently engineered to permit what she wishes to be “a smooth and orderly Brexit”, is possibly asking for too much. So something looks like it will have to give, which is a concern given that pricing data released yesterday morning confirmed December’s UK inflation had accelerated to its fastest pace in more than two years with Sterling’s step decline driving a surge in import cost. Now at 1.6%, CPI is within striking distance of the Bank of England’s 2% target which it believes will be breached early summer. Although Mark Carney is expected permit the economy to ‘run hot’ for the whole of 2017 unless the figure spikes a full percent above his preferred ceiling, UK’s highly indebted economy will likely already be slowing the following year just when it will be knocked further by a series of interest rate hikes. Not the best circumstances to confront the realities of life outside the EU! Having thrown the markets yet another googly, Donald Trump describing the US$ as “too strong” was enough to unnerve the principal US equity indices which all ended in negative territory. Asia also suffered from his apparently haphazard commentary, closing mixed to down as the US$ recovered slightly from its earlier dive to a 1-month low against the international basket, with Chinese equities the only ones confident enough to stay in the positive. While Theresa May heads for Davos in order to convince world leaders she has a winning Brexit strategy, the UK is due to release unemployment data as the also EU publishes its December Consumer Price Index. A batch of US macro releases, such as the Redbook, Consumer Prices, Industrial Production and the NAHB Housing Market Index, can be expected this afternoon. A batch of US macro releases, such as the Redbook, Consumer Prices, Industrial Production and the NAHB Housing Market Index, can also be expected. UK corporates due to provide earnings or trading updates include Anglo Pacific (APF.L), Diploma (DPLM.L), Experian (EXPN.L), Ladbrokes Coral (LCL.L), Pearson (PSON.L), Premier Foods (PFD.L), Watkin Jones (WJG.L) and Weatherspoons (JDW.L). While media comment regarding Rolls-Royce’s involvement in contract bribery will generate some market gossip this morning, traders will also be more focussed on quarterly earnings anticipated from a number of US majors this afternoon. Against this background, London is seen opening gently firmer this morning, with the FTSE-100 rising 15 points or so in early trade. "

- Barry Gibb, Research Analyst

 

Markets

Europe

The FTSE-100 finished yesterday's session 1.46% lower at 7,220.38, whilst the FTSE AIM All-Share index closed 0.41% down at 872.19. In continental Europe, the CAC-40 finished 0.46% lower at 4,859.69 whilst the DAX was down 0.13% at 11,540.00.

Wall Street

In New York last night, the Dow Jones fell 0.3% to 19,826.77, the S&P-500 lost 0.3% to 2,267.89 and the Nasdaq dropped 0.63% to 5,538.73.

Asia

In Asian markets this morning, Nikkei 225 had risen 1.23% to 18,996.37, while the Hang Seng firmed 1.19% to stand at 23,112.4.

Oil

In early trade today, WTI crude was up 0.38% to $52.68/bbl and Brent was down 0.36% to $55.67/bbl.

 

Headlines

EE mobile firm fined £2.7m for overcharging customers

Mobile operator EE has been fined £2.7m by the telecoms regulator, Ofcom, for overcharging tens of thousands of customers. The watchdog found that the UK's biggest mobile network broke a billing rule on two occasions. Users who called its '150' customer services number while roaming within the EU were incorrectly charged as if they had called the US. That meant customers were charged £1.20 a minute, rather than 19p. As a result, more than 32,145 customers were overcharged a Total of £245,000. Despite calls or texts to the '150' number from within the EU becoming free from 18 November 2015, EE continued to bill more than 7,600 customers until 11 January 2016 who were overcharged £2,203. Lindsey Fussell, Ofcom's consumer group director, said: "EE didn't take enough care to ensure that its customers were billed accurately. This ended up costing customers thousands of pounds, which is completely unacceptable. "We monitor how phone companies bill their customers, and will not tolerate careless mistakes. Any company that breaks Ofcom's rules should expect similar consequences."

Source: BBC News

 

Company news

DekelOil Public Limited (LON:DKL, 13.21p) – Buy

The operator and 100% owner of the vertically integrated Ayenouan palm oil project in Côte d'Ivoire yesterday provided the market with two separate announcements. Firstly a production update for the year ended 31 December 2016; secondly a formal declaration of its long-awaited dividend policy and maiden payout. It confirmed production for full year 2016 totalled 39,111 tonnes of CPO, 9% higher than 35,770 tonnes of CPO in FY 2015. Following strong like for like sales in October 2016 fresh fruit bunches ('FFB'), quantities were lower than expected in November and December. This was a West African region-wide issue where all key players experienced a similar situation. Agriculture experts have been unable to point to any one specific reason, although January 2017 has seen FFB quantities pick up considerably. Crude Palm Oil prices are currently at their highest level for three years; the CPO price has consistently increased over the course of 2016 with sales prices in December of €700 per tonne, 29% higher than H1’2016 at €542 per tonne. Sales prices have continued to increase in January 2017. Production and sales at the Group’s Kernel Crushing plant continue to exceed management's expectations with the Palm Kernel Oil extraction rate consistently above 42% (H1 2016 41%) and the average sales prices in December of €899, 15% higher than H1 2016 at €781 per tonne. Regarding the adoption of a progressive dividend policy, management confirmed its intention to pay a maiden dividend in H1’2017 in respect of the year ended 31 December 2016. This follows the progress made both in terms of operations on the ground at Ayenouan and at the corporate level, including the refinancing of senior debt on improved terms and the cancellation of certain capital notes, the settlement of which ranked above the payment of dividends to ordinary shareholders. In addition, following the increase in its interest in Ayenouan to 100% from 51% over the last nine months, DekelOil's share of the Project's revenues and net profits is expected to show a significant increase going forward. Dividends will be distributed to qualifying shareholders following the release of the Group's audited results for the financial year ended 31 December 2016. An update detailing the relevant record and ex-dividend dates will be provided in due course. The total maiden dividend to be paid in 2017 is expected to amount to approximately £500,000 and shareholders will have the option to receive either cash or shares by way of a scrip dividend. Shareholders are advised that the default option is cash and that the appropriate documentation will be sent to shareholders in due course. Certain executive directors of the Group intend to receive all or part of their dividends in new ordinary shares.

Our view: DekelOil is delivering on its promises. Joining the dividend list is a major achievement for any company, let alone one that only came to market in 2013 with the vision to provide a much-needed outlet for fresh fruit bunches grown by thousands of local smallholders by building one of West Africa's largest crude palm oil extraction mills. With its state of the art site entering its fourth year of operations, the Group’s balance sheet is now more reflective of the profitable palm oil producer it is today. Having recently confirmed a 100% interest in Ayenouan, it has a cash generative platform in place that can fund not only regular dividends, but also its future expansion plans both at Ayenouan and elsewhere. Such news is transforming non-believers who often remain sceptical of African agri operations, while also discounting the significance of yesterday’s disappointing sales volumes during Q4’2016. During this period, a 25% decline in gathered FFBs, knocked production by 19% and sales by 50%. Recovery from such a seasonal aberration is already underway, however, with average local CPO prices spiking back to around €700/tonne which should repair much of the damage inflicted. Volumes, pricing and extraction levels for the kernel oil crushing plant also remain ahead of management expectations. All-in-all the overall message for shareholders must be that they cannot discount some form of annual production interruption, to the extent that it is prudent for Beaufort to trim back its most ambitious revenue and profit expectations, until activity levels are seen to regularise. The shares nevertheless still remain much too chap for what DekelOil now appears capable of delivering. Based on a 0.17p/share dividend, the equity yielded 1.4% for FY2016, which rises to an estimated 1.7% this year. Based on a reduced 2017E revenues of £35.0m, followed by £38m in 2018E, the shares presently trade on earnings multiples of just 7.3x and 5.4x respectively. The shares remain on Beaufort’s Buy list.

Beaufort Securities acts as corporate broker to DekelOil Public Limited

 

AstraZeneca (LON:AZN, 4,539.23p) – Hold

AstraZeneca, a global, science-led biopharmaceutical company focused on three main therapy areas - Oncology, Cardiovascular & Metabolic Diseases and Respiratory, yesterday announced that it has expanded its 1st-line non-small cell lung cancer (‘NSCLC’) Immuno-Oncology (‘IO’) development opportunities. The Phase III MYSTIC trial was initially designed to assess the benefit of durvalumab monotherapy and durvalumab and tremelimumab (durva + treme) combination therapy against standard-of-care (‘SoC’) chemotherapy, focused on progression-free survival (‘PFS’). The Group has now refined endpoints and statistical analysis plan for MYSTIC trial that it will now assess PFS and overall survival (‘OS’) endpoints in patients with programmed death ligand-1 (‘PD-L1’) expressing tumours for both durvalumab monotherapy and the combination of durva + treme, as well as in 'all comers' for the combination of durva + treme, against SoC chemotherapy. This reflects recent internal and external data showing durvalumab's strong efficacy in monotherapy, as well as significant opportunities in the competitive landscape. The Group anticipates MYSTIC PFS data in mid-2017 and final OS data at the latest in 2018. Further to this, its Phase III NEPTUNE trial (durvalumab in combination with tremelimumab against SoC platinum-based chemotherapy) will be expanded with local patients to support regulatory submission of durva + treme combination therapy in China for 1st-line NSCLC patients without delaying the anticipated OS data readout in 2018 from the global cohort, which is approaching full recruitment. The Group has also initiated the new Phase III PEARL trial of durvalumab monotherapy against SoC chemotherapy in 1st-line NSCLC patients whose tumours express PD-L1. The PEARL trial will focus on Asian countries, primarily China, due to the high prevalence of NSCLC in the region.

Our view: The amendments in MYSTIC trial has delayed production of its PFS data readout to “mid-2017” instead of the previously guided “H1 2017”. The MYSTIC trial amendments, along with expansion in NEPTUNE trial and initiation of the new PEARL trial, however has potential to enhance its options in 1st-line NSCLC for IO-IO combination as well as for IO monotherapy. IO is a therapeutic approach designed to stimulate the body's immune system to destroy tumours with a potential to offer life-changing cancer treatments. The Group continues to attempt to catch up with its major peers in this therapeutic class through the introduction of combination therapies. Given delay in MYSTIC PFS data readout, uncertainty and risk towards its trial success and subsequent potential impact to its revenue due to unfavourable results, Beaufort maintains its ‘wait and see’ approach before having the confidence to return the shares to a Buy rating. Concern over Obamacare in the US that is likely to be subject to substantial change under Trump is also something to be monitored carefully. Beaufort continues to recommend AstraZeneca as a Hold.

 

Evgen Pharma (LON:EVG, 23.75p) – Speculative Buy

Evgen Pharma (‘Evgen’), a clinical stage drug development company focused on cancer and neurological conditions, yesterday announced that it has dosed its first patient for Phase II clinical trial of SFX-01 in breast cancer on 16 January 2017. The STEM trial (SFX-01 in the Treatment and Evaluation of Metastatic Breast Cancer) is investigating SFX-01 in combination with different hormone-based therapies in 60 metastatic breast cancer patients whose cancer cells are estrogen-receptor positive (ER+). The primary objectives is to evaluate safety and efficacy (via tumour imaging) in patients starting to become resistant to mainstream hormone therapy. Patients will be enrolled into one of three study arms (SFX-01 in combination with either aromatase inhibitors, tamoxifen or fulvestrant) based on their current therapy. One proposed mechanism for the generation of resistance to hormone therapy is via the proliferation of hormone-independent breast cancer stem cells. Earlier work by the Group with xenograft models suggests that SFX-01 has the effect of reducing the number of hormone-independent cancer stem cells. Separately, the Group has announced appointment of new CFO, Richard Moulson, effective on 1 March 2017.

Our view: Evgen has passed another key milestone. Following its first patient dose, the Group will need to complete recruitment of 60 metastatic breast cancer patients and demonstrate the safety and efficacy of its SFX-01 in combination with different hormone-based therapies. Evgen’s lead product, SFX-01, is a synthetic and stabilised version of the naturally occurring plant compound sulforaphane, a known anti-cancer agent and neuro-protective. The Group has also announced recently, receipt of a positive first interim safety review for its Phase II SAS trial of SFX-01 for subarachnoid haemorrhage (‘SAH’) indication. Both SAS and STEM trials are expected to report in the H1 2018. Considering £5.5m cash held at 30 September 2016, given estimated monthly burn of around £330k during 2017, there should be sufficient funding to complete its current clinical trials and lay the foundations for the follow-on Phase III trials, as may be necessary. Orphan status for SAH offers a prospective route to commercialisation in a market that is prospectively valued at US$1.7bn, just 12 or so months following release of Phase II data, while STEM could be developed further as foundation drug to be used in combination therapy for an indication valued at a multiple of this. Both have high unmet need while also offering strategic entry portals to further therapeutic opportunities in oncology and neurology. For a company presently valued at just £17.0m, investors appear not to have fully recognised the value Evgen might deliver over the coming 18 months or so. Beaufort reiterates its Speculative Buy rating on the shares.

 

Hotel Chocolat (LON:HOTC, 292.00p) – Sell

The premium British chocolatier and omni-channel retailer, yesterday announced a trading update for the 13 weeks ended 25 December 2016. Total Group revenue for the period increased 16.2 per cent compared to the prior year (14.6 per cent on a proforma constant currency basis). Retail expansion was driven by increases in footfall and items per basket, with customers also choosing to buy more high-priced gift items. The digital business reported similar momentum, further benefitted from this month’s launch of a new website which included optimisation for smartphones and tablets, a bespoke 'gift creator' service for delivered gifts, and better integration of the tasting club subscription service. The business opened 10 new stores during the six months and now has 90 outlets in the UK, seven of which include the signature drinks offer of Hot Chocolat, coffee-chocolate and light cocoa infusions. Management confirmed that trading since December continues to be in line with management's expectations. The Board expects to announce the Group's results for the six months ended 25 December 2016 on 22 February 2017.

Our view: Well that was not particularly helpful! Investors would be much more interested in knowing what the same-store, like-for-like revenue improvement was. Being told that Group revenues were up 16.2% in total, during a period when the comparative number of UK outlets has in fact expanded by 12.5%, while the customer offering has been adjusted somewhat without providing guidance regarding its effect on overall margins, does not really provide the desired transparency. Adjusting for the expected enhancement from new openings during the period, suggests the like-for-like may in fact be down to just single digit during a period when retail sales experienced a ‘bigger than expected pre-Christmas boost’ according to the CBI. Given that the Group’s equity rating is already demanding an awful lot, that’s not really what shareholders want to hear. The reality is that Hotel Chocolat has created a powerful brand, from which it has developed a loyal and engaged customer base centered on its core competence in chocolate. But have UK investors not been on a similar journey before? Some will recall another chocolatier, Thorntons, having a similar booming experience back in the 1990’s; then, exceptional near-term, but ultimately faddish, success led to its dramatic over-expansion (600 national stores at one stage), which was followed by implosion and subsequent financial collapse. It is true this is not really comparing like-with-like, but it is a stark reminder of just how painfully fickle the consumer can be, particularly when dealing with narrow product offerings and rapidly changing tastes. The reality is that having created outlets in the most obvious high-footfall, international and wealthy UK customer locations already, Hotel Chocolat is likely to find that going forward it is more difficult to sustain a profitable domestic expansion, while more intense competition will possibly limit international ambitions to all but the costliest locations, like airports and luxury malls. Successfully transferring the model overseas into continental Europe, for example, has additional complication, not least due to the number of established peers in sophisticated, high cacao product that already saturates the region. Post BREXIT, operating margins are also likely to be squeezed, weighing the fact that the majority of Group revenues are derived from the UK (2015 Revenue Split: UK 92%, Europe 5%, Rest of the World 2%) while, the Group purchases ingredients in Euros and US$ which of course have appreciated sharply against Sterling. More to the point, Hotel Chocolat’s product will be impacted by any fall in consumer confidence, given that it has set its pricing at the premium end of such discretionary purchases. October’s full year maiden preliminaries provided limited excitement, with just a 0.2% improvement in gross margins despite scale efficiencies, while operating expenses remained stubbornly above 50% and providing little comfort regarding like-for-like sales. Based on revenue forecasts to June 2017E and June 2018E of £103m and £115m, the shares trade on a current year earnings multiple of almost 39x, followed by 37x respectively, on a price/book of around 8x with negligible yield. That’s expensive for a management new on the block, that cannot be judged by past form, operates with high structural cost and whose business opportunity looks too expensive to sustain. While appreciating the fact that Hotel Chocolat has rapidly created a quality brand, its narrow business model makes the shares vulnerable to disappointment. Beaufort recommends taking profits. Sell.

]]>
Wed, 18 Jan 2017 08:10:00 +0000 http://www.proactiveinvestors.co.uk/columns/beaufort-securities/26902/beaufort-securities-breakfast-alert-astrazeneca-dekeloil-public-ltd-evgen-pharma-hotel-chocolat-group-26902.html
'Twas a perfect Sterling storm http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26901/-twas-a-perfect-sterling-storm-26901.html FTSE 100 Index called to open +25pts at 7245, with intersecting support at yesterday’s 7220 lows having been built on overnight to deliver a bounce of sorts. Whether this has legs remains to be seen (7250 yet to be cleared) but we note the 4-hourly chart already suggests RSI recovery from oversold and 7240 has proved supportive for the last 2-3 hours. Bulls need to see a break back above 7250 to rekindle optimism while Bears likely want to see 7240 give way for another test of 7220. Watch levels: Bullish 7255, Bearish 7235.

Calls for a positive open come thanks to a halt in yesterday’s damaging Sterling rally (GBP vs USD), one which dealt a 100pt blow to the internationally-exposed index, taking it from recent all-time highs. But not before a near 3% currency rally (biggest since Oct 2008) fuelled by the surprise concoction of hard Brexit clarity from PM May that fuelled short-covering, hawkish comments from BoE Governor Carney that refreshed bullish bets on GBP and President-elect Trump taking a surprisingly vocal dovish stance on the Dollar that sent the Greenback lower. A perfect Sterling storm for the FTSE.

A negative US return from the long weekend didn’t prevent a largely positive Asian session with a USD rebound from yesterday’s 5-week lows helping Japan’s Nikkei via a weaker Yen to boost exporters and Chinese equities higher. The stronger USD has kept a lid on already weak commodity prices, however, to hinder Australia’s ASX and push it into the red, although it is  Healthcare and Financials that are weighing most heavily.

US equity markets reopened yesterday after a long weekend, however suffered as Financial stocks underperformed based on concerns surrounding the implementation of Trump’s proposed deregulation plans. Goldman Sachs (reporting today) and JP Morgan dragged the Dow Jones 0.3% lower while the S&P also closed down 0.3% as its Financial sector fell by over 2%, including Morgan Stanley despite beating earnings expectations. Meanwhile the Nasdaq underperformed its peers, closing -0.6%.

Crude Oil prices have fallen since the reopening of US markets yesterday afternoon, however a run of rising lows support sees both Brent and US Crude safely above last week’s 3 month lows. Continuing OPEC production cuts alongside consensus that tomorrow’s official government inventory data will show a drawdown, providing some upside.

Gold’s rally has faltered slightly after yesterday’s speech from the UK PM abated market fears surrounding Brexit that has seen investors move away from safe haven assets. Alongside the Japanese Yen, gold is 0.5% lower overnight at $1211 having fallen from $1219fresh 8-week highs, hampered further by a stronger US Dollar bouncing from its lows during Asian trading hours. A strong US CPI print could provide a further setback for the precious metal given its implications for Fed rate policy.

In focus today will be two separate Consumer Price Inflation (CPI) readings, this morning from the Eurozone and this afternoon from the United States. The former is expected to confirm a 1.1% YoY figure for December, marking a strong rebound to its highest level since 2013, although potential for an upward surprise given other European inflation markers (France, Germany) producing strong bounces gives further weight to calls for the MoM figure to swing to 0.5% from -0.1%. The latter’s YoY reading is forecast to move above 2% for the first time since the second half of 2014, with any uptick to consensus likely to have a significant bearing on the Fed’s interest rate policy for 2017.

Elsewhere, UK Unemployment figures are released at 9:30am, with no change expected to the headline figure, however greater impetus may be placed on Average Weekly Earnings for any indication of increasing inflation, especially after yesterday’s CPI readings beat consensus across the board.

This afternoon, US Industrial and Manufacturing Production figures will be watched for signs of increased productivity in the run-up to Donald Trump’s presidency. Expectations for both to swing into positive territory would suggest this is the case.

Speakers of note today include the EU President Juncker at 10am, likely to give his opinion on yesterday’s Brexit speech from UK PM May, while the Fed’s Kaplan and Kashkari this afternoon could provide immediate reaction to those US inflation figures at 2pm and 4pm respectively before their boss Fed Chair Janet Yellen gives her thoughts at 8pm.

 

]]>
Wed, 18 Jan 2017 08:09:00 +0000 http://www.proactiveinvestors.co.uk/columns/morning-market-pulse/26901/-twas-a-perfect-sterling-storm-26901.html
In The News - Peak Resources White Rock Minerals, Base Resources http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/26900/in-the-news-peak-resources-white-rock-minerals-base-resources-26900.html In the news: Peak Resources, Base Resources & White Rock Minerals
 

FROM THE BROKING DESK

We will be roadshowing Darren Townsend, the CEO of Peak Resources††, in London on 26 and 27 January. This very interesting story is driven by the projected dramatic growth of the electric vehicle (EV) and alternative energy markets. The company’s Ngualla rare earth project in Tanzania is heavily weighted towards neodymium and praseodymium, which are key elements in the manufacture of high-efficiency permanent magnets, the outlook for which is positive due to growth in demand for electric cars and bikes (and also wind power generation). The provision of high-capability battery power is undergoing huge growth amid a potentially enormous multi-year expansion (clearly witnessed last year in the reaction of the lithium space to ever growing demand projections).

Permanent magnets are expected to see a similar growth trajectory to lithium. In terms of scale, grade, product output and development stage, Ngualla (where a fully-funded BFS is almost complete) is a potentially globally significant strategic asset. We have some further details on Peak and its proposed investment in the UK in the Companies section below.

While this is a non-deal roadshow, it’s still a great opportunity to get up to speed on what could become a key part of the EV economy. Please let us know if you’d like a meeting.

In other news, Base Resources*† has announced its December quarterly production report. We’ll have a full discussion of this and our outlook for the company out later, but the initial key takeaways from this were:

Ilmenite prices are continuing to improve, with a 40% increase in prices over the quarter and expected further improvements over the course of this year.

Production and costs were broadly stable QoQ.

Net debt was reduced by a further US$18m to US$130m.

The company has an increased focus on exploration, with a view to adding to reserves at the mine. In the June quarter it expects to be able to publish the results of a drilling program to test the south-west extension of mineralisation at the Southern Dune. It has also commenced drilling In the NE Sector (to the north-east of the Central Dune) and expects to commence initial drilling on its licences in Tanzania before mid-year.

COMPANIES

PEAK RESOURCES††

ASX:PEK| A¢7.5 | US$25m

UK Location for Rare Earth Refinery

Peak Resources announced in December that it has selected a site in the north-east of the UK as the location for its proposed rare earth refinery. The site in the Tees Valley (in the same area as that proposed by Sirius Minerals) benefits from access to global shipping, cheap and reliable reagent supplies, skilled labour, readily available supplies of power and water and environmentally sustainable options to dispose of tailings materials.

COMMENT: The selection of the Tees Valley adds a number of downstream advantages to those that the company’s project already has on account of the quality of its Ngualla deposit in Tanzania, which has a large, high-grade, near-surface, weathered zone of mineralisation that can be upgraded before downstream processing.

Project revenues are heavily weighted towards neodymium and praseodymium, which are used in the rapidly growing permanent magnet market, the outlook for which is positive due to growth in demand for electric cars and bikes, and also wind power generation.

Prices for neodymium and praseodymium, like those for rare earths in general, have suffered since the 2011 boom, which resulted from threats to supply from the dominant supplier, China. However, the widespread losses being reported from producers, along with structural reforms in China to limit illegal production, suggest that we are at a cyclical low and that improved prices can be expected. We looked at the outlook for neodymium and praseodymium in our last issue of The Alchemist. This can be viewed here.

 

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.

Project mainly produces neodymium and praseodymium oxide — Approximately 85% of the value of the final product is associated with a high-purity neodymium and praseodymium oxide, with the remaining value split between a heavy rare earth (samarium, europium and gadolinium) carbonate product and mixed lanthanum and cerium carbonate.

Targeting completion of bankable feasibility study (BFS) for early 2Q17 — Having completed a pre-feasibility study on the project in March 2014, the company undertook an updated study of the results which it announced in March 2016. The company is fully funded for the completion of the BFS following the completion of a placement and entitlement offer and the draw-down of A$4.1m of debt from Appian. In its September quarterly, progress towards the completion of the BFS was reported to be good. A draft Environmental and Social Impact Assessment was lodged with the National Environmental Council during 3Q16 and the company expects to receive an Environmental Certificate by the end of the year and the Mining Licence in early 2017.

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 at a grade of 2.15%. 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 21.3Mt grading 4.75% REO, containing 1.01Mt of REO, of which 90% is in the Measured category.

Tanzanian operations to produce 27,900tpa of beneficiated REO concentrate grading 45% REO — The study of March 2016 updated the parameters from the PFS two years earlier, and showed a mining inventory for the project of 18.4Mt grading 4.89% REO, containing 900,000t REO. Mining is expected to benefit from a low waste-to-ore ratio of 1.68:1 and, owing to the weathered nature of the material, is not expected to require blasting. The company plans to process 556,000tpa of dry ore through a beneficiation plant to produce 27,900tpa of high-value, 45% REO concentrate containing 12,555tpa of REO, for overall REO recovery of 46%. Upgrading is achieved by crushing, grinding and flotation, with re-grinding and a second stage of flotation to produce a rare earth bastnaesite concentrate. The concentrate has a very low uranium and thorium content, resulting in no requirement for additional transport permitting.

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 relatively low levels of iron in the concentrate. Lime slurry is then planned to be used to precipitate residual impurities, leaving a filtrate for treatment in the final stage solvent extraction separation circuit. Final products from project are planned to be:

• 2,300tpa of neodymium and praseodymium 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). This comprised 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 magnets that are notable for their strength and durability. 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$4.7m in cash and debt of A$4.1m (a three-year term loan from Appian) at the end of September 2016. It raised a further A$0.8m in equity in October 2016, as a result of which it has stated that it is fully funded for the completion of the BFS.

 

WHITE ROCK MINERALS***

ASX:WRM | A¢1.5 | US$8.6m

DFS Team Selected for Mt Carrington Gold/Silver Project

White Rock Minerals has announced that it has assembled the team that will complete the Definitive Feasibility Study (DFS) and Environmental Impact Statement (EIS) on its Mount Carrington gold/silver project in New South Wales.

COMMENT: Having raised a total of A$4.8m late last year and then completed a positive updated Scoping Study in March 2016, White Rock has put together the team of consultants that will now complete the DFS and EIS. The company believes that there is considerable potential to increase the in-pit mineable resource over the Scoping Study.

 

Mount Carrington project background — The company completed an updated Scoping Study on its 100%-owned Mount Carrington gold/silver project in March 2016. This is a relatively small, but high-return, project, comprising two gold-rich open pits and three silver-rich pits together with a flotation/CIL processing route. Estimated capex was low at A$24m, with a capital payback of <1 year. Total resources contained 659,000oz of AuEq, from which 111,000oz of gold and 6.7Moz of silver (203,000oz AuEq) were planned to be produced over a mine life of seven years. Project C1 cash costs were estimated to be A$754/oz AuEq (~US$550/oz). At a gold price of A$1,600/oz and a silver price of A$22/oz, the project had a pre-tax NPV10 of A$61m and an IRR of 103%. The company plans to complete the DFS and the EIS by late 2017. Allowing 12 months for construction suggests that the project could potentially be in production by the beginning of 2019.

Streaming finance from Cartesian Royalty Holdings to fund Mount Carrington’s development — In late July 2016 the company entered a binding, conditional Term Sheet under which Cartesian Royalty Holdings was to provide A$1.0m under a two-tranche placement and a gold and silver streaming-based financing to provide A$19m for the development of the project, in return for 40,000oz of gold equivalent production over a seven-year period. The company states that, subject to the successful delivery of the DFS, the funding will directly provide for construction and commissioning through to commercial production.

Red Mountain Project polymetallic exploration project has historical resources of 5.7Mt at 5% Zn, 2% Pb and 120 g/t Ag — White Rock Minerals also owns the Red Mountain zinc-rich, polymetallic VMS advanced exploration project in Alaska. Historical estimates are sourced from prior owner Grayd Resource Corp, based on drilling completed between 1996 and 1998. Drilling highlights to date include grades of 26% Zn and 12% Pb over 5.5m at Dry Creek, and 7% Zn and 4% Pb over 3m at West Tundra Flats. Preliminary metallurgical test-work has indicated recoveries of over 90% Zn, >80% Au and >70% Pb & Ag. Statistical analysis of VMS clustering patterns indicates that, further to Dry Creek and West Tundra Flats, the Red Mountain camp has the potential to host a sizeable 10-15Mt deposit with similar Zn, Ag and Pb grades. The company is undertaking a programme of data compilation, geochemistry and geophysics to establish drill targets.

Current EV of A$8m/US$6m — Having completed a number of fund raisings late last year, the company has 770m shares outstanding and 101m options. Cash at the end of the year was A$3.8m.

 

]]>
Tue, 17 Jan 2017 11:47:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-rfc-ambrian-metals-mining-and-oil-gas-overview/26900/in-the-news-peak-resources-white-rock-minerals-base-resources-26900.html
Today's Market View - Anglo Asian Mining Plc, Alecto Minerals PLC, Asiamet Resources, Strategic Minerals http://www.proactiveinvestors.co.uk/columns/sp-angel/26899/today-s-market-view-anglo-asian-mining-plc-alecto-minerals-plc-asiamet-resources-strategic-minerals-26899.html Anglo Asian Mining* (LON:AAZ) Hold – 22p, Q4 Operations Update

Alecto Minerals (LON:ALO) Suspended – Alecto agrees to pay 20% rate on convertible loan notes plus additional fees

Asiamet Resources (LON:ARS) – Drilling shows good high-grade copper intersections close to surface

Strategic Minerals* (LON:SML) – Sales rise by 24%

 

Safe haven assets gain ahead of the May speech due later today.

Gold and yen climbed for a seventh day with US Treasuries trading higher.

The pound is in a recovery mode this morning up 0.8% following the BoE comments yesterday that the MPC policy move may be in the direction of tightening as well as easing while there are limits to the BoE tolerance for the inflation accelerating past the 2% target.

The currency has been further supported by stronger than expected increase in the inflation rate.

The IMF assumes only a modest increase in the pace of US expansion led by the proposed Trump policies.

The uncertainty over the Trump policies present a “wider than usual range of upside and down risk factors”, the fund said.

US growth was increased by 0.1pp for this year and 0.4pp in 2018 to 2.3% and 2.5%, respectively.

Chinese growth was increased by 0.3pp to 6.5% in 2017 compared to the Oct forecast driven by expectations for more government stimulus.

Although IMF economists argued that “continued reliance on policy stimulus measures, with rapid expansion of credit and slow progress in addressing corporate debt, especially in hardening the budget constraints of state-owned enterprises, raises the risk of a sharper slowdown or a disruptive adjustment”.

Brent is little changed trading in the $55.5-56.0/bbl range.

Iron ore prices posted the first decline in seven days and are trading 0.6% lower today after having rallied 16% in the previous six sessions.

 

LME inventories show falls in copper and zinc

Copper fell 1,625t at 277,375t

Aluminium rose 45,825t at 2,296,775t – Japan saw a large increase in aluminium at major ports in December

Zinc fell 2,225t at 419,800t

Nickel rose 2,382t at 372,114t

Tin rose 50t at 3,985t

Lead rose 575t at 193,500t

 

121 / SP Angel Mining Investment conference Cape Town, 6th-7th February 2016

Located in the beautiful and historic gardens of the Welgemeend farm house in Cape Town, close to the Mount Nelson Hotel

Investors go for free.  Please ask for conference brochure

 

Dow Jones Industrials         19,886   Markets were closed yesterday

Nikkei 225   -1.48% at 18,814 

HK Hang Seng   +0.54% at 22,841 

Shanghai Composite    +0.17% at 3,109

FTSE 350 Mining   -1.25% at 16,521

AIM Basic Resources   +1.60% at 2,548 

 

Economic News

UK – Inflation continued to pick up through 2016 finishing the year at the highest reading in more than two years.

Dec data showed prices climbed more than forecast led by a jump in import costs amid a weaker pound.

The cost of imports is reported to have climbed 16.9%yoy in Dec, the strongest move since Jul/11.

CPI (%yoy): 1.6 v 1.2 in Nov and 1.4 forecast.

Core CPI (%yoy): 1.6 v 1.4 in Nov and 1.4 forecast.

 

Currencies

US$1.0660/eur vs 1.0597/eur yesterday.   Yen 113.13/$ vs 114.12/$.   SAr 13.479/$ vs 13.632/$.   $1.213/gbp vs $1.204/gbp.

0.753/aud vs 0.746/aud.   CNY 6.865/$ vs 6.898/$.

 

Commodity News

Precious metals:         

Gold US$1,214/oz vs US$1,203/oz yesterday

   Gold ETFs 57.0moz vs US$57.0moz yesterday

Platinum US$991/oz vs US$985/oz yesterday

Palladium US$751/oz vs US$749/oz yesterday

Silver US$16.99/oz vs US$16.83/oz yesterday

           

Base metals:   

Copper US$ 5,770/t vs US$5,891/t yesterday

Aluminium US$ 1,785/t vs US$1,811/t yesterday - Aluminium – Aluminium inventories held at three major Japanese ports climbed 14.8% in Dec, according to the Marubeni data,

• Stocks climbed to 276kt accounting for c.12% of Total LME stockpiles.

Nickel US$ 10,140/t vs US$10,310/t yesterday

Zinc US$ 2,693/t vs US$2,787/t yesterday

Lead US$ 2,243/t vs US$2,287/t yesterday

Tin US$ 21,015/t vs US$21,080/t yesterday

           

Energy:           

Oil US$55.8/bbl vs S$55.3/bbl yesterday

Natural Gas US$3.480/mmbtu vs US$3.464/mmbtu yesterday

Uranium US$23.00/lb vs US$23.00/lb yesterday

           

Bulk:   

Iron ore 62% Fe spot (cfr Tianjin) US$79.8/t vs US$81.8/t

Chinese steel rebar 25mm US$500.1/t vs US$492.7/t

Thermal coal (1st year forward cif ARA) US$66.5/t vs US$66.9/t yesterday

Premium hard coking coal Aus fob US$180.0/t vs US$184.7/t

           

Other:

Tungsten - APT European prices $191-200/mtu vs $187-198/mtu

 

Company News

Anglo Asian Mining* (LON:AAZ) 23p, £25m – Q4 Operations Update

Hold – 22p

Total gold production totalled 15.5koz (Q3/16: 16.5koz; Q4/15: 17.9koz) with FY16 gold output at 65.4koz (FY15: 72.0koz).

Annual production came in below the management revised guidance of 67-69koz on the back of lower than expected processed grades at Gedabek.

Agitation Leaching (AL) operations contributed 10.2koz to quarterly production treating 193kt of ore at 2.3g/t (Q3/16: 164kt at 2.5g/t; Q4/15: 148kt at 3.5g/t).

Annual AL contribution stood at 41.7koz from 641kt at 2.8g/t (FY15: 48.2koz from 577kt at 3.4g/t)

Flotation and SART operations performed in line with estimates with 0.6kt Cu produced in Q4/16 (Q3/16: 0.5kt: Q4/15: 0.3kt). The Flotation circuit accounted for around 2/3s of production.

Annual copper output totalled 1.9kt Cu (FY15: 1.0kt) meeting the 1.7-2.1kt Cu guidance for the year.

Annual gold sales (excl 12.75% government interest under the PSA) totalled 53.4koz at an average price of $1,253/oz (FY15: 63.9koz at $1,161/oz).

Copper concentrate sales grossed (excl PSA) $12.6m implying an average price of $2,114/dmt of concentrate (FY15: $3.7m and $2,482/dmt) thanks to additional by-product revenue from retreating of AL tailings through the flotation plant.

The processing plant was connected to the state power grid in Q4/16 which should help lower operating costs compared to diesel gen sets used previously.

Mapping, trenching and drilling programmes continue at Gadir for confirmation of the orebody orientation and potential expansion as well as in areas adjacent to the Gedabek processing hub including the Ugur deposit.

Net Debt came down to $35.1m by the end of 2016 compared with $37.7m in Q3/16 and $49.0m in Q4/15 with the ATB outstanding debt reduced to $17.1m from $27.1m in 2015.

Conclusion: Production came in below our estimates for 68.8koz with the difference attributed solely to Gedabek lower processed grades.

While a decline in processed grades weighed on the H2/16 production (1.8g/t v 2.7g/t in H1/16 for the Gedabek AL ore), we expect Gedabek grades to normalise moving forwards supported by the reserve statement.

On the other note, a newly commissioned SAG mill helped to improve quarterly throughput rates to budgeted 90-100tph. Additionally, flotation plant is performing in line with estimates contributing some 4.5koz of gold from reprocessing of AL tailings.

The Company continues to repay the ATB loan; although, liquidity remains constrained with the management investing a share of the dore and concentrate proceeds into water treatment, connection to the grid, maintenance and exploration.

One of the tailwinds of note, is continuing depreciation of the manat which lost another 10% in 2016 and operating costs.

Updated earnings estimates below account for a weaker USDAZN exchange rate (1.8 v 1.5) and new more conservative gold price forecasts (2017/18/LT: $1,175/1,150/1,250; v 2017/18/LT: $1,200/1,300/1,300):

 

 

Alecto Minerals (LON:ALO) Suspended – Alecto agrees to pay 20% rate on convertible loan notes plus additional fees

Alecto Minerals has agreed to issue £1m in convertible loan notes with an interest rate of 20% plus an additional fee of £50,000.

The company plans to use the funds to restart operations at the Mowana Copper mine in Botswana.

The note holders have the right but not the obligation to convert into shares within the first ten trading days of the company’s readmission at the closing price on the day immediately after readmission and at “80% of the of the closing mid-price per Ordinary Share as quoted on AIM on the trading day immediately prior to the date of receipt by the Company of the conversion notice in question (the "Floating Price"). Following that ten trading day period the conversion price will be the Floating Price.”

 

Asiamet Resources (LON:ARS) 2.8 pence, Mkt Cap £20.1m – Drilling shows good high-grade copper intersections close to surface

Asiamet Resources continue to report intervals of copper near surface at its Beruang Kanan Main copper prospect in Central Kalimantan in Indonesia.

The company has drilled 67 holes for 6,750m. 

The results below speak for themselves:

104.0m at 0.83% Cu (from 8.00m)

Including 4.0m at 1.93% Cu (from 8.0m)

Including 7.0m at 1.92% Cu (from 21.0m)

Including 18.0m at 1.31% Cu (from 33.0m)

Including 5.0m at 3.64% Cu (from 106.0m)

15.0m at 0.66% Cu (from 9.00m)

Including 2.0m at 2.41% Cu (from 9.0m)

74.5m at 0.64% Cu (from 29.0 m)

Including 17.0m at 1.41% Cu (from 69.0m)

Includes 2.0m at 7.23% Cu (from 73.0m)

60.0m at 0.51% Cu (from 69.0m)

9.0m at 1.35% Cu (from 5.00m)

Including 3.0m at 3.18% Cu (from 9.0m)

52.25m at 1.15% Cu (from 26.0m)

Including 4.0m at 3.04% Cu (from 30.0m)

Including 6.0m at 1.59% Cu (from 49.0m)

Including 15.25m at 1.53% Cu (from 63.0m)

105.5m at 0.65% Cu (from 0.5m)

The company raised £2m at 0.023p/share in mid December towards the completion of a feasibility study this year on the Beruang Kanan Main (BKM) project.  Infill resource drilling and metallurgical test work is currently underway.

Work done to date indicate a number of shallow ore zones of contiguous mineralisation with relatively high grade.  Recent test-work suggests the ore should be relatively simple to process with low levels of crushing required.

Conclusion:  Asiamet Resources appear to have a very promising and undervalued copper project on its hands at Berung Kanan Main ‘BKM’.  The presence of higher-grade copper mineralisation close to surface indicates potential for a relatively simple low cost and lower capex project.

 

Strategic Minerals* (LON:SML) 0.6 pence, Mkt Cap £7.1m – Sales rise by 24%

Strategic Minerals report a significant rise in magnetite sales from their Cobre magnetite mine in New Mexico in the US.

The company sold 25,385tons of magnetite last year for $1.55m representing a 24% increase over last year.

Higher tonnages combined with better prices for iron ore helped the Cobre mine to better performance.  Persistent higher iron ore prices at $79.8/t this morning should continue to lift sales through 2017.

Production rose in Q4 to 9,431 tons vs 7,524 tons a year earlier indicating a potential significant increase in sales going forward

While the introduction of a new large customer is reported to have reduced sales prices it has cut transportation cost so that profits have risen by 70% despite the ‘bulk’ pricing discount being applied.

Management also confirm that their wholly-owned subsidiary ‘Southern Minerals Group’ has received $400,000 due under a settlement with the rail provider at the Cobre Mine.

The team will use these funds and existing funds to exercise its option to take 50% of the historic Redmoor tin mine in Cornwall.

We expect drilling at Redmoor to confirm and expand the existing mineral resource of 13.3mt grading 0.56% tin equivalent.  The drill program should start H1 2017.

Strategic Minerals recently appointed Brett Grist, the former CEO of Casa Mining, as exploration manager to oversee the Redmoor project.

Brett led the team at CASA to the discovery and identification of >1.2m oz of gold at Misisi in the DRC.  We hope the natives of Cornwall are as friendly as those in the DRC.

The company raised £600,000

See company presentation for further info: http://www.strategicminerals.net/investors/presentations.html

Conclusion:  It’s good to see additional funds coming in from the Cobre magnegite mine in the US.  The funds will help to advance the Redmoor project to delineate a new tin / tungsten resource and to work up a potential mine plan from thereon.

*SP Angel act as Nomad and joint broker to Strategic Minerals alongside Optiva Securities

]]>
Tue, 17 Jan 2017 11:14:00 +0000 http://www.proactiveinvestors.co.uk/columns/sp-angel/26899/today-s-market-view-anglo-asian-mining-plc-alecto-minerals-plc-asiamet-resources-strategic-minerals-26899.html
Gold bulls slowly returning, as Trump boost to dollar fades and balance of power shifts http://www.proactiveinvestors.co.uk/columns/jackhammer/26898/gold-bulls-slowly-returning-as-trump-boost-to-dollar-fades-and-balance-of-power-shifts-26898.html Tue, 17 Jan 2017 11:03:00 +0000 http://www.proactiveinvestors.co.uk/columns/jackhammer/26898/gold-bulls-slowly-returning-as-trump-boost-to-dollar-fades-and-balance-of-power-shifts-26898.html Oil price, Tullow, Cairn, Cape, Velocys, And finally... http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26897/oil-price-tullow-cairn-cape-velocys-and-finally-26897.html Oil price

The above prices are slightly skewed as the US was shut for MLK day, I suspect that tomorrow will rearrange the order of things. I remain sceptical about bulls and bears sticking to their view, yesterday the Saudis said that after the May meeting the quotas may not need to be rolled over as ‘the market should have re-balanced by then’ especially as they are over cutting to make up for the likes of Libya. Cue whooping and shouting but no, the bears immediately went off saying that the game was over and the end was high, you pays your money and makes your choice.

Dav-oh starts today and all those people paying 30 grand each for the privilege cant be wrong, can they? They didnt expect Brexit or Trump and so far havent managed to fix the world in any way shape or form. They have said that you could put the richest 8 people in the world in a golf buggy and they would be worth the same as 50% of the rest of the world but do nothing about it, shame on you all….!

Tullow

A nice discovery from Tullow today at Erut-1 in Kenya where the oil column was 100-125m which is indeed impressive. The well was to test the structural trap at the northern limit of the South Lokichar basin and de-risks multiple prospects. With Kenya looking better the farm-out to Total (right this time) in Uganda looks smarter and smarter.

Cairn Energy

A pre-close update from Cairn today but very little to add. The 3rd phase of drilling in Senegal is about to start with SNE-5 and 6 to be drilled at the southern end of the structure in an attempt to provide connectivity and deliverability. After that the selection process for the next wells takes place. Kraken plods on with first oil due in Q2 2017 and Catcher also looks likely to be onstream H2 2017. Here capex is $1.6bn which is $600m less than originally estimated. With $335m of cash and the RBL undrawn all looks good but after UK devex of $170m this year plus E&A of $125m those receivables will be handy. The arbitration re CIL continues and with some big cheques to write i’m sure they wish they could access some of that cash pile.

Cape

Same old, same old Cape, repeatedly delivering the goods and not always being appreciated…Today they announce a contract for the Saudi Aramco Jazan refinery in Saudi Arabia and also the scope of the contract with Daewoo on the same project has been increased. Whilst the legal matters do, I understand, hang over them, the company cannot be accused of slowing the rate of growth in the business proper and the market should be more appreciative.

Velocys

The company announce a strategic alliance with Morimatsu Heavy Industry today which is intended to reduce the costs of the smaller scale GTL plants. MHI will be the preferred supplier of module engineering and fabrication services for all Velocys’ plants. I have a meeting in the book with David Pummell the Velocys CEO and look forward to a proper catch-up then.

And finally…

Wins this morning down under for Konta, Watson and Edmund with Sir Andy to come.

Valtteri Bottas signs for Mercedes on a one year contract hoping to be ‘equal with Lewis please’ and asking for the ability to race each other with no rules…

And of course it is FA Cup replay week, several tonight including Wimbledon v Sutton, the Eagles v Bolton and of course Lincoln v the Tractor Boys…

]]>
Tue, 17 Jan 2017 09:38:00 +0000 http://www.proactiveinvestors.co.uk/columns/the-pay-zone/26897/oil-price-tullow-cairn-cape-velocys-and-finally-26897.html
Northland Capital Partners View on the City - Evgen Pharma http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26896/northland-capital-partners-view-on-the-city-evgen-pharma-26896.html Evgen Pharma plc (LON:EVG) – BUY*: First patient dosed in cancer trial

Market Cap: £16m; Current Price: 22p; Target Price: 97p

First patient dosed in breast cancer trial

Evgen announced that the first patient has been dosed in the Company's Phase II clinical trial of SFX-01 in breast cancer.

The trial is being led by Manchester's Christie NHS Foundation Trust, Europe's largest single-site cancer centre, and will include approximately 15 sites in 5 countries.

The first patient was dosed on 16 January 2017 at the Cliniques universitaires Saint-Luc, the largest hospital in Brussels, Belgium.

The trial is investigating SFX-01 in combination with different hormone-based therapies in 60 metastatic breast cancer patients whose cancer cells are estrogen-receptor positive (ER+).

Evgen also announced the appointment of a new CFO and Head of Clinical Operations.

NORTHLAND CAPITAL PARTNERS VIEW: First Patient Dosing in this trial represents another major milestone for Evgen. With two Phase 2 trials now dosing patients and with both trials fully funded, the group is well positioned to deliver significant value creation in the near future—both trials are expected to report top line results in calendar H1-2018. As such, we reiterate that the Company’s shares are significantly undervalued. BUY.

]]>
Tue, 17 Jan 2017 09:04:00 +0000 http://www.proactiveinvestors.co.uk/columns/northland-capital-partners-view-on-the-city/26896/northland-capital-partners-view-on-the-city-evgen-pharma-26896.html
Breakfast News - AIM Breakfast : Brady Plc, Dotdigital Group plc, Evgen Pharma, FairFX Group Plc, Global Energy Development, Learning Technologies Group plc, Miton Group PLC, Nature Group Plc, Velocys http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26895/breakfast-news-aim-breakfast-brady-plc-dotdigital-group-plc-evgen-pharma-fairfx-group-plc-global-energy-development-learning-technologies-group-plc-miton-group-plc-nature-group-plc-velocys-26895.html What’s cooking in the IPO kitchen?

Global Energy Development (LON:GED) — To be renamed Nautilus Marine Services. Schedule 1 from developer and seller of hydrocarbons and related products. Reverse takeover. Raising $10.5m via a convertible. Expected 9 Feb.

Eco (Atlantic) Oil & Gas—TSX-V listed oil and gas  exploration has announced its intention to float on AIM. Assets in Guyana and Namibia. Proposed £2m-£3m fundraise.

Diversified Gas & Oil—According to LSE website first day of trading on AIM now expected for 30 January.

 

Breakfast buffet

7 Digital Group (LON:7DIG.L) 9.5p £10.7m

FYDEC16 trading update from the  B2B digital music and radio services company. 7digital performed well in the second half of the year; the Company delivered against the Board's commitment to achieve profitability by the year-end, and returned an operating profit for the final quarter.  Results for the year are in line with market expectations, including a modest gain from the strength of the US dollar.  The Board remains committed to being profitable at the operating level for the full year in 2017. Total Group revenue grew by 7.2% to £11.1m, with good growth across all revenue streams.  The Group achieved its target of £1m of annualised cost savings by the year end. Year end Cash: £730,000. In Q4, 7digital was awarded contracts with a combined value of approximately £1.6m.

Elegant Hotels (LON:EHG) 80.75p £71.72m

Final results (FYSep16) from the owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados.  Revenue down 5.2% to $57.0 million. RevPAR down 6.7% to $238. ADR (average daily rates) up 1.3% to $378. Adjusted EBITDA: down 11.6% to $19.6 million. Adjusted EPS of 13.1 cents per share (2015: 14.7c per share). Successful acquisition, refurbishment and reopening of Waves Hotel & Spa in Barbados. Signed management contract in November for Hodges Bay Resort & Spa in Antigua, the Group's first property outside Barbados. Year-end net debt of $61.8m (2015: $40.8m). Proposed final dividend of 3.5 pence per share, resulting in a full year dividend of 7.0 pence per share. Difficult market but encouraged by increasing popularity and airlift to Barbados and is increasing regional scale.

FairFX (LON:FFX) 34p £35.06m

FYDec16 trading statement from  e low cost multi currency payments service. Turnover for the twelve months ended 31st December 2016 was up 27% and exceeded £795 million, which was ahead of management expectations. In addition, revenue for the same period is expected to show similar growth and also surpass management expectations. Growth accelerated during 2016, with total turnover in the second half being 45% ahead of the same period in 2015.  Growth was driven by continued focus on the core products of International Payments (up 49%) and Prepaid Cards (up 25%). The Company's overall focus in 2017 will be on continuing its broad-based growth targeting the higher margin core segments of the business. FYDec16 E £8.86m and £1.6m PBT loss rising to 12.08m and £1.13m profit respectively for FY16E.

Brady (LON:BRY) 70.5p £58.57m

The global provider of trading and risk management solutions for metals, recycling, energy and soft commodities reported that the Company is trading in line with market expectations. "The markets in which we operate remain challenging. However, there has been a sea-change in the mood and focus of this business, and as a team, we have entered 2017 with considerable optimism. I would like to thank all our staff who have embraced the changes we are making with vigour and dedication. We are concentrating on providing a first-class service to our clients, and improving our earnings visibility through increased recurring revenues. We are making steady progress and I look forward to providing a further update in our preliminary results in March." FY16E revenue £30.46m and EPS of 1.99p.

Evgen (LON:EVG) 23p £16.82m

The clinical stage drug development company focused on the treatment of cancer and neurological conditions, announced that the first patient has been dosed in the Company's Phase II clinical trial of SFX-01 in breast cancer.  The Company has also announced two Senior appointments, Richard Moulson, an experienced healthcare executive, as the Company's Chief Financial Officer. Dave Chadwick the Company's Senior Clinical Study Manager, on 1 March 2017, assumes the role of Head of Clinical Operations. The current CFO John Bradshaw and Chief Development Officer, David Howat are stepping aside.

Learning Technologies Group (LON:LTG) 37.5p £157.9m

FYDec16 trading update from  e-learning company. Profit for the year was ahead of market expectations, with EBITDA margins firmly ahead of LTG's strategic ambition of 20 per cent. The Group has increased its recurring revenues to c27% in 2016 from c10%.   Over the same period, revenues generated outside of the UK have risen from c12% to c36%. These trends underpin the Group's  development of new learning technology solutions and expansion into new geographical markets. Cash generation remains strong with gross cash at 31 December of £5.3m and net debt of £8.5m, after significant operational investment. 33.5xPE. Yield 0.9%.

Dotdigital Group (LON:DOTD) 61p £179.9m

H1Dec16 trading update from the provider of intuitive email and marketing automation software as a service ("SaaS") and managed services to digital marketing professionals. Overall revenue up 17% to approximately £15.0m. EBITDA in line with market expectations and on track for full year; Monthly recurring revenues from dotmailer's SaaS based usage up approximately 22% to £12.2m. Direct sales tea, now in Australia to support Asia Pac. “Continuing to build strategic partnerships is key and as we start to look out into second half of the year, the partnerships we are building with both PayPal and ORO CRM is also exciting.” FYJun17E revenue £33m. PBT £7.83m.

Miton group (LON:MGR) 34.25p £60.79m

FYDec16 trading update from the fund management group. £2,905 million closing Assets under Management ("AuM"), up from £2,784 million at the start of 2016. Average AuM for the year was £2,783m, an increase of 20%. Renewed momentum with £91 million of net inflows in the second half of 2016. Adjusted Profit before tax is expected to be at least in line with expectations. £21.3 million of cash balances as at 31 December 2016 (2015: £14.1 million). “The Group continued to grow through a combination of net fund inflows and strong market / investment performance, despite the loss of a fund team earlier in the year.” FY16E EPS 2.1p, div 0.8p.

Velocys (LON:VLS) 49p £70.5m

The Company at the forefront of smaller scale gas-to-liquids (GTL), announced that it has signed a memorandum of understanding with Morimatsu (Jiangsu) Heavy Industry Co., Ltd., a subsidiary of Morimatsu Industry Co. Ltd. establishing a strategic alliance. Morimatsu will be Velocys' preferred supplier of module engineering and fabrication services for the plants. This will drive down costs for GTL and biomass-to-liquids (BTL) plants based on Velocys technology by optimising the design and fabrication of plant modules. .

Nature Group (LON:NGR) 10.13p £8.03m

The provider of port reception facilities and waste treatment solutions for the oil, marine and process industries, has sold its wholly-owned subsidiary in Gibraltar, for cash consideration of £4m, of which £3m on was paid at closing  and £1m will be retained in escrow for a period of up to two years. Board expects H1 loss of £1.4m to widen for the full year  as a result of various factors, including the continued downturn in the Oil and Gas market, and further write-downs and re-organisation expenses. The 2016 Results will not include the small gain on the book value of NPRF as this transaction will be posted in FY2017. “We intend to use some of the proceeds for some relatively small but sensible investments that we had to postpone due to cash restrictions.”

]]>
Tue, 17 Jan 2017 08:50:00 +0000 http://www.proactiveinvestors.co.uk/columns/hybridan-breakfast-news/26895/breakfast-news-aim-breakfast-brady-plc-dotdigital-group-plc-evgen-pharma-fairfx-group-plc-global-energy-development-learning-technologies-group-plc-miton-group-plc-nature-group-plc-velocys-26895.html
Brexit Plans Rattle Pound and Stocks as Gold Rises http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26894/brexit-plans-rattle-pound-and-stocks-as-gold-rises-26894.html Brexit Plans Rattle Pound and Stocks as Gold Rises

This article by Cecile Gutscher and David Goodman for Bloomberg may be of interest. Here is a section:

Caution dominated markets amid tough talk from May and Donald Trump about Europe’s economic and political institutions. British government officials trying to limit damage to the pound will speak to major banks in London before the U.K. leader sets out her vision for leaving the bloc in a speech on Tuesday, according to people familiar with the situation. Meanwhile Trump predicted that Britain’s exit will be a success that will encourage others to do the same. He also branded NATO obsolete.

“Markets are trading in risk aversion mode,” said Neil Jones, the head of hedge-fund sales at Mizuho Bank Ltd. in London. “Investors and corporates around the world are concerned by the prospect of a hard Brexit. Pound rallies are limited and weak, while plunges are harsh and prolonged.”

Eoin Treacy's view

When we get down to basics. The UK is betting it will not be the only country to leave the EU. If it is correct in that view then it will have made the correct decision by gaining first mover advantage and the current concerns about the form of the subsequent relationship will be academic.

On the other hand, the European Commission has to successfully sell the idea that the UK should never have been brought in to begin with and that it can hold the remaining group of Eurozone nations together. It has to do that because the prospect of countries leaving the EU, raises the very real possibility that creditors in Germany will not be paid back the money they lent to countries like Greece, Cyprus, Italy, Spain, Portugal, Ireland et al.
 

Email of the day on the secular bull market in bonds

Enjoy watching the video presentations. Thought you may be interested in the following interview of Gary Shilling;

Eoin Treacy's view

Thank you for you kind words and this interesting interview which may be of interest to subscribers.

Gary Shilling’s view that technological innovation is inherently deflationary is very much in tune with our view. The increasing commercial applications of biotechnology, automation, artificial intelligence, the internet and mobile technology are all likely to enhance productivity and could very well represent a deflationary influence. On the other hand, the increasing calls for free money (universal social payments) lower taxes, more spending and deregulation have the capacity to stoke inflation.
 

Email of the day on MOOCs

On your piece about MOOCs I couldn't help but observe that you did not mention FutureLearn

This service is UK based and is an offshoot of the Open University.

It claims to be the largest MOOC. See below. I've used it and it's very good. I particularly like the fact that many courses are short - 6 weeks and typically 2 - 3 hrs per week. 

All the best

Eoin Treacy's view

Thank you for highlighting FutureLearn.com which, as you point out, is another major centre of online learning and builds on Open University’s long history of distance learning. This article from May last year highlights how a number of universities will allow students to earn as many as 30 credits towards a degree using FutureLearn’s portal. That’s a powerful method to help reduce the cost of earning a primary degree and enhances even further our ability to enjoy learning throughout our lives.

 

Email of the day on reshoring and automation

This is indeed well under way and generally government-supported trend globally, with Germany (as always) at the forefront, but also the US and the rest of Europe promoting and facilitating the process.

The article below is interesting I think

It gives an idea of how easily these processes are implemented (2 weeks to start production) and the advantages offered to producers (design innovation + shorter time to market + customisation). €2 million investment for being able to produce a total of 200k pieces every year seems very low.

Shima Seiki (6222) - that provided the machinery to Benetton - is a company worth looking into, and the recent rally in share price confirms what you mentioned re the growth potential from clothing manufacturers in Asia.

This is also confirmed on their IR page
 

Eoin Treacy's view

Thank you for this above article expounding upon the seamless garment manufacturing being pioneered by Shima Seiki. Seamless garment manufacture has been around in the hosiery business for a long time but finishing was always required to sew the legs on the gusset. Introducing seamless manufacture to outer wear is a major innovation and as you point represents an additional sign of increasing interest in automation in the garment industry.

]]>
Tue, 17 Jan 2017 08:43:00 +0000 http://www.proactiveinvestors.co.uk/columns/fuller-treacy-money/26894/brexit-plans-rattle-pound-and-stocks-as-gold-rises-26894.html
In the Papers - Condé Nast, Burberry, Unilever, Ikea http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26893/in-the-papers-cond-nast-burberry-unilever-ikea-26893.html Newspaper Summary

The Times

Hard Brexit talk leads to ‘bloodbath’ for sterling: The pound slipped close to its lowest level against the U.S. dollar in 32 years yesterday amid fears that today the Prime Minister will set out a course for hard Brexit and a full break from the European Union’s single market.

New nest for Angry Birds: Rovio, the Finnish mobile games company, is opening a studio in London that will focus on developing “massive multiplayer online” games as it seeks to reduce its dependence on its fading Angry Birds franchise.

Rolls-Royce pays £671 million to settle bribery claims: Four years of bribery and corruption investigations across five continents have ended with Rolls-Royce making a £671 million out-of-court settlement with fraud-busters and international government agencies.

Bonus helps give New Look Chief bumper new year: The Boss of New Look has picked up a £2.2 million bonus after the sale of the high street fashion retailer nearly two years ago.

Two executives are in vogue at the head of Condé Nast: The magazine publisher behind Vogue and GQ has announced a management reshuffle after Nicholas Coleridge decided to step down after 26 years as Managing Director.

We don’t need to extend oil cuts, says Minister: Saudi Arabia has suggested there will no extension of Opec’s cuts in oil production beyond June, with the cartel’s members largely sticking to a deal to reduce supplies.

Palamon’s foothold in Happy Socks: Palamon Capital Partners has taken a majority stake in Happy Socks, a fashion brand launched in Sweden by two entrepreneurs in 2008. The deal values the Swedish company at SKr725 million (£67.4 million).

Burberry Boss will go into the trenches before starting top job: The incoming Boss of Burberry will start work next Friday, but will not take charge of the British luxury fashion chain until July.

WANdisco bookings are music to investors’ ears: A fraught game of musical chairs at WANdisco was left firmly in the past yesterday when the technology company reported record bookings and massively reduced costs.

Cutting cloth is paying off already, says Hugo Boss: Eager to please the market after issuing two profit warnings in the past 18 months, Hugo Boss said yesterday that it had enjoyed a better final quarter than expected and that the decline in its full year profits would be less than previously feared.

Buy-to-let investors are persuaded to go shopping: Britain is about to become a nation of shopkeepers again, or at least shop owners, as buy-to-let investors increasingly turn from the residential market to commercial properties in search of a higher return and greater stability.

The Independent

Brexit latest: IMF upgrades 2017 U.K. growth but downgrades 2018: The International Monetary Fund has revised up its growth forecast for the U.K. this year, but pencilled in a downgrade for 2018 as the fund expects the economic pain of Brexit to be delayed rather than avoided.

Marmite owner to make all plastic packaging fully reusable or recyclable by 2025: Unilever, the consumer goods giant behind brands such as Dove, Ben & Jerry’s and Marmite, has pledged to ensure that all of the plastic packaging from its product “is fully reusable, recyclable or compostable by 2025”.

Ikea won't invest any of its £524 million green energy fund in U.K. until Government backs renewables: Ikea won’t spend any of its £524 million green energy fund in the U.K. because government policies on renewables have made it “difficult” to invest, the company said.

Brexit latest: Bank saved 250,000 jobs by cutting rates after referendum, says Mark Carney: The Bank of England’s decision to cut interest rates by 0.25% last August in the wake of the Brexit vote may have saved 250,000 British jobs, Mark Carney has suggested.

The Daily Telegraph

British bosses are more upbeat about business prospects this year than almost every other major advanced economy: British bosses are more upbeat about their business prospects this year than almost every other major advanced economy, as companies “keep calm and carry on”, despite domestic and global uncertainty.

Oil price volatility ‘is the name of the game’ in 2017, says IEA: The oil market’s path to recovery will be volatile, even with a global deal to drive oversupply lower, according to the head of the International Energy Agency (IEA).

New radar system for Royal Navy guarantees hundreds of British jobs: A contract to build the radar systems that monitor the skies, land and sea around the Navy’s new aircraft carriers will support more than 200 highly skilled engineering jobs in the U.K.

BP’s Norwegian spin-off raises concerns in first outing: BP’s Norwegian spin-off has raised investor concerns over its billion-dollar spending plans and shrinking reserves in its first outing since its $6 billion (£4.98 billion) tie-up with Scandinavian explorer Det Norske last year.

Ashmore reports drop in assets as U.S. election spooks investors: The value of emerging markets fund manager Ashmore's assets dropped $2.4 billion (£2.0 billion)  at the end of last year, after the U.S. election result spooked investors.

Shop Direct toasts record Christmas as more shoppers move online via smartphones: Shop Direct, the owner of Littlewoods.com and Very.co.uk, has toasted a record Christmas as the trend for consumers shopping on mobile phones rather than in stores continued.

London Stock Exchange hits back at claims Frankfurt will seize jobs from the City after merger: The London Stock Exchange has hit back at claims that its £21 billion merger with Germany’s Deutsche Börse will result Frankfurt seizing jobs from the City.

H&M misses December sales forecasts despite bumper Christmas for most of high street: Hennes & Mauritz, the Swedish fashion giant, has missed analyst expectations for December sales after Black Friday bargain-hunters warped the typical festive trading season.

The Guardian

Top bosses question benefits of globalisation, PwC survey finds: Executives running the world’s leading companies share public scepticism about the benefits of globalisation and doubt whether breaking down barriers to trade has helped tackle climate change or inequality.

New BT service could end nuisance phone calls: Nuisance calls could largely be eradicated under a new BT service that allows phone users to block firms making the calls, which other telecom firms are expected to follow.

Samsung Boss faces arrest as South Korea corruption scandal grows: Prosecutors investigating a corruption scandal that has plunged South Korea into its biggest political crisis in decades are seeking a warrant for the arrest of the acting head of Samsung, the country’s most powerful conglomerate, on bribery charges.

Bank of England ‘keeping close eye on U.K. consumer spending’: The Bank of England is keeping a close watch on consumer spending amid signs households are dipping into their savings and amassing debts to keep spending in the face of rising inflation.

BA to operate all Heathrow long-haul services during strike: British Airways will operate all its long-haul services to and from Heathrow during a three-day cabin crew strike this week and cancel a small number of short-haul flights, the airline has announced.

Trump and Scottish golf resort profit from falling pound after Brexit vote: Donald Trump’s Ayrshire golf course is expecting its most profitable year thanks to the fall in the pound after the Brexit vote and an increase in hotel guests at the resort.

Daily Mail

Poundland to sell £1.50 vests and £7 jeans as it expands clothing range in bid to copy success of George at Asda: Poundland is expanding its clothing range in a bid to copy the success of George at Asda. The discounter is introducing clothes from Pep&Co in 50 of its larger stores in the next few months.

£40 billion merger for Ray-Ban: Sunglasses firm owner Luxottica in tie-up with French lens maker Essilor: The company behind Ray-Ban sunglasses is to merge with French lens maker Essilor in a tie-up worth £40billion. Italian group Luxottica, which also owns Oakley and Sunglasses Hut, and Essilor are expected to rake in revenues of £13billion as a combined entity.

Best sales in 20 years at Caterham as French and Japanese drivers snap up the lightweight sports cars: Caterham has toasted its best sales in 20 years after customers snapped up its Seven range. The British sports car specialist sold more than 600 of the Caterham Seven model last year – its best result since 1996.

Founder of Goals five-a-side football centres gets the boot after more than 30 years: The Founder of Goals five-a-side football centres is being given the boot after more than 30 years with the firm. Keith Rogers is stepping down from the board through 'mutual agreement' following a company-wide reshuffling.

Daily Express

City bosses finally accept Brexit access to single market not an option: London bankers and city bosses have finally accepted Britain is likely to leave the single market and are preparing for a 'hard Brexit' when the U.K. splits from the European Union (EU).

Interest rates could go up or down after Brexit, admits Bank of England Chief Carney: Interest rates could go up or down in the months ahead, Bank of England Governor Mark Carney has warned. Ballooning household debt and rising consumer credit will be a key issue for the Bank's Monetary Policy Committee (MPC) as it decides whether or not to hike interest rates.

Brexit looking good: Job vacancies increasing despite bitter claims from fearmongers: Job vacancies are increasing despite fearmonger claims over what will happen to the economy when the U.K. leaves the European Union, according to a report.

The Scottish Herald

Aggreko wins power deals in Argentina: Scottish temporary power company Aggreko has announced the government of Argentina has extended 174 megawatts of fixed-site contracts until December 31. It added that standby contracts in Argentina, now amounting to 214MW, had now all been extended until the end of February or March.

West is heading east with £1 million Waverley investment: Petra Wetzel, the entrepreneur behind the West bar and brewery on Glasgow Green, has revealed plans to open her first outlet in Edinburgh.

Channel 4 takes stake in Govan TV producer: Broadcaster Channel 4 has acquired a minority stake in the Scottish TV company behind the Supershoppers series. Firecrest Films, the award-winning Govan-based company, was set up by Nicole Kleeman in 2008 with a focus on current affairs.

Cluff hires oil and gas veteran: Cluff Natural Resources has appointed oil and gas veteran Mark Lappin to its board. Mr Lappin, whose most recent role in a 35-year oil and gas career was with Centrica, arrives as Cluff said it was focused on attracting industry partners to fund drilling on one or more wells on its two production licences in the southern North Sea.

University has role in €30 million ‘smart farming’ project: From tracking the movement of cattle to remotely assessing milk quality, a new era of farming in Scotland is one step closer after Strathclyde University was named as a partner in a €30 million Internet of Food and Farm (IoF2020) project.

Hurricane signals hopes Lancaster field west of Shetland could be extended: Hurricane Energy has started drilling work on the Halifax Well West of Shetland, after work on the Lancaster pilot well signalled that oil may be accumulated beyond the licence boundary.

The Scotsman

Edinburgh hotel changes hands in £18 million deal: One of Edinburgh’s biggest and busiest city centre hotels has changed hands for almost £18 million as buyers are sought for two further Scottish establishments.

RBS aims to help small firms build more connections: Royal Bank of Scotland will this week kick off a new initiative aimed at boosting growth among small businesses.

Alliance Trust reveals list of new investment managers: Wealth manager Alliance Trust has revealed the eight equity managers chosen to oversee its new investment strategy.

Overseas buyers ‘dominate’ Edinburgh office market: The Edinburgh office market is dominated by overseas investors, with U.K. political uncertainty failing to deter interest, a new report out today reveals.

City A.M.

Technology and construction specialists are among London's worst firms for recruiting apprentices: London's technology and construction firms are the among the capital's worst employers for recruiting apprentices, according to a new report.

City financier Edi Truell puts forward new rescue plan for Tata Steel U.K. pension scheme: A leading City financier is looking to join Tata Steel U.K.’s £15 billion British pension scheme as a trustee and has set out an ambitious plan to revamp the pensions rescue plan.

Metro Bank gets down to business, planning to increase its number of in-store managers by around a third: Business banking is booming for Metro Bank, so much so that the challenger plans to increase the number of business bankers in its branches by around a third, or 30%, in 2017.

Tube talks between RMT, TSSA and London Underground adjourn as threat of further strikes looms over capital: Negotiations aimed at averting more Tube strikes were adjourned today, leaving the threat of industrial action looming over the capital.

Hard Brexit will need longer transition for businesses, City policy Chief warns: The Square Mile will need a longer transition if Theresa May pursues a so-called Hard Brexit, City policy Chairman Mark Boleat has warned.

Welsh water bidding war heats up after activist locals attempt to block Severn Trent takeover: An investment company is still hopeful of buying a Welsh water company, with angry locals seeking to block the rival bid in an unprecedented case of shareholder activism.

U.K. tech urges Theresa May to clarify skilled immigration in hard Brexit speech: The U.K. tech industry is calling on Theresa May to consider the need for skilled migrants in her plans for Brexit, which are due to be revealed in a highly-anticipated speech on Tuesday.

Italian banking crisis: Monte dei Paschi Boss to produce new business plan by February: The Boss of Monte dei Paschi di Siena is drawing up a new business plan for the troubled lender, with the aim to get it polished off by February.

CBI Boss Carolyn Fairbairn sounds the alarm on Brexit "crash-landing": CBI Boss Carolyn Fairbairn has issued a warning against "crash-landing" into Brexit without planning or sufficient preparation.

Wonga's hire hopes: Lender nabs Worldpay Finance Boss as new Chief Financial Officer: Wonga has appointed Joanna Baker as its new Chief Financial Officer in the hopes that she'll put the payday lender back into the black.

Popcorn group Propercorn snaffles up £7 million investment to help with U.K. and overseas expansion: Gourmet popcorn company Propercorn has snaffled a £7 million investment from JamJar Investments and Piper Private Equity.

Shareholder group hits outs at Sports Direct's "disappointing" failure to conduct an independent governance review: Sports Direct is under fire for its failure to find an independent organisation to conduct a review of its corporate governance.

U.K.'s export credit agency pumps in $400 million of funding to help GE Oil & Gas secure Ghana gas contract: The U.K.'s export credit agency has agreed its first direct loan to a British exporter in Africa, pumping up an oil and gas firm's contract to the tune of $400 million (£328 million).

]]>
Tue, 17 Jan 2017 08:31:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-newspaper-briefing/26893/in-the-papers-cond-nast-burberry-unilever-ikea-26893.html
Market Briefing - UK markets finished in negative territory yesterday, as caution prevailed amongst investors ahead of a key Brexit speech by UK Prime Minister, Theresa May http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26892/market-briefing-uk-markets-finished-in-negative-territory-yesterday-as-caution-prevailed-amongst-investors-ahead-of-a-key-brexit-speech-by-uk-prime-minister-theresa-may-26892.html UK Market Snapshot

UK markets finished in negative territory yesterday, as caution prevailed amongst investors ahead of a key Brexit speech by UK Prime Minister, Theresa May. Mitie Group declined 3.1%, amid reports that its CEO, Phil Bentley, would start a review of the company's accounts which would reduce revenue and profits of the company. Royal Bank of Scotland dropped 2.8%, following a broker downgrade on the stock to ‘Neutral’ from ‘Buy’. Vodafone Group lost 2.0%, after a broker downgraded its rating on the stock to ‘Hold’ from ‘Buy’. On the positive side, Acacia Mining climbed 4.0%, after the company announced that it is in preliminary talks for a merger with Endeavour Mining Corp. Miners, Glencore, Anglo American and Rio Tinto advanced 1.6%, 2.0% and 2.1%, respectively, after a leading broker raised its target prices on the companies. The FTSE 100 shed 0.1%, to close at 7,327.1, while the FTSE 250 fell 0.3%, to settle at 18,307.7.

US Market Snapshot

US markets were closed yesterday for Martin Luther King Jr. Day.

Europe Market Snapshot

Other European markets ended in the red yesterday, weighed down by banking and auto sector stocks amid concerns over a ‘Hard’ Brexit and Donald Trump’s policies. Commerzbank and Deutsche Bank declined 1.6% and 1.9%, respectively. Carmakers, Bayerische Motoren Werke, Daimler and Volkswagen slipped 1.1%, 1.4% and 1.7%, respectively, after Donald Trump reminded his move to impose heavy duty on German cars imported into the US from Mexico in an interview. Bucking the trend, Essilor International rallied 11.9%, amid news that the company is merging with Italy’s Luxottica Group, up 8.3% to form a company worth about €46.0 billion. Hugo Boss jumped 7.6%, after the company announced that its full year profit would drop less than expected following positive fourth quarter sales. The FTSEurofirst 300 index declined 0.9%, to close at 1,434.8. Among other European markets, the German DAX Xetra 30 slid 0.6%, to close at 11,554.7, while the French CAC-40 shed 0.8%, to settle at 4,882.2.

Asia Market Snapshot

Markets in Asia are trading mixed this morning. In Japan, exporters, Panasonic, Canon and Honda Motor have dropped 0.6%, 0.9% and 1.5%, respectively, amid a stronger Japanese Yen. However, Ube Industries and Fuji Electric have gained 2.3% and 3.0%, respectively. In Hong Kong, oil giants, CNOOC, Sinopec Oilfield Service and PetroChina have risen 0.4%, 1.0% and 1.3%, respectively. Power Assets Holdings and Cheung Kong Property Holdings have advanced 0.2% and 2.5%, respectively, while Cheung Kong Infrastructure Holdings has slipped 1.1%. In South Korea, index major, Samsung Electronics has gained 1.8%. On the other hand, POSCO and LG Electronic have fallen 0.4%, each. The Nikkei 225 index is trading 0.8% lower at 18,939.7. The Hang Seng index is trading 0.4% up at 22,817.4, while the Kospi index is trading 0.5% higher at 2,074.8.

Key Corporate Announcements Today

EGMs

PJSC Centre For Cargo Container Traffic Transcontainer GDR (Reg S), Public Power GDR SA (Reg S)

Final Dividend Payment Date

Hargreave Hale AIM VCT 1

Interim Dividend Payment Date

IG Design Group

Trading Announcements

Cairn Energy, City of London Investment Group, Greggs, Sinclair Pharma, Rio Tinto, Provident Financial

Key Corporate Announcements for Tomorrow

AGMs

Diploma, Game Digital, Majedie Investments

Final Dividend Payment Date

Focusrite, Northamber

Interim Dividend Payment Date

British Smaller Companies VCT, Circle Property, Ventus VCT D Shs, Ventus 2 VCT, Ventus 2 VCT 'C' Shares, Ventus 2 VCT D Shs, Ventus VCT, Ventus VCT 'C' Shares

Special Dividend Payment Date

British Smaller Companies VCT

Quarterly Payment Date

Assura

Trading Announcements

Ladbrokes Coral Group, Burberry, Diploma, Experian, Hochschild Mining, Premier Foods, JD Wetherspoon

Commodity, Currency and Fixed Income Snapshots

Crude Oil

At 0430GMT today, Brent Crude Oil one month futures contract is trading 0.25% or $0.14 lower at $55.72 per barrel. Yesterday, the contract climbed 0.74% or $0.41, to settle at $55.86 per barrel, after Saudi Arabia’s Energy Minister, Khalid al-Falih, confirmed that the country would strictly observe the output cut commitment.

Gold

At 0430GMT today, Gold futures contract is trading 0.26% or $3.10 higher at $1206.10 per ounce. Yesterday, the contract advanced 0.60% or $6.80, to settle at $1203.00 per ounce, reaching an 8-week high level, boosted by increased demand for the safe-haven asset ahead of the British Prime Minister’s speech regarding Brexit plans.

Currency

At 0430GMT today, the EUR is trading 0.31% higher against the USD at $1.0633, ahead of the ZEW survey across the Euro-zone for January, slated to release in a few hours. Yesterday, the EUR weakened 0.39% versus the USD, to close at $1.0600. Meanwhile, economic data showed that the Euro-zone’s trade surplus expanded more than expected in November.

At 0430GMT today, the GBP is trading 0.25% higher against the USD at $1.2073, ahead of a speech by UK’s Prime Minister, Theresa May, scheduled for today, where she is expected to unveil her Brexit plans. Also, market participants will focus on UK’s consumer price index figures for December, set to release today.  Yesterday, the GBP fell 1.09% versus the USD, to close at $1.2043, amid lingering concerns that the UK is heading for a ‘Hard’ exit from the European Union.

Fixed Income

Yesterday, the US Treasury Markets were closed on account of a public holiday.

Key Economic News

IMF’s global growth forecasts for 2017 and 2018 remained unchanged

The International Monetary Fund (IMF) has released a quarterly update to its world economic outlook, with a cautious stance to the policies of US President-elect, Donald Trump. The IMF’s 2017 and 2018 global growth forecasts remain unchanged at 3.4% and 3.6%, respectively. The organization further added that potential widening of global imbalances coupled with sharp exchange rate movements could intensify protectionist pressures. Also, increased restrictions on global trade and migration would hurt productivity and income, and take an immediate toll on market sentiment.

BoE’s Carney: UK reliant on buoyant consumers

The Bank of England (BoE) Governor, Mark Carney, in his speech at the London School of Economics, indicated that British growth was relying more heavily on consumer spending - rather than investment or exports - which boded poorly for the future. He also warned that UK’s economic growth might take a hit in the coming years as the dropping Pound begins to weigh on wages and consumer spending. Further, the Governor stated that monetary policy can respond in either direction to ensure sustainable return of inflation to target.

Euro-zone trade surplus widened in November

The non-seasonally adjusted trade surplus in the Euro-zone expanded to €25.90 billion in November, following a trade surplus of €20.10 billion in the prior month. Markets were anticipating the region to record a trade surplus of €24.30 billion.

Euro-zone trade surplus widened in November

The seasonally adjusted trade surplus in the Euro-zone widened to €22.70 billion in November, compared to market expectations of a trade surplus of €20.80 billion. The Euro-zone had reported a revised trade surplus of €19.90 billion in the previous month.

Italian CPI recorded a rise in December

In Italy, the final consumer price index (CPI) registered a rise of 0.40% on a MoM basis, in December. In the prior month, the CPI had registered a drop of 0.10%. The preliminary figures had also recorded an advance of 0.40%.

Italian EU normalised CPI registered a rise in December

The final EU normalised CPI climbed 0.40% in Italy on a MoM basis, in December. The EU normalised CPI had fallen 0.20% in the previous month. The preliminary figures had also recorded a rise of 0.40%.

Canadian existing home sales climbed in December

Existing home sales recorded a rise of 2.20% on a MoM basis in Canada, in December. Existing home sales had fallen 5.30% in the previous month.

Japanese tertiary industry index advanced as expected in November

The tertiary industry index recorded a rise of 0.20% on a monthly basis in November, in Japan, compared to a revised flat reading in the prior month. Markets were anticipating the tertiary industry index to rise 0.20%.

Japanese machine tool orders rose in December

In Japan, the flash machine tool orders rose 4.40% on an annual basis, in December. In the prior month, machine tool orders had recorded a drop of 5.60%.

]]>
Tue, 17 Jan 2017 08:27:00 +0000 http://www.proactiveinvestors.co.uk/columns/guardian-cfds-pre-market-briefing/26892/market-briefing-uk-markets-finished-in-negative-territory-yesterday-as-caution-prevailed-amongst-investors-ahead-of-a-key-brexit-speech-by-uk-prime-minister-theresa-may-26892.html