column Proactiveinvestors column RSS feed en Mon, 26 Sep 2016 21:39:53 +0100 Genera CMS (Proactiveinvestors) (Proactiveinvestors) Oil price, Victoria Oil & Gas, Lamprell, Velocys, Egdon/EOG/Union Jack. And finally... Oil price
The ‘Opec’ meeting scheduled for Wednesday and looked forward to by so many bystanders looks like being a farce but don’t say you weren’t warned. When the Opec President called for this meeting back on August 9th, swiftly followed by the Opec machine led by the Saudis and others it all looked so good, even the Russians and the Iranians made comforting noises. It seems that now the meeting is ‘for consultations only’ according to KSA sources, in my view it was never a ‘proper’ Opec meeting and at best would send a paper to the November 30th official gathering. So many things can and have gone wrong, production is soaring and the prospects are worse, indeed with the rig count growing and world growth slowing only the huge capex falls scheduled for the next two years can make the numbers add up. Only the Algerian Minister thinks he can salvage something from the meeting…
Victoria Oil & Gas
Interims from VOG this morning which yet again prove that this company is delivering the goods in all its intended areas. EBITDA of $14.2m and post tax profits of $1m were as expected and the cash sum of $1.9m at the period end grew to $9m as of 23rd September. Average daily production of 13.1 mmscf/d was up 93% and the amount of gas sold was 2,282 mmscf which was well up on the previous number of 1,525 but also in line with the target of increasing sales by 30% on 2015.
Phase 2 of the Bonaberi pipeline is well underway and will be complete by the year end whilst work at Logbaba means that almost all drilling preparations are complete and they are nearly ready to spud. During the period the company bought 75% of the Matanda PSC which could be transformational, secured a debt facility of $26m and after, strengthened the board with a new CEO and FD. I have long contended that VOG has been largely forgotten by the market who either misunderstand the utility nature of its portfolio or just dont understand the nature of the beast. The company find, deliver and secure customers for clean gas for thermal and grid power markets where there is significant demand, the acquisition of Matanda also gives much optionality to size up the model with consequential effects in the future, not to be underestimated by any means.
A small cheer today for Lamprell who have announced a new contract from Jacktel, a subsidiary of Master Marine for the upgrade of the mobile operating unit ‘Haven’ as an accommodation service vessel for Statoil’s  Johan Sverdrup field in the Norwegian North Sea. At a value of $90m and from a new client this must not be sneezed at…
Is my long held faith in VLS about to be vindicated as today, along with meaningless interims the company announce good news from Oklahoma? The ENVIA GTL plant in Oklahoma City is ‘making good progress’ and pre-commissioning is substantially complete and early commissioning steps have begun. With a major strategic review expected in the upcoming quarter, the new-ish CEO will outline plans for the future.
Egdon/EOG/Union Jack
The long awaited CPR on Wressle and Broughton North is out and for Wressle, STOOIP of 14.18m of which 2.15m is 2P and 2C across three reservoir sands, Ashover Grit, Wingfield Flags and Penistone Flags  has led to the initial FDP for the field being submitted. At Broughton North STOOIP is 3.43m leading to 0.51m of oil and 0.51 BCF of gas.
And finally…
In the Prem there were again plenty of goals, leaders the Noisy Neighbours won 1-3 at the Swans whilst the Gooners beat Chelski 3-0 and the HubCap Stealers were 5-1 victors against Hull City Tigers. The Red Devils saw off the Champions 4-1 and Spurs won 1-2 at the Boro. With the Eagles coming back to win 2-3 at the Maccams it was also another bad day for the Hammers who lost again at the Olympic stadium.
In the rugby the big surprise was that the Quins overturned the Sarries at the Stoop whilst the Saints went down 15-20 at home to the Wasps and the Tigers beat Bath.
Phil ‘The Power’ Taylor won the inaugural Champions League darts in fine style.
And on the day that Rory McIlroy won the $10m FedEx Cup it was sad to note the passing of Arnold Palmer at the age of 87.
In the MLB,
Miami Marlins pitcher Jose Fernandez was killed yesterday in a boat crash off Miami Beach. Fernandez was 24 years old and already one of the best players in the game. The Marlins game against the Braves was cancelled last night as a result.
Elsewhere, in the National League, the Cubs, Nationals and Dodgers have won their divisions and the wildcard race is tight with the Mets, Cardinals and Giants still in contention for two playoff places.
In the American League, the Rangers have already clinched the AL West with the Red Sox and Indians well placed for the other automatic playoff spots. The Blue Jays and Orioles should take the wild cards in the AL.
In the NFL,
The Bears move to 0-3 with a 31-17 loss to the Cowboys, the Patriots are now 3-0 with a shutout of the Texans and the Packers bounce back with victory over Detroit.
Russell Wilson was injured and removed from the Seahawks-49ers game. Seattle won 37-18 but, if serious, Wilson’s injury will worry Seahawks fans.
The Vikings built on last week’s win over the Packers with a big win in Carolina. They move to 3-0. The Panthers are 1-2.
There were also wins for the Broncos, Redskins and Chiefs. Tonight sees the Falcons travel to New Orleans as they take on the winless Saints.

Mon, 26 Sep 2016 13:02:00 +0100
Goldplat, Highland Gold, Kodal Minerals, Gemfields, Kefi Minerals, Savannah Resources, SolGold Goldplat* (LON:GDP) – Results improve as Goldplat recovers from disastrous year
Highland Gold (LON:HGM) – Interim results
Kodal Minerals* (LON:KOD) – Field reconnaissance in Mali
Gemfields (LON:GEM) – Results for FY to 30th June
Kefi Minerals* (LON:KEFI) – Interim results and project update
Savannah Resources (LON:SAV) – Raising £1.42m
SolGold* (LON:SOLG) – Newcrest ups its financing and offer price for stock in SolGold

European equities are off this morning with the Euro Stoxx 600 index down 1.4% and all sector components of the measure trading in the red with financial and energy stocks leading losses.
• Crude prices are flat today following a 4% decline on Friday as Saudi Arabia suggested the oil producers’ meeting in Algiers on Sep 26-28 will fail to lead to a concerted action.
• Money managers hiked their short positions in crude by the most in more than a year in a week through Sep 20, according to the CFTC data.
• Gold prices are little changed holding on to its last week’s gains (+2.2%) on the back of a the Fed announcement to keep low rates for longer than markets expected it to.
• Nickel prices are trading 1.8% lower today (-$195/t) following its biggest weekly gain in almost three months (+9.6%) and as Philippines authorities delay results of the audit.
• Iron ore futures climbed albeit only marginally on Monday on reports of a decline in iron ore stockpiles (-0.3%wow according to Steelhome weekly data).

Colombia – landmark peace deal with Farc rebels
• Colombia stands to benefit hugely from the peace deal due to be signed with Farc rebels today.
• There is little doubt the nation will benefit from the appearance of peace and the end to bombing and more importantly kidnapping which affected so many Colombian families.
• Many of the families affected by kidnapping and murder called for the peace deal but many others will also struggle to come to terms the reality of reconciliation.  The nation is divided on the merits of the deal but today’s signing will at least give peace in Colombia a chance.
• The Farc have in recent years lost ground to government forces and are not the only rebel group on the ground.  Rebel groups who refuse to be a part of the peace deal are to be allowed to move into specified areas as part of the deal.
• The deal and the lasting peace which is expected to follow should raise Colombia’s international status and enable this, sophisticated and developing, nation to gain better international standing.

US – stops short of accusing Putin of war crimes
• The US ambassador to the US has accused Russia of Barbarism.
• Russia claims that peace in Syria is almost impossible.
• The US special envoy has said the use of weapons fired by the Russians may amount to a war crime.
• The implications and potential for Russia being accused of war crimes is not good for Russia and risks the co-operation seen recently between the US and Russia on airstrikes against Islamic State and related terrorist groups.

US and UK politicians in race to bottom in terms of political confidence
• The UK is in the lead with Labour electing comrade Corbyn this weekend but the US looks likely to regain the lead as the US holds a ‘Trump’ card.

Dow Jones Industrials  -0.71% at 18,261 
Nikkei 225   -1.25% at 16,545 
HK Hang Seng   -1.56% at 23,318  
Shanghai Composite   -1.76% at   2,980 
FTSE 350 Mining   -1.72% at 12,238  FTSE 350 +67% since 1st January
AIM Basic Resources   +0.54% At   2,462  AIM Basic Resources +51% since 1st January

Date Index Period   Actual Est Previous
Friday Manufacturing PMI Sep   51.4 52.00 52.00
Monday New Home Sales Aug %mom  -8.3 12.4
Tuesday SPCS 20 City Index (SA) Jul %mom   0 -0.1
SPCS 20 City Index (NSA) Jul %yoy  5.1 5.1
Markit Services PMI Sep   51.2 51.00
Markit Composite PMI Sep    51.5
  Consumer Confidence Sep     98.8 101.1
Wednesday Durable Goods Orders (ex Transport) Aug (Prelim) %mom   -0.5 1.3
  Capital Goods Orders Aug (Prelim) %mom   -0.1 1.5
Thursday Weekly Jobless Claims       260k 252k
GDP Q2 (Final) %qoq  1.3 1.1*
Consumer Spending Q2 (Final) %qoq  4.4 4.4
  Core PCE Q2 (Final) %qoq   1.8 1.8
Friday Personal Income Aug %mom   0.2 0.4
Personal Spending Aug %mom  0.1 0.3
PCE Aug %mom  0.2 0.00
PCE Aug %yoy  0.9 0.8
Core PCE Aug %mom  0.2 0.1
  Core PCE Aug %yoy   1.7 1.6
* Previous Q2 GDP estimate; Q1 GDP change was +0.8%qoq   

Turkey – Moody’s cut long term issuer and senior unsecured bond ratings of Turkey one notch to junk Ba1 on Friday.
• The agency cited risks to the “country’s sizeable funding requirements” and “the weakening in previously supportive credit fundamentals, particularly growth and institutional strength” as primary reasons behind the decision.
• S&P placed the nation’s credit rating in junk following the failed coup attempt in mid Jul, while Fitch has Turkey on BBB- investment grade rating on review for a downgrade.
• The lira lost more than 1.0% against the US$ over two days on the back of the announcement.

US – Obama vetoes bill to allow families to sue a sovereign state eg Saudi Arabia over 9-11
• Reports suggest that Saudi Arabia may have threatened to pull funds out of the US, eg US treasuries if the bill had gone through.
• It makes financial sense for the US president to veto the bill, but 9-11 is a highly emotive subject and strange things do happen though Obama had previously made firm statements saying that he will veto the bill.
• Republican leaders in congress appear confident that they may have sufficient votes to override the veto
• Speculation may suggest that Saudi Arabia which may not be allowed to receive interest payments on paper due to Sharia law may receive services in return for the payment of interest on US government bonds.  These services may be in the form of the provision of municipal and other services provided to the Saudi Arabian government. 

US$1.1239/eur vs 1.1206/eur yesterday.    Yen 100.60/$ vs 100.88/$.   SAr 13.703/$ vs 13.574/$.    $1.293/gbp vs $1.301/gbp.
0.761/aud vs 0.762/aud.   CNY 6.669/$ vs 6.670/$.  

Commodity News
Precious metals:
Gold US$1,334/oz vs US$1,335/oz yesterday –
     Gold ETFs 65.3moz unch vs 65.3moz yesterday
Platinum US$1,038/oz vs US$1,057/oz yesterday
Palladium US$691/oz vs US$692/oz yesterday
Silver US$19.42/oz vs US$19.80/oz yesterday

Base metals:   
Copper US$ 4,821/t vs US$4,848/t yesterday –
Aluminium US$ 1,626/t vs US$1,644/t yesterday –
Nickel US$ 10,460/t vs US$10,670/t yesterday –
Zinc US$ 2,252/t vs US$2,288/t yesterday –
Lead US$ 1,910/t vs US$1,938/t yesterday –
Tin US$ 19,625/t vs US$19,575/t yesterday –

Oil US$45.8/bbl vs US$47.1/bbl yesterday
Natural Gas US$2.982/mmbtu vs US$3.003/mmbtu yesterday
Uranium US$24.40/lb vs US$24.40/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$55.9/t vs US$55.6/t –
Steel rebar, China 25mm US$388.2/t vs US$384.5/t –

Thermal coal (1st year forward cif ARA) US$60.3/t vs US$60.0/t yesterday -
Coking coal prices $206.4/t unch vs $206.4/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level

Tungsten - APT European prices vs $180-200/mtu unch ‘again’ vs $185-200/mtu two weeks ago

Company News

Goldplat* (LON:GDP) 6.25 pence, Mkt Cap £10.5m – Results improve as Goldplat recovers from disastrous year
• Goldplat report year end results for the year to 30 June 2016 adding to information released at end August.
• The team managed to turn the business around from what was a disastrous 2015 to show a modest £1.4m post-tax profit for the year vs a loss of £0.9m a year earlier.
• Admin expenses rose to £1.836m vs £1.679m indicating less focus in this area than some others.
• Gold sales rose to 37,666oz of gold from 30,524oz a year ago with the gold recovery operations producing 35,661oz vs 28,246 yoy.
• Operating profits rose to £1.172m from £0.711m yoy and Pre-tax profits rose to £1.942m vs £0.796m.
• The Gold Recovery plant in Ghana reports an operational profit of £0.437m for the year vs a loss of £641,000 yoy
• The very small, loss making Kilimapesa gold mine in Kenya lost £0.711m for the year vs a loss of £753,000.
• Goldplat has improved its cash position to £2.056m from £0.630m a year earlier
• New chairman Matthew Robinson has taken over from displaced Brian Moritz.
Conclusion:  Goldplat is recovering from a disasterous 2015.  The group is still trying to generate a profit at its only gold mine at Kilimapesa in Kenya but has returned to profit at its gold recovery plant in Ghana.
The slow demise of the South African gold mining industry may make the sourcing of gold bearing waste materials, such as wooden packs, increasingly difficult.
*SP Angel analysts have visited the Goldplat’s recycling plant at Benoni in Johannesburg

Highland Gold (LON:HGM) 141p, Mkt Cap £459m – Interim results
• Revenues increased 12.5%yoy to $147.1m (H1/15: $130.7m) on stronger sales volumes (127.7koz v 119.3koz in H1/15) and slightly better realised prices for gold dore and Novo concentrates.
• EBITDA climbed 45%yoy to $79.7m (H1/15: $54.9m) helped by a decline in cash costs on a weaker USDRUB exchange rate.
• Net profit more than doubled to $37.1m (H1/15: $14.5m) with EPS coming in at $0.11 (H1/15: $0.04).
• An interim 5p per share dividend was approved by the Board
• Net debt reduced to $197.9m (H1/15: $232.4m) with ND/EBITDA ratio coming down to 1.3 (H1/15: 1.7).
• TCC remained at impressive sub-$500/oz levels averaging $444/oz (H1/15 and FY/15: $538/oz and $480/oz).
• AISC averaged $609/oz (H1/15 and FY15: $710/oz and $640/oz).
• Net cash flow from operations (post interest and tax) totalled $71.8m (H1/15: $48.9m) and FCF at $47.4m (H1/15: $24.8m).
• The Company reiterated its FY16 production target for 255-265koz (2015: 262.5koz).
Conclusion: Good H1/15 interim results reflect solid performance at the flagship Novo mine and improvements in cash costs at MNV ($602/oz in TCC) with both operations beating internal production targets.

Kodal Minerals* (LON:KOD) 0.16p, mkt cap $5.9m – Field reconnaissance in Mali
• Kodal Minerals today reports a summary of field reconnaissance at its Bougouni lithium project in Southern Mali.
• The visit to the three key prospects identified a zone of outcropping pegmatite veining over a strike length of 400m with a width of >20m.
• “Previous investigation at the Kola prospect had returned anomalous lithium results up to 1.1% Li2O from very limited sampling.”
• “At the Ngouanala prospect the previously identified pegmatite vein was found to have a thickness in excess of  20m and strike length in excess of 300m.”
• The visit also identified further parallel and new zones of pegmatite veining at Ngouanala.
• Previous sampling on the Sogola property has returned lithium assay results in excess of 2.2% Li2O.
Conclusion:  Bernard Aylward, the Kodal ceo is working to define the potential of these lithium bearing pegmatites.  This is relatively early stage exploration and much work has yet to be done to define the potential value of these prospects.
*SP Angel acts as Financial Advisor and Broker to the company.  *Robert Woodridge, a partner at SP Angel is also Chairman of Kodal Minerals. 

Gemfields (LON:GEM) 46.5p, mkt cap £257.8m – Results for FY to 30th June
• Gemfields reports a 90% increase in after tax profit for the year to 30th June 2016 of US$23.5m (2015 – US$12.3m).
• At the operating level, profit rose by over 30% to US$39.89m (2015- US$30.40m) and the company also benefitted from a substantial increase in finance income to US$6.81m (2015 – US$0.22m) as the company’s cash balances increased to US$41.48m (2015 – US$27.97m).
• Net debt declined to US$10.00m from US$16.73m.
• At the Kagem emerald operation, production of 30.0m carats during the year is in line with the 30.1m carats achieved in 2015. The company is planning an investment of US$10m in an expanded mining fleet to increase mining capacity and is now targeting 30-35m carats of production from Kagem for the current year.
• Kagem production generated revenues of US$101.2m (2015 – US$64.9m as it benefitted from record unit prices of US$70.68/carat. Costs declined to US$1.48/carat (2015- US$1.58/ carat).
• At the Montepuez ruby operation, production rose to 10.3m carats (2015 – 8.4m) and the company is looking for 2016/17 production in the range of 10-12m carats.
• Grades at Montepuez rose from 26 carats per tonne to 35 carats per tonne and the company reports a modest reduction in operating costs to US$2.54/carat (2015 – US$2.57/carat).
• The company plans to invest approximately US$25m to expand production at Montepuez. The main additional items of equipment include additional dense media separation, optical sorting and stone sorting capacity within the wash plant.
• “Gemfields expects demand for its rubies and emeralds to continue to rise in the coming year driven and supported by the Company’s global marketing initiatives.” The company is expecting to hold four emerald and beryl auctions and two ruby and corundum auctions in the coming year.
• Elsewhere, “Work continues in Colombia to progress the acquisition of the Coscuez emerald mine while the next stage of exploration has commenced at the Company’s greenfield properties in Ethiopia.” The company is also “close to establishing a supply chain which will see the introduction of sapphires [from Sri Lanka] to its existing product supply chain.”
Conclusion: The company is continuing to build its coloured gemstone business with expansions of the African emerald and ruby businesses likely to be augmented by the introduction of sapphires from Sri Lanka and a further source of emeralds from S America.

Kefi Minerals* (LON:KEFI) 0.49 pence, Mkt Cap £19.0m – Interim results and project update
• Kefi Minerals has reported a loss of £1.88m (0.07p/share) for the first six months of 2016 compared to £1.63m (0.12pence) in 2015.
• Following investment of £1.20m and receipt of £1.63m (net) from the issue of shares during the period, the company’s cash balance at 30th June amounted to £0.15m.
• The company is maintaining momentum on the development of its flagship Tulu Kapi gold project in Ethiopia where it expects to achieve “Steady-state gold production of 115,000 oz pa from 2018 from the open pit at an impressive All-in Sustaining Costs (“AISC”) level of c US$746/oz.”
• During the first half of the year, Kefi Minerals has strengthened its management team and improved the project economics of the Tulu Kapi gold project to the point where they “are better today than at any time and with all-in costs estimated at US$746/oz, we believe it puts the Tulu Kapi project in the lowest cost quartile of gold producers globally.”
• The company  expects that “In the second half of the year, our focus is on working with the Government of Ethiopia on the community resettlement, livelihood restoration and community resettlement programmes.”
• In addition, the company is in continuing discussions with potential financiers for the project, which, according to the company’s estimates released in August, will require capital investment of US$130m. Kefi Minerals has already secured some US$85m of debt facilities and received a further commitments for US$20m from the Ethiopian Government, and “As a result, the Board looks to the future with confidence.”
• At the company’s Jibal Qutman project in Sadi Arabia, preliminary analysis indicates a viable, low capital cost project with the potential to provide a source of cash flow to underpin a further, ambitious, exploration programme in conjunction with Kefi’s partner, G&M. The prime target of future exploration in Saudi Arabia are the precious and base metals targets at Hawiah in western Saudi Arabia.
• The partners (Kefi 40%) plan to apply for a mining licence for Jibal Qutman when the outcome of a Government review of policy is known late this year.
Conclusion: Kefi Minerals continues to press ahead with its flagship Tulu Kapi gold project and has made a number of improvements to enhance the project economics, strengthened the management team ahead of the development phase and is starting on the community resettlement programmes in conjunction with the Ethiopian Government. Progress in Saudi Arabia is likely to pick up pending the outcome of a Government policy sector review later this year.
*SP Angel act as Nomad and broker to Kefi Minerals

Savannah Resources (LON:SAV) 3.9 pence, Mkt Cap £15.0m – Raising £1.42m
• Savannah Resources reports that it has raised £1.42mthrough the placing of approximately 28.2m shares and subscription for 12.5m shares at a price of 3.5p/share.
• In addition, the Company has received letters of intent for a further £0.83m from directors and related parties which will become effective when the Company has exited its current “close period”.
• The funds are to be used to progress the development of the Company’s copper projects in Oman and to further explore the newly acquired lithium projects in Finland.

SolGold* (LON:SOLG) 13.875p, Mkt Cap £169.7m – Newcrest ups its financing and offer price for stock in SolGold
Fully diluted market cap is around £195m
• Newcrest has raised its proposed investment in SolGold to US$22.863m from US$10.8m in return for a 10% stake in SolGold.
• The new proposed price for the investment is US$0.16c/s up from US$8c/s.
• Maxit Capital and its clients are to also invest US$10.137m for a further 4.43% of the company.
• The combined capital raising of US$33m reduces the proposed Maxit Capital funding by US$9.863m leaving appetite for more investor interest.
• On completion Newcrest will have the right to appoint a director and anti-dilution rights to maintain a 10% position in the company.
• Newcrest has agreed, for a period of three years, to follow the recommendations of any independent expert appointed by the SolGold board in respect of any proposed change of control transaction in respect of SolGold capital or its assets.
• SolGold now appear to have around US$48m of cash at hand with which to drill out the Cascabel copper / gold porphyry discovery in Ecuador.  This is a good amount of funding for the delineation of a resource at the Alpala prospect and for the determination of further resources within a series of other prospects within the Cascabel license area.

Mon, 26 Sep 2016 11:02:00 +0100
Today's Oil and Gas Update - Union Jack Oil Headlines

Union Jack Oil* (LON:UJO – 0.19p) (BUY – 0.70p) – Maiden Reserves: As a result of today's news, we are also upgrading our outlook for Broughton North, which when netted off against the increase in shares results in modest increase in our valuation to $13.7mm (0.70p), of which $1.8mm (0.11p) can be considered Core. Using SPA's recommendation scale, we reiterate BUY Recommendation.

News Items

Union Jack Oil* (LON:UJO – 0.19p) (BUY – 0.70p) – Maiden Reserves
Today's news of the release of its competent persons report ("CPR") on Wressle is a watershed for the company in that following its release, the company can now report reserves of 0.05mm bbl. This is a momentous occasion, as it not only reports reserves, but also independently confirms Wressle's commerciality.
However, of more note is the contingent resources, which are reported at 1.53mm bbl (0.13mm bbl net to UJO), which will be reclassified as reserves once a development plan for the Penistone Flags has been accepted by the Oil and Gas Authority ("OGA").
Tangentially, with the change in the risk profile, the company can now legitimately take on more risk, should it wish to, at the exploration end of its portfolio. Today's news underlines the fact that the company has stayed true to its stated aim of giving investors exposure to high growth oil and gas exploration, without exposing the company to excessive risk.

Mon, 26 Sep 2016 10:57:00 +0100
Diageo off the rocks The world’s largest spirits group Diageo generated 1.3% organic volume growth and 2.8% organic net sales growth in the year to June 2016.  This follows on from a fall in volume in the previous year with flat organic net sales.  Daigeo’s three strategic priorities in the current year are Scotch, US spirits and India.

Diageo’s latest trading update stated that the financial year to June 2017 has started well.  The momentum in place in the last fiscal year appears to e flowing through to a stronger top line performance.

The objective through to fiscal 2019 is for mid-single net sales growth with this a marked increase on the 2.8% generated last year.  Diageo is also looking to achieve a 100bps organic operating margin improvement by fiscal 2019.

If these targets can be achieved then Diageo is set to deliver robust profit growth over the next three years.  Diageo is already a very profitable business with the organic operating margin in fiscal 2016 coming in at 27.1%.

Diageo’s six “global giants” generated 40% of net sales last year


Source: Diageo Factsheet

Diageo’s three priorities in the current fiscal year to June 2017 are Scotch, US spirits and India.  In fiscal 2016 Scotch made up 24% of net sales while North America is Diageo’s most important market at nearly half of operating profit.

India is a key growth market for Diageo with the group owning a 55% controlling stake in India-listed United Spirits Limited (USL).  This exposure positions will allow Diageo to benefit from the growth in India’s middle class.

North America returned to organic volume growth for Diageo in fiscal 2016 at 1.1% versus a 2.9% decline in fiscal 2015.  In Asia Pacific the pace of organic volume decline slowed to 0.1% from 3.4% decline in fiscal 2015.

Diageo turns around in fiscal 2016: year to June.


Source: Diageo Factsheet

Diageo’s three priorities in the current fiscal year to June 2017 are Scotch, US spirits and India.  In fiscal 2016 Scotch made up 24% of net sales while North America is Diageo’

s most important market at nearly half of operating profit.

India is a key growth market for Diageo with the group owning a 55% controlling stake in India-listed United Spirits Limited (USL).  This exposure positions will allow Diageo to benefit from the growth in India’s middle class.

North America returned to organic volume growth for Diageo in fiscal 2016 at 1.1% versus a 2.9% decline in fiscal 2015.  In Asia Pacific the pace of organic volume decline slowed to 0.1% from 3.4% decline in fiscal 2015.

Diageo turns around in fiscal 2016: year to June




Source: Diageo investor presentation

Turning to India and United Spirits Limited has a number of the leading brands in the country.  McDowell’s is described as “India’s largest consumer goods brand” and is USL’s flagship offering in the fast-growing local Scotch market.

USL also has the second largest Scotch brand in India, Black Dog, and the fastest growing Scotch brand in the country, Black & White.  With a diversified portfolio USL should inevitably benefit from the forecast growth in India’s spirit market.


Source: Diageo investor presentation


Diageo appears to be back in good form after a difficult 2015 when organic volume declined 1.3%.  The fall in the value of the pound will also provide a currency tailwind for the current year.

If the targets for top line growth and margin expansion through to 2019 are achieved we will see solid medium-term profit growth.  The key is for Diageo to continue to improve its position in the larger North American market.

Emerging markets appear to be driving a turnaround in demand for Scotch with volumes stabilising.  India holds significant potential for Diageo as it owns a majority stake in the country’s leading spirits group.


Given a very high operating profit margin it is no surprise that Diageo does not appear cheap at 21.6X forecast earnings for fiscal 2017.  However, the forecast yield is attractive at nearly 3% and the group has a strong track record.

Looking out to 2020 and the forecast P/E falls to 18X while the forecast dividend yield edges up to 3.2% (1.8X covered).  With a range of strong brands the shares offer an attractive core portfolio holding.

This report was produced by Fat Prophets Senior Research Analyst, Andrew Latto

Disclosure: Interests associated with Fat Prophets declare a holding in Diageo.



Mon, 26 Sep 2016 09:36:00 +0100
Sainsbury's checked out by Jefferies, which cuts target Mon, 26 Sep 2016 09:35:00 +0100 Northland Capital Partners View on the City - Active Energy Group, Savannah Resources, Premier African Minerals, Petrel Resources Active Energy Group (LON:AEG) – CORP: Interim Results
Market Cap: £18.1m; Current Price: 2.75p

Progress in all divisions,  international timber, forestry and renewables
  Active Energy Group announced Interim Results for the six months to June 30th 2016.  The Group noted: “strong growth delivered across entire international timber processing, forestry management and renewable energy business”. 
  Timber processing division AEG WoodFibre saw: “Excellent progress in increasing revenue, volumes and gross profit” resulting in:
  11% increase in Group revenue to US$13.409m (H115: US$12.046m)
  33%YoY increase in shipped volume to 137,568 tons
  50% increase in Group gross profit to US$1.840m (H115: US$1.227m) reflecting demand from Turkey, improved purchasing conditions and price stability
  The Company reported work underway to increase output capacity by 33% to  approximately  4,000 tonnes per day by Q4 2016
  Group operating profit (adj) was US$1.015m compared to H115 US$(0.569)m loss, underpinned by a reduction in admin costs to US$1.323m (H115: US$2.391m). 
  AEG reported progress at its Forestry management division AEG TimberLands  towards becoming “a leading forestry management business”, with:
  Progress towards finalisation of the Métis Settlement economic development and coal reduction initiative for Alberta and new agreement relating to the management, development and sustainable commercialisation of approximately 186,500 hectares of mature commercial forestry in Northern Ukraine
  New Ukrainian MOU signed over significant tracts of forestry
  Its third division, AEG CoalSwitch, saw progress towards commercialisation of its  'drop-in' biomass fuel coal replacement technology, with:
  completion of a demonstration plant at Salt Lake City
  product testing by commercial partners 
  progress towards financing and building the first commercial scale plant in North America
  On outlook AEG noted that full year revenue is “anticipated to reflect a significant year-on-year increase”, with a post period-end placing which raised £2.05 million (gross) to fund expansion of core AEG WoodFibre operations.  The Company said that a “Highly active development plan across all divisions” should result in “strong news flow”.  CEO, Richard Spinks said, "We have over the past three years succeeded in establishing a multi-divisional business with huge potential.  We have invested heavily in our WoodFibre business which is now yielding positive results, allowing us to further develop our other business opportunities at TimberLands and CoalSwitch, highlighted by the significant improvement in our financial performance, and continuing investment into these new business areas.  With additional capital raised in August, we are executing our investment plan which will see a further increase in capacity, output and most importantly revenue for the full year 2016.  This remains primarily from the WoodFibre division in Ukraine and will be augmented when AEG CoalSwitch and TimberLands begin to operate”.

NORTHLAND CAPITAL PARTNERS VIEW: Active Energy reported tangible progress in its core Ukrainian Woodfibre process operation and capacity expansion underway, which remains the mainstay of revenue growth in 2016. At the same time there is evidence of steps towards commercialisation of its coal replacement biomass-based solution, and access to additional forestry reserves in Canada and in Ukraine.

Savannah Resources (LON:SAV) – CORP: Placing and subscription
Market Cap: £15m; Current Price: 3.95p

Raises £1.42m
  Savannah Resources has raised £1.42m through the placing of 28,208,973 shares and subscriptions for 12,500,000 shares at a price of 3.5p.
  The Company also has letter of intent for an additional £0.83m from Directors and related parties once the Company has exited its current closed period.
  Following the Completion of the placing the Company will have 425,869,714 shares in issue.
NORTHLAND CAPITAL PARTNERS VIEW: A sizable fundraise for Savannah Resources that was oversubscribed and has the potential for additional funds from Directors and related parties once the Company exits its closed period. The funds will be used to support the development towards production of Savannahs copper projects in Oman, pursue its other projects in Mozambique and Finland, and for working capital.

Premier African Minerals (LON:PREM) – CORP: RHA update
Market Cap: £8m; Current Price: 0.425p

From Friday: New mesh inserts from the crushing screens installed.
  The new mesh inserts for the RHA crushing screens have been installed and commissioned.
  A further update will be included in the Chairman’s Statement from the interims results due to be released 27/09/16.
  A review of the immediately available underground resources to support underground mining will be provided before the end of September.

Petrel Resources (LON:PET) – CORP: Interims
Market Cap: £7m; Current Price: 7p

LBT reduces and early signs from LO16/24 are promising
  LBT during H116 was €106,000 down from €147,000 in H115.
  Net cash totalled €592,000 in H116 down from €885,000 in H115.
NORTHLAND CAPITAL PARTNERS VIEW: During the first half of the year Petrel Resources focused its activities in Irish Atlantic Porcupine Basin. Petrel has a 15% carried interest in two Frontier Exploration Licences (FEL3/14 and FEL4/14) that are operated by Woodside Energy. Processing of the recently collected 3D seismic data is underway and the results are expected in early January, with the interpretation likely to be completed by the middle of next year. Petrel also owns 100% of two Licensing options (LO16/24 and LO16/25) and work is currently underway on LO16/24 with the acquisition of the relevant seismic and well data that is not currently in Petrels data base. The Company notes the presence of pinch-outs mapped in area 35/1 that extend into the 35/2 area, with the source rock already established and the sands known to be excellent reservoirs, the presence of these traps is encouraging.

Mon, 26 Sep 2016 09:02:00 +0100
In the papers: Tesco, Goldman Sachs, Apple The Times
Chinese sued in brewery fight over ‘owed’ millions: A company chaired by Sir John Ritblat is suing China’s largest property developer over claims that it has reneged on an agreement made as part of a deal in London.
Tesco faces questions amid pension deficit fears: Tesco could be called before the Commons inquiry into workplace pensions amid claims that the hole in its pension fund could be up to £6.5 billion.
Struggling Mitie’s ‘prickly peer’ gives critics the silent treatment: The services group that stunned the stock market with a profit warning last week has refused to talk to analysts who take a negative view on their shares, it emerged over the weekend.
Europe ready to put exchanges merger under the spotlight: The European Commission is expected to respond to competition concerns by launching an inquiry this week into the £22 billion merger between the London Stock Exchange and Deutsche Börse.
Ex-Quindell Boss loses £1 million on broker stake: The ousted Boss of Quindell has been forced to take a near-£1 million hit on a delisted broker, about a year after he was talking up the investment.
Goldman Sachs to cut its cloth in Far East: A dearth of mergers and acquisitions work has required Goldman Sachs to take the axe to its Asian business, with nearly 30% of jobs in investment banking in Hong Kong, Singapore and China set to be lost.
Apple’s high five shows you don’t have to be brand new to be cool: It faces an £11 billion tax bill, iPhone sales are sliding and disgruntled users have bemoaned its decision to ditch the headphone jack, but experts still believe that Apple is the coolest company on the planet.
Taxman is breaking down more doors to catch the fraudsters: Tax officials are increasing the numbers of property raids they carry out as part of criminal investigations.
Give exporters a break with tax credit, argue business Chiefs: British exporters should be rewarded with a tax credit that would encourage international trade, a pan-European business group has claimed.
Superyachts power through choppy waters: Global demand for superyachts has boosted revenues within the sector by 11.5% over the past 12 months, a fourth consecutive year of growth.
The Independent
Monarch Airlines denies rumours it is going bust amid passenger fears: The U.K. budget airline Monarch has denied rumours it is going bust, amid growing concerns among passengers that their bookings may be at risk.
Experts warn U.K. won’t have trade deal with EU within two years: Civil servants preparing for negotiations to pull Britain out of the EU face a task of “mind-boggling” complexity, experts have said.
The Daily Telegraph
Brexit vote ‘will not dent economy this year’ as U.K. growth forecasts back to pre-referendum levels: The U.K.’s decision to leave the EU will not dent growth at all this year, according to economic forecasts compiled by the Treasury, in a complete reversal of the gloomy short term forecasts made after the EU referendum.
Europe should look to Japan for warning signs on negative rates: The Bank of Japan’s announcement of Yield Curve Control might look like an arcane piece of monetary policy from an economy that has struggled to escape from deflation. But for central bank watchers in Europe – all investors should be central bank watchers these days – it may provide a roadmap to the future.
Jeremy Corbyn’s growth plan ‘excessive’ and risky, economists warn: Economists and Labour party donors have poured scorn on Jeremy Corbyn’s plans to launch a £500 billion investment spree if the party wins the next election, calling it “excessive” and a risk to the economy.
Mobile giants ‘face £1 billion Phones 4U claim’: Britain’s mobile giants face a High Court claim for hundreds of millions of pounds over allegations they colluded and forced Phones 4U out of business, The Daily Telegraph has learned.
Australian internet firm mounts BT challenge with business broadband launch: An Australian “challenger” broadband firm has vowed to shake up Britain’s telecoms market when it launches in the U.K. this week with cheap fibre internet and data services aimed at small businesses.
Petra Diamonds Boss Johan Dippenaar on how the miner was created from scratch: At a time when miners are looking to save money hand over fist, one company has been swimming against the tide. Petra Diamonds, the South Africa-based upstart led by Johan Dippenaar, is on the cusp of completing a seven-year, $1 billion (£763 million) expansion programme that will triple its production of the sought-after rocks.
The Guardian
Midcounties Co-op makes record payout to worker who earned below minimum wage: Britain’s biggest independent co-op has made the highest single payout to a worker for breaching low pay laws and is examining whether 200 others may have been paid below the minimum wage, the Guardian can reveal.
AkzoNobel Chief urges U.K. to clarify future relationship with EU: AkzoNobel, one of Europe’s biggest industrial companies, has called for “quick clarity” over the U.K.’s future relationship with the EU.
British manufacturing sector ready for expected boost from Treasury: Britain’s manufacturers insisted they have a crucial role to play in a post-Brexit world, contributing $247 billion (£190 billion) a year to the economy and creating well-paid, high-value jobs.
Former IMF head Rodrigo Rato on trial over bankers’ luxury sprees: Former IMF Chief Rodrigo Rato stands trial on Monday accused of overseeing a “corrupt system” that helped him and other Executives misuse funds on hotels, parties and luxury shopping when he was a Spanish bank Boss.
Daily Mail
Mobile Phone giant 02 eyes up a London listing valuing the business at £10 billion: Mobile phone provider O2 is thought to be gearing up to list on the stock exchange in a flotation which would value the business at £10billion.
Daily Express
Gloomy view from banks and lenders as confidence in financial services drops: Confidence across the financial services industry has continued to deteriorate over the past three months, marking the longest period of falling sentiment since the financial crisis.
BHS to be relaunched online one month after the last high-street store shut down: British Home Stores is to relaunch online, a month after the last of its high-street shops shut down.
Burger King branch out into home deliveries following new deal: Burger King is branching out into home deliveries following a deal with French on-demand courier service group Stuart.
The Scottish Herald
Buyer sought as Castle Douglas car dealership goes into liquidation: Campbell Dallas restructuring partner Blair Milne is seeking a buyer for James Haugh (Castle Douglas) after the independent garage was placed into liquidation.
Trio of firms share £85,000 to develop oil and gas technologies: The Oil and Gas Innovation Centre has provided £85,000 of funding to three companies that are working in partnership with Scottish universities to develop technologies to improve efficiencies in the oil and gas industry.
Law at Work bulks up with addition of Square Circle: Law at Work, the employment law and HR business that was spun out of law firm Maclay Murray & Spens in 2012, has acquired Glasgow-based HR consultancy Square Circle.
P&O sees clear water after scrapping loss-making Troon service: Ferry operator P&O says it is having is “best year in five” on its Irish Sea services, and more than 50% of passenger volumes from its scrapped Troon to Larne route have been retained on its crossing from Cairnryan.
The Mortgage Lender sets sights on specialist market: Specialist mortgage business The Mortgage Lender has signed off on its first loan weeks after moving into its new headquarters on Glasgow’s Waterloo Street.
Harper Macleod eyes growth in Inverness with local firm bolt-on: Glasgow law firm Harper Macleod has continued to grow its business in the Highlands and Islands with the addition of two-partner Inverness firm Allen & Shaw.
Sainsbury’s sales expected to be hit by Argos deal and supermarket price war: Sainsbury’s is forecast to report another dip in sales when it unveils second quarter results next week, with the City also looking for any further news of cost savings linked to its acquisition of Argos.
The Scotsman
Surveyor Malcolm Hollis builds up practice with capital hiring: Malcolm Hollis, the independent commercial building surveying firm, has expanded its team with the appointment of Ewan Wyllie at its Edinburgh office.
Tsunami Axis riding the crest of a wave: The Scottish arm of office furniture supplier Tsunami Axis has clocked up a record-breaking quarter, further highlighting the buoyancy of the workplace market north of the Border.
BBC Alba future in balance warns operator: Scotland could lose its dedicated Gaelic channel and see a decline in the use of the language unless BBC Alba wins a better financial deal, its operator has warned.
BBC admits need for new Scots shows: BBC Scotland Chiefs have admitted they are unhappy with the number of high-¬quality drama and comedy shows being made north of the border.
City A.M.
People still trust brick-and-mortar branches more than digital banks: Digital banking has surged in popularity over the last few years, but research out also shows many still won’t trust a lender without a brick-and-mortar presence.
Banks warned over fintech payment firms: The world’s biggest banks risk losing control of digital payments to small fintech startups and global tech giants, the Boston Consulting Group (BCG) has warned.
Credit Suisse banker to found independent advisory firm: One of the top European bankers at Credit Suisse is quitting the bank to launch his own advisory firm.
SABMiller and AB InBev wait with bated breath for £79 billion megabrew deal ahead of SAB shareholder votes on Wednesday: SABMiller investors will cast their votes this week on a deal which, if passed, will be the U.K.’s largest ever corporate merger.
Sports Direct’s property aide jumps ship months after Mike Ashley appoints his daughter’s boyfriend to run property portfolio: Sports Direct’s top property lawyer has jumped ship after Mike Ashley hired his daughter’s boyfriend to run the retailer’s property portfolio.

Mon, 26 Sep 2016 08:36:00 +0100
Market Briefing: UK markets closed lower on Friday, amid a decline in mining and financial firms UK Market Snapshot
UK markets closed lower on Friday, amid a decline in mining and financial firms. Polymetal International plummeted 7.4%, after its two major investors sold 26.0 million shares of the company. Other miners, Antofagasta, Fresnillo and Randgold Resources slid 0.3%, 0.9% and 1.4%, respectively. Banking stock, Standard Chartered dipped 1.9%, while its peers, Lloyds Banking Group and Royal Bank of Scotland Group lost 2.1% each. On the upside, Sports Direct International climbed 5.5%, after its founder and largest shareholder, Mike Ashley, announced that he is taking over as the Chief Executive Officer of the company from Dave Forsey. Persimmon gained 2.3%, after a broker upgraded its rating on the stock to ‘Buy’ from ‘Hold’ and stated that trading in the sector is much better than expected. Taylor Wimpey and Barratt Developments advanced 1.4% and 2.1%, respectively. The FTSE 100 declined marginally, to close at 6,909.4, while the FTSE 250 fell 0.4%, to settle at 17,923.1.
US Market Snapshot
US markets closed in negative territory on Friday, dragged down by a slump in technology shares and energy producers. Devon Energy and Transocean tumbled 5.6% and 5.7%, respectively, amid a decline in crude oil prices. Yahoo! eased 3.1%, after it revealed a massive security breach that affected at least 500.0 million user accounts. Facebook dipped 1.6%, as big ad buyers were disappointed after the company vastly overestimated average viewing time for video ads on its platform. Bucking the trend, Twitter rallied 21.4%, on the back of reports that the former is holding takeover talks with potential buyers including, down 5.6%. Bats Global Markets surged 19.9%, following news that CBOE Holdings, up 1.3%, was in talks to acquire the exchange operator. The S&P 500 slipped 0.6%, to settle at 2,164.7. The DJIA shed 0.7%, to settle at 18,261.5, while the NASDAQ slid 0.6%, to close at 5,305.7. 
Europe Market Snapshot
Other European markets finished in the red on Friday, following mixed data on the Euro-zone manufacturing and services PMIs for September. H Lundbeck tanked 15.3%, after its highly anticipated idalopirdine Alzheimer’s drug failed to achieve its target in a late-stage study. CaixaBank fell 3.8%, as it sold shares worth €1.3 billion to raise fund for its takeover of Portugal’s Banco BPI. Other lenders, Deutsche Bank, Banco Popular Espanol and Banco Santander dropped 2.4%, 2.7% and 3.3%, respectively. RWE shed 1.2%, after it offered shares worth up to €5.0 billion in the initial public offering of its renewable energy unit, Innogy. On the contrary, Aryzta soared 9.9%, after it announced that Gary McGann would join company’s Board as the Chairman. The FTSEurofirst 300 index declined 0.7%, to close at 1,359.6. Among other European markets, the German DAX Xetra 30 slid 0.4%, to close at 10,627.0, while the French CAC-40 shed 0.5%, to settle at 4,488.7.
Asia Market Snapshot
Markets in Asia are trading lower this morning. In Japan, auto exporters, Toyota Motor, Honda Motor and Mazda Motor have slid 0.6%, 1.5% and 2.3%, respectively, amid a stronger Japanese Yen. Oil giants, JX Holdings, Japan Petroleum Exploration and Inpex have lost 1.4%, 1.7% and 2.0%, respectively.  On the flipside, Nichirei Corp has climbed 5.7%, following a broker upgrade on the stock to ‘Outperform’ from ‘Neutral’. In Hong Kong, banking shares, Bank of East Asia and Bank of Communications have dipped 1.1% and 2.4%, respectively. Energy producers, PetroChina and CNOOC have eased 1.0% and 1.3%, respectively. In South Korea, index major, POSCO has shed 1.5%, while Samsung Electronics has added 0.3%. The Nikkei 225 index is trading 0.8% lower at 16,612.6. The Hang Seng index is trading 0.7% down at 23,525.6, while the Kospi index is trading 0.3% lower at 2,048.9.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.81% or $0.37 higher at $46.26 per barrel. On Friday, the contract tumbled 3.69% or $1.76, to settle at $45.89 per barrel, after a Saudi Arabian official commented that major oil producers will not probably reach an agreement on production levels at a meeting in Algeria. Additionally, Baker Hughes reported that the weekly US oil rigs rose by 2 to 418 in last week.
At 0330GMT today, Gold futures contract is trading 0.06% or $0.80 lower at $1336.70 per ounce. On Friday, the contract declined 0.24% or $3.20, to settle at $1337.50 per ounce, reversing its gains from the prior session.
At 0330GMT today, the EUR is trading marginally higher against the USD at $1.1229, ahead of a speech by the European Central Bank’s (ECB) President, Mario Draghi, in the EU Parliament, scheduled later today. Additionally, the German IFO survey data for September, due to release in a few hours, will be closely monitored by investors. On Friday, the EUR strengthened 0.16% versus the USD, to close at $1.1226, after upbeat data on the Euro-zone and Germany’s Markit manufacturing PMI activity in September. Meanwhile, the Euro-zone and German services sector data unexpectedly declined in September.
At 0330GMT today, the GBP is trading 0.08% higher against the USD at $1.2976. On Friday, the GBP weakened 0.86% versus the USD, to close at $1.2966, after Britain Foreign Secretary, Boris Johnson, stated that he expects to start formal Brexit negotiations with the EU in early 2017.
Fixed Income
In the US, long term treasury prices rose and pushed yields mostly lower, after data showed that the US Markit manufacturing activity dropped to three-months lows for September. On Friday, yield on 10-year notes fell 1 basis point to 1.62%, while yield on 2-year notes lost 2 basis points to 0.77%. Meanwhile, 30-year bond yield remained steady at 2.34%.

Key Economic News
Euro-zone manufacturing PMI climbed unexpectedly in September

The flash manufacturing PMI rose unexpectedly to 52.60 in September, in the Euro-zone, compared to a level of 51.70 in the previous month. Market expectation was for the manufacturing PMI to ease to 51.50.
Euro-zone composite PMI dropped in September
In September, the preliminary composite PMI in the Euro-zone registered a drop to 52.60, compared to a level of 52.90 in the previous month. Markets were expecting composite PMI to ease to 52.80.
Euro-zone services PMI recorded an unexpected drop in September
In September, the preliminary services PMI registered an unexpected drop to a level of 52.10 in the Euro-zone, compared to a reading of 52.80 in the prior month. Markets were anticipating services PMI to record a steady reading.
German services PMI slid unexpectedly in September
The flash services PMI registered an unexpected drop to a level of 50.60 in September, in Germany, lower than market expectations of an advance to a level of 52.10. Services PMI had registered a level of 51.70 in the prior month.
German manufacturing PMI recorded an unexpected rise in September
In September, the preliminary manufacturing PMI climbed unexpectedly to 54.30 in Germany, higher than market expectations of a drop to a level of 53.10. In the prior month, manufacturing PMI had recorded a level of 53.60.
French manufacturing PMI recorded a rise in September
In September, the preliminary manufacturing PMI in France registered a rise to 49.50, compared to a reading of 48.30 in the prior month. Market anticipation was for manufacturing PMI to climb to a level of 48.50.
French GDP unexpectedly eased in 2Q 2016
In 2Q 2016, the final gross domestic product (GDP) recorded an unexpected drop of 0.10% on a QoQ basis in France, less than market expectations for an unchanged reading. The preliminary figures had recorded a steady reading. GDP had recorded a revised rise of 0.70% in the prior quarter.
French GDP rose less than expected in 2Q 2016
On an annual basis, the final GDP recorded a rise of 1.30% in France, in 2Q 2016, less than market expectations for an advance of 1.40%. The preliminary figures had recorded an advance of 1.40%. In the prior quarter, GDP had registered a similar rise.
French services PMI climbed unexpectedly in September
The flash services PMI climbed unexpectedly to 54.10 in France, in September, compared to a level of 52.30 in the prior month. Markets were expecting services PMI to drop to 52.00.
Spanish PPI slid in August
The producer price index (PPI) in Spain dropped 0.20% in August on a monthly basis. The PPI had registered an unchanged reading in the prior month.
Spanish PPI registered a drop in August
The PPI recorded a drop of 3.10% on a YoY basis in Spain, in August. In the prior month, the PPI had registered a drop of 4.60%.
US Markit manufacturing PMI dropped surprisingly in September
In September, the flash Markit manufacturing PMI fell unexpectedly to a level of 51.40 in the US, lower than market expectations of a steady reading. The Markit manufacturing PMI had recorded a reading of 52.00 in the previous month.
Canadian CPI surprisingly dropped in August
In Canada, the seasonally adjusted consumer price index (CPI) unexpectedly eased 0.10% on a MoM basis in August, compared to an unchanged reading in the previous month. Markets were anticipating CPI to rise 0.20%.
Canadian CPI unexpectedly slid in August
In August, the CPI recorded an unexpected drop of 0.20% in Canada on a monthly basis, compared to a similar fall in the prior month. Market expectation was for the CPI to climb 0.10%.
Canadian retail sales surprisingly eased in July
Retail sales unexpectedly fell 0.10% on a monthly basis in July, in Canada, less than market expectations for a rise of 0.10%. In the prior month, retail sales had registered a revised flat reading.
Canadian core CPI remained flat in August
On a MoM basis, the seasonally adjusted core CPI remained steady in Canada, in August, compared to a rise of 0.10% in the previous month. Market expectation was for core CPI to rise 0.20%.
Canadian core CPI remained flat in August
In August, the core CPI in Canada remained flat on a monthly basis, similar to a flat reading in the prior month. Markets were anticipating the core CPI to climb 0.20%.
Canadian retail sales (ex-autos) surprisingly fell in July
Retail sales (ex-autos) in Canada recorded an unexpected drop of 0.10% on a monthly basis in July, less than market expectations for a rise of 0.50%. Retail sales (ex-autos) had dropped by a revised 0.60% in the prior month.
Canadian CPI unexpectedly dropped in August
In August, the CPI in Canada unexpectedly fell by, on monthly basis, to a level of 128.70, compared to market expectations of 129.00. In the previous month, the CPI had registered a level of 128.90.
Japanese all industry activity index rose more than expected in July
On a MoM basis, the all industry activity index registered a rise of 0.30% in Japan, in July, compared to a rise of 1.00% in the prior month. Markets were expecting the all industry activity index to advance 0.20%.

Mon, 26 Sep 2016 08:31:00 +0100
Beaufort Securities Breakfast Alert: Smiths Group, Tullow Oil, Vodafone Markets

The FTSE-100 finished yesterday's session 0.03% lower at 6,909.43, whilst the FTSE AIM All-Share index closed 0.26% higher at 816.01. In continental Europe, markets ended in the red amid weak economic data released, which added to economic woes in the region. France’s CAC 40 and Germany’s DAX shed 0.5% and 0.4%, respectively.
Wall Street
Wall Street ended in the red as oil prices declined amid speculations that major oil producers were not likely to reach an agreement to freeze production. The S&P 500 declined 0.6%, with the energy sector losing the most. For the week, the markets closed 1.2% higher.
Equities are trading lower as investors await the outcome of the OPEC members’ meeting regarding freezing oil production. The Nikkei 225 dropped 1.3% as a strong yen led to loss in export-driven stocks. The Hang Seng was trading 0.9% down at 7:00am.
On Friday, WTI prices decreased 4.0% to US$44.48 per barrel, and Brent oil prices fell 3.7% to US$45.89 per barrel.

Eurozone’s private sector slows in September

As per Markit, the Eurozone’s services PMI contracted to 52.1 in September from 52.8 in August, marking the lowest reading in 21 months. Conversely, the flash composite output index fell to 52.6 in September from 52.9 in August.

Company news

Smiths Group (LON:SMIN, 1,420.0p) - Hold
The Smiths Group entered into an agreement to sell its Artificial Lift business, part of the John Crane division, to Endurance Lift Solutions LLC. The gross consideration payable at completion is US$39.5m in cash, subject to an adjustment based on the working capital position at completion. For the year ended 31stJuly 2015, the business and assets subject to the transaction had combined revenues of US$90.8m and an operating loss before certain non-recurring items of US$1.8m. The gross assets of the combined business as at 31st July 2015 stood at US$63.2m. For the unaudited year ended 31stJuly 2016, the business and assets subject to the transaction had combined revenues of US$53.4m and an operating loss before certain non-recurring items of US$10.1m. The gross assets of the combined business as at 31st July 2016 stood at US$32.1m. The management team will transfer with the business. The transaction is subject to customary regulatory approvals and expected to close by the end of the calendar year.

Our view: The Smiths Group’s disposal of the Artificial Lift business is in line with its commitment to increase focus on building technology differentiated leadership positions in its chosen markets. Funds from the transaction would be reinvested in attractive growth opportunities. Nonetheless, the outlook for the energy market appears less encouraging and the group’s exposure to it cannot be overlooked. Also, the recent full year trading update was in mixed colour as group confirmed that its revenue and operating profit are both expected to exceed market consensus, but said profit is below the FY2015 level caused by substantial reduction in profit from John Crane division. The group also reiterated its FY2017 expectations. We maintain our Hold rating until recovery in the surrounding environment is sensed.

Tullow Oil (LON:TLW, 225.0p) - Buy
Tullow Oil (Tullow) informed that hull & machinery insurance cover was confirmed for the floating production, storage and offloading (FPSO) vessel that serves the Jubilee field offshore Ghana, following the failure of the turret bearing earlier this year. The hull & machinery policy covers relevant operating and capital costs associated with both current operating procedures at the FPSO and long-term solutions.

Our view: The hull & machinery insurance cover confirmed for the FPSO is a positive development. Tullow would now work with the loss adjusters and reinsurers to build an efficient payment schedule even as remedial work continues. The company continued work with its business interruption reinsurers on confirming cover for the loss of production and revenue caused by the turret bearing failure. Recently, Tullow informed that first oil flowed from the Tweneboa, Enyenra, Ntomme (TEN) fields offshore Ghana. First oil was reached on time, on budget three years after the Plan of Development was approved in May 2013. The TEN start-up process is now well advanced and Tullow expects oil production to ramp up gradually towards the FPSO capacity of 80,000 bopd through the remainder of 2016. Tullow estimates that TEN’s average annualised production in 2016 will be approximately 23,000 bopd (net: 11,000 bopd). In light of these developments, we maintain a Buy rating on the stock.

Vodafone (LON:VOD, 220.70p) - Buy
Vodafone extended its partner market agreement with Afrimax in Cameroon. As per the deal, the two companies will launch long-term evolution data services under the Vodafone Cameroon brand, initially in Cameroon’s two biggest cities, Douala and Yaounde. The financial details of the deal remained undisclosed.

Our view: Vodafone continues to build on its existing relationship with Afrimax. The launch builds further on the framework agreement between Vodafone and Afrimax announced in November 2014, to co-operate and explore potential partner market opportunities in territories in sub-Saharan Africa. The roll-out of Vodafone Cameroon for consumers and businesses will include the opening of Vodafone-branded retail stores and kiosks in key locations. This would be supported by a network of distributors and re-sellers offering an attractive range of LTE handsets and devices. Vodafone recently reported a solid performance in Q1 FY2017, registering good organic service growth driven by strength in AMAP. The company recorded a sharp jump in the number of 4G customers and data volumes. It anticipates substantial growth opportunity for the 4G service in the Eurozone. We look forward to updates from the company and retain a Buy rating on the stock.

Economic news
Germany manufacturing PMI

As per the data released by Markit, the preliminary manufacturing PMI of Germany for September increased to 54.3 from 53.6 in August. The markets expected a reading of 53.1.
Eurozone manufacturing PMI
Manufacturing PMI for the Eurozone increased to 52.6 in September from 51.7 in August, preliminary data from Markit showed yesterday. The markets expected a reading of 51.5.
US manufacturing PMI
The preliminary Markit PMI for the US stood at 51.4 in September, from 52.0 in August. The markets expected a reading of 52.0.

Mon, 26 Sep 2016 08:27:00 +0100
VSA Capital Market Movers - Egdon Resources Egdon Resources (lon:EDR)# has announced the results of a new Competent Person’s Report (CPR) over PEDL 180 and 182, of which EDR holds a 25% WI in each. The CPR ascribes resources to the Wressle-1 discovery and Broughton North prospect encompassed within the licences.

At Wressle a STOOIP 14.2mmbbl was recorded across the three reservoirs of which 2.15mmboe is classified as 2P and 2C. The 2P reserves of 0.62mmboe form the basis of the Field Development Plan (FDP) which has been submitted to planning for by the Oil and Gas Authority (OGA) and is currently being considered by the North Lincolnshire Council. We expect this to be granted.

The Ashover Grit reservoir is now expected to produce at 500boepd at Wressle whilst the Broughton North Prospect has been assigned a geological chance of success (CoS) of 40-49% and has been assigned a STOOIP of 3.4mmboe across two reservoirs.

This CPR has confirmed reserves and resources above EDR’s initial pre-drill estimates, which will be cash generative to EDR in early 2017. This independent CPR confirms the significant resources at Wressle whilst also affirming the relatively low risk nature of the Broughton North prospect.

#Indicates VSA house stock. 

Mon, 26 Sep 2016 08:08:00 +0100
The great debate to trump all others? FTSE 100 Index called to open -35pts at 6875, as overnight weakness from 6900 results in a test of Friday’s 6880 lows. This confirms a bearish break from a 7-day rising channel and any foray towards 6870 could exacerbate the general downtrend from Thursday’s 6935 peak. New falling channel? The Bulls will be looking for any signs 6900 can be regained; the Bears hope to see 6860. Updated watch levels: Bullish 6895, Bearish 6870.
A negative opening call stems from a largely negative start to the week in Asia (-1%) with last week’s dovish policy inspired rally (Fed, BoJ) taking a pause for breath, although we note Australia’s ASX is holding its head just above water. Optimism continues to crumble about a deal to support oil prices this week, with it more likely to prove a warm-up for another meet in the weeks that follow. Oil may be off its late Friday lows, but has given up most of last week's gains.
A still strong JPY is hindering Japan’s Nikkei (and Topix) as last week’s BoJ policy update is digested as negative (less dovish) and the Fed is now expected to take a less aggressive path at policy normalisation. Australia's ASX is outperforming but not thanks to its beloved Miners/Oil, rather  defensives like consumer staples, healthcare and telcos. Markets also perhaps a bit jittery ahead of tonight's US Presidential debates not knowing which Trump will turn up and how Hillary fares in front of her bitter rival.
US equities closed lower on Friday after weak performances from the Energy sector amid weak crude oil prices, not helped by a slide from tech giant Apple. The iPhone producer's share price declined by 1.7% coming after concerns about sales of its latest model, the iPhone 7, were reported.
Brent Crude  is enjoying a slight rise in price this morning on the back of positive comments from the Algerian oil minister regarding a possible production freeze at this week’s informal OPEC meeting. However, US crude remains volatile since Friday when analyst hopes of a comprehensive production freeze deal fade and prices fell. Build up to this week’s meeting could once again see varying statements of intent from the oil ministries involved, increasing price volatility rather than sustaining price increases.
Gold, having failed to achieve a second breakout in less than a week after facing tough resistance around $1345 thanks to a strengthened USD, is continuing a sideways trend trading in a tight $1334-1340 narrowing channel (bearish descending triangle?). All eyes are now firmly set on tonight’s US Presidential debate for clues as to who the favoured candidate for the job is; a strong showing from Republican candidate Trump could see the precious metal price rally as investors predict a highly volatile economic climate under a Trump presidency.
In focus today will be the build up to this week’s unofficial OPEC-led production freeze meeting on the sidelines of the IEA forum in Algiers. Can a deal be cobbled together to support oil prices? Expectations are low in light of last week’s contradictory comments, with much willingness offset by just as much reluctance. Oil and exposed stocks could move.
Data-wise this morning, consensus is looking for minimal deviation for September for Germany’s IFO surveys. A Brexit-inspired cooling of the UK housing market is, however, likely to be blamed for another drop in BBA Home Loans, extending a 2016 decline to the lowest level since Feb 2015, something which could impact UK housebuilders and GBP.
In the afternoon, US New Home Sales are seen normalising in August after a surprise July jump and the Dallas Fed Manufacturing Activity index is forecast still negative, although correcting back closer to breakeven after a weak August.
Speakers to listen out for, potentially moving markets during European hours, are ECB President Draghi as well as his colleagues Mersch, Coeure and Angeloni as well as the Fed’s Kashkari. After the European close the Fed’s Tarullo and Kaplan grace the wires along with the ECB’s Nowotny. All have potential to move the EUR/USD cross.

Mon, 26 Sep 2016 08:07:00 +0100
Gulf Keystone heading to 14 pence. Oh, please, behave! Sat, 24 Sep 2016 07:00:00 +0100 Fed caution belies a greater weakness in Central Banks, but may free up metals Fri, 23 Sep 2016 13:32:00 +0100 Commodities Week in a Minute: Diamond premiums, gold price forecasts plus ACA, CEY, DCP, FDI, GEM, LOM, PDL & POLY Commodities

Diamonds and precious stones

Following on from the more positive notes around the last few sales Alrosa announced that sales during August rose 58% to $243 million. The company maintains a moderately conservative outlook but noted that “in August 2016, the company observed no seasonal slump in demand for rough diamonds characteristic of this month”.

Elsewhere, after prices rose by an average of 3% at the last DB Sight, premiums have gone even further with some categories reporting double digit gains. The offset of this, and very much in line with our long term thesis, is that smaller, lower quality goods remain on offer with very few buyers.

It will be interesting to see how the demand side holds up once we are the other side of the Diwali rush as inventories seem to be pretty much in balance right now…

Precious metals

In recent weeks Central Banks have been providing their respective views of the world, and how they plan to raise inflation rates to something more than anaemic. We had the Fed giving more mixed signals to the market (hawkish hold, or dovish whatever…certainly nothing to do with the election?).

Better yet, the BoJ confirmed they are just making it up as they go along and the ECB have clearly gone to lunch.

Still, with the upcoming conference season about to commence, the competition for headlines is intensifying. This week’s winner has to be Mr McEwen, who admittedly knows a fair bit about mining, but to claim gold will rise to between $1,700oz to $1,900/oz by the end of the year, may be a little far-fetched. Still if his call of $5,000/oz in four years is even half right, that will be a huge opportunity for some producers to actually make a profit…

I think a reduction in the go-go juice might not be a bad idea, in my humble opinion of course…

PS Before you ask, the average price for gold in 2016 is currently $1,258, we are using $1,275.

More seriously, let’s hope for something next week. I genuinely fear a downgrade is in the post, either in the form of lower production or higher costs…

Centamin PLC (Hold) Stake sale
News during the week that Van Eck Associates lobbed out around 118m shares has put the shares under a fair bit of pressure, from which they are yet to really return. Likely to remain a bit soggy for a bit, but given they remain good value vs. peers, relative performance should recover in due course.

DiamondCorp, (Under Review from Buy): September sales
“As reported on 20 September, DiamondCorp provided details of the latest Antwerp tender and direct sales in Johannesburg that, whilst possibly lower than many had expected, highlight the volatility of smaller parcel sizes during the ramping up phase of a mining operation. Looking forward, increasing underground tonnages and providing buyers with larger parcel sizes to satisfy the considerable interest in Lace Diamonds, we believe, will provide the key to unlocking the significant value inherent in DiamondCorp's operation”.
I expect further newsflow in due course. Once published, a full valuation review can then be undertaken.

Firestone Diamonds, (Buy): Chairman buying
Mr Genovese, Non – Executive Chairman has acquired a healthy 1 million shares in recent days.
For Lucio to put his hand in his pocket is a rare treat indeed, obviously a good sign…

Gemfields (Buy): Results Monday
Gemfields are set to announce results on Monday. We are looking for around $192m in sales and $60m in EBITDA. It will be interesting to understand the impact of the Metical’s effective devaluation in recent weeks, down almost 40% in 2016. Positive for the operations to an extent, but in-country inflation will be a concern going forward.
I remain a big fan of Gemfields, the valuation is starting to burn off a little and I hope to see that continue with another solid set of results.

Lucapa Diamond, (Buy): Another biggie
Recovered the fourth >100ct stone from Lulo this year with an exceptional top-tier 104ct Type IIa.
Link for the image Here
One could imagine that should recoveries continue, then further shareholder distributions cannot be far off. Positive.

Petra Diamonds, (Hold): Starting to settle down after a pretty rough ride
“Petra Diamonds announced FY2016 preliminary results whilst slightly lower than our expectations, maintain plenty of scope for growth, primarily through the 5Mcts production target possibly being attained in FY2018, one year earlier than planned. The failure to meet the covenant for dividend distributions is not a major surprise as we had previously voiced our concerns over the potential for a suspension. However, that said, we believe that the company can return to the dividend list next year. We maintain our Hold recommendation and 120p target price at this time”.

Polymetal International, (N/c): Resource growing.
Last week I had the pleasure of catching up with the team and came away reassured that the long term outlook for Polymetal is as solid as it perhaps ever has been. Poly has one of the highest average reserve grades around and offers a clearly defined production growth profile (Unlike other many peers). This week, the company announced a maiden PGM resource of more than 6 million ounces (plus 220kt of Cu) at its Viksha project in the Republic of Karelia supporting the investment case.
Placing overnight of 26m shares at 975p as Fodina and Staroak reduce their holdings. Likely we will see a little bit of volatility as the shares are absorbed, in what is a relatively thin market vs. peers, but given the long term value growth and notable track record of shareholder returns, POLY could be worth another look.

Company announcements/news/meetings:
Acacia Mining, (Hold): Still no update on Buly…
Company seems to have been on the end of a rather controversial article published today in the Globe and Mail (?!). The company has provided a suitable response.
Since last week, I have been doing a fair bit of research on the mechanics of ball mills, notably trunnion bearings... and it’s fair to say I now have a little more appreciation as to how complex the mechanics indeed are, but also it allowed me to discover that Kimberley Engineering works have just achieved their largest casting to date – bearing housings for a 2800kW ball mill.

Fri, 23 Sep 2016 12:21:00 +0100
In The News - Base Resources FROM THE BROKING DESK

Our roadshow for Tim Carstens of Base Resources*† comes to an end today. While overall feedback from the meetings has been universally positive, it is the spread of investors that have been taking meetings with Tim (over this week and the company’s two other roadshows in April and July earlier this year) that impresses. It’s not just mining funds, but long-only UK fund managers, hedge funds, value funds, private wealth managers and so on.

Investors are underweight natural resources and Base ticks all the boxes for investment. Like its peer group, Base’s share price was walloped last year even though Tim and his team got the company’s Kwale Project in Kenya into production in 2014 on time and on budget. Capacities for ilmenite, zircon and rutile production were all met as scheduled, but debt levels were perceived as high and the underlying commodity market was very weak. Despite management being acknowledged as having done an exceptional job, Base had to battle headwinds not of its own making.

The year 2016 has been transformational. While zircon and rutile prices have remained reasonably strong over the period, the ilmenite price has recovered very strongly. Base is signing contracts at US$110/t. There were worries that this was just a seasonal blip, but this has carried on into the autumn and the market is looking forward with anticipation to the next TZMI report on pricing in early November. Talk is that we could even recover to US$150/t by summer 2017, and this is extremely significant for Base; every dollar improvement in pricing goes straight to the bottom line. Debt is being paid back rapidly; having seen net debt peak at US$225m last year, it has now fallen to US$150m. At this rate, this could be completely cleared by the end of 2018, allowing returns to accrue to shareholders, not just the banks.

On top of this, drilling of community bore holes around Kwale showed significant unexpected mineralisation. Exploration licences were applied for (and granted quickly), and a drill rig should be on site at the end of the month. Exploration drilling in mineral sands is extremely cheap as the drill rig is fitted on the back of a Toyota Hilux and a significant drill programme can be completed for as little as US$1.5m. If all goes to plan, and Tim is confident, then the resource and mine life at Kwale can be expanded. The Mivumoni zone adjacent to the higher-grade Southern Dune at Kwale looks particularly interesting. Base is also doing a bit of exploration across the nearby border with Tanzania where there is the prospect of being able to truck concentrated ore to Kwale’s MSP plant quickly and easily. This is really exciting for existing shareholders. In other generally positive sector developments, we’ve had the restructuring at Kenmare completed (with a major new shareholder getting involved) and the takeover attempt of Sierra Rutile by Iluka.

This is the perfect storm of positive news that Base needs to get its share price moving up. The stock is currently trading at A$0.15 (or 8-9p); Jim Taylor’s recent target price upgrade (Base Resources — Valuation Update, 21 July 2016) was to A$0.30, so we see another doubling of the share price from here. I think this is entirely plausible given the reception of our latest marketing.

Fri, 23 Sep 2016 11:09:00 +0100
Today's Market View - ASA Resource Group ASA Resource Group* (LON:ASA) – Bindura Nickel AGM speech highlights cost improvements

European stocks are slightly down today but on the way to post a 2% weekly increase as measured by the Stoxx Europe 600 Index on the back of dovish BoJ and FOMC announcements made.
• Sovereign bonds are heading for the strongest weekly gain since Jul.
• Oil prices are off 1.2% this morning with Brent trading at $47/bbl as Saudi Arabia and Iran hold tlalks for a second day now ahead of the Sep 28 meeting in Algiers.
• Gold is holding on to its post FOMC announcements gains with prices currently around $1,335/oz (-$6/oz or -0.4% on the day).
• Iron ore futures climbed a little today with Jan contracts posting the best week in seven as steel mills raised their capacity utilisation rates.

Lithium – SQM to boost lithium hydroxide sales capacity by 7,500tpa to 13,500tpa
• SQM are to invest $30m by end 2017 to raise lithium hydroxide capacity to 7,500tpa.
Potash – Oman to build major potash producer
• The Oman Observer reports that Gulf Mining Group, one of the largest mining and mineral processing companies in the Sultanate of Oman is to set up a major potash mining project to process major reserves in Central Oman.
• The rationale for the project may be led by a more strategic vison and a desire to locally utilise surplus ammonia from the Kazan gas field run by BP.  The concept of locating a major fertilizer processing hub makes sense for Oman which has significant gas fields and with demand for fertilizers in India likely to grow.
• SGRF, the Sovereign Wealth Fund of the Sultanate of Oman recently invested US$20m in Elemental Minerals as part of a US$50m financing alongside SQM (Chile) and Summit, a PE firm.  Elemental has a potash project in the Republic of Congo.  SGRF are likely to look to target other African potash and phosphate production.
• We suspect the SGRF will look to develop local shallow brine potash deposits within Oman but may also draw in feedstock from as far away as Brazil and may displace Chinese processing facilities which may suffer from higher energy and other input costs.
• SGRF might have a run at the South Boulder project in Eritrea due to its proximity to Oman and quality of its resource.
• Moroccan phosphate contains uranium content of some 150-600ppm u3o8 in their p2o5 rock phosphate which is largely overlooked for now due to the logistics of sourcing phosphate material but may become an issue if the EU decide to restrict uranium content in fertilizer.  Incidentally, one theory is that lung cancers may be caused by the concentration of uranium in phosphate fertilizer by tobacco plants.

Dow Jones Industrials  +0.54% at 18,392 
Nikkei 225   -0.32% at 16,754 
HK Hang Seng   -0.31% at 23,686  
Shanghai Composite   -0.28% at   3,034 
FTSE 350 Mining   -0.83% at 12,248  FTSE 350 +67% since 1st January
AIM Basic Resources   +0.59% At   2,449  AIM Basic Resources +50% since 1st January

US – Job market continues to show signs of strengthening with jobless claims falling 8k in the week to Sep 17 marking the quickest drop since early Jul.
• The gauge has been running below the 300k mark for over a year now (81 straight weeks).

Japan – Manufacturing conditions improved for the first time in seven months in Sep; although, a pick up in production was only marginal.
• Markit Manufacturing PMI: 50.3 v 49.5 in Aug
• While general new business orders continued to contract, international demand is reported to have picked up for the first time since the start of 2016.
• Final prices continued to fall driven by an accelerating decline in input costs.

Germany – Manufacturing output growth accelerated through Sep beating estimates while services sector posted a surprising slowdown coming down to a 39-month low.
• Markit Manufacturing PMI: 54.3 v 53.6 in Aug and 53.1 forecast.
• Markit Services PMI: 50.6 v 51.7 in Aug and 52.1 forecast.
• New business continued to grow, although the pace remained below levels recorded in H1/16.
• “Today’s survey data are a clear indication that German economic growth has slowed in the third quarter. While further GDP growth is expected, it is highly unlikely that the 0.7% rate seen at the beginning of the year will be repeated,” Markit concluded.

France – Q2 GDP fell 0.1%qoq as suggested by final estimates, down from no growth calculated previously.
• The decline follows strong Q1 results (+0.7%qoq) with weak household spending and business investment contributing the most to a decline.
• On a more positive note, PMI numbers released this morning showed manufacturing fell at a slower pace through Sep, while services sector grew more than forecast hitting the strongest reading in 15 months.
• Markit Manufacturing PMI: 49.5 v 48.3 in Aug and 48.5 forecast.
• Markit Services PMI: 54.1 v 52.3 in Aug and 52.0 forecast.
• “The data raise hopes of a firmer GDP print for the third quarter,” Markit said.

Argentina – The economy remained in recession through Q2/16 with the pace of a contraction increasing to -2.1%qoq from -0.5%qoq in Q1/16.
• Growth has been affected by a fall in private consumption and business investment on the back of high inflation and an increase in borrowing costs.
• Inflation peaked at 47% in Jul while the one day repo rate hit 39% in Mar, but has since been brought down to 31.5%.

US$1.1206/eur vs 1.1231/eur yesterday.    Yen 100.88/$ vs 100.80/$.   SAr 13.574/$ vs 13.436/$.    $1.301/gbp vs $1.308/gbp.
0.762/aud vs 0.766/aud.   CNY 6.670/$ vs 6.670/$.  

Commodity News
Precious metals:
Gold US$1,335/oz vs US$1,333/oz yesterday –
     Gold ETFs 65.3moz unch vs 65.1moz yesterday
Platinum US$1,057/oz vs US$1,045/oz yesterday
Palladium US$692/oz vs US$689/oz yesterday
Silver US$19.80/oz vs US$19.75/oz yesterday

Base metals:   
Copper US$ 4,848/t vs US$4,815/t yesterday –
Aluminium US$ 1,644/t vs US$1,610/t yesterday –
Nickel US$ 10,670/t vs US$10,525/t yesterday –
Zinc US$ 2,288/t vs US$2,288/t yesterday –
Lead US$ 1,938/t vs US$1,948/t yesterday –
Tin US$ 19,575/t vs US$19,425/t yesterday –

Oil US$47.1/bbl vs US$47.2/bbl yesterday
Natural Gas US$3.003/mmbtu vs US$3.082/mmbtu yesterday
Uranium US$24.40/lb vs US$24.75/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$55.6/t vs US$56.4/t –
Steel rebar, China 25mm US$384.5/t vs US$382.9/t –

Thermal coal (1st year forward cif ARA) US$60.0/t vs US$60.0/t yesterday -
Coking coal prices $206.4/t unch vs $206.4/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level

Tungsten - APT European prices vs $180-200/mtu unch again vs $185-200/mtu two weeks ago

Company News

ASA Resource Group* (LON:ASA) 0.975 pence, Mkt Cap £16.5m – Bindura Nickel AGM speech highlights cost improvements

ASA Resources hold 74.73% of Bindura Nickel
• Bindura Nickel report at their AGM in Harare significant improvement in costs and sales as compared with last year.
• The company, under new and more focussed management have slashed costs mainly through the cutting of some high-cost senior managers as well as through the unfortunate retrenchment of 300 employees.
• Bindura Nickel Corporation ‘BNC’ has now outsourced development services in the mining department to a contractor company leading to further cost savings.  Critically the move enables the development of a new culture ‘anchored on the principal of improved accountability’.
• BNC report nickel sales of 2,014t of nickel in concentrate vs 1,493t for the June quarter and 2,274t for the march quarter.
• Critically cash costs are expected to fall in the month of September to $3,770/t marking a huge improvement in costs on costs of >$4,000/t through most of the year.
• All-in Sustaining Costs are  forecast to fall to $4,863/t in the September quarter from $6,589/t in the September quarter and $4,934/t in the March quarter
• The average nickel price received should be around 6,304/t in the September quarter allowing a net margin of $1,441/t and $2.9m for the quarter and $3.1m for the past three quarters.
• Nickel demand:  Interestingly the market outlook reports a sustained positive trend in nickel demand in the aerospace and battery sectors and that Jinchuan, a major player in the Chinese metal space, reports that demand in China is increasing due to recovery of the Stainless Steel sector and demand from new energy vehicles.
• Reserves: 
• The Trojan mine reports ore reserves of 6.4mt grading 1.61% nickel giving it a nine year mine life and 103,102 tonnes of contained nickel.  The first four years will see blending of massive and disseminated ore at 0.500mtpa followed by the mining of disseminated ores at 0.750mtpa subject to ongoing economic assesment.
• Hunters Road mine:  is reported to have a planned production rate of 0.72mtpa through its first four years risign to 1.2mtpa in year five and then gradually ramping up to full production of 1.92mtpa in year 10 to give the mine a life of around 22 years
Conclusion:  The reporting of a significant margin improvement and cost control at ASA’s Bindura Nickel subsidiary is a major step forward in the long march to restoring profitability.  We look forward to the restart of the smelter.
*SP Angel act as Nomad and broker to ASA Resources

Fri, 23 Sep 2016 10:33:00 +0100
Today's Oil and Gas Update - Baron Oil & MX Oil Headlines
• In Brief:
o Baron Oil (LON:BOIL  – 0.48p) – Road to Mandalay?
o MX Oil (LON:MXO – 1.05p) – Can't Fault the Approach

In Brief
• Baron Oil (LON:BOIL  – 0.48p) – Road to Mandalay?: Today's news, that the Company is seeking new opportunities in SE Asia represents the restarting of the Company's long term growth prospects. While much may be made of the familial connection, Andy Butler has successfully led a number of growth and value enhancing strategies in Asia and, to our mind, represents a significant coup for Baron Oil. While there is a considerable way to go before we can assess whether this tie-up will result in a successful outcome, we believe that in securing a relationship with SundaGas today, the company has already reduced the risks associated with entering a new area from where it otherwise would have been.

• MX Oil (LON:MXO – 1.05p) – Can't Fault the Approach: While we still have our doubts about the long term commerciality of the Aje field, the current approach of the Management team can't be faulted. While Mexico was a disaster, at least the Company's owners can take heart from the fact that once faced with how far off the pace they were, the team acted swiftly. MX is well placed to take advantage of what we too believe will be the start of a wave of commercial and corporate activity, but it must remain focused, and not allow the resources that it has at its disposal to be dissipated excessively, save for turning in to another Nu Oil and Gas, which has all the projects, but seemingly refuses to execute. We believe that investors should be happy with the progress to date, but that once it has recouped its costs, it should dispose of Aje as soon as possible.

Fri, 23 Sep 2016 10:27:00 +0100
Strength in certain shares continue MARKETS

Strength in certain shares continue and all I know is my accounts continue to rocket up.

As I mentioned last time that always comes with a warning!

There is no doubt the market is more bonkers than a roomful of
Labour politicians. It's rising at the mo because interest rate rises have been pushed back further in the US. Which of course means we continue to be in economic trouble. But the markets love it - just push the trouble further down the road.

A reader wrote to me: "Never heard anything more ridiculous for shorting ftse 100. Don't you agree. September worse month ever traditionally . Nothing has historically changed it. Rising like crazy. Time for a short. Don't you agree."

The thing is, the market is bonkers. It may rise like crazy and unfairly and then do the opposite. It is way better to follow it then guess it.

I have heard from people who've been shorting the FTSE since 1,000 lower and STILL holding onto major losing shorts. They then justify it thinking the trade will come good eventually.

And it might but in the meantime there are a lot of costs. And it stopped you making the money by following the market up. They also justify it by using "technical analysis".

And despite all the jargon words, it still goes against them. Despite when they shorted it the "Indicators" told them to do it! (They can't bring themselves to believe said indicators are a pile of bad word here).

I have had people emailing me shocked their shorts went against them. If you do short the market for goodness sake don't hang on, get out! And with social media etc and copy sites abounding - I warn again about getting involved in groups.

This will only enable you to overtrade as you follow other people's ideas. When their trades inevitably fail you'll be left holding a duffer that you'll never sell.

There is loads on this in my new book Trade Like A Shark.

Still available at a discount by putting NTSHARK in the discount box when you pay. Buy it here:

Right, onto some trades.

As those who came to the seminar saw from live accounts, I took a few Franchise Brands (FRAN)  last Thursday. Despite being much smaller company than I would usually go for I liked the business model. (They operate franchises Chips Away and Ovenclean).

I got 10,000 at 43.9  15,000 at 42.2 and 7,500 at 42.8.

My intention was to stick them away for a year or two and hope the business soared.

Then on Sunday the shares were tipped by the Mail on Sunday pushing them up 25% on Monday during the seminar!

This was an interesting chat! I'd made nearly 5 grand just because of a newspaper tip..  that made it tricky. Should I just sell the lot and bank the loot and say thanks very much MOS? Or just keep as per original plan?

I thought the most sensible thing was to sell some, so I sold 7,500 of them at the seminar banking £915. Since then they have gone up even more so holding onto the rest in case it does become another Dominos Pizzas as suggested by the MOS.

I picked up some Motorpoint (LON:MOTR) at the seminar managing to get a few at the then "sell" price using direct market access and a few at the then buy price separately. Motorpoint looks off the radar and well undervalued at 2 quid.

I rate it at least a 250p stock which is where I am aiming. However it can have a big spread so picking them on DMA at the sell price is better - come along to the seminar on Oct 7th and learn how to do it!

Character (LON:CCT) have had a boring run but I picked up a few more on Tuesday on weakness. It sells toys like Peppa Pig and Teletubbies.

A trading update was fine, the reason for weakness is currency.

But shares should rise now as directors have now bought some more shares  and the company has started buying back its own shares as they think it is underpriced so this should feed through to a move back up. Indeed they bought some back yesterday. So with the shares underpinned look a good buy.

*** Next seminar Oct 7th, please mail me at for details.**

I couldn't resist buying more GB Group (LON:GBG) though this really will be my final lot. Up nearly £50,000 on site trades but well over £100,000 personally.

There are 3-4 buys that came up at the seminar but as usual remain patient and waiting for a good price for them.

Two new shorts have come up (betting the share price comes down) - and made good money shorting them both before. Both look overvalued. The AA seems a sound business but it is stuck in a rut and has a massive debt pileover £2.5 billion!

An easy short as it is hitting its year high of 310 - if it goes much through that and breaks up I'll just take a small loss but risk reward is strong as it could head back to the 260-280 level.

The other short is EMIS - again looks like a decent chance of 100 points lower here and again, I'll just quit if it goes much higher - guaranteed stops on both would ensure no chance of getting hit say by a bid.

Patience often pays off in the market and it has paid off big time for me as finally I part company with Powerflute as it got an agreed cash bid at 90p.

Sometimes it is worth hanging on a bit to see if there is a rival bid but I've decided to cash in on my shares which banks a fantastic profit for the website of just under £22,000  - and quite a bit more for me personally as I also had a lot in my pension and in another account too.

I sold the rest of MCS - it simply kept on going down,but that banks a further profit of £696. Since then it has fallen a bit more and begins to look a tempting buyback.  

Same comment for Easyjet - negative broker comments kept pushing it down. I really should have banked profits sooner but there we go, I still got a profit of £
434    even though could have got a way better higher price if I hadn't dithered.
Again, though levels look pretty low now and remains tempting.

It has been a brilliant couple of weeks.

Shares in the portfolio continue to climb they include BBOX, Osirium Tech, Dignity (ex div today), Cyprotex.

ETO  is back on the rise. Yu Group produced impressive figures this week and has bounced up strongly.

Hotel chocolat looks sweet and has been up 20pc last couple of weeks. Only disappointment is Alliance which has come back a bit. It tends to do that and I think patience will pay.

NCC is on a big kick upwards.  GVC has risen massively which is great as I topped up a couple of weeks ago as reported here. Quartix has once again risen nicely. Avon Rubber has bounced.

Fri, 23 Sep 2016 09:09:00 +0100
Brokers: Upgrades all round for housebuilders Fri, 23 Sep 2016 09:02:00 +0100 Beaufort Securities Breakfast Alert:Kier Group, Ferrum Crescent, Mitchells & Butlers The Financial Policy Committee appeared to fire a warning shot across Philip Hammond’s bow yesterday. Stating in no uncertain terms that the UK faces a period of uncertainty and adjustment, while noting that households may struggle to service debts if the economy weakens due to a hard landing following Brexit negotiations, the Bank of England effectively told the Chancellor ‘we have done our bit, now it’s up to you’. Having seen the UK fare surprisingly well on the back of Mark Carney’s immediate post-Referendum rate cut and major injection of fiscal stimulus, the baton clearly now has to be picked up on 23rd November as Hammond delivers his first Autumn Statement. And here, the BOE’s obvious demand is for some relaxation of the stiff terms of austerity enforced by George Osborne along with additional access to cheap capital in order to power the Country’s entrepreneurial society. Having reminded London that the problems of Brexit have not gone away, but have simply been deferred, the FTSE-100 is seen opening somewhat cautionary this morning, losing 10 or so points in early trade. The US markets by comparison extended their celebrations of Wednesday’s Fed decision, with all principal equity indices putting in a reasonable performance and the NASDAQ again leading the way as it closed on a second consecutive record high. Asia, on the other hand, ended mixed with only the commodity-heavy ASX reflecting Wall Street’s confidence while the Nikkei, re-opening after its Autumn Festival holiday, moved negative on concerns about the strengthening Yen. Macro data due from the UK today includes Hometrack’s Cities House Price Index, while the Secretary of State for International Trade, Liam Fox, is due to attend a EU trade meeting in Slovakia. Release of Eurozone PMI figures is also anticipated. No major UK corporates are due to provide earnings today, although a couple of second-liners like Cogenpower (CGP.L), CVS Group (CVSG.L), Haydale Graphene (HAYD.L) and Pathfinder Minerals (PFP.L) are scheduled. Traders will also be keeping an ear open for any further messages from Boris Johnson regarding possible timing of the UK effecting Article 50, along with any media suggestions of breakthrough or otherwise by OPEC and Russia regarding their negotiated production cap."
– Barry Gibb, Research Analyst


The FTSE-100 finished yesterday’s session 1.12% higher at 6,911.40, whilst the FTSE AIM All-Share index closed 0.29% higher at 813.87. In continental Europe, markets ended higher as the Fed’s decision to hold interest rates created a sense of optimism among investors. The weakening of the dollar and improvement in oil prices led to gains in basic resources stocks. Germany’s DAX and France’s CAC 40 rose 2.3% each.

Wall Street
Wall Street ended in the green as investors cheered the Fed’s policy decision to keep rates unchanged. Investors digested mixed economic data released in the US. The S&P 500 advanced 0.7%, with the real estate sector gaining the most.

Equities are trading lower as investors booked profits following recent gains, driven by monetary policy decisions by the Fed and Bank of Japan. The Nikkei 225 edged down 0.3% as a weak yen exerted pressure on export-driven stocks. The Hang Seng was trading 0.2% down at 7:00am.

Yesterday, WTI prices increased 2.2% to US$46.32 per barrel, and Brent oil prices rose 1.8% to US$47.65 per barrel.


Manufacturing in UK improves in September: CBI
As per the Confederation for British Industry, the total order balance in the UK remained at -5.0 in September, well above the long-run average of -15.0, in line with market expectations. The output forecast for the next three months reached a three-month high. Conversely, growth in export orders eased marginally from the two-year high in August.

Company news

Ferrum Crescent (LON:FCR, 0.32p) – Speculative Buy
Ferrum Crescent, the AIM, ASX and JSE listed mining development company announced yesterday that it has acquired 100% of the share capital of GoldQuest Iberica S.L. further to the excise of its option as announced on 16 February 2016. GoldQuest owns 100% of two lead-zinc exploration projects, Toral and Lago, in Spain. Ferrum believes there is a potential for re-interpretation of historical data and delivery of a new geological model identifying potential zones of continuous mineralisation. Mineralogical data supports initial assessment of the mineralisation as being metallurgically straight forward. Ferrum believes that it can implement a cost effective work programme targeting potential new shallow high-grade ore deposits at the Toral project.

Our view: With its option on the Toral and Lago lead-zinc projects now completed, Ferrum can focus on the analysis and re-interpretation of historical geological data. We are encouraged with the high prospectivity for additional lead-zinc mineralisation particularity in the more advanced Toral project. We look forward to updates on the re-interpretation of the geological model and a revised compliant resource estimate. In the meantime, we reiterate our Speculative Buy on the stock.

Beaufort Securities acts as a corporate broker to Ferrum Crescent plc

Kier Group (LON:KIE, 1,289.0p) – Buy
Kier Group (Kier) declared preliminary results for the year ended 30th June 2016 (FY 2016). On an underlying basis, revenue surged 26% y-o-y to £4.2bn and profit from operations increased 44% y-o-y to £150m. Underlying pre-tax profit rose 45% to £125m, leading to an underlying EPS of 106.7p, 11% higher than that in FY 2015. On statutory basis, revenue rose 26% to £4.1bn and profit from operations stood at £12m. Kier incurred pre-tax loss of £15m compared with pre-tax profit of £39m in FY 2015. Net debt at the end of period stood at £99m (2015: £141m). Kier reduced pension deficit to £72m (FY 2015: £123m). On the operational front, the Group completed the integration of Mouchel. Kier proposed full-year dividend of 64.5p per share (FY 2015: 55.2p), with dividend increasing to £61m (FY 2015: £47m).

Our view: Kier delivered good performance in H1 2016, in line with expectation. The Group recorded a sharp rise in revenue and 8% increase in like-for-like revenue. The Group continued to perform well in growing market sectors, including infrastructure, housing and regional building, providing a range of capabilities to clients. Kier’s underlying profit soared on contribution from Mouchel, increased share of property joint venture results and margin recovery supported by cost efficiencies. The Group reported pre-tax loss on underlying basis due to charges of £116.0m related to underlying items, including £50.0m for the integration of Mouchel and restructuring of Kier operations within the Services division. Kier’s operating cash conversion remained solid at 121%, with a net debt-to-EBITDA ratio of less 1x, a year ahead of the board’s Vision 2020 target. The Group remained focused on growing the business by enhancing operational efficiencies and investing in new technology to support operations. Kier made progress in the Mouchel Consulting review, with total impact of review and portfolio simplification expected to be cash positive in FY 2017. We are buoyed by Kier’s progress in FY 2016 and maintain a Buy rating on the stock.

Mitchells & Butlers (LON:MAB, 272.0p) – Buy
Mitchells & Butlers (M&B) issued a pre-close trading update for the 51 weeks to 17th September 2016. During the period, total like-for-like (LFL) sales for M&B dropped 0.8%. The food and drink divisions reported a drop of 1.4% and 0.1% in LFL sales, respectively. For the 8 weeks to 17th September 2016, LFL sales for M&B increased 1.8%, with the food and drink divisions reporting LFL sales growth of 0.4% and 3.7%, respectively. Separately, M&B appointed Mr Keith Browne as a non-executive director with immediate effect.

Our view: The aforementioned update highlights M&B’s performance in the 51 weeks to 17th September 2016. The company’s LFL sales across both divisions fell during the period. M&B expects margins for the full year to be lower than those last year, mainly due to increased investment and higher wage costs following the introduction of the national living wage. However, warm weather in the UK in recent weeks led to positive LFL sales growth across divisions in the 8 weeks to 17th September 2016. The company generated good sales growth from upgraded outlets, converted or remodelled 244 sites and opened 7 new sites so far this year. M&B benefits from increased investment activity, infusing a commercial culture and faster pace of execution and innovation in business. We look forward to further updates from M&B and maintain a Buy rating on the stock.

Economic news

US initial jobless claims
Initial jobless claims in the US declined by 8,000 to 252,000 for the week ended 17th September, matching the lowest level since mid-July, the Labor Department reported yesterday. The four-week moving average dropped fell by 2,250 to 258,500 last week.

Eurozone consumer confidence
The gauge of Eurozone consumer confidence improved to -8.2 in September from -8.5 in August, the European Commission stated yesterday.

US existing home sales
Existing home sales in the US decreased 0.9% m-o-m to a seasonally adjusted annual rate of 5.33 million units in August, from 5.38 million units in July, the National Association of Realtors announced yesterday. The markets expected the home sales to increase to 5.45 million units.

US leading index
The Leading Economic Index for the US dropped 0.2% m-o-m in August, after a 0.5% rise in July, the Conference Board said yesterday. The markets expected no change in reading.




Fri, 23 Sep 2016 08:22:00 +0100
UN Fears Third Leg of Global Financial Crisis With Prospect of Epic Debt Defaults UN Fears Third Leg of Global Financial Crisis With Prospect of Epic Debt Defaults
Here is the opening of this mischievous report by Ambrose Evans-Pritchard for The Telegraph, perhaps best not read if standing near a ledge, busy traffic or other obvious hazards:
The third leg of the world's intractable depression is yet to come. If trade economists at the United Nations are right, the next traumatic episode may entail the greatest debt jubilee in history.
It may also prove to be the definitive crisis of globalized capitalism, the demise of the liberal free-market orthodoxies promoted for almost forty years by the Bretton Woods institutions, the OECD, and the Davos fraternity.
"Alarm bells have been ringing over the explosion of corporate debt levels in emerging economies, which now exceed $25 trillion. Damaging deflationary spirals cannot be ruled out," said the annual report of the UN Conference on Trade and Development (UNCTAD).
We know already that the poisonous side-effect of zero rates and quantitative easing in the US, Europe, and Japan was to flood developing nations with cheap credit, upsetting their internal chemistry and drawing them into a snare. What is less understood is just how destructive this has been.
Much of the money was wasted, skewed towards "highly cyclical and rent-based sectors of limited strategic importance for catching up," it said.
Worse yet, these countries have imported the deformities of western finance before they are ready to cope with the consequences. This has undermined what UNCTAD calls the "profit-investment nexus" that ultimately drives growth and prosperity.
The extraordinary result is that some countries are slipping backwards, victims of "premature deindustrialisation". Many of them have fallen further behind the rich world than they were in 1980 despite opening up their economies and following the global policy script diligently.
The middle income trap closed in on Latin America and the non-oil states of the Middle East a long time ago, but now it is beginning to close in such countries as Malaysia and Thailand, and in some respects China. "The benefits of a rushed integration into international financial markets post-2008 are fast evaporating," it said.
Yet the suffocating liabilities built up over the QE years remain. UNCTAD says corporate debt in emerging markets has risen from 57pc to 104pc of GDP since the end of 2008, and much of this may have to written off unless there is a world policy revolution.
"If the global economy were to slow down more sharply, a significant share of developing-country debt incurred since 2008 could become unpayable and exert considerable pressure on the financial system," it said.
"There remains a risk of deflationary spirals in which capital flight, currency devaluations and collapsing asset prices would stymie growth and shrink government revenues. As capital begins to flow out, there is now a real danger of entering a third phase of the financial crisis which began in the US housing market in late 2007 before spreading to the European bond market," it said.

David Fuller's view
I am not a fan of acronyms, especially the long ones, beloved by nerdy backroom types.  To lessen readers’ possible frustration, UNCTAD, stands for United Nations (that’s the easy part) Conference on Trade and Development (the cumbersome part).
I am not sure why AEP, one of the best financial journalists in the business, decided to share parts of this UNCTAD with us.  Perhaps it is an indirect caution against overconfidence regarding Brexit.  He did warn us shortly after the referendum result, as I recall, that the Brexit process would be challenging over the medium term, before the advantages were realised. That was a sensible comment, I felt.  Brits need to stay focussed and work hard, in order to redevelop a fully independent and internationally oriented UK.
What about the UNCTAD report?
This item continues in the Subscriber’s Area, where a PDF of AEP's article is also posted.

Email of the day
On Brexit articles, from a pre-subscriber:
I am not currently a subscriber but I always glance at the introductions to articles that you e-mail to me.  I must say that I agree with all of David's comments regarding the EU and am glad that he is helping publicise intelligent articles in favour of Brexit.  Unfortunately, it seems at times that most of these articles are from the Telegraph.  I was disappointed at the very negative response in the Financial Times and it does seem to me that somehow these more positive articles need to appear more frequently in other publications and were they to do so they may calm people’s fears on the subject.

David Fuller's view
I am glad to hear that you enjoy the Brexit articles, and don’t be afraid to subscribe, it’s an investment.
I am aware of how emotive the Brexit issue is for many of us in the UK.  If I am testing the patience of some subscribers on this subject, I apologise but I do think not only Brexit but overall developments in Europe are hugely important, and they certainly affect markets.
Re the FT, I assume its ambition is to be the most informative and successful financial paper in Europe.  It may have achieved this but the EU has overly influenced its political and even economic views, in my opinion.   


America Is Not the Greatest Country on Earth. It is No. 28
Here is the opening of this interesting report from Bloomberg:

Every study ranking nations by health or living standards invariably offers Scandinavian social democracies a chance to show their quiet dominance. A new analysis published this week—perhaps the most comprehensive ever—is no different. But what it does reveal are the broad shortcomings of sustainable development efforts, the new shorthand for not killing ourselves or the planet, as well as the specific afflictions of a certain North American country.
Iceland and Sweden share the top slot with Singapore as world leaders when it comes to health goals set by the United Nations, according to a report published in the Lancet. Using the UN’s sustainable development goals as guideposts, which measure the obvious (poverty, clean water, education) and less obvious (societal inequality, industry innovation), more than 1,870 researchers in 124 countries compiled data on 33 different indicators of progress toward the UN goals related to health.
The massive study emerged from a decadelong collaboration focused on the worldwide distribution of disease. About a year and a half ago, the researchers involved decided their data might help measure progress on what may be the single most ambitious undertaking humans have ever committed themselves to: survival. In doing so, they came up with some disturbing findings, including that the country with the biggest economy (not to mention, if we’re talking about health, multibillion-dollar health-food and fitness industries) ranks No. 28 overall, between Japan and Estonia.
Eradicating disease and raising living standards are lofty goals that have attracted some of the biggest names to philanthropy. Facebook Inc. founder Mark Zuckerberg and Priscilla Chan, his wife and a pediatrician, on Wednesday pledged $3 billion toward the effort. The new study itself was funded by (but received no input from) the Bill & Melinda Gates Foundation. The 17 UN Sustainable Development Goals (SDGs) themselves are a successor to the Millennium Development Goals, a UN initiative that from 2000 to 2015 lifted a billion people out of extreme poverty, halved the mortality of children younger than five years old, and raised by about 60 percent the number of births attended to by a skilled health worker.
The research team scrubbed data obtained on dozens of topics from all over the world. For example, to make sure they had adequate data on vaccine coverage for each region, they looked at public surveys, records of pharmaceutical manufacturers, and administrative records of inoculations. “We don’t necessarily believe what everybody says,” says Christopher Murray, global heath professor at the University of Washington and a lead author of the study. “There are so many ways they can miss people or be biased.”
The U.S. scores its highest marks in water, sanitation, and child development. That’s the upside. Unsurprisingly, interpersonal violence (think gun crime) takes a heavy toll on America’s overall ranking. Response to natural disasters, HIV, suicide, obesity, and alcohol abuse all require attention in the U.S.

David Fuller's view
Interesting but incredibly subjective, in my opinion.  However, size of population seems to be a key factor, if you look at the table at the end of this article which shows The Top 30.  Among the first 23, only the United Kingdom at number 5 and Germany at 15 clearly have larger populations than the other highly ranked countries.
I am surprised to see the UK so highly rated, not least given all the diesel fumes, especially in London.  Smoking and obesity are also UK problems. Having visited most of these countries, I am baffled to see New Zealand no higher than 30.  The USA does have big problems with violence, alcoholism and obesity, as mentioned, but it also has by far the largest population among the top 30 listed. 


The Markets Now
Here is the new brochure for our next meeting at The Caledonian Club on Monday evening, 10th October 2016. 

David Fuller's view
I look forward to seeing another lively group of subscribers, at this event.  Former subscribers and newcomers are also welcome.  These are unusual times in the markets so we should also have some interesting discussions, not least over refreshments following the three presentations.  Fellow subscriber Tim Price is a popular guest speaker. 

My personal portfolio
A net profitable trade rolled forward

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


Email of the day on Japan's stimulus program
Hello I read your analysis about the Topix bank index, for the first time I don't really agree with you. The bank of Japan is doing something new and it could push the Topix banks index up. I cannot attach graphs here to this message, but if on Bloomberg you compare the Topix bank index (or any bank index) to the difference in 30 year and 10 year JGB yields the correlation in the last 2 years is almost perfect. I believe they intend targeting yields to keep the curve ripid to help the banks. The same thing will probably happen in the Eurozone as they soften some capital rules as well, so I think the bank indexes should be watched even if only on a relative basis (bank indexes should outperform general indexes like sp500 and DAX and the yield curve become more ripid in Eurozone Japan and US), sorry I can't attach my Bloomberg graph. I hope at the chart seminar in London you can let me understand why you do not consider correlations such as these. They are not long term correlations, but are valid in a zero bound environment.

Eoin Treacy's view
Thank you for this email highlighting some key measures of how the financial sector has reacted to the Bank of Japan’s stimulus policies. I look forward to covering these topics with you in person in London this November. It’s looking like an interesting group of delegates will be in attendance.

EU Banks May Need Rescue Funds Equaling Twice ECB Capital
This article by Boris Groendahl for Bloomberg may be of interest to subscribers. Here is a section:
The Brussels-based SRB, the resolution authority for 142 banks including Deutsche Bank AG and BNP Paribas SA, will use the minimum capital requirement set by the European Central Bank as a proxy for capital that would be needed to absorb losses in a crisis, Koenig said in an interview this month. The ECB last year set an average requirement for the highest-quality capital of 9.9 percent of risk-weighted assets.
Requiring banks to have at least that same amount again in loss-absorbing liabilities will ensure that they can recapitalize themselves quickly after restructuring, Koenig said. This minimum requirement of own funds and eligible liabilities, or MREL, is calculated at the “30,000-foot level,” and more precise levels tailored to each bank will follow after the ECB sets new capital requirements and changes are made to capital, bank-failure and insolvency rules, she said.
“We want to avoid confusing the markets by saying, this is our decision this year, knowing that it will be different next year,” Koenig said. “So we take an indicative step this year. For next year, we hope that some of the dust has settled.

Eoin Treacy's view
When reading about the increasingly high obstacle of regulation, higher and higher capital requirements for banks and stricter requirements for what constitutes Tier 1 capital I am put in mind of the adage that “generals are always fighting the last war.” These are policies that would have been appropriate before the crisis in order to mitigate risks. They represent a barrier to lending activity today that deters banks from acting as liquidity providers, regardless of where short-term interest rates are set.


Email of the day on the Dollar Index
Do you think the Fed announcement will change the trajectory for the USD (DXY) heading into year end? and in turn potential provide some strength to the commodities?

Eoin Treacy's view
Thank you for this question which may also be of interest to other subscribers. The Fed’s announcement that the economic activity is moderating suggests that the interest rate differential between the US Dollar and other major currencies like the Euro is unlikely to expand rapidly. That would suggest the rangey environment overall for the Dollar Index may continue a while longer, subject to what happens in Europe and Japan.

California's legal marijuana market is on the verge of exploding
This article by Ben Gilbert for Business insider may be of interest to subscribers. Here is a section:
We're not talking about de-criminalization, or police de-prioritization.

We're talking about alcohol-style regulation and sale of marijuana to adults, age 21 and up. We're talking about legally allowed personal cultivation, state/local taxation of retail sales/distribution, and re-evaluation of sentences/records for people charged with marijuana offenses.
We're talking about outright, full-on legalization of marijuana. And in the world's sixth largest economy, that means billions of dollars.

If California's Proposition 64 passes on November 8, and sales begin by January 1, 2018, California's looking at an additional $1.5 billion flooding into the marijuana market. That number swells to just shy of $3 billion in 2019, and nearly $4 billion by 2020, based on the latest report from New Frontier Data and ArcView Market Research.

And to be clear, that's on top of the already booming medical marijuana market — the total size of the cannabis market would reach $4.27 billion in 2018, and would grow to $6.45 billion by 2020.
The ballot initiative has overwhelming support in California: Over 60% of respondents support Prop. 64, compared to just 34% opposed, according to Ballotpedia's average of polls.

Eoin Treacy's view
Evidence from companies like GW Pharmaceuticals and others means that the Drug Enforcement Agency’s (DEA) assertion cannabis is a Schedule 1 narcotic with no medical use and a high probability for misuse is looking increasingly outdated. Arguments for full legalisation go a step further and promote the view cannabis is no more dangerous for consenting adults than alcohol. Considering the damage abuse of alcohol is capable of that’s not a particularly high barrier.

The Chart Seminar 2016
We are pleased to confirm two venues for The Chart Seminar in 2016.

Eoin Treacy's view
We are pleased to confirm two venues for The Chart Seminar in 2016.

The first will be in London on November 24th and 25th. We will be working with a partner to co-promote the event and expect a full house (we cap the event at 50). The Radisson Blu Edwardian Vanderbilt on Cromwell Road will be the venue for the seminar. 

If you are interested in securing your place please contact Sarah Barnes at

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

Fri, 23 Sep 2016 08:12:00 +0100
Be watchful of USD rebound FTSE 100 Index called to open -5pts at 6905 with yesterday’s sell off from 6935 (Sept highs, 17-month falling highs) retracing to 6900 where support emerged overnight. The week-long uptrend from 6640 may have legs if rising lows hold at 6890, a level the Bears will be watching carefully for clues about a reversal. The Bulls will likely be content with another rally to yesterday’s highs to finish the week, more so if a breakout allows for a revisit next week of August 6955 highs, even the 7000 level traded last May/June. Updated watch levels: Bullish 6910, Bearish 6895.

A muted start to the last session of the week comes after a mixed session in Asia followed a positive US close with Japan playing catch-up from a day’s holiday, its flagship Nikkei reacting to the BoJ’s stimulus tweak now favouring ETF purchases from its Topix sibling index. A weaker Yen and PMI Manufacturing back to growth above 50 are offering no help. Markets also continue to digest the Fed’s latest update, humming and hawing over whether it was a hawkish hold prepping us for December or a dovish hold given the cut in projections. The USD rebound is thus something to keep an eye on.

Note China stocks in the red despite the nation’s MNI Business Indicator climbing to its highest level since August 2015, driven by acceleration in new orders growth and continued improvement in manufacturing confidence. This only goes to bolster recent confidence in the world’s #2 economy that has helped commodities deliver an attractive rebound.

Note Australia’s ASX outperforming significantly (+1%), set to end a five week streak of losses thanks to higher raw materials prices helping Miners (watch those listed in London again) and Energy buoyed by Oil prices well off their recent lows although, as mentioned, the USD rebound is something to keep an eye on.

US equities maintained the rally that began on Wednesday following the Fed’s (hawkish?) hold, at one point 150pts up on the previous close, however failing at the 18380 mark where it encountered August falling highs. A weaker USD helped treasuries and oil to strong gains over the course of trading, in turn helping markets to close between +0.5% (Dow Jones) and +0.8% (NASDAQ) for the day.
Oil prices declined during Asian trading hours as reports of a meeting of officials at OPEC headquarters in Vienna resulted in no major breakthroughs. This came after yet another oil minister, this time from Iraq, stated confidence that a production ceiling can be agreed upon at the unofficial OPEC meeting in Algiers next week. Surely with OPEC oil ministers queuing up to release statements of confidence, a production freeze is inevitable?
Gold, after achieving two week highs amid a brief breakout yesterday, is back facing resistance this morning in the $1335-1340 channel in response to a strengthening of the USD. A strong performance from other commodity markets today could provide the impetus for the precious metal to break above current resistance and attempt to regain stable prices around the $1350 mark.

In focus this morning will be preliminary Eurozone PMI Manufacturing and Services figures for September with updates from France (following a flat GDP confirmation) and Germany. The former is seen still struggling on the Manufacturing front but solid in Services. In contrast, the region’s economic powerhouse, Germany, should show both metrics holding firm above the key 50 mark that separates growth from contraction. A similar result is expected for the Eurozone region as a whole, but nothing to write home about yet, suggesting the ECB has work to do on the stimulus front.

In the afternoon US PMI Manufacturing is seen solid like Germany’s while the Baker Hughes Rig Count after the European close could shed some light on US production levels and those surprise US crude oil inventory drawdowns this week that helped oil prices rally ahead of next week’s OPEC-led Algiers meeting.

After ECB President Draghi pinned blame on a ‘too big banking sector’ yesterday at the ESRB annual conference in Frankfurt, listen out for what his colleague Constancio has to say in his speech about “Low interest rates and the implications for financial stability”.

Finally, as we continue to digest whether the Fed’s Wednesday update was a hawkish or dovish hold, prepare for speeches from Harker, Lockhart and Kaplan to attract attention  after the European close, investors getting their fix now the blackout period is over) however, prepare for this trio’s thought to be overshadowed by dissenter Mester, who voted for an immediate hike on Wednesday.

Fri, 23 Sep 2016 08:10:00 +0100
In the news: Atrum Coal/Atlantic Carbon The increasing level of corporate activity at the quality end of the coal market has been further shown by Atrum Coal’s possible offer for Atlantic Carbon. After a prolonged downtrend that started in late 2011, coking coal spot prices have rallied strongly this year; they’re up 105% since January, with anthracite also having seen a 10% upturn since April. This increase in prices has led to a significant change in sentiment towards the sector and we believe that it could mark the beginning of further consolidation in the short-to-medium term.

Atlantic Carbon Group plc is a UK-based private coal company with assets in the US. On 4 August, Atrum Coal, an ASX-listed company that owns the Groundhog Anthracite Coal Project in British Columbia, announced that it had entered an agreement to acquire 26.68% of Atlantic Carbon. The plot thickened on 19 September when both Live Microsystems Inc and Atrum Coal approached Atlantic Carbon to make preliminary approaches for the company. Further excitement followed just a day later when Royal Energy also made a preliminary approach, further increasing the potential competition for the company. Under the UK Takeover Code, each party has 28 days from their approach to make an offer.

Previously known as Atlantic Coal, Atlantic Carbon Group is a UK-based anthracite mining and processing company. It owns three active open-cut anthracite operations in Pennsylvania, including Stockton, the largest anthracite mine in the US. After being readmitted to AIM in November 2007, the company was delisted in January 2016, although it does remain subject to the UK Takeover Code.

Atrum Coal is an Australian-listed mining company that is developing metallurgical coal projects throughout Canada. With a market cap of A$164m, the company has almost doubled in value since the start of the year, with its price increase closely related to the coking coal price rise. Its Groundhog Project is under development and is expected to be the world’s largest high-grade anthracite operation.

Royal Energy is a US energy company focused on coal, oil, natural gas and renewable energy. The company has a current market cap of US$163m and its price has remained steady over the year. The company previously pursued gold, silver, rare earths and copper concessions in Romania, as well as mining leases in the US. In January 2015 it began a series of transactions to dispose of its existing assets, change its management and transformed its vision to purchase long-life energy assets. Live Microsystems is a diversified business that has investments in a number of industries.

Thu, 22 Sep 2016 12:08:00 +0100
Today's Market View - Kibo Mining, IronRidge Resources, Metal Tiger, SolGold Kibo Mining (LON:KIBO) – Advisory engagement letter signed for Mbeya coal to power project
IronRidge Resources* (LON:IRR) – Drilling to start at May Queen gold project
Metal Tiger (LON:MTR) – MOD Resources enters trading halt on ASX
SolGold* (LON:SOLG) – Superior Investment Proposal Received of US$20m at 16c/s

Miners rise as US dollar falls following fed decision to hold rates
• It was no surprise that the Fed held rates last night
• Many Americans reckoned the Fed would not raise rates ahead of the election but will raise rates in December.
• We reckon the first rate rise might come in Q2 next year eg when global growth is better assured and the world is better able to withstand the massive flow of funds into the US out of Emerging Markets as investors rebalance their portfolios.
• The Fed flagged the potential for a December rate rise but with a less certain outlook.  This caused the US dollar to fall.
• It is possible/likely that the Fed is working to a new agenda and that a more aggressive approach to driving inflation while maintaining low rates till government borrowings fall.
• The Central Bank of New Zealand also held rates low indicating it may cut rates further from its current 2% rate.

The Fed decision to keep rate level yesterday is helping the sentiment with the Stoxx Europe 600 Index up at the highest in almost two weeks.
• Bulk commodities producers and energy stocks are leading gains.
• Brent climbed for a third consecutive day on reports of falling curve inventories in the US.
• The latest EIA report showed stockpiles dropped by 6.2mmbbl last week compared to forecasts for a 3.25mmbbl increase.
• Base metals climbed across the board led by a decline in the US$ index which fell 0.9% over the course of two days.
• Gold climbed c.$20/oz or 1.4% in the last two days.
• Iron ore futures jumped 3% on Dalian Commodity Exchange advancing for a third consecutive day supported by price surges in a different bulk commodity market. Coking coal futures climbed 8.7% this week with coke futures up 9.2%.

Dow Jones Industrials  +0.90% at 18,294 
Nikkei 225    at 16,808  Unch due to holiday
HK Hang Seng   +0.38% at 23,760  
Shanghai Composite   +0.54% at   3,042 
FTSE 350 Mining   +3.46% at 12,274  FTSE 350 +67% since 1st January
AIM Basic Resources   -0.42% At   2,435  AIM Basic Resources +49% since 1st January

US – The US$ index fell as the Fed left rates unchanged in a divided vote while cutting its forecasts for future rate increases.
• “The Committee judges that the case for an increase in the federal funds rate has strengthened, but decided, for the time being, to wait for further evidence of continued progress toward its objectives,” FOMC said.
• The Bank ruled there remains scope for the labour market to continue strengthening without causing inflation rate to overshoot the Fed’s 2% target rate.
• Three of ten FOMC members including Esther George (Kansas City), Loretta Mester (Cleveland) and Eric Rosengren (Boston) voted in favour of a rate hike.
• Economic growth projections have been cut to 1.8%, down from 2.0% forecast in Jun, for this year while the longer-term pace has also been brought down to 1.8% (from 2.0%).
• Inflation projections (measured by the PCE index) have been adjusted only slightly (1.3% for this year v 1.4% estimated previously; 2017/18/19 numbers were left unchanged at 1.9%/2.0%/2.0%).
• The pace of tightening has been brought down with the median rate forecast to end 2016 at 0.6%, implying one 25bp hike before year end (down from 0.9% as of Jun). Additionally projected rates for 2017/18 were cut to 1.1%/1.9% versus 1.6%/2.4%.
Date Index Period   Actual Est Previous
Tuesday Housing Starts Aug %mom -5.8 -1.7 1.4
  Building Permits Aug %mom -0.4 1.8 -0.8
Wednesday FOMC Rate   % 0.25-0.50 0.25-0.50 0.25-0.50
  Fed Economic Projections         
Thursday Weekly Jobless Claims       261k 260k
  Existing Home Sales Aug %mom   1.1 -3.2
Friday Manufacturing PMI Sep     52.00 52.00
Source: Bloomberg     

US$1.1231/eur vs 1.1159/eur yesterday.    Yen 100.80/$ vs 101.80/$.   SAr 13.436/$ vs 13.771/$.    $1.308/gbp vs $1.298/gbp.
0.766/aud vs 0.759/aud.   CNY 6.670/$ vs 6.672/$.  

Commodity News
Precious metals:
Gold US$1,333/oz vs US$1,320/oz yesterday –
     Gold ETFs 65.1moz unch vs 64.9moz yesterday
Platinum US$1,045/oz vs US$1,040/oz yesterday
Palladium US$689/oz vs US$687/oz yesterday
Silver US$19.75/oz vs US$19.41/oz yesterday

Base metals:   
Copper US$ 4,815/t vs US$4,766/t yesterday – Refined copper imports hit the lowest level in 18 months in Aug following a strong run in H1/16 and compensated by an increased domestic production.
• Refined metal shipments dropped to 232kt, down 8%mom and 12%yoy, marking the a fifth consecutive monthly decline.
• Nevertheless, refined copper imports YTD remained up showing a 16% gain on increased credit availability and property market rebound.
• At the same time, refined copper production inland jumped to the highest in at least six months on increased supply of concentrates and improved smelters’ margins.
• Arbitrage window improved slightly in the last week of Aug after remaining closed for the most part of time since May, but it proved to be insufficient to lead to improved refined copper imports in Aug.

Aluminium US$ 1,610/t vs US$1,576/t yesterday –
Nickel US$ 10,525/t vs US$10,250/t yesterday –
Zinc US$ 2,288/t vs US$2,283/t yesterday –
Lead US$ 1,948/t vs US$1,969/t yesterday –
Tin US$ 19,425/t vs US$19,430/t yesterday –

Oil US$47.2/bbl vs US$46.7/bbl yesterday
Natural Gas US$3.082/mmbtu vs US$3.088/mmbtu yesterday
Uranium US$24.75/lb vs US$24.90/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$56.4/t vs US$54.2/t – Vale reiterated its target for first S11D iron ore shipment in Jan/17.
• The $17bn 90mtpa iron ore concentrate project was 80% complete as of Q2/16 with the project forecast to supply 30-40mt in 2017 and reach 80% of capacity by 2018.
• The project is estimated to produce iron ore concentrate at less than $10/t at full capacity.

Steel rebar, China 25mm US$382.9/t vs US$382.8/t –

Thermal coal (1st year forward cif ARA) US$60.0/t vs US$58.5/t yesterday -
Coking coal prices $206.4/t vs $205.9/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level

Tungsten - APT European prices vs $180-200/mtu unch again vs $185-200/mtu two weeks ago

Company News

Kibo Mining (LON:KIBO) 9.1 pence, Mkt Cap £32.4m – Advisory engagement letter signed for Mbeya coal to power project
• Kibo Mining has signed an advisory engagement letter with Absa Bank / Barclays Bank under which the bank will act as new financial advisor to the company on the Mbeya coal to power project in Tanzania.
• There is a ‘minimal cash retainer fee’ and an ‘undilutable’ advisors equity call option over 3.5% of the total share capital of the Mbeya Development Company Ltd.
• The, unstated, cash retainer fee can be suspended in the event of project delays.
• Kibo recently reported an MoU with General Electric for supply equipment, technology and services to the Mbeya Coal to Power Project (MCPP) in Tanzania.
Conclusion:  Kibo are still some way off the financing and construction of the Mbeya project and the engagement of a new financial advisor is a small step towards its eventual development if the market and banks are able to get comfortable with the risk and returns of providing power in Tanzania.

IronRidge Resources* (LON:IRR) 11.1p, Mkt Cap £26.3m – Drilling to start at May Queen gold project
• IronRidge have received landholder approval to start drilling on their May Queen gold project in central Queensland, Australia.
• The company is looking to follow up on previous drilling done by Black Swan Pacific NL.
• Black Swan’s drilling indicated two good holes of mineralisation with the first drill hole ending in mineralisation. 
• Why the drillers did not continue drilling into this mineralisation is a mystery as any sane driller/geologist should continue to follow the mineralisation if it is visually identifiable?
• Historical intersections including:
o 4m @ 38.8g/t Au (at end of hole) and 3m @ 18.9g/t Au
o 2m @ 73.4 g/t Au, including 1m @ 145g/t Au
• Mineralisation at May Queen “appears to be hosted within numerous parallel quartz vein systems open to the north‐west and south‐east, projected to extend under cover and concealed below younger sediments.
• The Intersections appear to occur at or close to the contact between intrusive andesite porphyritic dykes and gabbros, and a mixed mudstone – limestone sedimentary package.  The licence area is largely covered by a thin sandstone cover sequence, which is believed to mask additional areas of potentially extensive mineralisation.  The Company has also identified potential exoskarns beside the intrusive contact with visible secondary copper mineralisation at surface, and endo skarns within the exposed intrusives.    Likewise, elevated zinc anomalism is reported within stream sediments draining the broader project area. IronRidge considers this to be indicative of potentially mineralised basement.
• The May Queen Prospect is also characterised by a discrete magnetic anomaly, spatially associated with historical drill intersections.  Additional magnetic anomalies occur along strike to the south‐east of the May Queen prospect under approximately 20m to 50m of younger cover sediments.  Potential exists for the discovery of additional high‐grade gold mineralisation concealed below the younger cover sequence in settings similar to May Queen, 2km to 8km along strike to the south‐east and associated with these magnetic anomalies.”
• “The gold mineralisation along the intrusive contact (endoskarn) has similarities to the Red Dome copper‐gold deposit within the Mungana District, in Northern Queensland.  There is potential skarn association with base metal mineralisation along the sedimentary contact (exoscarn).   
• At Red Dome, the gold is restricted to the skarns and in the primary state occurs as very fine free gold, either as inclusions in sulphides (bornite, chalcocite, chalcopyrite and arsenopyrite), associated with silicates, tellurides and as minor electrum, with free gold in the oxide zone.  Pre‐mining geological resources in 1986 were 15 Mt @ 2.6 g/t Au at a 1 g/t Au cut‐off*.“
Conclusion:  The May Queen project appears to offer near certain potential to drill into high-grade gold mineralisation and to delineate more strike length and potential volume for the gold mineralisation.
IronRidge are starting off with a 10-hole, 500m drill program with a view to aggressively following up once the previous drill results have been confirmed.  This should give a much better indication of the potential of the extent of gold mineralisation and high-grade potential of the project.
We are excited about the potential for discovery at the May Queen gold project and look forward to seeing confirmation of the high-grade gold results as previously drilled.
*SP Angel act as Nomad and Broker to IronRidge Resources

Metal Tiger (LON:MTR) 3.3 pence, Mkt Cap £20.1m – MOD Resources enters trading halt on ASX
• Metal Tiger plc report that their joint venture partner MOD Resources has entered into a trading halt on the ASX.
• Metal Tiger as an AIM market stock continues to trade.
• MOD Resoruces shares are halted pending the release of a new JORC resource on the company’s T3 copper project in Botswana.
• Recent drilling at the T3 project has expanded high grade mineralisation into the western part of the deposit.
• Metal Tiger holds 30% of the T3 copper silver project in joint venture with MOD Resources
• MOD Resources recently reported:
• “Wide intersections in MO-G-24D (32.6m @ 1.6% Cu and 22g/t Ag from 146m down hole) and MO-G-25D (45.3m @ 2.0% Cu and 36g/t Ag from 131m down hole) and previously an-nounced MO-G-20D (20m @ 3.2% Cu and 77g/t Ag from 130m down hole) now appear to extend the central footprint of  higher grade mineralisation into the western part of the depos-it.”
• Among the drilling results reported were 6.3m averaging 1.9% copper and 16 g/t silver from a depth of 159m in hole MO-G-23D; 32.6m averaging 1.6% copper and 22 g/t silver from 146m and 4.5m averaging 3.3% copper and 53 g/t silver from 184.5m in hole MO-G-24D and 45.3m averaging 2.0% copper and 36 g/t silver and 237 ppm molybdenum from a depth of 131m in hole MO-G-25D.
• Six drill rigs, including 4 diamond core rigs, have been working on the T3 prospect area to evaluate the “Phase One” resource area and testing extensions to the mineralisation.
• We last reported that there were 12 drill holes currently awaiting assay results and, according to MOD Resources’ Managing Director, Julian Hanna, these, coupled with the remaining planned holes, “may provide further support for this interpretation of a wide, high core extending at least 700m along the deposit which remains open along strike.”
• Drilling at T3 has been hitting wide, high grade intersections of copper and silver and more recently molybdenum across an extensive area. The extent of the mineralisation, which in some holes appears to occur in multiple horizons has yet to be closed off and we look forward to further results as they become available..
Conclusion:  The new, maiden, JORC resource will give good indication as to the economic potential of the T3 project.  JORC resources now have to incorporate a range of economic parameters to determine if mineralisation should be considered to be part of a potentially economic resource.

SolGold* (LON:SOLG) 13.75p, Mkt Cap £168.1m – Superior Investment Proposal Received of US$20m at 16c/s
• SolGold report that Maxit Capital have offered to arrange a cash investment of US$20m at a price of US$16c/s.
• It is possible that Newcrest, the mining company, may also participate in the capital raising if it raises its offer for stock to match the price being offered by Maxit Capital.
• Newcrest is currently offering 8c/s to buy 10% of SolGold capital.
• If Newcrest raises its offer to 16c/s and commits to putting in US$22.863m then Maxit Capital would input US$10.137m, though this is less than the $20m offered today, also at 16c/s to create a total raising of US$33m.
*SP Angel acts as Nomad and Broker to SolGold. An SP Angel analyst visited the Cascabel project.

Thu, 22 Sep 2016 10:38:00 +0100
Broker sees Centrica losing its spark Thu, 22 Sep 2016 10:00:00 +0100 In the papers: SFO, M&S, BG Group The Times
SFO drops inquiry into farm lender: Farmers have Expressed dismay after the Serious Fraud Office dropped a proposed criminal investigation into an agricultural lender accused of cheating them out of their homes and livelihoods.
Small business confidence sinks amid Brexit fears: Confidence among small businesses is at a four-year low because of concerns among companies that the economy will weaken as Britain prepares to leave the European Union.
Things are motoring at busy car factories: Britain’s car plants are at their busiest since the days when the country still made Ford Escorts and Rovers, latest industry data has shown.
M&S is threatening to sack thousands, says MP: A Labour MP has accused Marks and Spencer of threatening to sack “thousands of staff” over the Christmas period if they do not accept new proposals that could cut their take home pay.
Tanker carries new hope for Libya’s oil exports: Libya has exported its first cargo of oil from the port of Ras Lanuf since 2014, reviving hopes of a recovery in production in the country.
SABMiller deal ‘at risk’ if investors sit on hands: Hedge funds are being warned that they could inadvertently put Anheuser-Busch InBev’s £79 billion takeover of SABMiller at risk unless they convert their derivatives in the Peroni and Grolsch brewer into shares.
Former BG Group Boss to oil wheels for private equity: The former Chief Executive of BG Group has joined an American private equity firm as an adviser.
Half-term strike in pilots’ sights at EasyJet: EasyJet has launched last-ditch talks to avert a pilots’ strike that could ground the short-haul airline during the all-important October half-term period.
Sky’s departure adds to clouds over the CBI: Sky has decided to leave the CBI, dealing a fresh blow to the business lobby group.
The Independent
OECD halves U.K. growth forecast due to EU referendum vote: The OECD has slashed its 2017 growth forecast for the U.K. in half as a result of the Brexit vote and warned of “very high” uncertainty ahead.
Public finances continue to miss official targets in August: The improvement in the public finances continued to undershoot expectations in August, further undermining the Government’s hopes of reducing the deficit on its original planned timetable.
Brexit has had no major impact on the economy, says ONS: The Brexit vote has had no major impact on the economy, the Office for National Statistics said on Wednesday.
HSBC offers record low mortgage at 0.99% and other banks may follow: HSBC is offering a record low mortgage interest rate of 0.99%, as intense competition makes borrowing cheaper than ever.
U.S. government allows Airbus to sell planes to Iran in landmark deal: Airbus has been granted a license by the U.S. government to sell its first 17 planes to Iran as part of a landmark deal, the airline confirmed on Wednesday.
The Daily Telegraph
Exports boost car manufacturing in August as industry awaits Brexit tariff deal: Foreign demand for British cars has helped push automotive manufacturing to its best August for 14 years as the industry reported a boom in exports following sterling’s post-Brexit plunge.
BHP Boss Andrew Mackenzie’s pay halves following Samarco disaster: The Boss of Australian mining giant BHP Billiton will take a 50% pay cut this year as the company tries to move on from a fatal dam burst at an iron ore mine it co-owns in Brazil.
Premium pubs drive Britain’s oldest brewery to record profits: Shepherd Neame’s investment in ‘premium pubs’ has helped the 500-year-old brewer grow its profits to record levels in the last year.
Broker Cenkos hit as Brexit knocks floats: Stockbroker Cenkos Securities has emerged as a casualty of the Brexit vote with its revenues plunging and its profits almost wiped out after the uncertainty caused by the EU referendum hit stock market floats.
AstraZeneca withdraws cancer drug after ‘differences of opinion’ with regulator: AstraZeneca has suffered a setback after being forced to withdraw an application for a key ovarian cancer drug to be approved, citing “differences of opinion” with the European regulator.
Zara Owner Inditex storms past rivals as profits surge: Inditex, the giant behind fashion brands Zara and Massimo Dutti, has posted a surge in half-year profits after investing in its global shops and websites in response to changing shopping habits.
Saga customers predict calm waters after Brexit: Saga said its customers’ travel plans had not been affected by the vote to leave the EU as it released robust half-year results.
The Guardian
The post-referendum economy: data defies gloomy U.K. predictions: Fears that Britain will slide into a post-referendum recession have been allayed after a Guardian analysis showed the latest news on the economy has confounded analysts’ gloomy expectations, with consumer spending strong, unemployment low and the housing market holding steady.
National living wage ‘failing to provide basic needs for lowest paid’: The ‘national living wage’ (NLW) falls short of providing a decent standard of income to low-paid staff and will need to increase sharply to offset rising rents and slowing wages growth, according to campaigners against low pay.
Businesses scaling back investment plans after Brexit vote, says report: Businesses across the U.K. are scaling back investment plans and imposing freezes on recruitment as the uncertainty surrounding the Brexit vote reverberates through the British economy.
Apple ‘in £1.5 billion talks to buy supercar maker McLaren’: Apple has been linked with a shock £1.5 billion deal to buy McLaren Technology Group, the Formula One team Owner and supercar maker.
Women do four years more work than men in lifetime, report shows: A young woman entering the job market can expect to do an average of four years more work than her male peers over her working lifetime, according to a report.
Daily Mail
U.S. interest rates remain at 0.5% but are set to rise again before Christmas: The Federal Reserve left interest rates in the United States unchanged – but hinted that they could rise again before the end of the year.
Zoopla Boss cashes in shares worth £14 million to back U.K. tech start-ups: The Boss of property website Zoopla has sold a third of his shares in the company, worth £13.8 million.
Star investor Terry Smith doubles the amount invested in his own fund putting in another £200 million: Maverick investor Terry Smith has more than doubled the amount of money he has invested in his own funds to £200 million.
Ofgem probes pre-payment energy company Economy Energy amid concerns over its selling practices: A pre-payment energy company is being investigated over concerns about its selling practices.
Verdict due in long-running row between Airbus and arch-rival Boeing over ‘illegal’ payouts: Airbus is braced for the latest twist in a bitter trade dispute with arch rival Boeing.
Daily Express
Majestic Wine £70 million below measure after trade problems and failed marketing: Majestic Wine’s investors were nursing a £70 million hangover after the company warned that profits would suffer from problems at its trade arm and from a failed marketing campaign in the U.S.
Sellers should pay stamp duty not house hunters, says lender: House sellers should foot the bill for stamp duty, rather than buyers to make it easier for first-time buyers to make their first step on to the property ladder, according to the Yorkshire Building Society.
Brexit economy boost as tourists splash millions in bumper summer spending spree: Tourists have splashed millions of pounds in Britain this summer, giving the economy a massive boost in the wake of the vote to leave the European Union (EU).
Britain closer to balancing books after Brexit, new figures show: Britain’s public borrowing has continued to fall in the aftermath of the referendum, in yet another blow to predictions the economy would be hit by a vote to leave the European Union (EU).
The Scottish Herald
Scottish business confidence plunges after Brexit vote, job cuts flagged: Scottish small business confidence has plummeted following the Brexit vote to its lowest since 2011, with firms overall signalling a likelihood of job cuts in the coming three months, a key survey has revealed.
Prominent think tank cuts growth forecast for U.K.: A leading economic think tank has halved its forecast for growth in the U.K. economy next year following the Brexit vote.
Scotch helps Diageo get off to a flying start: Diageo has highlighted its Scotch whisky brands as a key driver of growth as its current financial year started well, with one analyst noting that the depreciation of sterling since the Brexit vote has brought a sales boost to the world’s biggest drinks company.
Hollywood makes stock market debut: Shares in Hollywood Bowl Group, the U.K.’s largest ten-pin bowling operator, have been admitted to the London Stock Exchange.
Bowleven shares rise after investment firm notifies major interest: Shares in Bowleven have risen seven per after the Crown Ocean Capital P1 investment firm revealed it had put itself in position to play a significant role in the future of the Edinburgh-based oil and gas firm.
Ecometrica signs deal with University of Edinburgh: Ecometrica, the software company whose applications monitor the effects of deforestation and climate change, has struck a memorandum of understanding with the University of Edinburgh.
Space Solutions steadies profits following central belt surge: Space Solutions, the office design specialist, has steadied profits and revenues in its latest financial year after an uptick in central belt activity offset the downturn in the north-east economy.
RBS set to wind down shipping business: RBS has confirmed it is to wind down its shipping finance business, ending its attempts to sell it off.
The Scotsman
Bonmarche shares slump after hot September melts sales: Shares in womenswear retailer Bonmarche plummeted more than 25% this morning after the firm issued a profit warning, saying “unseasonably hot weather” in September melted sales of its autumn ranges.
Deal for Edinburgh body camera business: An Edinburgh firm that makes body-worn cameras used by police, traffic wardens and other frontline staff has won a contract to supply firefighters in the West Midlands.
Insolvency firm offers hi-tech boost to help creditors: An insolvency practitioner with offices in Edinburgh, Glasgow and Aberdeen is aiming to better the prospects for unsecured creditors when a company goes into liquidation by offering a hi-tech solution it believes is a first in the sector.
Alloa firm RMD powering up for growth: An Alloa-based business that supplies and maintains power protection systems is targeting a doubling of its turnover within the next three years.
City A.M.
Leavers and Remainers across politics and business unite to launch new Brexit forum: A new Brexit group which brings together Remainers and Leavers from the worlds of business and politics is set to formally launch on 19 October.
Slimmed corporate travel budgets have hit London’s hotel sector: Corporate uncertainty and tight travel budgets took their toll on hotels in the capital during the first half of the year, according to figures from PwC.
Postal Savings Bank of China in world’s biggest IPO in two years: China’s sixth-largest lender by assets has raised $7.4 billion (£5.6 billion) in the world’s biggest initial public offering since Chinese ecommerce retailer Alibaba’s 2014 float.
Co-Op Group set to announce 25% hit on value of bank stake: The Co-Operative Group has taken a 25% hit to the value of its stake in Co-Op Bank, the company is expected to announce this week.
U.S. teleco AT&T wants to send internet via power lines: U.S. teleco AT&T has unveiled ambitious plans for wireless internet using power lines.
Rival European exchange warns London Stock Exchange-Deutsche Boerse merger would create a “virtual monopoly”: The merger of the London Stock Exchange and Deutsche Boerse would create a “virtual monopoly”, the Boss of a rival European exchange company has claimed.
Wireless broadband provider Relish launches same-day broadband service: London wireless broadband provider Relish has announced it will deliver its 4G router by same day delivery, if orders are placed before 12pm.
Investors want €8.2 billion in damages from VW over the emissions scandal: The Volkswagen emissions scandal – which recently spread to U.S. car supplier Bosch – could be about to land VW with a bill for €8.2 billion (£7 billion) in claims from investors.

Thu, 22 Sep 2016 09:24:00 +0100
Market Briefing: US markets closed in positive territory yesterday, after the US Federal Reserve (Fed) decided to keep interest rates unchanged at its September meeting. UK Market Snapshot
UK markets ended higher yesterday, helped by gains in financial sector shares as market participants digested the news regarding Bank of Japan’s (BoJ) new policy framework. Barclays advanced 3.1%, following a broker upgrade on the stock to ‘Buy’ from ‘Hold’. Other lenders, HSBC Holdings, Lloyds Banking Group and Standard Chartered gained 0.9%, 1.2% and 1.6%, respectively. Diageo added 0.1%, after stating that its fiscal year ending on 30 June 2017 has started on a positive note and it is expected to achieve the targeted growth. Bucking the trend, Imperial Brands shed 2.0%, following a broker downgrade to ‘Neutral’ from ‘Outperform’ who also reduced its target price to 4,000.0p from 4,250.0p. Royal Bank of Scotland Group fell 0.3%, after Spanish lender, Banco Santander, abandoned its offer to acquire Williams & Glyn unit. The FTSE 100 rose 0.1%, to close at 6,834.8, while the FTSE 250 gained 0.2%, to settle at 17,933.9.
US Market Snapshot
US markets closed in positive territory yesterday, after the US Federal Reserve (Fed) decided to keep interest rates unchanged at its September meeting. Adobe Systems surged 7.1%, after the company projected higher than expected profit for the fourth quarter. FedEx climbed 6.9%, as it raised its guidance for the full year following upbeat earnings in the first quarter. Industrial sector stocks, Boeing and Caterpillar advanced 2.2% each. Microsoft added 1.7%, after the tech giant announced plans to repurchase up to $40.0 billion in stock and it increased its quarterly dividend. On the contrary, CarMax lost 2.0%, as it reported dismal results for the fiscal second quarter. Viacom dipped 0.3%, after it announced that its interim CEO, Tom Dooley, would leave the company and it trimmed its quarterly dividend in half. Also, the company issued a profit warning for the fourth quarter. The S&P 500 advanced 1.1%, to settle at 2,163.1. The DJIA rose 0.9%, to settle at 18,293.7, while the NASDAQ gained 1.0%, to close at 5,295.2. 
Europe Market Snapshot
Other European markets finished in the green yesterday, boosted by a rally in banks after the BoJ modified its monetary policy and set a new target rate for long-term government bonds. UniCredit, Commerzbank and Banco Popular Espanol jumped 3.6%, 3.9% and 9.1%, respectively. Banco Santander climbed 3.2%, on the back of reports that it had walked away from talks to buy Royal Bank of Scotland’s Williams & Glyn branches. Evotec added 2.9%, after it signed a multi-target research pact with Bayer, down 0.3%, for five years to develop multiple clinical candidates for the treatment of kidney diseases. The FTSEurofirst 300 index gained 0.4%, to close at 1,347.3. Among other European markets, the German DAX Xetra 30 rose 0.4%, to close at 10,436.5, while the French CAC-40 advanced 0.5%, to settle at 4,409.6. 
Asia Market Snapshot
Markets in Asia are trading higher this morning, tracking overnight gains on Wall Street amid US Fed’s rate decision. In Japan, markets are closed on account of a public holiday. In Hong Kong, China Shenhua Energy has climbed 3.2%, on the back of news that mines under Shenhua Group could raise their coal output this month. Property stocks, Cheung Kong Property Holdings and Hang Lung Properties have advanced 2.4% and 2.5%, respectively. Financial services firms, China Construction Bank and China Life Insurance have added 1.7% and 2.3%, respectively. Oil stocks, Sinopec Oilfield Service and PetroChina have risen 2.0% and 2.2%, respectively, following a climb in crude oil prices. In South Korea, index majors, POSCO and Samsung Electronics have edged up 0.2% and 2.8%, respectively. The Hang Seng index is trading 1.6% up at 24,044.8, while the Kospi index is trading 1.1% higher at 2,059.0. Yesterday, the Nikkei 225 gained 1.9%, to settle at 16,807.6.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 0.81% or $0.38 higher at $47.21 per barrel. Yesterday, the contract climbed 2.07% or $0.95, to settle at $46.83 per barrel, after the Energy Information Administration reported that US crude oil inventories unexpectedly declined by 6.2 million barrels for the week ended 16 September 2016.
At 0330GMT today, Gold futures contract is trading 0.72% or $9.60 higher at $1336.80 per ounce. Yesterday, the contract advanced 1.00% or $13.20, to settle at $1327.20 per ounce, extending its gains for a straight third session, following weakness in the greenback.
At 0330GMT today, the EUR is trading marginally lower against the USD at $1.1187, ahead of the European Central Bank (ECB) President, Mario Draghi’s speech and the Euro-zone economic bulletin, slated to release today. Yesterday, the EUR strengthened 0.34% versus the USD, to close at $1.1189. The US Dollar lost ground against its major peers, after the US Fed left benchmark interest rates steady at its recent meeting.
At 0330GMT today, the GBP is trading 0.08% higher against the USD at $1.3043, ahead of the Bank of England Governor, Mark Carney’s speech, due later in the day. Investors will look forward to the US weekly initial jobless claims data, due to release today. Yesterday, the GBP advanced 0.34% versus the USD, to close at $1.3032, amid upbeat data on UK’s public sector net borrowing for August.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, after the US Fed kept interest rates steady at its latest policy meeting but signalled that an interest rate hike is probable by the end of the year. Yesterday, yield on 10-year notes dropped 3 basis points to 1.66%, while yield on 2-year notes remained unchanged at 0.79%. Meanwhile, 30-year bond yield lost 4 basis points to 2.39%.

Key Economic News
UK public sector net borrowing posted a deficit in August

In the UK, the public sector net borrowing has reported a deficit £10.10 billion in August, following a revised surplus of £2.40 billion in the previous month. Markets were expecting public sector net borrowing to post a deficit of £10.30 billion.
UK public sector net borrowing reported a deficit in August
The public sector net borrowing (excluding temporary effects of financial interventions) has posted a deficit £10.50 billion in August, in the UK, following a revised surplus of £1.90 billion in the prior month. Market expectation was for public sector net borrowing to show a deficit of £10.20 billion.
UK public sector net cash requirement posted a deficit in August
Public finances (public sector net cash requirement) in the UK has posted a deficit £0.70 billion in August, from a revised surplus of £2.40 billion in the prior month.
Swiss M3 money supply advanced in August
M3 money supply in Switzerland advanced 2.80% in August on a YoY basis. M3 money supply had recorded a revised rise of 2.60% in the prior month.
Fed stood pat on interest rate
The Federal Open Market Committee (FOMC), after its two-day policy meeting, voted to hold the federal funds rate steady between 0.25% and 0.50%. The central bank strongly signalled that it could tighten monetary policy by the end of this year as the US labour market improved further. The Fed Chairwoman, Janet Yellen, speaking after the central bank's latest policy statement, indicated that US economic growth looks stronger and rate increases would be needed to keep the economy from overheating and fuelling high inflation. Further, the Fed cut its longer-run interest rate forecast to 2.9% from 3.0%.
US mortgage applications declined in the last week
Mortgage applications registered a drop of 7.30% in the US on a weekly basis, in the week ended 16 September 2016. Mortgage applications had registered a rise of 4.20% in the previous week.
Canadian wholesale sales advanced as expected in July
In Canada, wholesale sales recorded a rise of 0.30% in July on a monthly basis, in line with market expectations. Wholesale sales had advanced 0.70% in the previous month.
Japanese machine tool orders fell in August
The final machine tool orders recorded a drop of 8.40% on an annual basis in Japan, in August. Machine tool orders had dropped 19.70% in the prior month. The preliminary figures had also recorded a drop of 8.40%.
Japanese nationwide department store sales declined in August
In August, on a YoY basis, nationwide department store sales in Japan registered a drop of 6.00%. Nationwide department store sales had recorded a drop of 0.10% in the prior month.
Japanese Tokyo department store sales dropped in August
Tokyo department store sales in Japan dropped 5.90% on a YoY basis, in August. Tokyo department store sales had climbed 0.60% in the previous month.
Japanese supermarket sales declined in August
On a YoY basis, supermarket sales slid 2.90% in August, in Japan. Supermarket sales had advanced 0.20% in the prior month.
Chinese leading economic index rose in August
On a monthly basis, the leading economic index in China rose 0.90% in August. The leading economic index had advanced 0.70% in the previous month.

Thu, 22 Sep 2016 09:18:00 +0100
Northland Capital Partners View on the City - Savannah Resources, Fishing Republic plc, Keras Resources, Clontarf Energy Savannah Resources (LON:SAV) – CORP: Oman update
Market Cap: £15m; Current Price: 4p

Mahab 4 and Maqail South Mining Licence Applications submitted.
  Savannah Resources has submitted two mining licence applications to the Public Authority of Mining (PAM) in the Sultanate of Oman, as part of the licencing requirements for new mine developments in Oman.
  The applications are for an open-cut mine at Maqail South and an underground deposit at Mahab 4.
  Savannah Resources has completed the milestones necessary to have 51% shareholding in Al Thuraya Mining, the owner of Block 4.
  Savannah has relinquished its interest in Block 6 due to relative progress and prospectivity of Blocks 4 and 5.
NORTHLAND CAPITAL PARTNERS VIEW: Savannah Resources continues to move its Omani Project forward at pace, with the Mining Licence Application now submitted. The company is seeking technical feedback from eight Government departments in order to finalise the financial evaluations of the mine developments.

Fishing Republic plc (LON:FISH) – BUY*: Interim Results
Market Cap: £12.7m; Current Price: 33.5p; Target Price: 37p

Interims show progress
  Results: Interims to June shows healthy YoY growth, where group sales were +34% YoY to £2.5m and +16% YoY on a l-f-l basis. Store sales showed double digit growth,, +23% YoY on a l-f-l basis including the newly relocated Hull store, and including the new stores in Birmingham, Crewe and Swindon store sales were an impressive +70% YoY. Furthermore, store sales made up c. 70% of group sales in the 1H16. Own website sales increased significantly, +153% YoY, and now represents c. 30% of total online sales. However, total online sales were -9% YoY as online sales via third party websites (eBay & Amazon) were lower YoY, a reflection of shifting the focus on growing sales derived from own websites, where a greater margin can be captured for the business.
  Gross margins improved by 600bps to 50% (44%) in the 1H16, reflecting the increase in own website sales as well as initiatives to enhance the profitability of third party online sales. As a result of this and increased store scale, gross profit was +54% YoY to £1.25m. We do however expect the gross margin to normalise toward c. 45% for FY16, during the 2H16. Adjusted pre-tax profit was +5% YoY to £157, 384 reflecting increased costs of being a publicly quoted business and additional resources for new stores. The balance sheet is in a strong position with £3.9m of cash at the end of June, after raising £3.75m in order to accelerate the growth of the business.         
  Outlook: Lower than expected sales during the latter part of the summer season combined with two further store openings in Cambridge and Reading before year end, additional investment into the online business and the store network, implies that costs will increase and forecasts for FY16 will be impacted as a result.
  Forecasts: Though store sales are showing healthy YoY growth and broadly tracking our forecasts we are reducing our overall sales forecasts particularly online sales, which were -9% in the 1H16 and now expect overall online sales to be flat YoY. As a result we now expect the business to produce £5.7m (£6.5m previously) of sales for FY16. This combined with increased costs in the short term will impact on profits and we now expect pre-tax profit of £404k (£663k previously) for FY16. The new store openings will require inventory (stocking) so we increase our inventory levels for this year which lowers our previous cash forecast from c. £4.3m to c. £3.7m for FY16. Finally we will look to introduce new estimates for FY17 for the business in due course.

NORTHLAND CAPITAL PARTNERS VIEW:  The newly planned store openings, increases the store network to thirteen stores by the end of 2016, which is almost double the footprint at time of listing in June 2015 (seven stores). Although there are costs associated with new store openings and investment into the online business in the short term, we expect the benefits of these openings and investment to transpire in the new fishing season in 2017 and beyond. Lower than expected online sales in the 1H16 and lower than expected sales in the latter part of the summer is disappointing news, which has prompted us to reduce our forecasts for FY16 and our target price to 37p (42p previously). However, we maintain our Buy rating on the stock and expect the business to benefit from both a larger store footprint and increased investment in the online business, particularly in own websites, in 2017 and beyond.   

Keras Resources (LON:KRS) – CORP: Wycheproof update
Market Cap: £9.4m; Current Price: 0.7p

Milling of first batch of ore underway
  Milling of the first 10,000t batch of gold ore from the Wycheproof deposit has commenced at the Lakewood Mill.
NORTHLAND CAPITAL PARTNERS VIEW: A short update from Keras Resources, to keep investors updated that the milling of the Wycheproof ore is underway. The ore is being processed under a toll milling agreement with Golden Mile Mining. Keras has a 50:50 profit share agreement with the owners of the Wycheproof deposits, Kalgoorlie Mining Associates.

Clontarf Energy (LON:CLON) – CORP: Placing
Market Cap: £2.7m; Current Price: 0.6p

Additional placing to raise £250,000
  Clontarf Energy has raised an additional £250,000 through the placing of 47,619,048 shares due to higher demand at an increased price of 0.525p per shares.
  The placing represents 8.18% of the Company.
  Following admission the Company will have 581,844,829
NORTHLAND CAPITAL PARTNERS VIEW: In combination with the placing completed earlier in the week Clontarf Energy has now raised £650,000 that will be used to fund any costs associated with the ongoing negotiations regarding the Company’s Ghanaian assets and will also provide it with additional working capital.

Thu, 22 Sep 2016 09:14:00 +0100
Today's Oil and Gas update - Union Jack Oil, Eland Oil and Gas, Gulf Keystone, Hurricane Energy Headlines
 In Brief:
 Union Jack Oil* (LON:UJO – 0.18p) (BUY – 0.35 to 0.65p) – Placing Provides Flexibility
 Eland Oil and Gas (LON:ELA – 37p) – Jam Tomorrow
 Gulf Keystone (LON:GKP – 2.15p) – Restructuring Dominates
 Hurricane Energy (LON:HUR – 39p) – Nothing New, But Outlook Confirms Prospectivity

In Brief
 Union Jack Oil* (LON:UJO – 0.18p) (BUY – 0.35 to 0.65p) – Placing Provides Flexibility: Today’s news that the Company has completed a raise approximately $1mm, provides the Company with flexibility at just the right time, given the fact that the UK onshore oil and gas segment appears to be showing signs of a return activity at the field level. We believe that the Company will be able to take advantage of not only the thaw in onshore corporate activity, but the fact that its migration from Explorer to producer is imminent, with the commissioning and first oil from Wressle. We are taking this opportunity to reiterate our valuation range of $13.8 – 25.5mm (0.35 – 0.65p), which given SPA's recommendation guidelines implies a BUY recommendation.
 Eland Oil and Gas (LON:ELA – 37p) – Jam Tomorrow: The Company’s interim announcement, released today, on the one hand underlines the impact that the closure of a sole export route can have on a company’s underlying business, but on the other demonstrates that the management team have not let this period of inactivity goes to waste, taking advantage of a window in the market to raise sufficient funds to enable them to continue with their planned work programme, albeit focused away from its existing producing assets for obvious reasons. We believe that Forcados will come back on stream in the fourth quarter, albeit late, which means that 2016 will be one of consolidation for the Company, and making the outlook for 2017 more exciting. Whilst the adage “jam tomorrow” in describing a company is normally meant in a pejorative sense, we believe that the Company is act ually utilising the current period of inactivity in a constructive manner, which will indeed result in “jam tomorrow.” However, as with everything there is the possibility that things could change, and one of the largest variables for our recommissioning of the Forcados export terminal, which will be essential for the Company received its near, medium and long-term ambitions.
 Gulf Keystone (LON:GKP – 2.15p) – Restructuring Dominates: Today’s results, on the face of them point towards a more positive future of the Company once it’s been able to restructure its balance sheet, given the $30mm net cash generation for the period. Of course this excludes approximately the same in bond coupon payments, which is why we think it underlines the need for this balance sheet restructuring. Invariably the equity holders will be significantly diluted, but they will have some measure of value, and provided that an opportunistic acquirer does not subsequently make a bid for the Company, which is a real and significant risk now that the balance sheet has been restored, then, once oil prices recover to “more normal levels,” we would expect the full value of Shaikan to be better reflective in the then share price, which will be significantly above the settled market price post restructuring. While investors will not be happy currently, the silver lining to this restructuring cloud is the fact that operationally the Company will be able to meet not only its ongoing costs but with the Company generating $30mm of free revenues, it should also be able to fund its forward programme, albeit to a limited extent.
 Hurricane Energy (LON:HUR – 39p) – Nothing New, But Outlook Confirms Prospectivity: Today’s results announcement doesn’t really tell us anything of note that we didn’t already know. The cash balance is healthy, but what is really going to be the catalyst for this company in the near-term is going to be the publication and acceptance of the field development plan, and resolution on the extent of funding that the Company will have to provide over and above any credit based instrument or farmin. All in all, we believe that investors should be pleased with the progress that the Company is making, and the steps that it is taking going forward.

Thu, 22 Sep 2016 09:07:00 +0100
AIM Breakfast: Cambridge Cognition, Venn life Sciences, Conroy Gold & Natural Resources, First Property Group, LXB Retail Properties, Union Jack Oil, Elektron Technology, Proteome Sciences, DJI Holdings What’s cooking in the IPO kitchen?
Krispy Kreme UK—Press reports that Alcuin Capital Partners, the owner of  the doughnut chain is seeking a London float this year
Air Astana— In the press: Kazakhstan ‘s Air Astana intends to list in Kazakhstan. London a strong candidate for secondary listing
Biffa— Intention to float announcement states that up to £270m  is to be raised to pay down debt and historic landfill tax liability
Bacanora Lithium— To list on AIM around 28 Sep as holding company for TSX listed Bacanora Minerals at £100m market cap

Breakfast buffet

Cambridge Cognition Hldgs* (LON:COG)  76.5p £15.6m
Solid financial and commercial progress reported in the neuroscience company’s H1Jun16 Interims. Revenue up 11.3% to £3.26m. EBITDA loss more than halved to £0.11m. Product portfolio growing  via complementary distribution agreements, and development of wearable platform, Cognition Kit. Balance sheet strengthened by £1.25m April placing at 37p. Continued revenue growth expected H2. FY2016e forecasts of £7.1m sales and £0.1m PBT.

Venn life Sciences* (LON:VENN) 28.25p £17m
The growing Contract Research Organisation providing drug development, clinical trial management and resourcing solutions to pharmaceutical, biotechnology and medical device clients, announced the appointment of Mary Sheahan as a Non-Executive Director.  She has 20+ years  Senior experience  in publicly listed life sciences companies, most recently as Senior VP of Global Integration and Country Manager for Ireland with Perrigo, a NYSE-listed, $13bn market cap leading global healthcare supplier.

Conroy Gold & Natural Resources (LON:CGNR) 65p £2.59m*
High grade gold and wide intersections reported in the latest drilling results from Clontibret. High grades and wide intersections included 0.50m at 25.85 g/t gold in one of the already known gold zones and 5.75m grading 5.04 g/t gold in one of the newly discovered gold zones. Five new lodes discovered and continuity confirmed in four know lodes. Deposit remains open in all directions. Further support that Clontibret/Clay Lake could host a multi-million oz deposit.

First Property Group (LON:FPO) p £m
AGM Statement from the property fund manager and investor. The Company continues to trade well and in accordance with expectations. Funds under management, including those held by the Group, currently stand at some £393 million, an increase of some £40 million since 31 March 2016, benefitting  from new UK investments and a £14m  rise due to a strong Euro boosting the value of its Polish and Romanian assets.

LXB Retail Properties (LON:LXB) 67.25p £113.22m
The Jersey resident closed-ended real estate investment company focused on edge of town and out of town retail investments, has announced proposals for a £30.3m Return of Cash (18p per share).  This Return of Cash is enabled by receipts from previously announced transactions concerning the Group's Ayr, Kingsmead Stafford and B&Q Greenwich investments and follows previous returns of cash of £64.0m earlier on this year in June and £82.6m in June 2015. The company continues to run off its assets.

Union Jack Oil (LON:UJO) 0.19p £5.34m
The company has raised £700k at 0.17p an 11% discount to yesterday’s closing mid price. The intended proceeds from the Placing are to further expand the Company's portfolio through the acquisition of interests in near term development and production opportunities onshore UK.

Elektron Technology (LON:EKT) 6.88p £12.79m
The global technology group has released H1 Jul 16 results. Revenue  down 8% to £17.9m. Underlying operating profit excluding Checkit start up costs +22% to £1.1m.  Following the sale of Agar the Group has returned a net cash position for the first time in many years. Raised its selling prices after order  drop off  post Brexit.  The first two weeks of September have seen a reversal in performance, with orders ahead of the same period last year. However visibility is limited.

Proteome Sciences (LON:PRM) 10.13p £23.22m
A peer reviewed study led by Proteome Sciences, in conjunction with a group of highly respected universities and hospitals, demonstrates the ability of an innovative mass spectrometry (MS) workflow to dramatically improve the ability to detect tau-derived peptides that are directly related to human Alzheimer's pathology as early stage biomarkers of the disease.

DJI Holdings (LON:DJI) 165.75p £344m
The company has proposed a name change to BNN Technology ‘reflecting its strategy to become one of the leading mobile technology providers in China’. Additionally NewNet, which represents DJI's technology platform and marketing resources in China, has agreed to acquire a 10% stake in its joint venture partner Xinhuatong and transfers its lottery assets into the Xinhuacai joint venture. Will be seeking to change sector from Tourism and Leisure Services.

Thu, 22 Sep 2016 08:35:00 +0100
Yellen Rebuffs Pressure to Hike as Fed Gives Economy Room to Run Here is a latter section of this report on Janet Yellen’s comments from Bloomberg: “We had a rich, deep, serious, intellectual debate about the risks and the forecasts for the economy, and Yellen Rebuffs Pressure to Hike as Fed Gives Economy Room to Run
Here is a latter section of this report on Janet Yellen’s comments from Bloomberg:

“We had a rich, deep, serious, intellectual debate about the risks and the forecasts for the economy, and we struggled mightily with trying to understand one another’s points of view,” she said.
She played down concerns that the Fed’s easy monetary stance was fueling bubbles in the financial markets and the economy. “In general, I would not say that asset valuations are out of line with historical norms,” she said.
Michael Gapen, chief U.S. economist at Barclays Plc in New York, said Yellen may be too complacent. “Historically the Fed has had problems seeing financial instability in real time,” he said.
Weak Productivity
Yellen also argued that monetary policy was not exceptionally easy, in spite of the low level of interest rates. That’s partly because slow productivity growth and an aging workforce have reduced the economy’s potential growth rate and thus its long-run equilibrium interest rate.
“Monetary policy is only modestly accommodative,” she said.
Policy makers on Wednesday lowered their estimate of the economy’s long run cruising speed to 1.8 percent from 2 percent. They also trimmed their calculation of the long-run federal funds rate to 2.9 percent from 3 percent in June.
Former Fed official Jonathan Wright backed Yellen’s decision to give the economy more leash.
“There is little risk and considerable potential benefit from running the labor market somewhat hot for a while” because it could draw more discouraged workers off the sidelines, said Wright, who is now an economics professor at Johns Hopkins University in Baltimore.
Drew Matus, deputy U.S. chief economist at UBS Securities LLC in New York and himself a former Fed official, disagreed. Yellen “might find that room to run disappears pretty quickly,” he said.

David Fuller's view
The opening sentence above is a memorable classic, but unlikely to inspire confidence much beyond today’s relief / panic rally, fuelled a combination of renewed purchases by momentum traders and short covering by bearish speculators.  

Email of the day 1
On markets:

Hello David
I hope that you are keeping well.
I am looking forward to your seminal or is it secular review of stock markets as it continues?
In this regard, I would be grateful for any comments on the attached articles on companies which seem to me to share many characteristics of the autonomies or are indeed part of that grouping. I know that you are blessed with uncanny intuition which might, just, enable you to guess which fund group sent them to me.
Having regard to your recent comments about value managers turning bearish too early, do you have any thoughts as to whether you continue to prefer autonomies & other ‘high quality’ shares or value plays (other than late cycle commodities/resources which you often mention)?
Wishing you all the very best

David Fuller's view
Thanks for this interesting email and I look forward to seeing you at our next Markets Now on 10th October.

Email of the day 2
On fat, the American Medical Association and the Heart Association:
The good old American Medical Association and the Heart Association promoted fat as the culprit....
I guess there wasn't a fat industry to pay for the untainted research....whereas the sugar guys could pay for their "research.."
High-fat cheese: the secret to a healthy life?

David Fuller's view
Well said, and thanks for this video: High-fat cheese: the secret to a healthy life? It is at least the secret to a happier life.  I regret the misleading diet information we received for so many years, including the 1970 & 1980s, when we were told to avoid fats.  The way food industries have funded misleading ‘research projects’ is also a disgrace, and not for the first time.  Similarly, I maintain that pharmaceutical companies have spent $billions funding ‘statins for everyone’ campaigns, and still are by some accounts.
Personally, I have enjoyed a mostly Mediterranean diet for at least the last five years and it includes plenty of healthy natural fats, but very few processed foods.  You are what you eat. 

Science Says Silence Is Much More Important To Our Brains Than We Think
Here is the opening of this interesting article from Lifehack:

In 2011, the Finnish Tourist Board ran a campaign that used silence as a marketing ‘product’. They sought to entice people to visit Finland and experience the beauty of this silent land. They released a series of photographs of single figures in the nature and used the slogan “Silence, Please”. A tag line was added by Simon Anholt, an international country branding consultant, “No talking, but action.”
Eva Kiviranta the manager of the social media said: “We decided, instead of saying that it’s really empty and really quiet and nobody is talking about anything here, let’s embrace it and make it a good thing”.
Finland may be on to something very big. You could be seeing the very beginnings of using silence as a selling point as silence may be becoming more and more attractive. As the world around becomes increasingly loud and cluttered you may find yourself seeking out the reprieve that silent places and silence have to offer. This may be a wise move as studies are showing that silence is much more important to your brains than you might think.
A 2013 study on mice published in the journal Brain, Structure and Function used differed types of noise and silence and monitored the effect the sound and silence had on the brains of the mice. The silence was intended to be the control in the study but what they found was surprising. The scientists discovered that when the mice were exposed to two hours of silence per day they developed new cells in the hippocampus. The hippocampus is a region of the brain associated with memory, emotion and learning.
The growth of new cells in the brain does not necessarily translate to tangible health benefits. However, in this instance, researcher Imke Kirste says that the cells appeared to become functioning neurons.

David Fuller's view
Silence in an attractive rural setting is therapeutic.  We ignore this at our peril if we spend all our time in cities, however exciting and glamorous they may be.

The Markets Now
Here is the new brochure for our next meeting at The Caledonian Club on Monday evening, 10th October 2016. 

David Fuller's view
I look forward to seeing another lively group of subscribers, at this event.  Former subscribers and newcomers are also welcome.  These are unusual times in the markets so we should also have some interesting discussions, not least over refreshments following the three presentations. 

Banks Emerge as Winners From BOJ With Bonds, Yen Erasing Losses
This article by James Regan and Kelly Gilblom for Bloomberg may be of interest to subscribers. Here is a section:

The BOJ plans to maintain 10-year yields in the nation at around the current level of close to zero, it said Wednesday, giving it scope to keep loosening policy to revive growth and inflation, while limiting the negative impact on financial companies’ earnings. The BOJ faced a backlash after first deploying negative rates in January, with Governor Haruhiko Kuroda acknowledging it cut into the profits of lenders and insurers by driving long-term yields lower. Next, investors will be looking to the U.S. for any signals regarding the timing and pace of future Fed hikes, with all but four of 102 economists surveyed by Bloomberg predicting policy makers will hold off from raising interest rates.
“Central banks are acknowledging that excessively negative rates are damaging to bank profitability,” said Michael Hewson, a market analyst at CMC Markets in London. “There is a perception that maybe what the Bank of Japan is looking to do could be a template for the European Central Bank and potentially the Bank of England.”
Monetary authorities will continue to command attention on Thursday with speeches due from the new governor of the Reserve Bank of Australia as well as the heads of the European Central Bank and the Bank of England. In addition, central banks in countries including New Zealand, Norway and South Africa have policy decisions due that day.

Eoin Treacy's view
The Topix Banks Index collapsed in January following the announcement of negative rates. While we might look back in a few years and wonder what on earth central banks were thinking, it is now increasingly evident that they are beginning to accept it is a bad idea. Negative rates represent a major headwind for bank profitability and are inherently deflationary, which is the exact opposite of the long-term objectives of central bank policy

Self-driving vehicles in China, Europe, Japan, Korea, and the United States
This report by Darrell M. West for the Brookings Institute may be of interest to subscribers. Here is a section:

Vehicles equipped with sensors and cameras navigate the streets of Mountain View, California; Austin, Texas; Kirkland, Washington; Dearborn, Michigan; Pittsburgh, Pennsylvania; Beijing, China; Wuhu, China; Gothenburg, Sweden; Rotterdam, Netherlands; Suzu, Japan; Fujisawa, Japan; and Seoul, South Korea, among other places. Sophisticated on-board software integrates data from dozens of sources, analyzes this information in real-time, and automatically guides the car using high definition maps around possible dangers.

People are used to thinking about vehicles from a transportation standpoint, but increasingly they have become large mobile devices with tremendous processing power.2 Experts estimate that “more than 100,000 data points” are generated by technology in a contemporary automobile.3 Advances in artificial intelligence (software that applies advanced computing to problem-solving) and deep learning (software analytics that learn from past experience) allow on-board computers connected to cloud processing platforms to integrate data instantly and proceed to desired destinations. With the emergence of 5G networks and the Internet of Things, these trends will harbor a new era of vehicle development.

Between now and 2021, driverless cars will move into the marketplace and usher in a novel period.4 The World Economic Forum estimates that the digital transformation of the automotive industry will generate $67 billion in value for that sector and $3.1 trillion in societal benefits.5 That includes improvements from autonomous vehicles, connected travelers, and the transportation enterprise ecosystem as a whole.

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

There are two very big questions when it comes to the viability of self- driving cars. The first is whether it is technologically feasible to let a fleet of autonomous vehicles loose on the roads where the actions of unpredictable pedestrians, animals and weather will test an artificial intelligence to the limit. The second is the extent to which governments will successfully regulate for these vehicles so that insurance considerations can be ameliorated.

Gold Seen Entering Long-Term Bull Cycle as Asset Bubbles Pop
This article by Ranjeetha Pakiam for Bloomberg may be of interest to subscribers. Here is a section:

Parrilla joins a slew of investors who are bullish on gold because of low borrowing costs and central-bank bond buying. Billionaire bond-fund manager Bill Gross has said there’s little choice but gold and real estate given current bond yields, while Paul Singer, David Einhorn and Stan Druckenmiller have all expressed reasons this year for owning the metal.

Some are not confident prices will rise. The probability of three rate hikes through end-2017 means there’s little room for rallies, according to Luc Luyet, a currencies strategist at Pictet Wealth Management. Cohen & Steers Capital Management, which oversees $61 billion, has pared its gold allocation, while investor Jim Rogers said after the Brexit vote in June that he’d rather seek a haven in the dollar than bullion.

While global bond yields are still very low, they’ve been rising. Yields have climbed to 1.21 percent from a record low 1.07 percent in July, according to the Bloomberg Barclays Global Aggregate Index in data going back to 1990. The odds of the Fed hiking in December have risen to 58 percent after the U.S. reported higher-than-expected inflation in August, from just below 50 percent on Thursday.

Eoin Treacy's view
Despite the fact precious metal prices have been in a reaction and consolidation for the last few months, the biggest bulls are unabashed because they don’t see a solution to how central banks can support growth while simultaneously reducing the debt mountain without the assistance of inflation which could involve helicopter money.

Thu, 22 Sep 2016 08:32:00 +0100
A hawkish hold but a shallower path FTSE 100 Index called to open +30pts at 6865 with the latest bounce off rising support spurred on by last night’s Fed ‘hold’. This has allowed the FTSE to challenge yesterday’s highs and keeps alive the Sept 15 rising channel uptrend. It also increases the chances of Sept 6935 highs being revisited. Bulls will now want to see 6890 cleared before looking to 6930. The Bears, will again be eyeing a retrace to test now higher rising support at 6850. Updated watch levels: Bullish 6885, Bearish 6840.

A positive start for equities comes as no surprise after risk appetite was given a boost by the US Federal Reserve (Fed) electing not to hike rates last night, dovetailing nicely with the BoJ’s stimulus tweaking yesterday to keep the loose policy party in full flow. A weaker USD is helping risk appetite with commodities prices rejoicing (both precious and base metals, and oil) something likely to buoy London’s Miners after an already solid performance down-under overnight.

Fed Chair Janet Yellen’s message of economic progress, but not enough to move this month, is being interpreted as a hawkish hold, prepping us for a December hike to keep excessive market complacency at bay. There was nonetheless something for both the hawks and doves, providing the US central bank with enough wiggle room to swerve a pre-Christmas hike if necessary.

On the one hand, a ‘more balanced’ risk assessment increases the probability of a December hike (market implied probability risen to 60%). This is bolstered by a not insignificant three voters going against the grain and calling for an immediate rate rise. A lively debate it must have been. Yellen was also at pains to emphasise that the upcoming election has no influence (really?) although a 6pt lead for Clinton in the latest poll must be a relief.

On the other hand, a December hike would still mean the Fed only managed one this year, well below its initial dreams of four. Furthermore, its expectations for future rate rises now call for only two next year, a significant downgrade from three previously, implying dented confidence and an even shallower path to US monetary policy normalisation. Cheap money for longer. Yay!

Asian stocks are positive outside of Japan, which is closed for a holiday, although Australia’s ASX is posting gains helped by miners enjoying higher commodity prices courtesy of that weaker USD, another Copper breakout and Oil still climbing to help Energy names.

US equities, as expected, reacted positively to the news of the Fed’s base rate hold, with markets closing sharply higher helped by a rising crude oil price. The Dow Jones closed 160pts (0.9%) higher alongside a +1.1% finish for the S&P 500, with strong contributions from the energy sector.

Oil continues the breakout started yesterday as EIA Crude Inventories confirmed Tuesday’s API data showing a 7.5m barrel drawdown. Crude price was helped further as the USD weakened following the Fed’s decision to hold interest rates. The news of 7-month lows for US inventories comes at a crucial time for oil producers, as the U.A.E. energy minister urges OPEC not to rush into any hasty decision regarding a production freeze at next week's informal talks with members and non-members alike.

Gold, the commodity most sensitive to interest rate decisions, has rallied significantly after yesterday’s ‘no change’ decisions in Japan and the US. Currently trading around 2-week highs, the next hurdle for the precious metal will be to challenge resistance at the $1335 mark, clearing the way to regain September highs above $1350.

In focus today will be the continued fallout from Federal Reserve’s announcement last night to leave the base interest rate unchanged at 0.5% and, more importantly, how markets will react to the heightened possibility of a December rate hike. The ECB’s Mario Draghi is the highlight of a busy day for speeches from European policymakers.

Thursday’s macro data begins UK CBI Trends data, looking to continue a wave of positive post-referendum data, after which will Eurozone Consumer Confidence show sentiment from European consumers on the rise? Across the pond, the first post-meeting US macro data releases from the Chicago Fed National Industry Index and US employment figures will look to help increase predictions of a December rate hike further, with house price data coming in an hour later.

Thu, 22 Sep 2016 08:27:00 +0100
Beaufort Securities Breakfast Alert: Cyan Holdings, DekelOil Public Limited, Savannah Resources, Concepta, Diageo, Imperial Innovations, Pennon Group, Saga, Venture Life Group Markets

The FTSE-100 finished yesterday's session 0.06% higher at 6,834.77, whilst the FTSE AIM All-Share index closed 0.37% lower at 811.49. In continental Europe, markets ended in the green, driven by a rally in banking stocks after the announcement of new policy measures by the Bank of Japan. Investors awaited the monetary policy decision of the US Federal Reserve. France's CAC 40 and Germany's DAX increased 0.5% and 0.4%, respectively.
Wall Street
Wall Street registered sharp gains after the US Federal Reserve kept interest rates unchanged, as it sought further proof of economic strength. Moreover, a rally in oil prices lifted investor sentiment. The S&P 500 advanced 1.1%, with the energy sector ending as the top gainer.
Equities are trading higher, tracking the global equities, after the US Federal Reserve kept interest rates unchanged. Investors cheered an increase in commodities prices. The Nikkei 225 remained closed for a public holiday in Japan. The Hang Seng was trading 0.2% up at 7:00am.
Yesterday, WTI prices increased 4.4% to US$45.34 per barrel and Brent prices rose 2.1% to US$46.83 per barrel.

US Federal Reserve keeps interest rates unchanged

The Open Market Committee of the US Federal Reserve voted 7–3 to keep interest rates unchanged at 0.25–0.50%. Although the US Federal Reserve expressed confidence in economic growth, it believed that it was not enough to raise increase rates. However, it hinted at the possibility of a rate hike later this year.

Company news
Cyan Holdings (LON:CYAN, 0.20p) - Speculative Buy

CyanConnode, the world leader in narrowband RF mesh networks for Omni Internet of Things communications, yesterday announced that it has signed a multi-year strategic partnership with Eppix eSolutions to enable the integration of SAP Hybris software with CyanConnode's Enterprise platform. Eppix eSolutions will integrate CyanConnode's enterprise-level, Head End Software ('HES') with a Meter Data Management System ('MDMS') to create the first SAP-based MDMS for the global utility market. This SAP-based MDMS will provide middleware between CyanConnode's HES and a utility's Enterprise Resource Planning ('ERP') software. The MDMS based on the SAP Hybris range of digital commerce solutions such as billing, eCommerce and marketing platforms, will enable utilities to deliver customised products and superior customer service. According to a recent report from Navigant Research, global revenue for MDMS and analytics is expected to Total US$10.3 billion from 2015 to 2024. John Cronin, Executive Chairman of Cyan Holdings, commented: "We are delighted to be working with Eppix eSolutions to further expand our reach as well as validate our HES as Enterprise level software. This strategic partnership with Eppix eSolutions provides a clear indication of the Company's planned evolution to a managed services business model that delivers a recurring revenue stream from software licenses and support services. Furthermore, this collaboration will broaden our partner eco-system, adding a new level of decision makers and influencers within the global ERP market for utilities."

Our view: An ideal strategic partnership for Cyan! Eppix is the latest major player that has recognised Cyan is onto something big and wants to be part of smart metering's prospective global penetration. Eppix eSolutions is the technical services brand of Usha Martin Technologies, part of the Usha Martin Group, a US$1 billion business conglomerate. As a Strategic Industry Solution Partner of SAP Hybris, Eppix is one of a few select partners with significant experience in the development and implementation of SAP-based digital commerce solutions. SAP Hybris, ranked as a vendor in the 'Leader' Quadrant for the 2016 Gartner Magic Quadrant report for Digital Commerce, provides enterprise multichannel e-commerce and product content management software. The opportunity it foresees was been detailed in a major report released by Beaufort yesterday, which provided a comprehensive review of the Cyan Holdings and its sector. It points out the World Bank's extraordinary demonstration that it is three-times cheaper for utilities to save 1kWh of electrical energy by improving network efficiencies than investing in new generating capacity. Such losses in developing regions, along with the need for much better demand response in developed territories, are now the single most pressing issue for utility groups worldwide. The note goes on to show that a comprehensive and cost effective solution can be found through the implementation of sophisticated smart metering programmes. As such, the report concludes this now represents a giant, unfulfilled, scalable and truly global growth opportunity with the potential to attract large, long-term and exceptionally sticky customers. Beaufort's assessment of the enlarged, post-raise, post-acquisition Group suggests a valuation of some £123.9m. Accordingly, it awards the shares a Speculative Buy recommendation with a price target of 0.6p/share.

Beaufort Securities acts as corporate broker to Cyan Holdings PLC

DekelOil Public Limited (LON:DKL, 11.12p) - Buy
DekelOil Public Limited, operator and 85.75% owner of the profitable Ayenouan palm oil project in Côte d'Ivoire (the 'Project'), yesterday announced its interim results for the six months ended 30 June 2016. Record half yearly production of 28,550 tonnes (2015: 21,836 tonnes) of crude palm oil ('CPO'), with its first full half year production from kernel crushing plant in line with strategy to increase sales and profitability at Ayenouan, delivering 1,998 tonnes of palm kernel oil and 2,360 tonnes of palm kernel cake. It reported a 23.6% increase in revenues to €16.0 million and a 34.8% increase in EBITDA to €3.1 million, which was derived through Group sales of 25,225 tonnes of CPO (2015: 19,184 tonnes), leaving 3,498 tonnes in stock at 30 June 2016, although this has reduced post period end to normal levels on improved pricing. As a result, DekelOil was able to deliver a marked improvement in net profit to €1.8million (2015: €0.1m net loss). Executive Director Lincoln Moore noted in the statement "…it is clear to see why we made the decision to increase our stake in Ayenouan by 34.75% to 85.75%. We expect the impact of this transformational transaction on our financials will become more apparent in our full year results. I am incredibly proud of our operations and team, which has achieved so much in the short time since our listing and which has already delivered significant profit growth and debt refinancing on more attractive terms since operations commenced at the Mill. Optimising these areas will be a firm focus for DekelOil in the coming months and years ahead."

Our view: Very much delivering on best expectations, with the commodity pricing the only real blot on DekelOil's landscape. And even this has faded somewhat given the improvement in pricing post-period end, as its international markets regained their composure following Nigeria's niara collapse that resulted in the ending of its US$ fix back in June. This meant that DekelOil missed our first half expectations and, as a result, we now have to trim our full year 2016E revenue and EPS forecasts back from €29m to €27.5m and 1.75p to 1.42p respectively. We have, however, left our 2017E and 2018E estimates unchanged in anticipation of activity and returns continuing to build significantly during these years. With capacity to produce 70,000 tonnes of palm oil per annum, there remains room to more than double CPO production. Combined with the Group's recently commissioned kernel crushing plant, which is already producing value-added products, output is on course to expand substantially going forward. Significant growth in profitability also means the Group will be able to comfortably fund its scheduled debt repayments from operational cashflow, while we expect management to continue to improved debt terms going forward. Importantly, and as previously noted, DekelOil was a Brexit winner with the appreciation of the Euro against the Pound of over 10% post Brexit translating into higher Sterling earnings. Having positioned itself so, Beaufort believes the Group will be able to support its long-term operational ambitions while also producing a sustainable surplus. As these are realised, shareholders can expect to be rewarded by management implementing a formal dividend policy. Beaufort retains its Buy recommendation on the shares and places a price target of 21p on the shares.

Beaufort Securities acts as corporate broker to DekelOil Public Limited

Savannah Resources (LON:SAV, 4.00p) – Speculative Buy
Savannah Resources, the diversified exploration and development company, announced today that is has submitted two mining applications to the Public Authority of Mining (PAM) in the Sultanate of Oman as part of the licencing requirements for new mine developments in Oman. The licences relate to the Mahab 4 and Maqail South deposits in Block 5. Savannah owns a 65% shareholding in Al Fairuz Mining, the holder of the Block 5. Maqail South and Mahab 4 have a combined current resource of 1.7Mt grading 2.2% Copper. A revised mineral resource estimate for Maqail 4 and Maqail South and is expected in Q4 2016 on the back of a recently completed drill programme. Savannah is targeting commencement of copper mining in late 2017 with the application of open-pit development at the Maqail South deposit and underground development proposed for the Mahab 4 deposit.

Our view: This is an important milestone for the company as it continues to target mining in late 2017. Mahab 4 has an Indicated and Inferred resource of 1.5Mt grading 2.1% Cu and Maqail South has a current inferred resource of 0.16Mt grading 3.8% Cu, a revised mineral resource estimate for Mahab 4 and Maqail South is expected in Q4 2016. Whilst the current resource footprint is relatively small we note that both deposits are high-grade and we are encouraged with the potential to increase the overall resource. We look forward to the revised mineral resource estimate in Q4 2016, in the meantime, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Savannah Resources Plc

Concepta (LON:CPT, 17.75p) - Speculative Buy
Concepta, the UK healthcare company targeting the personalised mobile health market with a primary focus on women's fertility, yesterday announced it has moved its UK laboratory operations to a new site, at Colworth Park in Bedfordshire, doubling the size of its operational headquarters. This new laboratory opening is in line with the Group's strategy of increasing its operational capacity and economies of scale as it moves towards launching its MyLotus product for unexplained infertility into China in H2 2016 and, following CE marking, into the UK and Europe in 2017. The state of the art laboratory will house four employees in R&D and another two employees in Quality Assurance. In addition, a separate area for assembly can accommodate a further ten people producing testing strips for Concepta's MyLotus meter. Aside from manufacture, assembly and testing, the lab will primarily be used as a research and development hub for MyLotus product enhancements and new product development. Commenting on the opening of the new facility, Erik Henau, Concepta CEO said: "Following our highly successful AIM listing in July 2016, this new laboratory is a key part of the Company's growth strategy and extends both its capacity and capabilities as we begin the process of launching our proprietary product into China prior to a European launch in 2017. Concepta's research team will be working in the new lab effective immediately to accelerate new product development, both within our core business area of fertility as well as other areas in the wider mobile health space. We look forward to updating the market on these exciting developments in due course."

Our view: Human infertility is a critical but much neglected aspect of reproductive health. The World Health Organisation estimated in 2010 that 48.5 million couples worldwide were unable to conceive after five years of trying which, in turn, identifies a highly motivated target consumer group for Concepta. It's MyLotus technology differentiates itself by quite uniquely collecting both quantitative and qualitative measurement of a woman's personal hCG and LH hormone levels in urine, with a view to improving the probability of conception. Its global opportunity is estimated to be worth as much as US$2bn, beyond which its technology platform opens a much wider opportunity for personalised monitoring and self-diagnosis. Beaufort rates Concepta plc shares as a Speculative Buy and expects to be releasing initiation research on the Company shortly.

Diageo (LON:DGE, 2,183.50p) - Buy
The Company has issued a robust trading statement. The 2017 fiscal year has started well. The momentum Diageo created last year - strengthening its business through improved marketing, innovation, and commercial execution - has set the Company up to deliver a stronger performance. Key drivers of improved top line growth are the Company's fiscal 2017 priorities: scotch, US spirits and India. Diageo has made a strong start to its productivity work and are moving at pace. But as the Company no longer take productivity related costs as an exceptional item, in the first half these costs will impact the organic operating profit margin. In the second half productivity related costs will decline and be offset by higher savings as well as the benefits from the targeted reinvestment of those gains. This will contribute to organic margin expansion for the full year.

Our view: The top line momentum and progress in implementing productivity changes, gives continued confidence in achieving the Company's objective of mid-single digit top line growth, and over three years ending fiscal 2019 delivering 100bps of organic operating margin improvement. This is one of Beaufort shares of the year for 2016, and the shares have gained strongly since the Referendum vote to leave the EU. We still believe that Diageo is a core holding and we retain our Buy recommendation. Short-term investors may consider it prudent to 'top-slice' their holdings following the recent out performance.

Imperial Innovations (LON:IVO, 444.50p) - Hold
Imperial Innovations (Imperial) committed £5.1m to Artios Pharma Ltd's £25.0m Series A funding round. After providing the funding, Imperial will have a 14.9% stake in the Cambridge-based biotechnology firm, which was formed with assets spun out from Cancer Research Technology, the technology transfer arm of UK charity Cancer Research UK.

Our view: Imperial's decision to invest in Artios Pharma Ltd is interesting, given it is a newly launched biotechnology firm with a focus on developing DNA damage-response (DDR) cancer therapies. DDR drugs have the potential to act as single agents to selectively kill tumour cells through synthetic lethality, adjunctive therapy to overcome resistance to current cytotoxics, and potentiating agents to radiotherapy and novel therapies, including immune oncology treatments. In June 2016, Imperial informed shareholders with a disappointing outcome, following clinical trials undertaken by Circassia Pharmaceuticals in which it has significant investments. The study failed to achieve the desired result, given that both the active treatment and placebo groups were not significantly different. Circassia would now review its full dataset to understand the detailed results and assess whether or not any other confounding factor affected the outcome, as well as the more general impact on its allergy portfolio. Imperial invested £25.5m in Circassia (9.3% stake), the group's largest asset with a net fair value of £77.5m (based on market capitalisation of £833.6m), standing at c.22% of Imperial's net portfolio value of £355.1m as of 31st January 2016. The market reacted negatively to the news, with Circassia's share price falling 67% that day. In light of the growing uncertainty in Imperial's portfolio company, we maintain a Hold rating on the stock.

Pennon Group (LON:PNN, 886.0p) - Buy
The Group has released a robust trading statement, and it indicates they are on track to meet Group expectations for 2016/2017. The Group is on track to the targeted c.£100m of EBITDA from the Energy Recovery Facilities (ERFs), with three more in the pipeline. The Group anticipates achieving a sector-leading Return on Regulated Equity again this year. The Shared Services Review, which will result in cost savings, supports Pennon's strategy of working more closely as a Group.

Our view: Group EBITDA expectations for 2016/17 are driven by additional ERF earnings as Peterborough ramps-up and as availability increases at Trident Park in Cardiff and Runcorn II in Greater Manchester. The Group therefore expects to see an H2 weighting in the ERF results. South West Water (SWW) has continued to experience higher customer demand in H1 and is focused on delivering further Total Expenditure savings from efficiency initiatives outlined at the 2015/16 full year results. SWW continues to deliver a strong performance. RoRE for the combined water business is on track for continued outperformance in 2016/17 (11.7% reported for 2015/16), supported by Total Expenditure outperformance, cost savings and synergies. At Viridor, the portfolio of eight operational ERFs continues to perform well. There are three further ERFs under construction. Pennon continues to deliver a good underlying financial performance and is on track to meet management expectations for 2016/17 and, despite reasonable recent outperformance, we maintain our Buy recommendation.

Saga (LON:SAGA, 223.10p) - Buy
Saga, the UK's leading provider of products and services primarily tailored for the over 50s, yesterday announced its interim results for the 6 months ended 31 July 2016 ('H1 FY2016'). During the period, revenues fell by -8.6% to £437.2m against the comparable period (H1 FY2015) owing to the accounting impact from the introduction of the funds-withheld quota share arrangement in motor insurance. Trading Profit remain flat at £117.6m while pre-tax profit advanced by +8.5% to £109.9m due to derivative fair value gains from favourable foreign exchange and oil price movements as well as reduction in finance costs from lower interest costs on debt. This resulted basic earnings per share to expand by +8.2% to 7.9p. Net debt to EBITDA reduced to 2.2x from 2.4x, available operating cash flow decreased by £41.8m to £97.3m and cash and cash equivalents at the end of the period stood at £229m (31 January 2016: £ 164.4m). On the operational front, core insurance policies increased by +11.7% to 3,051k, tour operating passengers remain flat, while contactable people on Saga database rose +2.7% to 11.3m (active customers up +3.8% to 2.7m). Solvency II position now enhanced to 196% (31 January 2016: 170%). Saga's CEO, Lance Batchelor commented "We have seen no discernible impact to date from Britain's decision to leave the European Union; this has been especially notable in our Travel business, where we polled customers recently and 99% said that Brexit would not make them reconsider their future holiday plans. The robust operational performance in the first half means that we are on track to meet our targets for the full year." The Group declared an interim dividend of 2.7p per share, a jump of +22.7%, to be paid on 18 November 2016.

Our view: Saga delivered good results for the H1 FY2016, with management demonstrating confidence by hiking the dividend by +22.7% and stated that it is on track to deliver pre-tax profit growth of +5% to +7% for the full year. The Group also calmed investor fears, by noting the impact of Brexit on its travel business is not been noticeable and that they have not sensed change in customer behaviour, anywhere across its businesses. The Group's travel business model, which avoids volume commitments with hotels and suppliers, while also hedging and other costs up to 2 years in advance, has helped it to avoid price fluctuations for its customers. Saga already strengthened its balance sheet, leaving it positioned for its Solvency II ratio compliance. We believe Saga's industry position will keep its cost of customer acquisition low and position it well to sustain its growth momentum and maximise shareholder returns. Beaufort reiterates its Buy rating on the stock.

Venture Life Group (LON:VLG, 54.50p) - Speculative Buy
Venture Life Group (Venture Life) declared unaudited interim results for the six months ended 30th June 2016 (H1 2016). Revenue increased 40% y-o-y to £6.1m, and gross profit rose 47% y-o-y to £2.3m. Adjusted EBITDA profit stood at £0.1m (H1 2015: loss of £0.4m). Loss before tax, amortisation and exceptional items of £0.3m (H1 2015: loss of £0.4m). Pre-tax loss stood at £854,000 as compared to pre-tax loss of £755,000 in H1 2015. Loss per share stood at 2.81p in H1 2016 vis-à-vis 2.69p in H1 2015. Cash at the end of period totalled £1.6m (31st December 2015: £2.9m). On the operational front, Venture Life completed the acquisition of the UltraDEX brand of oral care products with Periproducts Limited for £5.7m in March 2016. In H1 2016, Venture Life signed nine long-term exclusive distribution agreements. Post the first half; the group signed three exclusive distribution agreements for Procto-eze (Greece and Taiwan) and Vonalei (Greece). The complete range of Lubatti skincare products is now stocked and sold through the group's partner in China, Gialen Group Co. Ltd. Moreover, a number of major retailers in the UK would expand store distribution and product listing activities for UltraDEX in Q4 2016.

Our view: Venture Life delivered an excellent performance in H1 2016. The group registered a sharp rise in revenue and positive EBITDA for the first time. Venture Life made good progress towards the achievement of its strategic objectives. The group added UltraDEX to its brand portfolio through the acquisition of Periproducts Limited. Significant organic growth and the acquisition of Periproducts led to solid revenue growth in H1 2016. Venture Life completed its first international partnering deals on the Benecol once-a-day liquid sachet and the UltraDEX brand. The group's complete range of 14 Lubatti skincare products has been stocked in nearly all 1,300 stores of Gialen Group since the end of July 2016. Venture Life is likely to accelerate brand development in China. Meanwhile, Venture Life's revenue from the manufacturing business continued to steadily grow on account of organic growth and new product manufacturing for existing and new customers. Venture Life has signed an agreement to develop and manufacture a number of products for Italian pharmaceutical firm Menarini Farmaceutica Internazionale Srl. Moreover, the group plans to look for M&A opportunities to drive sustainable profitability. Considering the factors mentioned above, we maintain a Speculative Buy rating on the stock.

Economic news
US MBA mortgage applications

US home mortgage applications, including both refinancing and home purchase, declined 7.3% in the week ended 16th September, after a 4.2% rise in the preceding week, the Mortgage Bankers Association said yesterday.

Thu, 22 Sep 2016 08:12:00 +0100
Gem Diamonds loses its shine, says Barclays Capital Wed, 21 Sep 2016 11:30:00 +0100 Today's Market View - Aurum Mining, Bushveld Minerals, Edenville Energy, IronRidge Resources and Rambler Metals Aurum Mining (LON:AUR)* – Aurum raises cash pile
Bushveld Minerals (LON:BMN) – IEA granted for Mokopane Vanadium project
Edenville Energy (LON:EDL) -  Updated financial model shows improved NPV
IronRidge Resources* (LON:IRR) – IronRidge to take 60% stake in Tekton
Rambler Metals (LON:RMM) – FY 2016 production results as production from LFZ builds up

Miners rising – Japan QQE adding to news from Rio Tinto and China indicating ongoing growth
• Japan’s new Quantitative and Qualitative Easing program is lifting markets today
• Yesterday news of new Chinese stimulus for a large number of new projects is also seen as lifting demand for metals and related commodities
• Rio Tinto ceo comments on firm demand for commodities following a recent two week trip to China is also supporting markets

Gold and the US$ index flat ahead of the Fed announcement with market expectations for US rates to be left in the 0.25-0.50% range.
• The BoJ reset its monetary policy from base money target to “yield curve control” pledging to keep 10 year bond yields at 0%.
• Nikkei climbed on the news supported gains recorded by financial stocks, while the yen after having fallen on the BoJ announcement has regained all its losses and is trading flat versus pre-event levels.
• Brent prices are up 1.8% this morning following the news that inventories fell by 7.5mmbbl last week on the API data.
• The API report also showed a fall of 2.5mmbbl in gasoline stocks; while chances of major oil producers’ meeting scheduled for 26-28 in Algeria remain minimal.
• Iron ore futures were little changed today after bouncing off a two-month low earlier this week. Prices are up 59% and 56% in CNY and USD terms YTD.

Dow Jones Industrials  +0.05% at 18,130 
Nikkei 225   +1.91% at 16,808 
HK Hang Seng   +0.60% at 23,672  
Shanghai Composite   +0.10% at   3,026 
FTSE 350 Mining   +1.18% at 11,803  FTSE 350 +61% since 1st January
AIM Basic Resources   -0.13% At   2,445  AIM Basic Resources +50% since 1st January

Date Index Period   Actual Est Previous
Tuesday Housing Starts Aug %mom -5.8 -1.7 1.4
  Building Permits Aug %mom -0.4 1.8 -0.8
Wednesday FOMC Rate   %   0.25-0.50 0.25-0.50
  Fed Economic Projections         
Thursday Weekly Jobless Claims       261k 260k
  Existing HomeSales Aug %mom   1.1 -3.2
Friday Manufacturing PMI Sep     52.00 52.00
Source: Bloomberg     

Japan – BoJ QQE program extends reach of stimulus program
• The BoJ has extended its action within financial markets to lift a broader range of Japanese equities through the buying of Equity ETFs covering the Topix index and also focussing on influencing the shape of the Japan bond yield curve.
• The BoJ left rates benchmark unchanged at -0.1% while pledging to keep 10-year government bond yields at 0% until inflation “exceeds the price stability target of 2% and stays above the target in a stable manner”.
• The central bank said it will buy less longer-term bonds allowing yields on those securities to increase and making it easier for banks to make profits.
• Although, the BoJ did not completely rule out a potential cut to rates taking them further into negative territory.
• On a separate note, trade data showed both exports and imports remained weak through Aug.
• Exports contracted for an 11th consecutive month on the back of stronger currency and a weaker external demand.
• Exports: -9.6%yoy v -14.0%yoy in Jul and -4.7%yoy forecast.
• Exports in the US were down 14.5%yoy, China -8.9%yoy and the EU -0.7%yoy.
• Imports: -17.3%yoy v -24.7%yoy in Jul and -16.6%yoy forecast.
• The Nikkei Index rose 1.9% while other Asian indices also rose

Sweden – cuts VAT to 12% from 25%
• Sweden has cut the VAT rate and extended tax refunds for the reclaim of half the labour cost on the repair of white goods and stoves.
• Given that the UK raised VAT rates to harmonise its tax with the rest of Europe we wonder how it is that Sweden, which is part of the EU is able to disregard EU harmonisation and halve its VAT rates?
• Shoe and clothes repairs are also subject to tax refunds.
• Question is can we take back our old Ikea furniture for repair and reclaim half the labour cost involved?  Much as we love Ikea we suspect this might have a material effect on the finances of Sweden!

US$1.1159/eur vs 1.1189/eur yesterday.    Yen 101.80/$ vs 101.74/$.   SAr 13.771/$ vs 14.907/$.    $1.298/gbp vs $1.302/gbp.
0.759/aud vs 0.755/aud.   CNY 6.672/$ vs 6.671/$.  

Commodity News
Precious metals:
Gold US$1,320/oz vs US$1,316/oz yesterday –
     Gold ETFs 64.9moz unch vs 65.0moz yesterday
Platinum US$1,040/oz vs US$1,028/oz yesterday
Palladium US$687/oz vs US$688/oz yesterday
Silver US$19.41/oz vs US$19.21/oz yesterday

Base metals:   
Copper US$ 4,766/t vs US$4,775/t yesterday –
Aluminium US$ 1,576/t vs US$1,587/t yesterday –
Nickel US$ 10,250/t vs US$10,225/t yesterday –
Zinc US$ 2,283/t vs US$2,281/t yesterday –
Lead US$ 1,969/t vs US$1,966/t yesterday –
Tin US$ 19,430/t vs US$19,355/t yesterday –

Oil US$46.7/bbl vs US$46.7/bbl yesterday
Natural Gas US$2.088/mmbtu vs US$2.960/mmbtu yesterday
Uranium US$24.90/lb vs US$24.90/lb yesterday

Iron ore 62% Fe spot (cfr Tianjin) US$54.2/t vs US$53.2/t – BHP warned authorities in Western Australia that raising local royalties will likely reduce potential supply from Australian operations with competitors stepping in and replacing lower local shipments with iron ore from Brazil and other nations.
• Higher royalty are expected to jeopardise investments in the state and “would most definitely not be good for Australia”, the Company said.
• Comments follow Western Australia’s Nationals party leader Brendon Grylls proposal to increase tax charges on BHP and Rio Tinto iron ore operations to A$5/t, up from A$0.25/t.
• A survey of 1,700 respondents carried last week by a local newspaper showed that 45% of voters supported the proposal.

Steel rebar, China 25mm US$382.8/t vs US$380.9/t –

Thermal coal (1st year forward cif ARA) US$58.5/t vs US$59.2/t yesterday -
Coking coal prices $205.9/t unch again vs $205.9/t FOB Australia for Premium Hard Coking Coal (The Steel Index) – Prices holding new high level

Tungsten - APT European prices vs $180-200/mtu unch again vs $185-200/mtu two weeks ago

Company News
Aurum Mining (LON:AUR)* 1.1p, mkt cap £1.8m – Aurum raises cash pile
• Aurum Mining has raised a cash pile of £1.2m.
• The funding was done at one pence per share versus a mid market price of 1.05p/s.
• The new funding war chest is said to be used to provide for on-going working capital for the company.
• David Williams and Chris Eadie (via his wife) are taking up £300,000 and 35,000 worth of stock respectively – hope Mrs Eadie is happy with this or there is going to be trouble at home?
• David Williams, Aurum Chairman, comments it is his “intention to raise sufficient funds to enable the Board to identify a suitable opportunity which will enhance the value of our Company.”.
• Aurum last raised £257,500 at 1p/s in April this year.
Conclusion:  We hope the Dynamic Duo at Aurum are able to identify something of interest soon.  Lithium project anyone?
*SP Angel analysts have visited the Aurum gold and tungsten sites.

Bushveld Minerals (LON:BMN) 1.4 pence, Mkt Cap £8.5m – IEA granted for Mokopane Vanadium project
• Bushveld Minerals reports that the South African Mineral Resources Department has granted an Integrated Environmental Authorisation (IEA) for the company’s Mokopane vanadium project in the Limpopo Province,
• The granting of this permit is “a crucial step in the approval process for a mining right application”.  The company comments that the next step in the process will be the “approval of the mine works programme and the social and labour plan.” The expected timetable for these additional approvals is not disclosed.
• The Mokopane Vanadium project complements the company’s vanadium development strategy with the acquisition of the Vametco operation from Evraz and the recently completed acquisition of the Brits Vanadium project.
Conclusion: The IEA permit marks an important step forward in the development of the company’s vanadium strategy.

Edenville Energy (LON:EDL) 0.48 pence, Mkt Cap £3m -  Updated financial model shows improved NPV
• Edenville Energy reports that an updated financial model of its Rukwa Coal-to-Power Project, prepared by an independent power modelling consultant, Diamond Energy, shows an improved pre-tax NPV of US$252m using a 10% discount rate.
• The modelling, which uses the same basic assumptions of a 120MW plant operating at 80% utilisation over a period of 30 years as a model prepared in 2015, shows a 15% improvement in the NPV compared to the US$220m reported last year and a modest improvement in the pre tax IRR to 23.4% compared to 23.1%.
• In addition to the financial modelling work which the company points out was “independently constructed from first principles and provides a basis to engage in detailed discussions with relevant institutions for project financing and development” work is continuing on “an updated mining assessment; bulk sampling of the deposit and detailed coal wash plant requirements.”
• “Additionally, the work currently being completed by independent mining consultants, SMS, on evaluation of the mineable resource, will allow the potential for a larger power plant to be more fully assessed.”
Conclusion: The independent financial analysis should provide a basis for discussions with finance providers and aid the company in optimising the project as more detailed technical analysis and resource assessment may show opportunities to expand the project.

IronRidge Resources* (LON:IRR) 11.9p, Mkt Cap £28.1m – IronRidge to take 60% stake in Tekton
• IronRidge is raising its investment in Tekton, the Chad gold prospector, to 60%.
• IronRidge had previously agreed to invest US$3.5m to take up to 58% in Tekton.  This is now rises to 60% through the subscription of a separate pre-investment interest.
• The Tekton team returned to Chad in late August to further work on a number of prospective gold targets.
• Dorothe:  hosts two distinct gold mineralising events with a quartz vein swarm zone seen over 3x1km as defined by artisanal workings.  High grade gold samples have been found in trenching and channel sampling in this area.  Gold assays include 4m at 14.12g/t Au, 2m at 34.1g/t and 1m at 63.2g/t.
• Echbara:  United Nations Development Program work shows long intersections of gold supported by later Tekton work on a 2km soil anomaly within micaceous schists.
• Am Ouchar:  UNDP work showed tantalising intersections including 20m grading 6.8g/t, 16m at 4.7g/t and 12m at 5.7g/t.
• A series of other targets are also being looked at.
Conclusion:  Chad looks highly prospective for gold and the team at Tekton are well experienced in working in Africa and in the delineation of resources.  The Tekton management team are led by Alain Pillevuit ex Xstrata and Rio Tinto, Gary Vallerius ex Rio Tinto and Paul Reed, ex French Foreign Legion.
*SP Angel act as Nomad and Broker to IronRidge Resources

Rambler Metals (LON:RMM) 5.1 pence, Mkt Cap £21.2m – FY 2016 production results as production from LFZ builds up
• Rambler Metals reports that in the year ending 31st July 2016 it produced a total of 17,048 tonnes of concentrate containing 4,580 tonnes of copper, 7,549 oz of gold and 53,830 oz of silver.
• The production report shows that the contained  copper content of the concentrate was within the company’s previously published guidance 4,500-6,000 tonnes of copper and comfortably exceeded guidance for precious metals contents of 5,500-6,500 oz of gold and 42,000-57,000 oz of silver.
• The company attributes the record level of gold within the concentrate to “adjustments made to the flotation circuit in the first half of the year”. The company’s focus during the second half of the year was directed at increasing mill throughput which has risen from 58,053 tonnes in Q1 to 69,874 tonnes in Q4.
• The company’s immediate plans are for further production increases to 1250tpd (approximately 113,000 tonnes per quarter) by the end of FY 2017 and “Rambler will also continue advancing engineering studies on ore pre-concentration (DMS) and shaft rehabilitation with a view to further increase production to 2,000 mtpd at the Ming Mine. In addition, Rambler has initiated a detailed study at the mill with a goal to increase gold recovery and production in the copper concentrator”.
Conclusion: Rambler Metals is delivering an ambitious plan to increase the scale of operations at the Ming mine by mining the Lower Footwall Zone (LFZ). As the expansion plan proceeds, work to enhance gold recoveries, if successful, should enhance the value of larger volumes of concentrate.

Wed, 21 Sep 2016 10:35:00 +0100
In the papers: Hinkley Point, SolarCity, Seaworld The Times
Companies ignore Brexit to plan hiring spree: Businesses are planning to hire more staff in the coming year, despite their pessimism about the economy.
Hinkley Point offers £11 billion contract bonanza: British companies are lining up bids for contracts worth up to £11.5 billion after the government’s decision to press ahead with construction of EDF’s new nuclear power plant at Hinkley Point in Somerset.
Sky ‘has case to answer’ on customer complaints: The telecoms regulator has ruled that Sky has a case to answer over complaints by subscribers that the satellite television and broadband provider had made it too difficult for them to cancel their services or switch providers.
Southern Water has wave of complaints: Inaccurate bills, problems with meters that were meant to prevent dodgy charging and aggressive programmes to hit non-payers are behind more than 100,000 complaints against the nation’s water suppliers last year.
Assets under watchdog’s microscope at Exxon: ExxonMobil is being investigated by America’s U.S. financial watchdog over the way it values its oil and gas reserves, according to reports.
Clouds gather over Musk’s SolarCity deal: Tesla’s takeover of SolarCity could be delayed after shareholders accused its board of failing to act in their best interests.
Chapel Down hopes to sparkle in U.S. market: Many British companies’ attempts to crack the American market have fallen horribly flat over the years, but not so the Chapel Down Winery, which has agreed a deal to ship 10,000 bottles of its Three Graces sparkling wine across the Atlantic.
The Independent
Seaworld shares nosedive after rapid collapse in visitor numbers: Troubled theme park operator SeaWorld saw its shares take a plunge on Tuesday as it announced it will stop paying shareholders a quarterly dividend.
Google could face $400 million Indonesia tax bill: Indonesia’s tax authorities are planning to bill Alphabet’s Google for more than $400 million (£306 million) in back taxes and fines that the search giant allegedly owes from 2015.
U.K. will be ‘screwed’ by EU in Brexit trade deals, says Ryanair Boss Michael O’Leary: Ryanair Boss Michael O’Leary has rubbished Government claims it will secure favourable trade deals post-Brexit, insisting the U.K. will be “screwed” in negotiations.
Businesses haven’t even heard of Government’s £3 billion apprenticeship fund: Businesses are “in the dark” about the new apprenticeship levy, with many saying they have not even heard of it, a new survey reveals.
Brexit ‘will cause 8% drop in exports to the U.K. by 2018’: A Canadian trade official said he expects trade with the U.K. to take a hit due to the uncertainty following U.K.’s vote to leave the EU.
The Guardian
Base-rate cut could lead to U.K. mortgages at less than 1% interest: The fixed interest rate of mortgages could fall to less than 1% next year if the Bank of England cuts the base rate again, in a move that would give the housing market a boost.
Sports Direct bows to pressure and agrees to independent review: Sports Direct has bowed to shareholder pressure by agreeing to an independent review of its working practices and corporate governance.
European commission plans to overhaul how companies report profits: The European commission will launch a further crackdown on tax avoidance by reviving a long-stalled plan to overhaul how companies report their profits, according to Europe’s most senior tax policy official.
Amazon guilty of shipping dangerous goods to and from U.K. by air: Amazon has been found guilty of shipping dangerous goods by air. The items included lithium-ion batteries and flammable aerosols, which were flown in and out of the U.K. between January 2014 and June 2015.
Bake Off effect: ‘dual-screening’ sees eBay users shop during shows: Primetime TV programmes such as The Great British Bake Off and Game of Thrones have helped fuel a boom in “dual-screening” by consumers – watching television while simultaneously browsing and shopping online – new research has revealed.
Virtual becomes reality as Oculus Rift arrives in the U.K.: The Oculus Rift virtual reality system has arrived in the U.K. for the first time, with consumers now able to buy the headset on the high street.
Daily Mail
Confidence returns to housing market with Osborne’s tax raid blamed for slowdown in London: Confidence is returning to the housing market following the Brexit vote with George Osborne’s tax raid on buyers the primary factor behind the slowdown in London, according to experts.
French Connection sees its store sales improve but the fashion retailer still slumps to another £7.9 million loss: Fashion chain French Connection has unveiled another big loss for the first half of this year of £7.9 million, although sales at its stores returned to growth.
Glaxo’s consumer health Boss Emma Walmsley to replace Sir Andrew Witty as drug giant’s Chief Executive: GlaxoSmithKline’s consumer health Boss Emma Walmsley will replace Sir Andrew Witty as the drugs giant’s Chief Executive when he retires at the end of March 2017.
Nightclub giant Deltic plans £8 million investment despite fears of a crisis in the sector: Nightclub group Deltic is planning an £8 million investment despite fears of a crisis in the sector.
Big Four supermarkets boosted by bubbly sales but Germans Aldi and Lidl still steal the show and market share: Britons toasting Olympic and Paralympic sporting success helped the Big Four supermarkets enjoy their best run of sales growth for at least two years.
B&Q Owner Kingfisher notches up healthy profit but France remains an issue after strike action hits sales: Strong demand in the U.K. and Poland helped Kingfisher post a rise in profits, but the group remained cautious on the outlook for France - its most profitable market.
Daily Express
Shock pension warning for savers five years from retirement: Savers around five years from retirement are at risk of suffering a devastating blow to their cash pots and future income, a pension company has warned.
Juncker issues warning shot to Spain: There will be no more funds if debt isn’t controlled: Spain has been warned by Brussels it could be refused a huge amount of financial support if it fails to get its budget deficit under control.
Brexit boost: Banks will be able to deal with ‘hard’ EU exit, says Moody’s: Britain’s finance sector will not suffer a serious hit if the U.K. leaves the single market as well as the European Union, according to one of the world’s leading ratings agencies.
Catastrophic Portuguese economy hits new low as toxic combination to bring down Eurozone: Portugal’s economy is coming closer to a catastrophic derailment which could trigger a Eurozone meltdown, amid a toxic combination of rising bankruptcies, falling numbers of new businesses and high Government debt.
U.S. biotech firm to pump millions into Britain amid new European HQ: American biotech group Alnylam is to invest hundreds of millions of pounds in Britain as it opens a new European headquarters in Berkshire.
The Scottish Herald
Baillie Gifford trust beats benchmark: Baillie Gifford Shin Nippon achieved a 29.5% rise in net asset value during its first half, ahead of its benchmark index, as the investment trust’s stakes in property and construction and internet-focused holdings performed strongly.
Smart Metering Systems delivers profits rise, positions itself for U.K. smart meter roll-out: Smart Metering Systems (SMS) has lifted underlying profits before tax by 15% to £9.2 million during a first half that saw it acquire three firms south of the Border.
Law firm Blackadders bolsters Glasgow practice with Harper Macleod partner: Dundee law firm Blackadders has taken a partner from Harper Macleod as it looks to build its fledgling Glasgow office.
Scotland lagging in Alternative Investment Market stakes: Scottish companies are under-represented on the Alternative Investment Market, the head of the junior exchange has claimed.
Black & Lizars signs deal with Glasgow GP to flag early care: Black & Lizars, the Scottish optometry chain, has teamed with Glasgow Medical Rooms in a partnership designed to benefit their respective clients.
Shares surge in Johnston Press after activist fund lifts stake: Shares in Johnston Press have soared by nearly 17% after it emerged that activist investor Crystal Amber lifted its stake in the publisher to 5.42%.
Coup for Deeside Brewery as it hires Loch Ness Founders to lead sales drive: Aberdeenshire’s Deeside Brewery has hired the two of the Founders of Loch Ness Brewery as it seeks to capitalise on growing demand for its craft beers at home and abroad.
InfraRed buys Afton Wind Farm from E.ON: A fund run by InfraRed Capital Partners has paid £78 million for a wind farm that is soon to be built in East Ayrshire.
The Scotsman
Faroe Petroleum slides into the red as revenues halve: Oil and gas explorer Faroe Petroleum said its revenues more than halved during the first six months of the year, pushing it into the red.
Craneware Chief ups stake in healthcare tech firm: Keith Neilson, the Chief Executive of Craneware, has lifted his stake in the Edinburgh-based software company that he co-founded in 1999.
RBS ‘to offload NCP car parks’ in £500 million deal: Royal Bank of Scotland and U.S. private equity firm Blackstone are close to a £500 million deal to offload a group of NCP car parks they co-own, it has been reported.
Vets give their backing to food labelling campaign: Farmers and food producers have been urged to use the U.K. leaving Europe as an opportunity to create a unique selling point through improving the labelling of food.
City A.M.
Warning over risks of moving euro clearing from London to continent after Brexit: A senior derivatives industry official has warned over the risks of moving euro clearing from London to the continent after Brexit.
Airbnb host management service Hostmaker closes $1 million funding round to expand further into Europe: Piggybacking on the success of the booming sharing economy, Airbnb hospitality management service Hostmaker has closed a $1.1 million (£843 million) funding round to “turbocharge” its international expansion.
Marriott International’s takeover of Starwood Hotels & Resorts to close this week after Chinese ministry of commerce gives green light: Marriott International’s takeover of rival Starwood Hotels & Resorts Worldwide is set to complete this week after China’s antitrust authority granted approval for the $13.6 billion (£10.4 billion) merger.
Schroders backs private equity firm’s management as it fends off hostile approach: Schroders has given its backing to private equity company SVG Capital’s management team as it attempts to fend off a £1 billion-plus hostile takeover approach from the U.S. firm HarbourVest.
West End gets Brexit boost from overseas shoppers as sales to tip over £9 billion for the first time: Overseas shoppers are flocking to the West End to spend their cash since the fall in the value of the pound - and the Brexit boost is set to tip sales for the district over £9 billion this year.
ITV and Sky buy stakes in 24-hour video gaming TV channel: ITV and Sky have bought stakes in the Owner of a channel that screens video gaming 24 hours a day.

Wed, 21 Sep 2016 10:10:00 +0100
Market Briefing: US markets ended slightly higher yesterday, ahead of today’s key monetary policy meetings of the central banks in the US and Japan UK Market Snapshot
UK markets finished higher yesterday, extending their gains from the prior session, with the FTSE 100 index finding support from a weaker Pound. Multinational companies, Diageo, Shire and Burberry Group climbed 1.0%, 2.6% and 3.6%, respectively. Johnson Matthey gained 1.9%, following an increase in platinum prices. Rotork added 1.4%, after a broker initiated coverage of the stock with an ‘Outperform’ rating and a price target of 230.0p. Miners, Glencore and BHP Billiton rose 0.3% and 1.0%, respectively. On the down side, Kingfisher shed 2.1%, despite reporting upbeat pretax profit for the first half of the year. Bovis Homes Group slipped 0.4%, after a leading broker downgraded its rating on the stock to ‘Neutral’ from ‘Buy’. The FTSE 100 advanced 0.3%, to close at 6,830.8, while the FTSE 250 rose 0.1%, to settle at 17,900.2.
US Market Snapshot
US markets ended slightly higher yesterday, ahead of today’s key monetary policy meetings of the central banks in the US and Japan. Wells Fargo advanced 1.2%. The lender’s CEO, John Stumpf, weathered criticism as he testified before the US Senate Banking Committee. FedEx added 0.9%, after it announced that it will increase shipping charges from next year. On the contrary, Ascena Retail Group sank 29.9%, after it reported disappointing results for the fourth quarter and offered downbeat outlook for fiscal 2017. SeaWorld Entertainment tumbled 4.5%, after the company suspended its quarterly dividend. Housebuilders, PulteGroup and Lennar declined 2.9% and 3.5%, respectively, following weaker than expected housing starts data in August. The S&P 500 rose marginally, to settle at 2,139.8. The DJIA gained 0.1%, to settle at 18,130.0, while the NASDAQ advanced 0.1%, to close at 5,241.4.
Europe Market Snapshot
Other European markets closed mostly lower yesterday, with investors remaining cautious ahead of highly anticipated monetary policy decisions by the US Federal Reserve (Fed) and the Bank of Japan (BoJ).  Lenders, Deutsche Bank, Banca Popolare dell'Emilia Romagna and Banca Popolare di Milano Scarl declined 4.0%, 4.3% and 5.9%, respectively. Energy sector stocks, Statoil, Repsol and Saipem slid 1.0%, 1.3% and 3.2%, respectively. Renault slipped 0.7%. The company and its Japanese partner Nissan Motor announced that they had acquired French software development company, Sylpheo, to accelerate the expansion of connected vehicle and mobility services. On the brighter side, Bayer gained 1.2%, after its CEO, Werner Baumann, defended the company’s planned acquisition of Monsanto and raised its projected sales for its new-drug portfolio. The FTSEurofirst 300 index shed marginally, to close at 1,342.1. Among other European markets, the German DAX Xetra 30 rose 0.2%, to close at 10,393.9, while the French CAC-40 eased 0.1%, to settle at 4,388.6.
Asia Market Snapshot
Markets in Asia are trading lower this morning, In Japan, the BoJ has kept its interest rates unchanged but made some changes to its policy framework. Sugimoto & Co has tumbled 4.7%, after it trimmed its projected operating profit for the first half. Bucking the trend, Ihara Chemical Industry and Kumiai Chemical Industry have climbed 4.5% and 5.5%, after they announced an agreement to merge via a stock swap. Sumitomo Dainippon Pharma has advanced 2.2%, as Sunovion Pharmaceuticals met primary efficiency endpoint in two/three phase of clinical studies of its Pediatric ADHD drug. In Hong Kong, oil firms, China Petroleum & Chemical and Sinopec Oilfield Service have gained 1.3% each. In South Korea, Hyundai Motor has slid 1.1%, while LG Electronics has risen 1.1%. The Nikkei 225 index is trading 0.5% lower at 16,412.0. The Hang Seng index is trading 0.1% down at 23,502.0, while the Kospi index is trading 0.1% lower at 2,023.9.

Commodity, Currency and Fixed Income Snapshots
Crude Oil

At 0330GMT today, Brent Crude Oil one month futures contract is trading 1.33% or $0.61 higher at $46.49 per barrel, ahead of the Energy Information Administration’s weekly oil inventory data, scheduled to be released later today. Yesterday, the contract declined 0.15% or $0.07, to settle at $45.88 per barrel. Meanwhile, the American Petroleum Institute reported that US crude inventories slumped by 7.5 million barrels for the week ended 16 September 2016.
At 0330GMT today, Gold futures contract is trading 0.46% or $6.00 higher at $1320.00 per ounce. Yesterday, the contract rose marginally or $0.20, to settle at $1314.00 per ounce, extending its gains from the last session.
At 0330GMT today, the EUR is trading marginally lower against the USD at $1.1148, ahead of the non-monetary policy meeting of the ECB, scheduled to take place in a few hours. Investors will keep a close eye on highly anticipated US Fed’s interest rate decision, scheduled later today. Yesterday, the EUR weakened 0.21% versus the USD, to close at $1.1151, after the German producer price index unexpectedly declined in August.
At 0330GMT today, the GBP is trading 0.09% lower against the USD at $1.2976, ahead of the UK public sector net borrowing data for August. Yesterday, the GBP fell 0.32% versus the USD, to close at $1.2988, reversing its gains from previous session.
Fixed Income
In the US, long term treasury prices rose and pushed yields lower, with investors looking forward to the monetary policy decisions by the US Fed and the BoJ. Also, disappointing data on the US housing market led to a slide in bond yields. Yesterday, yield on 10-year notes eased 1 basis point to 1.69%, while yield on 2-year notes remained unchanged at 0.79%. Meanwhile, 30-year bond yield fell 2 basis points to 2.43%.

Key Economic News
German PPI recorded an unexpected drop in August

On a monthly basis, in Germany, the producer price index (PPI) unexpectedly fell 0.10% in August, lower than market expectations for a steady reading. In the prior month, the PPI had climbed 0.20%.
German PPI dropped as expected in August
The PPI in Germany registered a drop of 1.60% in August on an annual basis, compared to a fall of 2.00% in the previous month. Markets were anticipating the PPI to fall 1.60%.
Swiss exports declined in August
On a monthly basis, exports eased 2.10% in August, in Switzerland. Exports had risen by a revised 5.00% in the prior month.
Swiss trade surplus rose in August
In August, trade surplus in Switzerland expanded to CHF3.02 billion, compared to a revised trade surplus of CHF2.81 billion in the prior month.
Swiss imports eased in August
Imports in Switzerland recorded a drop of 3.50% on a MoM basis, in August. Imports had climbed by a revised 8.60% in the prior month.
US building permits surprisingly eased in August
In the US, building permits recorded an unexpected drop of 0.40%, on MoM basis, to an annual rate of 1139.00 K in August, lower than market expectations of 1165.00 K. Building permits had registered a revised reading of 1144.00 K in the previous month.
US Redbook index advanced in the last week
In the US, the Redbook index rose 0.20% in the week ended 16 September 2016 on an annual basis. In the previous week, the Redbook index had climbed 0.40%.
US Redbook index slid in the last week
In the US, the seasonally adjusted Redbook index registered a drop of 0.50% on a monthly basis, in the week ended 16 September 2016. The Redbook index had registered a drop of 0.30% in the prior week.
US housing starts registered a drop in August
Housing starts dropped 5.80%, on MoM basis, to an annual rate of 1142.00 K in August, in the US, lower than market expectations of 1190.00 K. Housing starts had registered a revised reading of 1212.00 K in the previous month.
BoJ left its interest rates steady
The BoJ kept key interest rate unchanged at -0.10% and held its monetary policy base steady at ¥80 trillion.
Japanese convenience store sales registered a rise in August
In Japan, convenience store sales advanced 0.60% on an annual basis, in August. Convenience store sales had risen 0.30% in the prior month.
Japanese imports declined more than expected in August
On a YoY basis, in Japan, imports slid 17.30% in August, more than market expectations for a fall of 16.50%. Imports had dropped 24.70% in the prior month.
Japanese adjusted merchandise trade surplus rose in August
Japan has registered adjusted merchandise trade surplus of ¥408.40 billion in August, from a revised adjusted merchandise trade surplus of ¥340.20 billion in the prior month. Markets were anticipating an adjusted merchandise trade surplus of ¥494.00 billion.
Japanese exports dropped more than expected in August
On an annual basis, exports recorded a drop of 9.60% in August, in Japan, higher than market expectations for a drop of 4.70%. Exports had recorded a drop of 14.00% in the previous month.
Japan posted merchandise (total) trade deficit in August
Merchandise (total) trade deficit in Japan recorded a reading of ¥18.70 billion in August, compared to market expectations of a merchandise (total) trade surplus of ¥191.00 billion. Japan had posted a revised merchandise (total) trade surplus of ¥513.60 billion in the prior month.

Wed, 21 Sep 2016 10:01:00 +0100
Northland Capital Partners View on the City - PhotonStar, Edenville Energy, Clontarf Energy PhotonStar (LON:PSL) – CORP*: Interims – Restructured for Growth
Market Cap: £3.3m; Current Price: 1.8p; Target Price 4.9p (from 5.3p)

FY16 Interims: Restructured for Growth
(Note attached)
  The main points of PhotonStar’s Interim results, announced on September 16th, were:
  Total revenue declined -22%YoY to £2.53m(H115: £3.26m), with LED Lighting Fixtures revenue -21% to  £1.59m, Halcyon™ and Light Engines revenue +6% to £0.26m, and Contract and Manufacturing -32% to £0.68m.
  Gross profit margin was 33.0%, compared to 36.9% in H115; however PhotonStar reports a return to a 40% margin in June.  Administrative expenses were reduced by 4%YoY to £1.762m  (H115: £1.834m).
  Adjusted EBITDA loss increased to £(0.54)m (H1 2015: loss £(0.20)m), and Pre-tax loss was £(0.91)m (H115: loss £(0.59m)).
  At 30 June 2016, net debt was £0.68m (H115: £0.67m), with cash at £0.247m (year-end FY15: £0.197m).
  The key features of H116 performance were: (i) restructuring of business operations, and establishment of a Halcyon™ sales team with associated strong subcontracted works relationships, (ii) broadening of the Halcyon™ offering in line with PhotonStar’s focus on combined lighting and building systems management and (iii) expansion from trial-phase deployments towards subsequent sales opportunities.
  PhotonStar commented that: “further revenue improvement in all business units is being seen in the current period of Q3 2016 which, together with the cost savings already in place, means that … we expect that the second half of 2016 will provide a positive contribution to the results for the full year”.

SOURCE: Company data and Northland Capital Partners Limited. *Northland Capital Partners Limited acts as Nominated Advisor and Broker to PhotonStar LED Group plc.,  therefore this information should be viewed as a Marketing Communication.

NORTHLAND CAPITAL PARTNERS VIEW:  Overall, the shortfall in H116 performance results in a revision of our full year FY16 outlook; our share price target reduced from 5.3p to 4.9p.  Nevertheless, there is clear evidence of measures and developments in H116 that provides the basis for profitable growth focused on PhotonStar’s increasingly established Halcyon™ product suite.


Edenville Energy (LON:EDL) – CORP: Updated Financial Model
Market Cap: £2.6m; Current Price: 0.425p

14% increase in NPV
  An updated financial model for the Rukwa Coal to Power Project has been completed by Diamond Energy.
  Model NPV10 has improved to US$252m with a pre-tax IRR of 23.4% for a 120MW power plant with a 30 year life. This compares with the 2015 estimate of an NPV10 US$220m with a pre-tax IRR of 23.1%.
NORTHLAND CAPITAL PARTNERS VIEW: Edenville Energy has completed a positive improvement to the 2015 financial model for the Rukwa Coal to Power Project with the NPV10 increasing by US$32m. The Company expects to further update these metrics in the coming weeks and months with additional work that includes an updated mining assessment, bulk sampling of the deposit and details on the coal wash plant requirements. There is also the potential for a larger plant to be utilised at the project, potentially adding additional upside to the metrics, and independent mining consultants, SMS, are currently evaluating the minable resource with this in mind.

Clontarf Energy (LON:CLON) – CORP: Interim results
Market Cap: £2.5m; Current Price: 0.54p

From yesterday: LBT of £96,000
  LBT during H116 totalled £96,000 slightly above £86,000 in H115.
  Net debt totalled £747,000 in H116 up from £501,000 in H115.
  Post period end the Company raised £400,000.
NORTHLAND CAPITAL PARTNERS VIEW: Clontarf Energy is fast approaching a resolution to the licence issue in Ghana. Pan Andean Resources, a company in which Clontarf has a 60% interest, has accepted new acreage in principle and is moving into negotiation of licence terms.

Wed, 21 Sep 2016 09:46:00 +0100
Today's Oil and Gas update - Amerisur Resources, JKX Oil and Gas and Soco International Headlines

• In Brief:
o Amerisur Resources (LON:AMER – 25p) – 2017 Continues the Trend
o JKX Oil and Gas (LON:JKX – 20p) – Operational Update Points Towards a Rejuvenated Business
o Soco International (LON:SIA – 141p) – Declaration of Intent

In Brief
• Amerisur Resources (LON:AMER – 25p) – 2017 Continues the Trend: Today's news of an analysts’ visit, while not newsworthy in and of itself, the disclosure of the 2017 outlook underlines the continuation of the 2016 programme. With an average production rate of up to ~8.5m bpd touted, the exit rate is likely to be significantly above that, and depending on the timing of that production, in excess of ~10.0m bpd. We believe this should buoy the shares, which will be added to by the post visit uplift on the sell side.

• JKX Oil and Gas (LON:JKX – 20p) – Operational Update Points Towards a Rejuvenated Business: Today's update, in which the new FDP has resulted in a 33% uplift in 2P Reserves. This positive development is added to by the fact that the Company is tackling its debt pile, and rather than using shares, which would dilute the equity holders further, it is repurchasing the bonds using cash. While the repurchase thus far is small, $2.2mm disclosed in this announcement, the fact that the management are looking at this approach at all is a testament to the fact that there is sufficient cash resource for it to do so, a statement of confidence in the future and a reflection of the fact that Management appear to be taking shareholder value seriously. All in all, today's update should please the Company's investors, and after what has been a period of instability, there finally appears to be some go od news for the equity holders and, more importantly, a positive outlook plotted for the future.

• Soco International (LON:SIA – 141p) – Declaration of Intent: Today's declaration of a 2p dividend while not a significant amount of money (in the wider scheme of things) or in yield, it does represent a sea change for the Company in that against this backdrop the Company is sufficiently confident in its current and future position to effectively put it beyond its use corporately. We believe that this underlines the current state of the business, and apart from the value creation in the share’s value, also offers equity holders opportunity to recoup their investment further. In this respect, investors should be pleased with the Company's officers and the declaration that they have made about the health of their investment.

Wed, 21 Sep 2016 09:42:00 +0100
Beaufort Securities Breakfast Alert: Horizon Discovery Group, Fox Marble, Harvest Minerals, Bushveld Minerals "Perhaps recognising the toxic effects of diving deeper into negative interest rates, the Bank of Japan this morning left deposits at minus 0.1% while retaining its target Y80tr annual buying of JGBs. The decision comes after an in-depth internal review of its unsatisfactory measures to generate inflation and support the wider economy, whereupon it instead changed policy framework to target 10-year interest rates, committing to keep them close to zero while expanding the monetary base until inflation stabilises above 2%. This is part of a new initiative to steepen the yield curve and weaken the Yen. While most observers conclude that Haruhiko Kuroda, like most other major central bank Governors, is effectively running out of ideas and options, Japanese traders chose to celebrate the news by piling into cheap financials whose share prices had already priced in further rate trimming but instead became the obvious beneficiaries of the BoJ’s new 10-year target. Overnight markets closed in positive territory across the board, although the Nikkei was a head and shoulders above its Asian neighbours amid high trading volumes, while the principal US indices largely trod water with activity led by a few tech majors only as investors nervously await Janet Yellen’s speech scheduled for this afternoon. The UK today will see release of its Public Finances data, while the OECD publishes its economic outlook report; corporates including DX Group (DX..L), Northgate (NTG.L) and Saga (SAGA.L) are amongst a good number of second-liner due to release earnings figures this morning. Traders will also be keeping a close eye out for further media reports that major oil producing countries may be edging toward a production agreement, which resulted in crude prices gaining marginally during Asian trade, despite nervousness ahead of this afternoons US inventory release. The FTSE-100 is seen gaining some 30-points in opening trade."
– Barry Gibb, Research Analyst


The FTSE-100 finished yesterday’s session 0.25% higher at 6,830.79, whilst the FTSE AIM All-Share index closed 0.36% better-off at 814.54. In continental Europe, markets ended mixed as investors remained cautious ahead of Fed’s decision on interest rate in its policy meeting today. Germany’s DAX advanced 0.2%, whereas France’s CAC 40 shed 0.1%.

Wall Street
Wall Street ended broadly unchanged amid disappointing housing data released in the US. Investors await the monetary policy decision of Fed. The S&P 500 closed flat, with health care leading gainers and energy losing the most.

Equities are trading higher after Bank of Japan (BOJ) informed that it would modify its monetary policy framework. The Nikkei 225 increased 1.9%, as BOJ kept interest rates unchanged, which led to gains in banking stocks. The Hang Seng was trading 0.7% up at 7:00am.

Yesterday, WTI prices increased 0.3% to US$43.44 per barrel, while Brent oil prices dropped 0.2% to US$45.88 per barrel.


BOJ announces rate target for 10 year government bonds
The BOJ informed that it would start targeting 10-year interest rates, to keep them around zero as part of a new policy framework aimed at strengthening inflation. The BOJ would continue its quantitative easing until inflation exceeds 2%. Meanwhile, the bank kept its deposit rate unchanged at -0.1%.

Company news

Bushveld Minerals (LON:BMN, 1.35p) – Speculative Buy
Bushveld Minerals, a diversified mineral development company with a portfolio of vanadium, iron ore, tin and coal assets in Southern Africa, announced today that it has been granted an Integrated Environmental Authorisation (IEA) for the Mokopane vanadium project. The IEA is issued through the South Africa Mineral Resources Department under terms of Section 24L of the National Environmental Management Act (Act 107 of 1998). Bushveld complied the Environmental Impact Assessment for Mokopane on 12 March 2015 as part of the Mining Right Application (MRA). The next step in the MRA process is the approval of the Company’s mine works programme and social and labour plan.

Our view: The Mokopane vanadium project remains a key part of Bushveld’s strategy whilst it pursues the acquisition of the Vametco vanadium mine and processing plant. The IEA is an important step in the approval process for a mining right application and we look forward to submission of a mine works programme and social and labour plan. Recent results of the pre-feasibility study confirm that Mokopane is one of the highest-grade vanadium projects with reserves of 28.5Mt grading 1.41% V2O5. Bushveld offers investors leverage to rising vanadium prices and we believe vanadium prices will continue to recover in the near term due to production curtailments from high cost producers. As such, we maintain a Speculative Buy rating on the stock.

Beaufort Securities acts as a corporate broker to Bushveld Minerals plc


Harvest Minerals (LON:HMI, 18.75p) – Speculative Buy
Harvest has appointed an agronomist to manage its ongoing and future agronomic studies (crop trials, met testwork and product optimization studies). His focus will be on Arapua, Harvest’s direct application fertiliser project in Brazil which is coming into production this year. The appointment follows successful Arapua testwork undertaken over the summer (announced end August) which showed 90%+ solubility of the potassium (K2O), 50-55% solubility of the phosphate (P2O5), and no toxic elements. Future agronomic studies are currently being designed/planned with the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA) and the Campo Agronomic Lab. Harvest is firstly working to get the Arapua product certified by MAPA as a “soil remineraliser” and then potentially get it certified as a fertilizer. It also wants to optimize the product i.e. getting the particle size right for optimum solubility kinetics. The agronomist will be key to Harvest’s marketing efforts of the Arapua product.

Our view: Harvest’s Arapua project is progressing smoothly and we expect first production by November and first sales in 1H17. The initial mining contract is for 50kt, which will be sufficient tonnage to start developing the market. Pricing is yet to be determined but a similar (and inferior) product sells for circa $70/t in Brazil. Arapua is located in a major agricultural region in Minas Gerais and local demand should be extremely strong, especially given the Arapua products potassium content and 90% solubility. Brazil imports circa 90% of its potash requirements while most Brazilian fertiliser mines produce phosphate (Brazil still imports >50% of its phosphate needs). It may take some time to develop a large scale market (e.g. 500ktpa) but the minuscule capex requirement and probable very high margin (opex < $7/t) makes Harvest an unusual and attractive opportunity. Beaufort Securities acts as a corporate broker to Harvest Minerals plc


Fox Marble (LON:FOX, 10.0p) – Speculative Buy
Fox Marble, the AIM-quoted dimensional stone company from Kosovo and southeast Europe, yesterday announced its interim results for the period ended 30 June 2016. Financial highlights included sales for the period of €262,000 (H1 2015: €110,000), an order book currently stands at €4.1m with cash advances of €415,000 received and a net cash balance €2.69 million (H1 2015: €5.59 million). Operational highlights included the long-term distribution agreement entered into with Eboracum Marble Limited; continued strategic relationship with Pisani plc and agreements signed with Marble Dino Sh.p.k. and Karailias Marble Limited for the supply of marble during 2016 and 2017. With its factory nearing completion, blocks of commercial size and quality are being extracted at the Malesheva quarry, and a new bench opened at the Prilep quarry in Macedonia from which higher grades of the white Sivec marble are being extracted. Fox successfully completed a share placing to raise £2 million during June 2016. Chris Gilbert, CEO, noted with the half year statement: “The Company has secured orders from a diverse and international customer base over the period. These have included both long-term agreements and sales to market-leading buyers, indicating the quality and demand for our stone. The market continues to see our product as world class, and we are pleased that our Bianco Illirico stone has been specified via Pisani for the Lille Square development in Earls Court. This places our marble at the forefront of a new residential development in London.”

Our view: Enough promises. Fox has now got to deliver. Shareholders need to be told that last June’s fund raising was the last one, and that going forward Fox will not only self-finance its low-cost operational expansion, but that it can also foresee a time when it will start to distribute a surplus back to long-suffering shareholders. Before release of full year results, the well-overdue factory should be commissioned and fully operational, while its already growing order book should have commenced what could potentially be its long-term and unabated expansion, as distributors supplying this global US$10 billion market finally begin to recognise that the grade, mix and availability of marbles Fox can competitively supply is genuinely world class. Between now and then, however, investors need to be reassured the Group can and will routinely convert supply agreements into sales and hard cash. So the next six or so months will quite possibly be ‘make-or break’ for Fox Marble. The challenge is to gain trust and credibility from a wide range global partners – whereby it becomes one of the default suppliers-of-choice when, for example, a San Francesco contractor receives an order for half an acre of pure while Sivec destined for a new Middle Eastern hotel. Once it has risen to this point, however, the rewards could become quite exceptional as low, largely fixed operating costs will see higher revenues trickle almost straight down to the bottom line. Management has already suggested this will be quickly returned to patient shareholders in the form of dividends. In expectation of the Board delivering an increasingly confident message in the run-up to its full-year statement, Beaufort gives it the benefit of the doubt by retaining a Speculative Buy recommendation on Fox Marble’s shares.


Horizon Discovery Group (LON:HZD, 156.0p) – Speculative Buy
Horizon Discovery Group (Horizon) declared results for the six months ended 30th June 2016 (H1 2016). Revenue increased 19.0% y-o-y to £10.2m. Revenue from the Products business grew 62.0% to £4.8m, while that from the Services business stood at £5.2m (H1 2015: £5.4m). Loss before interest, tax, depreciation and amortisation narrowed to £4.3m from £4.9m in H1 2015. Pre-tax loss stood at £6.4m (H1 2015: pre-tax loss of £6.8m), resulting in a loss per share of 6.4p compared with a loss per share of 7.9p in H1 2015. Cash resources stood at £13.0m (FY 2015: £25.1m), following one-time investments in the new global headquarters in the UK, business automation and Avvinity Therapeutics. The Group remains eligible to receive future R&D milestones of up to £208m plus future product royalties (H1 2015: £158m) through its Research Biotech business. On the operational front, Horizon signed a deal to integrate its molecular reference standards into Qiagen’s GeneReader NGS workflows. Horizon entered into a partnership with Ventana Medical Systems for the provision of reference standards. The Group signed two original equipment manufacturer (OEM) agreements with Next Generation Sequencing Company, a market leader. Horizon collaborated with Fulcrum Therapeutics for novel CRISPR-based target discovery in genetic diseases. The Group licenced its cell-line production technology to the Centre for Process Innovation (CPI) in the UK and the National Institute for Bioprocessing Research & Training (NIBRT) in Ireland. Horizon launched Avvinity Therapeutics, a cancer immunotherapy company, formed in a joint venture with Centauri Therapeutics.

Our view: Horizon delivered an excellent performance in H1 2016 on both financial and operational fronts. The Group recorded a sharp increase in revenues and narrowed its losses. Horizon’s Products business led the rise, with the molecular reference standards business driving organic growth. The expansion in cell-line and diagnostic reagent inventory increased the Group’s catalogue of products to more than 23,000. Moreover, customer growth remained solid with more than 1,600 unique customers, 33% higher than in H1 2015. In the Services business, the Group reported strong growth in in vivo and in vitro service revenues, which was offset by a reduction in revenue from molecular screening. The revenue guidance for FY16 in the £24-26m range is expected to bring downgrades. The limited commentary on second half milestones is also a concern. However, Horizon entered into many partnerships during the period. The noteworthy partnerships in H1 2016 include those with Qiagen (a leader in the supply of genomic and diagnostic instrumentation and reagents), Ventana Medical Systems (a leader in immunohistochemistry-based molecular diagnostic products) and a global leading sequencing platform company. These agreements would provide the Group an additional ongoing revenue stream. Horizon remains on track to report positive EBITDA in FY 2017, in line with its previously stated strategy. The Group also expects to deliver annual cost-savings of at least £5m in 2017. We are buoyed by Horizon’s progress in H1 2016, and despite the caution on the second half we maintain a Speculative Buy rating on the stock, but the more cautious may wish to buy on any weakness.


Kingfisher (LON:KGF, 368.80p) – Hold
Kingfisher declared results for the half year ended 31st July 2016 (H1 FY 2016). Adjusted sales rose 6.8% y-o-y to £5.7bn, with a like-for-like (LFL) sales growth of 3.3%. In the UK and Ireland, sales rose 3.3% to £2.6bn on a reported basis, with an LFL sales growth of 6.7%. Sales from France rose 10.1% to £2.2bn on a reported basis, while LFL sales declined 1.6%. Sales from the Other International grew 9.7% to £965m on a reported basis, with LFL sales increasing 5.9%. Kingfisher’s retail profit rose 13.1% to £464m and underlying pre-tax profit increased 13.5% to £436m. Retail profit in constant currencies rose 8.7% (the UK and Ireland – +8.8%; France – +1.6%; and Other International – +34.2%). Adjusted pre-tax profit surged 8.9% to £418m, leading to an underlying basic EPS of 14.2p, 15.4% higher than in H1 FY 2015. Net cash at the end of the period stood at £898m (H1 FY 2015: £435m). A free cash flow of £533m was generated in the period, an increase of £245m against the previous period, primarily due to the favourable timing in working capital. On the operational front, Kingfisher completed the disposal of the remaining 30% economic interest in B&Q China, following the regulatory approval, and received net cash proceeds of £63m. Kingfisher returned £317m of cash to shareholders year-to-date (£157m dividend and £160m buyback). Kingfisher’s board declared an interim dividend of 3.25p for H1 FY 2016, 2.2% higher compared to the same period last year.

Our view: Kingfisher delivered a good performance in H1 FY 2016. The company recorded an increase in sales on the reported and LFL fronts. Kingfisher’s growth was led by a rise in sales of tools to tradesmen in the UK and a surge in sales in its Polish division. Also, favourable foreign exchange movements on the translation of non-sterling retail profits aided growth. Wet weather conditions and extensive industrial activities led to a decline in LFL sales in its French business. The company’s ONE Kingfisher plan, which was announced in March 2015 to create a unified, unique and leading home improvement offer while driving digital capability and optimising operational efficiency, is making good progress and remains ahead of schedule. The company started new ONE Offer & Supply Chain organisation (OSC) global functions and roles in June and the initial set-up costs were lower than anticipated. Kingfisher took steps to achieve operational efficiency with the completion of 80% of B&Q stores and secured 50 lease exits. The company continued to enhance shareholder value through its share buyback programme. However, Brexit created uncertainty in the market and dampened investor confidence. We would like to wait and assess Kingfisher’s performance in the near future, and thus maintain a Hold rating.

Economic news

US housing starts
US housing starts dropped 5.8% to a seasonally adjusted annual rate of 1.14 million units in August, the Commerce department said yesterday. Housing starts were reported at a revised 1.21 million units in July. The markets expected the housing starts to drop to 1.19 million units.

Wed, 21 Sep 2016 08:35:00 +0100