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Views from the Trading Floor - Featuring Ithaca Energy, Kea Petroleum and Hambledon Mining 10th April

Last updated: 17:29 10 Apr 2012 BST, First published: 16:29 10 Apr 2012 BST

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Saints & Sinners: Oil & Gas   

Ithaca Energy (LON:IAE) jumped 5% to 212p during early trading after The Telegraph posted a report by Ben Harrington that that said traders are hoping that Ithaca's board will recommend a 250p a share offer from Kuwait Foreign Petroleum. The report also hinted that The Korea National Oil Corp (KNOC) and DANA Petroleum, which is winded by KNOC may also be ready to throw a hat into the ring. The Shares slipped a touch after lunch against the backdrop of a very weak equity market, trading at 202p up just under 1%.

Sticking with the Athena Field players, Lochard Energy (LON:LHD) could start to get active again soon, as the FPSO is getting closer to the Athena Field in the North Sea. Once the first barrel of oil has finally been extracted from the field, Lochard could find themselves on the move and back in play.

Kea Petroleum (LON:KEA) pushed 6% to 9.5p during lunchtime trading after the company said its Puka 1 well has struck oil in the Taranaki Basin. It said that independent analyses of well logs indicate a light oil in good reservoir-quality sands. Kea said it still estimates the well to contain gross recoverable resources of 1 million barrels of oil, with a potential upside of up to 3 million barrels. The well has been suspended before testing the oil flow rate. If the rate is high enough, it will be put into production. The timing of initial flow testing will be determined by the availability of equipment.

The volume in Creon Resources (LON:CRO) started to jump again today, with over 1.5 million shares changing hands before the end of lunch. The company did announce on the 4th of April the appointment of Mr Jeswant Natarajan has been appointed Chief Executive Officer and a director of the Company with effect from 4 April 2012. Mr Natarajan joins the board with a remit to lead the Company in executing its new Investing Policy as set out in the circular to shareholders dated 30 November 2011. Jeswant graduated from the University of Malaya in 1974 with a BA in Economics (Business Administration). Since then, he has enjoyed a varied career in business with over 30 years' experience in a variety of sectors and roles in industry both as director and in a corporate advisory capacity. Having started his career as a merchant banker, Jeswant moved into industry in corporate advisory, management and board roles during which time he oversaw the execution of various acquisition, divestment and restructuring strategies. Between 1983 and 2004, amongst others, he served on the board of Kuala Lumpur Stock Exchange-listed YTL Corp Bhd and Sunrise Bhd. Most recently, from 2003 to 2011, Jeswant served as an advisor to Kuala Lumpur-based UOA Bhd, and oversaw the listing of its Malaysian-based real estate investment trust (REIT) on the Kuala Lumpur Stock Exchange. He served on the board of the REIT until late 2010.

Sticking with the volume movers on the day Circle Oil (LON:COP) was another that caught the eye, with nearly 9 million shares, or just under 4 times the average daily volume changing hands before the end of lunch. We will be watching the newswires for any updated holdings announcements.

TomCo Energy (LON:TOM) slipped 7% to 2p on decent volume as holders took profit from the recent rally. The shares have enjoyed a decent run of late, pushing from 1.75p up to 2.35p after the company announced it has completed its $5 million investment in Red Leaf Resources Inc. ("Red Leaf") (the "Investment"), as part of a $100 million raising from Red Leaf in conjunction with the closing of a Joint Venture ("JV") with a super-major oil and gas company.

Wentworth Resources (LON:WRL) slipped 25% to 56p after the company provided an update of the Ziwani-1 exploration well, currently drilling in the Mnazi Bay Concession, Tanzania. As previously reported, the well was spudded on February 1, 2012 and was anticipated to take 35 to 40 days to drill. However, there have been some significant delays due to equipment down-time, additional activities not accounted in the well plan and extra bit changes. The 12 1/4" section of the well has been drilled to a depth of 1,606 meters. This section has been successfully logged and the 9 5/8" casing has been run. The 8 1/2" section of the well has now been drilled to a depth of 2,588 meters. While there have been a number of gas shows to date, no significant channel sands were identified in the Pliocene or Miocene. A number of sands have been identified throughout the Oligocene and drilling continues. The plan is to complete the well to the original target depth of 2,700 meters and carry out a full logging program. This will allow the well to be drilled to all the targets as originally planned in the Pliocene, Miocene and Oligocene.

Specialist Energy (LON:SEGR) jumped 21% to 30p during early trading after the company said it will raise £5 million before expenses via share subscription and added that it will seek shareholder approval to acquire a stake in MBE Cologne Engineering GmbH. MBE Mineral Technologies Pte Ltd has agreed to subscribe to 10 million new ordinary shares at 50 pence. To seek authority to issue 4 million new shares to acquire a 20% to 24% of MBE Cologne, a unit of MBE Mineral. Proposed new borrowing facilities of £12 million from Standard Chartered and MBE Mineral. MBE Mineral's holding in company to increase to 41.69% from 25.27% following the subscription. Funds raised to be used to settle existing derivative instruments with existing bank enabling it to re-bank with Standard Chartered. Anticipated net debt after the repayment of the derivative instruments to be reduced to £8.4 million from£9.4 million, before costs on a pro-forma basis.

Xtract Energy (LON:XTR) slipped another 6% to 0.87p during early trading as holders continued to jump ship now the stock has gone sub 1p. The market in these has tried to recover on a few occasions since the last operations update that said the Luna well didn't encounter any hydrocarbons.


Saints & Sinners: Mining   

Copper Development Corporation (LON:CDC) jumped 6% to 23p during afternoon trading after the company said High Grade Intersections at Basay Southeast Deposit Add Newly Discovered Extensions at Depth and on Strike to the East. Hole 50, drilled in a previously unexplored area east of the Southeast deposit intersects 111 metres of 0.51% Cu from 51 metres, and represents a previously unknown extension of this deposit. Hole 47, drilled at depth near the western limit of the Southeast deposit intersects 174 metres of 0.62% Cu from 156 metres, and also represents an area of previously unknown mineralisation. On the basis of recently completed geochemical, geophysical and geological information, the Company has designed a new step out and exploration drilling programme to identify the most prospective targets, including the depth and strike extensions of the known mineralisation; prominent coincident induced polarisation (IP), magnetic and geochemical anomalies; as well as attractive potential supergene deposits that could host substantial easily minable near surface resources. We (FoxDavies) as a shop currently have a BUY rating on the stock with a price target of 116p.

Hambledon Mining (LON:HMB) slipped 29% to 1.95p during morning trading on huge volume after the company said the purchase of Akmola Gold LLP has not yet been completed, despite the expected completion date of March 30 having passed, because certain permits and waivers from the Kazakhstan authorities have not yet been received and therefore relevant completion conditions have not been met. State mining company Tau-Ken Samruk has notified the company that it seeks a pre-emptive interest in Akmola Gold; On-going discussions with the vendors of Akmola Gold who are seeking to amend the terms of the sale and purchase agreement entered into on Sept. 15, 2011, given the delay to the acquisition completion date. Was required to make a payment of $2.5 million by March 30 to the vendors of Akmola Gold plus a permitting fee and associated costs of $0.5 million to the Government of Kazakhstan. None of these payments have been made due to the delay. Challenges of resolving the additional remedial works associated with TD3 will constrain the 2012 operations and revised operational plans are being considered to maximize gold production based on the effluent impoundment capacity constraints.

Thor Mining (LON:THR) jumped 20% to 2p during early trading as the stock played catch up to the Australian line that was up just over 20%. The company have recently said that the economic prospects for the company's Molyhil tungsten and molybdenum project in the northern territory have been significantly enhanced by the results from metallurgical testwork for tungsten recovery. Tungsten recovery is now estimated at 85% compared with the previous feasibility estimate of 67% and January 2012 estimate of 75%. Improvement is achieved by adding a flotation step to the tungsten recovery process after gravity separation. The testwork, carried out by independent metallurgical testing and mineral beneficiation consultants Nagrom & Co has demonstrated significant added value by the addition of a flotation step to the tungsten recovery process, following gravity separation. The results of this testwork will now be incorporated into the economic ore reserve and mining plan calculations as the next steps in completion of the Molyhil Definitive Feasibility Study (DFS).

Mariana Resources (LON:MARL) jumped 17% during afternoon trading after the company said Executive Director and Chief Operating Officer Ray Angus purchased 500,000 shares in the company at a cost of 7.25 pence per share plus transaction costs on April 4. The purchase takes his holding in Mariana Resources to 7.0 million shares, representing 3.03% of the company's issued shares.

African Eagle (LON:AFE) slipped another 8% to 4.25p at the mid-price after the company announced on Thursday the 5th of April that it is proposing the issue of up to 200 million new ordinary shares at a price of 4 pence per share to raise gross proceeds of up to £8 million. The company also announced a non-underwritten open offer to eligible shareholders of up to 100 million new ordinary shares at 4 pence per share to raise gross proceeds of up to £4 million. The proceeds of the issue of placing shares to fund the technical definition phase of the bankable feasibility study at Dutwa. Notice is given of a general meeting of shareholders to approve the resolutions necessary to give effect to the placing and open offer.

Ariana Resources (LON:AAU) continued to slide again during trading today, slipping another 11% to 3p on decent volume. We will be watching the newswires closely over the next few trading sessions to see if any updates materialise.


From the trading floor   

After the poor US Non-Farm Payroll data on Friday, it was no surprise to see the FTSE 100 weaker today, as I type we are trading 60 points easier at 5665 (-1.03%) on volume of 553 million shares. The next support levels that I can see are 5650 and 5600, and we are testing the first one right now. A close under could give the green light for a test of 5600. However, if the index can hold above the 5650 level, we could see a small relief rally from it. The FTSE AIM All-Share Index was 0.36% easier on volume of just over 800 million shares.


Commodities Corner   

Gold - ↑Trading at $1642, up $2 (+0.13%)

Silver - ↑Trading at $31.55, up 2c (+0.03%)

Copper - ↓Trading at $8203, down $121 (-1.45%)

Zinc - ↑Trading at $1997, up $22 (+1.14%)

WTI Crude - ↑Trading at $102.81, up 35c (+0.34%)

Brent Crude - ↓Trading at $121.98, down 67c (-0.55%)

Any questions please don't hesitate to contact me at steve.asfour@fox-davies.com or visit www.viewsfromthetradingfloor.com or www.fox-davies.com

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