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TO LISTEN TO THE PODCAST CLICK THE PLAY BUTTON BELOW If you find this podcast useful please give it a rating and review on iTunes by clicking here 5 Things You Need To Know, Today, on Friday 22nd December 2017 5. Poundland has removed the image of a box of Twinings tea from a controversial social media advert after the company complained on Twitter. The campaign displayed a toy elf in a suggestive pose with a plastic doll in front of a box of Twinings Classics tea. (Click here to read more) 4. Royal Dutch Shell has agreed to buy the energy supplier First Utility, giving the oil giant its first foothold in the UK’s household energy market. First Utility is the biggest energy supplier in the UK outside the so-called “big six”. (Click here to read more) 3. People should pay a deposit for using plastic bottles in an attempt to protect the seas from plastic pollution, MPs say. The government’s Environmental Audit Committee (EAC) also wants free public drinking water fountains. (Click here to read more) 2. Confidence among British businesses has picked up to its highest level since July, as firms expect a busier 2018, though optimism remains well below its level before last year’s Brexit vote, a survey by Lloyds Bank showed today. (Click here to read more) 1. Optimism that tax cuts in the US could boost a host of London-listed heavyweights, helped to propel the FTSE 100 to another record high last night. London’s blue-chip index, enjoyed its best day in five months as it climbed almost 79 points to 7,603.98. Wall Street also entered record territory. (Click here to read more) To subscribe to my blog click here 3 Further Reasons to add Energiser Investments #ENGI to your Watchlist 2 Overlooked Companies, That Could Be About to Release Signficant News 3 Reasons to add Flybe #FLYB to you Watchlist 3 Reasons to add Flying Brands to your Watchlist 1 More Reason to add Harvest Minerals to your Watchlist 1 Further Reason to add Harvest Minerals to your Watchlist Another 3 reasons to add Harvest Minerals to your Watchlist 3 reasons to put Harvest Minerals on your Watchlist One Further Reason to add Horizonte Minerals #HZM to your Watchlist To read my blog on Horizonte Minerals click here 3 Reasons to add Jangada Mines #JAN to your Watchlist 4 Reasons to add Kodal Minerals #KOD to your Watchlist 5 Reasons to put Savannah Petroeum #SAVP on your Watchlist 3 reasons to add Stellar Diamonds #STEL to your Watchlist To read my blog post on #TLOU Energy click here To read, “5 Reasons I bought more Shares in Tlou Energy This Week” click here 11 Quick Reasons to add Tlou Energy #TLOU to your Watchlist 3 Reasons to add Upland Resources #UPL to your Watchlist To read my blog post on Upland Resources #UPL click here To read my follow up article on Upland Resources: The Sensible and Sexy Asset Strategy, click here 2 Overlooked Companies, That Could Be About to Release Signficant News 1 Further Reason to add Utilitywise (UTW) to your Watchlist 3 Reasons to add Utilitywise (UTW) to you watchlist 2 Further reasons to add Versarien #VRS to your Watchlist 3 reasons to add Versarien #VRS to your Watchlist How to get company RNS releases sent straight to the front screen of your smartphone, as soon as they release them (for free) in 3 easy steps. 1. Download the Vox Markets app by clicking here (for either iPhone or Android). 2. Search for a company you want to receive the RNS’s from. 3. Click, “Follow” on that company’s page. If you find this podcast useful please could you give it a 5 star rating and review on iTunes by clicking here and I’ll return the favour by giving you a mention on the podcast! The content of this podcast (or content associated with it) is not intended as investment advice and people featured may hold positions in the companies they talk about. Please do your own research.

Battery Raw Material Review, Outlook – SP Angel Commodity Research Book CLICK FOR PDF Electric Revolution driving lithium dreams and cobalt nightmares

• Anti-pollution legislation and responsible social trends are driving structural change in automotive and energy markets.
• Consumers and industry are driving growth in electric vehicles and in new energy efficient technologies.
• The Paris Agreement should help financing and technological innovation to enhance green infrastructural capacity to slow destructive environmental damage.
• Electric vehicles, LEDs and other new technologies are generating demand for novel raw materials driving exploration and development along the entire global supply chain. The coming decades will see a decline in the terminal value of energy and a broad upheaval in electromobility.
• The rapid advance of “black box” proprietary technologies and transformative new supply have the potential to disrupt traditional commodity markets.
• The attached report examines the fundamental metals crucial to the green revolution and presents the relevant supply / demand data for our analysis.

Key findings from the report;

• The IMF forecast global GDP growth 3.7% and 3.8% into 2017 and 2018 respectively on the back of rising global investment and positive sentiment toward industrial production, manufacturing and trade. Positive global trends highlight favourable economic conditions and a supportive environment for commodities.
• The Paris Agreement and subsequent ‘One Planet Summit’ are creating supportive legal and financial declarations to drive energy capacity from renewable and nuclear sources above 50% global total by 2040.
• EV30@30 campaigns redefine ambitious goal of 30% market share for electric vehicles, significantly boosting demand for energy capture, storage and delivery infrastructure and associated raw materials.
• Innovate and competing technologies are creating rapid demand for battery chemistries to generate maximum energy density.
• Commercialisation of closed-loop multi-metal recycling of batteries represents a fundamental new industry with significant revenue potential.
• Copper: Long-term supply concerns are driving tightening market conditions for copper as continued demand from power and construction are boosted by electro mobility.
• Nickel: Despite strong innovative demand from battery-technologies, market hype is exaggerated with current consumption at only 3% and dominated by stainless steel. However, sustained investment in sulphide exploration and processing is required to maintain strong production. Technological trends toward higher nickel ratio nickel-manganese-cobalt (NMC) batteries will only exacerbate consumption.
• Lithium: Consumption is expected to swell over three-fold over the next decade across renewable energy and electromobility sectors. However, the number of new projects seeking finance for development could easily place the market in oversupply, with large, established producers able to manipulate output. Brine production will control majority supply with expected China chemical conversion capacity bottlenecks generating competitive spodumene market with a strong focus on quality.
• Cobalt: LME probe into ethical, inelastic supply from the DRC is expected to increase the strain on transparent, responsible mining operations and new Australian and Canadian projects. Rapidly rising high-grade premium pricing is elevating the risk of substitution in next-generation lithium-ion batteries.

    Analysts John Meyer – 0203 470 0490 James Mills – 0203 470 0490 Simon Beardsmore – 0203 470 0484 Sergey Raevskiy – 0203 470 0474 Phil Smith (Technology) – 0203 470 0475 Zac Phillips (Oil & Gas) – 0203 470 0481   Sales Richard Parlons – 0203 470 0472 Elizabeth Johnson – 0203 470 0471   SP Angel                                                             Prince Frederick House 35-39 Maddox Street London W1S 2PP   *SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded) ⁺SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.   DISCLAIMER This note has been issued by SP Angel Corporate Finance LLP (“SP Angel”) in order to promote its investment services. This information is a marketing communication for the purpose of the European Markets in Financial Instruments Directive (MiFID) and FCA’s Rules. It has not been prepared in accordance with the legal requirements designed to promote the independence or objectivity of investment research. This document is not based upon detailed analysis by SP Angel of any market; issuer or security named herein and does not constitute a formal research recommendation, either expressly or otherwise. The value of investments contained herein may go up or down. Where investment is made in currencies other than the base currency of the investment, movements in exchange rates will have an effect on the value, either favourable or unfavourable. Securities issued in emerging markets are typically subject to greater volatility and risk of loss. This note is confidential and is being supplied to you solely for your information and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or published in whole or in part, for any purpose. Neither the information nor the opinions expressed herein constitutes, or is to be construed as, an offer or invitation or other solicitation or recommendation to buy or sell investments. This information is for the sole use of Eligible Counterparties and Professional Customers only and is not intended for Retail Clients, as defined by the rules of the Financial Conduct Authority (“FCA”) and  subject to SP Angel’s Terms of Business as published or communicated to clients from time to time. It is not investment advice and does not take into account the investment objectives and policies, financial position or portfolio composition of any recipient. This document should not to be relied upon as authoritative or taken in substitution for the exercise of you own commercial judgment. SP Angel is not responsible for any errors, omissions or for the results obtained from the use of the information in this document. This document has been prepared on the basis of economic data, trading patterns, actual market news and events, and is only valid on the date of publication. SP Angel does not make any guarantee, representation or warranty, (either expressly or implied), as to the factual accuracy, completeness, or sufficiency of information contained herein. This document has been prepared by the author based upon information sources believed to be reliable and prepared in good faith. SP Angel, its partners, officers and or employees may own or have positions in any investment(s) mentioned herein or related thereto and may, from time to time add to, or dispose of, any such investment(s). SP Angel Corporate Finance LLP is a company registered in England and Wales with company number OC317049 and whose registered office address is Prince Frederick House, 35-39 Maddox Street, London W1S 2PP.  SP Angel Corporate Finance LLP  is authorised and regulated by the Financial Conduct Authority whose address is 25, The North Colonnade, Canary Wharf, London E14 5HS and is a Member of the London Stock Exchange plc. 

WTI $57.46 +30c, Brent $63.80 +39c, Diff -$6.34 +9c, NG $2.69 -5c

Oil price

As the market quiets down ahead of the holiday a couple of bullish factors emerge, on the geopolitical front the stakes are rising in the Yemen as yesterday the KSA said that they had intercepted a ballistic missile from there near Riyadh. After the close the API stats came out and provided another boost for the market, crude stocks fell by 5.2m barrels against the whisper of -3.8 whilst gasoline rose 2m b’s in line and distillates drew 2.9m way above estimates of 870/-.

Victoria Oil & Gas

VOG have announced the La-108 well result as being ‘ahead of expectations’. Initial gas flow rates of up to 15 MMscfd just from the Lower Logbaba (La-107 did 4) were good and it is now suspended ahead of testing the Upper Logbaba sands which may be used for production in the peak season.  Releasing the rig signals the end of the major capital spend and the company can move to the production process, this will include reservoir management to ensure maximisation of reserves. Finally, satisfying the incredible demand from power operators and companies in Douala can step up and highly profitable sales can be made.

Sound Energy

Sound has announced that the preliminary results of the RPS certification have validated the company’s previous mid-case estimate of GOIP in TE-5 Horst alone of 0.65 TCF with a 2C midcase recoverable contingent resource of 377 BCF. Further results are expected early next year and the company remain confident following comments made at their last presentation.

Cabot Energy

After the leak comes the deal, Cabot are acquiring H2P UK for $8.7m which gives them another 25% of the Canadian acreage and a 25% option valued at $4m. Alongside this they have raised $16.5m through a subscription, placing and Open Offer at 5p which places them on a solid footing. This acreage has proved highly successful and this raise will further add to the scale previously impossible and the partners are top notch. The rebuilding of the former NP has been in my view pretty impressive, at the start, the slow build up of production in Canada was painfully slow but necessarily so. Patience has been required but this deal will go a long way to recreating a company worthy of a very good management team that has got them back to here. I have only one concern, the company’s house broker in a note out this morning is suggesting that some of the proceeds might be used to ‘advance’ the Italian asset base, nothing wrong with that at all but I personally prefer to see most of it heading towards Canada, at least for the time being. So far for Keith Bush and team this has been a good job, well executed and should reward investors.

Hurricane Energy

Yesterday’s comment on Hurricane contained a slight faux pas, as it were. Confusing the Buoy and the FPSO is a schoolboy error, the former needs to be on site West of Shetlands by end 2Q 2018 whereas the latter has a planned sail away from Dubai by 3Q 2018. I still feel as per yesterday’s note that for choice things could be ahead of schedule if that doesnt confuse any more!

Savannah Petroleum

Just as I am going to press there is an update from SAVP with regard to the placing and Seven Energy transaction. It seems that ‘following significant support from the SSNs, discussions have taken place with key stakeholders including certain holders of SSNs’ there are some alterations to the makeup of the financing. The equity raise will now be reduced to $125m whilst changes have been made to the cash and shares amount previously announced. Consideration of $42.5 million in cash (previously $87.5 million) and $109.5 million in new Ordinary Shares (previously $52.5 million) will now be paid to the holders of the SSNs whilst the lender of the second bilateral facility will receive consideration of $3.5 million in cash (previously $7.3 million) and $9.2 million in new Ordinary Shares (previously $4.4 million). Finally, the S$20m new capital contribution from the SSNs will be exchanged for a new $26.7m Savannah share issuance (previously $25m). Bookbuilding is continuing today as the new details have obviously changed the process somewhat including the price. The ASMA investment is still on the table but not included in the $125m raise. The new indicated price is 35p which will mean the market cap would be around £313m and placees will receive 0.5 of an unlisted, untradeable warrant with each placing share subscribed for. The only other change is that the use of proceeds changes slightly and three wells will be drilled in Niger and no further 3D seismic will be acquired. This deal is highly complicated by the very nature of the acquisition but should this go ahead then the advantages of Seven and the Niger programme leave plenty of room for upside.  

Bahamas Petroleum

BPC has announced the results of the external technical audit carried out by Moyes and Co. They calculate ‘aggregate mean volumetrics assessed for the key structures in BPC’s southern licences is a STOIIP of 8.3 billion barrels, with an upside of up to 28 billion barrels STOIIP’. In addition they give a POS of 25-35% which is extremely positive. Applying their recovery factor of 20-40% they get a EUR of 1.66-3.3bn mean and up to 11bn barrels of upside. BPC has been a poor performer for a long time, this year the peak was 2.25p and the low 0.5p, so today’s 40%+ rise in the shares to 0.975p is good but some way from the best expected by the long-suffering shareholders. This news ticks one almighty box, although people like me have never really doubted the huge size of the structures in the area, more the ability to deliver such a potentially massive project with its mandatory green requirements. Armed with this report from Moyes and Co there is now no longer any excuse for non delivery of a partner, funding, and action, if and when that happens the upside will surely be the reward shareholders have been waiting for, after all current market cap is £15m….

Wentworth Resources

Wentworth has announced this morning that it has received payments from both the TPDC and Tanesco for $2.5m net worth of gas sales during the year. The company express confidence that they will receive paid invoices on a monthly basis evidence provided by today’s news. Probably more important is the news that gas delivery has started to Kinyerezi-2 for the commissioning of the first two (of 6) gas turbines which in due course will see demand of up to 36 MMscfd when it becomes fully operational. 2018 looks like being a most interesting year for WRL highlighted in my note from AOW in October and very much one for the watch list.

Sundry

On SDX Energy, I notice that Paul Welch has put a message up on his website which confirms my optimism for next year after what has been a cracking 2017. Worth a glance at http://www.sdxenergy.com/ Genel has announced that the refinancing of its Genel01 bonds and accordingly ‘With the approved proposal, the Company will reduce the outstanding bond debt from $421.8 million to $300 million by way of an early redemption of a notional amount of $121.8 million and extend maturity through amending and restating terms to a new 5 year tenor’. In quotation marks as I could wrap it up any better but things are looking up for Genel at the moment, I saw the team last week, including Bill Higgs now he is on board and I will be keeping my eyes on them…

And finally…

In the Haribo Cup last night the Gooners beat the Hammers 1-0 and the Noisy Neighbours edged through against the Foxes after a penalty shoot out. Tonight it’s Chelski hosting the Cherries at the Bridge whilst the Red Devils travel to Ashton Gate to play in-form Bristol City.

SP Angel – Morning View – Wednesday 20 12 17 Miner rise as metals continue to post gains CLICK FOR PDF  MiFID II – This note will move to FULL MiFID II compliant format come 3 January 2018 If you wish your company to be compliant so we can continue to write lovely things about you then please contact me If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format   Kennedy Ventures (KENV LN) 4.1p, mkt cap £10.4m – Kennedy reports third shipment of tantalum Rio Tinto (RIO LN) 2682p, mkt cap £66.7bn – Glencore, Apollo bid for Rio Tinto’s $1.5bn coal assets SolGold* (SOLG LN) 26.5p, Mkt Cap £450m – La Hueca outcrop shows high copper grades in rock chip sampling Tri-Star Resources* (TSTR LN) 0.138p, mkt cap £24.6m – Emin Eyi steps down as Deputy Chairman at Tri-Star   Gold exploration jumps but 2018 output expected to fall

• Gold mine exploration leapt in 2017 but output set to slip further from last year’s record as the focus on existing sites intensifies over finding new projects, according to leading analysts
• Gold mine output from China fell 10% over the first 9 months of 2017 and is predicted to decline for second year running in 2018, in the wake of lower investment and rising costs

 

Dow Jones Industrials		-0.15%	at	24,755
Nikkei 225		+0.10%	at	22,892
HK Hang Seng		-0.07%	at	29,234
Shanghai Composite		-0.27%	at	3,288
FTSE 350 Mining		+0.61%	at	17,585
AIM Basic Resources		+0.16%	at	2,648

  Economics US – Tax bill passed by the US Senate in a 51-48 vote with the legislation now up for a vote in the House of Representatives later today.

• Both US$ and gold are steady while US equities finished marginally lower ahead of the final vote in the House.
• US Treasuries came off yesterday with yields on 2y bonds extending gains climbing to 1.85%, the highest level since 2008.

  UK – Property prices are forecast to stagnate next year amid a drop in the number of transactions and weak supply preventing outright declines, according the RICS estimates.

• Political and economic uncertainty, tax changes, a lack of stock, low affordability and the BoE’s rate hike announced in November are included in driving factors behind forecasts.
• Most parts of the UK are expected to see price increases, except for East Anglia, the northeast and the southeast.
• Estimates follow Rightmove predictions for London house prices to post a 2%yoy drop next year taking national growth rates down to 1%yoy.
• On a separate note, fewer businesses are expected to hire new staff next year on the back of weak economic outlook, according to a monthly recruitment industry survey
• Net balance of companies planning to add permanent staff in the next 12 months fell to +16 in the three months to November, down from +24 the same time last year, the REC data showed.
• Results come in contrast to survey results announced by the CBI yesterday which showed that 51% of employers expect to expand their workforce next year, up from 41% in last year’s survey.

  Sweden – The central bank announced it will stop new bond purchases this month, but will keep other tools of expansionary monetary policy in place including reinvestment of bond repayments and coupons as well as record low interest rates (repo rate unchanged at -0.5%).

• Markets were cautious over the likely outcome of the monetary policy meeting given weak recent data on inflation, growth and the housing market.
• The krona spiked as much as 0.7% against the US$ on the announcement before losing all of its gains.
• Policy makers urged that it is “important that the krona does not appreciate too quickly” highlighting risks of tightening the policy prematurely while the ECB continues is hesitant to wind down the monetary easing programme.

  Currencies US$1.1849/eur vs 1.1805/eur yesterday  Yen 113.14/$ vs 112.44/$  SAr 12.697/$ vs 12.754/$  $1.339/gbp vs $1.340/gbp  0.767/aud vs 0.768/aud  CNY 6.579/$ vs 6.616/$   Commodity News Precious metals:          Gold US$1,264/oz vs US$1,263/oz yesterday

• Dollar index remains steady as the Senate Republicans pass the most extensive rewrite of US tax code in over 30 years, bringing Trump to the edge of his first major legislative victory. Despite the requirement for the bill to be returned to the House for another vote Wednesday morning after Senate Democrats invoked a technical budget rule to remove some minor provisions, the reform is broadly seen as a done deal.
• Diminishing economic anxiety is expected to put downward pressure on the gold spot price, with Goldman Sachs forecasting the precious metal to fall to $1,200/oz by mid-2018. The near-term bearish view is built upon three key factors:
  • Continued robust GDP growth in developed markets, and shift into expansion phase of business cycle.
  • Further rate increases from the Fed, and market moving closer to pricing in bank’s view of 4 hikes in both 2018 and 2019.
  • No deterioration in geopolitical risks, nor recession arriving in 2018, 2019.

   Gold ETFs 71.5moz vs US$71.8moz yesterday Platinum US$914/oz vs US$913/oz yesterday Palladium US$1,020/oz vs US$1,019/oz yesterday

• Palladium’s biggest rally in seven years is prompting industrial users to seek cheaper substitutions for the metal used across the automotive and electronics sectors. The 50% surge in price is giving platinum an average $107/oz discount, the biggest since 2001, is seeing auto and autocatalysts manufacturers to consider replacing palladium with platinum. “Seventeen years ago, when palladium was last as expensive as it is today and considerably more expensive than platinum, precisely this kind of substitution was made, which weighed substantially on the palladium price in subsequent years” Commerzbank analyst.

Silver US$16.13/oz vs US$16.15/oz yesterday             Base metals:    Copper US$ 6,969/t vs US$6,905/t yesterday

• Growing supply concerns surrounding the consistency of output across South America, the world’s largest producing region, draw the metal price higher, as unionised workers at the Quebrada Blanca copper mine walked off the job last week after failing to reach a new labour contract. The strike is the third in the last month, following the three-week strike at Southern Copper’s Peruvian operation and a union one-day ‘warning’ strike again at the giant Escondida mine. With a vast number of labour contracts up for renewal in the new year, threats of strike loom large for 2018 copper.
• 38 labour contracts are due for renewal according to Barclays Capital analysts, covering production for more than seven million tonnes; the largest number since 2010. The list of potential disruptions include some of the world’s largest copper mines, with state-owned Codelco alone totaling 19 contracts. The world’s single largest mine, Escondida, which was hampered by the longest running 44-day strike in the first quarter of 2017, is drawing ever nearer to its June deadline. According to operator BHP Billiton, the strike removed 214Kt production and depressed Chilean output by 14%.
• Striking actions are impacting broader market sentiment, with copper’s notoriously disruption-prone supply chain draw the metal price nearer to the $7,000/t mark. Despite the newly elected conservative Sebastian Pinera as Chile’s latest president, he faces a divided Congress with a leftist coalition who pledge to uphold the legacy of outgoing President Michelle Bachelet, thereby reducing the chances of revoking new national labour laws before mid-year contract deadlines. The real impact on copper market balance with ‘disruption allowances’ is unclear. A key offset to lost global output in 2017 was the simultaneous surge in scrap copper supply, and with more supportive prices forecast into 2018, the importance of this supply is expected to continue. With waning scrap stockpiles accumulated during the 2015-2016 price trough, potential supply disruptions may extend into secondary sources.

Aluminium US$ 2,102/t vs US$2,074/t yesterday

• Shanghai aluminium climbed as production cuts for raw materials provide support. Producers of alumina in northern China have been affected by rising natural gas shortage, which has been driving fuel costs to greater levels than the normal 30% level. The alumina price rebound is translated into rising aluminium prices as the most-traded February contract in Shanghai closed 1.4% higher.

Nickel US$ 11,840/t vs US$11,830/t yesterday Zinc US$ 3,222/t vs US$3,196/t yesterday

• Tightening market is expected to persist into 2018 according to Goldman Sachs analysis, supporting a zinc price which has risen 25% throughout 2017. “Market remains physically tight as suggested by continued backwardation, low inventories, and depressed levels of concentrate treatment charges in China”.

Lead US$ 2,564/t vs US$2,561/t yesterday Tin US$ 19,400/t vs US$19,350/t yesterday             Energy:            Oil US$64.0/bbl vs US$63.1/bbl yesterday

• France’s parliament upped the ante on the fight against climate change as they became the first nation to pass legislation requiring all oil and gas exploration and production on French territories to end by 2040. The bill bans the renewal of any existing concessions beyond the cut-off while no exploration permits will be granted immediately.

Natural Gas US$2.727/mmbtu vs US$2.756/mmbtu yesterday Uranium US$24.00/lb vs US$24.40/lb yesterday   Bulk:    Iron ore 62% Fe spot (cfr Tianjin) US$71.6/t vs US$72.3/t Chinese steel rebar 25mm US$731.4/t vs US$742.7/t Thermal coal (1st year forward cif ARA) US$89.3/t vs US$90.6/t Premium hard coking coal Aus fob US$236.1/t vs US$236.1/t             Other:   Tungsten APT European US$295-300/mtu vs US$293-300/mtu last week Cobalt LME 3m US$74250/t vs US$72250/t yesterday   Company News Kennedy Ventures (KENV LN) 4.1p, mkt cap £10.4m – Kennedy reports third shipment of tantalum

• Kennedy Ventures today reports a third shipment of high purity tantalum has been sent to its customer from its mine in Namibia.
• The statement also updates the market on >400m of drilling by MSA Group and the organisation of drill cores to be sent to ALS Laboratories.
• It seems strange that shipments are being reported with no indication of concentrate grade or tonnage which makes the statement next to useless from our perspective.
• While it’s nice to read that the mine has fitted some solar panels and a couple of 60,000ltr dams have been purchased we are really more interested to know more about the costs of the operation, capital being spent, revenues due and the often all-consuming corporate overheads.
• Rather unusually the statement fails to give direct contact details for the CEO Larry Johnson suggesting that he does not take direct calls while the company website does not do much better giving an address at St Mellons, Cardiff and a somewhat impersonal info@kvplc.com email address.

Conclusion: It’s nice to see progress at Kennedy Ventures but the content of the statement is next to useless from an analyst perspective and the company’s nomad should perhaps examine the press release to determine if it is deficient from an investor and AIM market perspective?   Rio Tinto (RIO LN) 2682p, mkt cap £66.7bn – Glencore, Apollo bid for Rio Tinto’s $1.5bn coal assets

• Glencore plc and a group led by Apollo Global Management LLC are among bidders set to be shortlisted for the sale of Rio Tinto group’s last remaining coal mines.
• A sale would allow Rio, the world’s second-biggest miner, to complete its exit from coal and continue an asset divestment program that has returned more than $7 billion since 2013.
• Personally we see the de-carbonisation of Rio Tinto as a sop to certain oil-rich sovereign wealth funds which have recently declared policies not to invest in oil and gas or other carbon fuel sources despite the origin of their funds being principally carbon-based.
• Ironically, Rio Tinto is possibly the world’s best large-scale coal miner with a strong track record in coal and bulk commodities though Glencore may well extract greater value from the coal sold.
• We note the move to greater Electromobility is likely to drive greater coal demand as consumers plug in their new Electric Vehicles which should make this a smart move for Glencore and Apollo.

  SolGold* (SOLG LN) 26.5p, Mkt Cap £450m – La Hueca outcrop shows high copper grades in rock chip sampling

• SolGold report a number of very promising rock chip assays in a newly identified outcrop at the La Hueca project in Southern Ecuador.
• Mineralisation is shown along a 250m brecciated fault which is reported to be open along strike in both directions.
• Surface rock chip assays include:
  • 2.23% copper, 0.21 g/t gold, 4.45% gold
  • 2.13 % copper, 0.13 g/t gold, 1.53% gold
  • 2.07 % copper, 0.24 g/t gold, 0.63% gold
  • 2.01 % copper, 0.11 g/t gold, 0.5% gold
• Rockchip samples from Target 3 also returned anomalous copper and gold results including from localised float material.  Best results included:
  • 3.52 % copper, 0.97 g/t gold
  • 0.55% copper

Conclusion: The reported rock chip assays are a great starting point for further exploration and are a significant indicator for a potential resource below. SolGold’s Inherent intellectual property in relation to exploration in Ecuador appears to be delivering results with lessons learned from geophysical surveying and drilling at the giant Cascabel project now delivering results on other properties to the south of Ecuador. *SP Angel act as UK broker to SolGold and have acted as placing agent in relation to the recent £45m new share issue   Tri-Star Resources* (TSTR LN) 0.138p, mkt cap £24.6m – Emin Eyi steps down as Deputy Chairman at Tri-Star (Tri-Star holds 40% of jv company SPMP alongside The Oman Investment Fund and Dutco Natural Resources) (Odey Asset Management, holds a 53.8% interest in TriStar Resources)

• Emin Eyi has stepped down as Deputy Chairman at Tri-Star Resources.
• The move follows Emin Eyi’s resignation from the joint venture company SPMP in which Tri-Star owns a 40% stake.
• SPMP recently appointed Jason Peers as interim CEO and as a board representative.  Peers has been heavily involved with SPMP since its formation and is well placed to step in following Eyi’s departure.
• SPMP should be close to commissioning of the Oman Antimony Roaster project.  The project should commission at an opportune time as Chinese antimony smelting capacity is closed due to environmental concerns and raw material should be looking for new roasting capacity.
• Tri-Star reported that it invested a further US$6m via a mezzanine loan to SPMP pay for further costs in the roaster project including the added gold recovery plant.

*SP Angel acts as Nomad and Broker to Tri-Star Resources     Analysts John Meyer – 0203 470 0490 Simon Beardsmore – 0203 470 0484 Sergey Raevskiy – 0203 470 0474 Phil Smith (Technology) – 0203 470 0475 Zac Phillips (Oil & Gas) – 0203 470 0481

 

TODAY’S FAYRE – Thursday, 21^st December 2017

 

 

“In my sky at twilight you are like a cloud
and your form and colour are the way I love them.
You are mine, mine, woman with sweet lips
and in your life my infinite dreams live.

The lamp of my soul dyes your feet,
the sour wine is sweeter on your lips,
oh reaper of my evening song,
how solitary dreams believe you to be mine!

You are mine, mine, I go shouting it to the afternoon’s
wind, and the wind hauls on my widowed voice.
Huntress of the depth of my eyes, your plunder
stills your nocturnal regard as though it were water.

You are taken in the net of my music, my love,
and my nets of music are wide as the sky.
My soul is born on the shore of your eyes of mourning.
In your eyes of mourning the land of dreams begin.”

 

 

Pablo Neruda – poet – 1904-1973

 

Up until Tuesday morning, PM May had every right to be relatively satisfied with the EU negotiations, considering that the whole episode has been an absolute nightmare since the June General election, when the PM was virtually  politically “knee-capped” thanks to a truly inept campaign, which took away the Government’s overall majority. The PM, David Davis et all have taken the negotiations on to phase two, which was no mean achievement considering that dealing with Tusk, Verhofstadt, Juncker and Barnier is akin to attempting to pick up quicksilver. In fairness to Barnier, he is but a servant of his political leaders, though he is very duplicitously calculating.

So I was very disappointed to hear yet again that Barnier was briefing against the UK Government when stating the obvious that there would be no special deal for UK financial services, if the UK was not a member of the single market.  There is nothing new in that statement but it should be reiterated to David Davis and Sir Tim Barrow, not the Guardian or any other newspaper, assuming Barnier is interested in promoting goodwill and that is very much in doubt.

CityAM told us this morning that Britain has been crowned the best country in the world for business in 2018 for the first time ever, even in the face of uncertainties around Brexit, according to Forbes’ annual ranking. The UK took the top spot out of 153 nations and jumped up from fifth place last year, scoring particularly well on technological readiness (fourth) and the size and education of its workforce (third). The rankings were based on 15 different factors including property rights, innovation, taxes, technology, corruption, freedom (personal, trade and monetary), red tape and investor protection.

The BBC’S Simon Jack has reported that banks offering wholesale finance – money and services provided to businesses and each other – would operate under existing rules. Mark Carney, BOE Governor, has quite rightly been clear that will be the case. Retribution would be counter-productive. These facilities would apply even in a “no deal” scenario.  It is thought the BOE will confirm these facilities today.

It means EU banks operating through branches can continue without creating subsidiaries – an expensive process. The difference between branches and subsidiaries is something all of us might have hoped not to care about ever but it is significant – so please bear with me. Branches offer an easy way for banks to move money around their international operations, but present the risk that in the event of a financial crisis, funds are quickly repatriated to the foreign bank’s headquarters – leaving customers of the UK branch out of pocket. Subsidiaries are forced to hold their own shock-absorbing capital and essentially become UK companies. Changing from a branch to a subsidiary could cost billions for a bank like Deutsche Bank, for example, which employs 9,000 people in the UK. Currently, banks based anywhere in the EU can sell services to anywhere else in the EU thanks to an instrument known a financial services passport.

 

Despite the DOW rallying by almost 40% since President Trump’s inauguration in November 2016, he has managed very little in the way of a change in legislation, though expectation for tax cuts, particularly corporation tax from 35% to 21% have been at fever-pitch.  This now looks like it may come to fruition before Christmas. This cut would boost overall earnings for S&P 500 companies by 9.1 percent, according to UBS equity strategists, lifting the prospects in particular for banks, telecoms, healthcare transport, tech and other industries that stand to gain the most from lower corporate tax rates. Banks pay the most prohibitive taxation of 27.5%. Tech is expected to benefit less than most other sectors from a drop in the corporate rate, with an earnings boost of 5.3 percent, according to UBS. Though semiconductors could lose 3% of their profits. Needless to say these overall tax arrangements are tied up with the repatriation of ‘one-time- taxation of overseas earnings to the US.

 

 

The news about Poundland’s owners Steinhoff, which has seen its share price collapse as the investigation in to accountancy irregularities gathers momentum, is not wholly discouraging for its 18,000 employees.  This retail operation looks to be in good shape and not doubt it could be sold, if Steinhoff fails to survive.  The same cannot be said for Toys 4 Us, whose 3,200 employees could lose their jobs as early as today, since the Pension regulator refuses to support a recovery programme, unless the £9 million pension contribution is met forthwith.  Finally the CMA has approved the £3.7 billion takeover of Booker by Tesco.  It sees no conflict of interest, nor does it see that prices will be falsely increased by its wholesale division.  There is plenty of wholesale competition to keep wraps on prices. Tesco share price has risen from 187 to 206p (+10%) in the last month, such was the confidence that the deal would be consummated. At 9.20am the FTSE is up 4 points at 7547.

 

David Buik

Market Commentator – Panmure Gordon & Co

 

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Panmure Gordon & Co

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SP Angel – Morning View – Tuesday 19 12 17 Copper looks strong as prices regain lost ground CLICK FOR PDF  MiFID II – This note will move to FULL MiFID II compliant format come 3 January 2018 If you wish your company to be compliant so we can continue to write lovely things about you then please contact me If you don’t like what we write about your company, don’t worry, we will continue to write but it will be in a new MIFID 2 compliant format   Lithium – Chinese groups make$C265m swoop for Canada’s Lithium X

• China’s Tibet Summit Resources and its partner NextView Capital have agreed to buy Canadian lithium producer Lithium X for $C265m ($206 USD) in latest move by Chinese companies to secure raw battery materials for EV market
• This is a second investment for NextView Capital into lithium following its agreement to buy a 20% stake in Bacanora Minerals.
• Lithium X has two lithium projects in Argentinas’s Salta province as well as stake in Pure Energy Metals, a developing lithium project in Nevada

  Chiles’s SQM to negotiate extending lithium quota after election

• SQM has said it will seek to end its long running dispute with Chilean regulators over how much lithium it can produce following election of billionaire Sebastian Pinera as president.
• The company has agreed to begin a ‘new conciliation process’ aimed at ending arbitration with Corfo the Chilean regulator for lithium so it can increase the  amount of lithium it can extract.
• The process could end a deadlock that has prevented SQM, the world’s largest producer of lithium, from expanding production further.

  China raises 2018 import tax on melting refined nickel

• China has raised taxes on melting refined nickel. This is likely to have the greatest impact on nickel imports from Russia as well as some impact on Finland, South Africa and Brazil. The move is part of China’s anti-pollution drive.

 

Dow Jones Industrials		+0.71%	at	24,827
Nikkei 225		+1.55%	at	22,902
HK Hang Seng		+0.70%	at	29,050
Shanghai Composite		+0.05%	at	3,268
FTSE 350 Mining		+1.88%	at	17,632
AIM Basic Resources		+0.98%	at	2,612

  Economics US – Equities continued strong in final weeks of the year closing at record highs on Monday on increasing optimism over a potential approval of the lower corporate tax rates bill this week.

• The US$ index is rangebound this morning as the lower chamber of Congress is preparing to hold a vote on the tax package today.

  China – The World Bank marginally upgraded Chinese GDP growth rate for 2017 to 6.8%, from 6.7% forecast in October, on the back of strengthening household incomes and a recovery in global trade.

• Nevertheless, estimates for 2018 and 2019 suggest growth is set to gradually comed down to 6.4% and 6.3%, respectively, amid a continued domestic policy tightening.
• “The authorities have undertaken a host of policy and regulatory measures aimed at reducing macroeconomic imbalances and limitgin fincnail risks without notable impact on growth. As a result, 2017 has been a successful year for China on many fronts,” the report read.

  Germany – Business confidence held up close to the highest in years with both measures of current situation as well as outlook coming in strong.

• The report follows positive Markit PMI surveys that saw both manufacturing and services sectors posting good performance amid strengthening business outlook, increasing orders and lower unemployment.
• IFO Business Climate: 117.2 in December v 117.6 in November and 117.5 forecast.

  UK – British businesses are fearing changes to the labour market regulations following Brexit will make the nation a less attractive investment destination over the next five years, the latest CBI survey showed.

• Around 2/3s of surveyed highlighted increasing pessimism about the UK outlook compared to 50% in 2016 and 25% in 2015.
• Businesses highlighted a potential difficulty in finding the right staff citing a potential skills gap as their biggest concern amid uncertainty regarding the future relationship with the UK.
• On a positive side of things, the report cited manufacturing orders hovering around a three-decade high in December amid an economic recovery elsewhere in Europe and a drop in the British pound.
• Industrial order book balance remained at +17 in December, the joint highest level since August 1998.

  Spain – Catalonia will hold regional elections this Thursday after the national government dismissed the regional office and the Catalan Parliament in late October and called new elections in an effort to take the heat out of the political crisis.

• Last week, the ousted leader of Catalonia Carles Puigdemont addresses his supportrs ahead of the vote in the Catalan city of Igualada using satellite from Belgium.
• Opinion polls show that PM’s Popular Party is looking to record a major defeat in upcoming elections, although another anti-independence party (Cuidadanos) is expected to make major gains.

  South Africa – Cyril Ramaphosa secured leadership of the ANC party eyeing the President seat in 2019.

• Ramaphosa has pledged to kickstart growth, rebuild investor confidence and bring a 28% unemployment rate down through the establishment of special economic zones, tax reforms and other business-oriented incentives as well as increased infrastructure spending.
• The target is to accelerate economic growth to 3% next year and 5% by 2023 compared to a meagre 0.7% forecast by the government in 2017.
• The rand is up more than 6% against the US$ since the start of December while yields on 10y government bonds fell nearly 55bp to 8.7% since last Friday when expectations for a Ramaphosa victory began to build up.

  Currencies US$1.1805/eur vs 1.1787/eur yesterday  Yen 112.44/$ v 112.05/$  SAr 12.754/$ vs 13.478/$  $1.340/gbp vs $1.343/gbp  0.768/aud vs 0.769/aud  CNY 6.616/$ vs 6.607/$.   Commodity News Precious metals:          Gold US$1,263/oz vs US$1,257/oz yesterday

• Gold spot price advances ahead of the last legs of the proposed Republican tax code reform, with House and Senate planning to vote by Wednesday. Market confidence grew as the Republican-controlled US Congress appeared all but certain to pass the sweeping tax legislation this week following further support by two Senate Republican holdouts on Monday.
• Despite short-term expectations that passing the tax reforms and getting the bill signed will boost interest in risk assets, raising interest rates and the dollar, gold prices edged higher. Optimism surrounding the bill has helped equities to continue their sustained growth, however the dollar index remained subdued as investors try to forecast its ultimate impact on economic growth with signals of a flattening yield curve. Outgoing Federal Reserve Chair Janet Yellen mirrored with the sobering assessment that the reform will give a short-term bump, but no longer-term boost.
• That being said INTL FCStone analysts are wary of gold’s upside potential with “higher equities, surging bitcoin prices, and the possibility that the tax bill could trigger a modest short-term uptick in both the dollar and US yields”.

   Gold ETFs 71.8moz vs US$71.7moz yesterday Platinum US$913/oz vs US$882/oz yesterday Palladium US$1,019/oz vs US$1,037/oz yesterday Silver US$16.15/oz vs US$15.96/oz yesterday             Base metals:    Copper US$ 6,905/t vs US$6,796/t yesterday

• Rising production across China is silencing slowing demand concerns as refined copper output jumps c. 10% yoy to 786,000 tonnes, the highest rate in over three years according to data from the National Bureau of Statistics. Smelters across the nation are capitalizing on elevated copper prices, driving margins. Smelting facilities are also working at capacity to offset October’s disappointing refined import figures, with cargoes falling 5% over the first 11 months of the year.
• The rise in forecast economic growth for China by the World Bank signaled broad growth across industrial metal prices, as personal consumption and foreign trade are expected to boost growth to 6.8%.

Aluminium US$ 2,074/t vs US$2,047/t yesterday

• Slowing winter demand for aluminium is expected to see prices retreating from the three-day advance.

Nickel US$ 11,830/t vs US$11,250/t yesterday Zinc US$ 3,196/t vs US$3,199/t yesterday Lead US$ 2,561/t vs US$2,502/t yesterday Tin US$ 19,350/t vs US$18,875/t yesterday             Energy:            Oil US$63.1/bbl vs US$63.6/bbl yesterday

• US shale output is set to rise for the 13^th consecutive month on sustained oil prices, as the Energy Information Administration increase their forecast by 94,000 bpd to 6.41 million bpd.

Natural Gas US$2.756/mmbtu vs US$2.711/mmbtu yesterday Uranium US$24.40/lb vs US$24.40/lb yesterday   Bulk:    Iron ore 62% Fe spot (cfr Tianjin) US$72.3/t vs US$68.1/t – Iron ore prices rise as China clean air policies drive demand for better quality ores

• Iron ore prices are rising again as China tightens its environmental policies requiring the use of better quality iron ore for more efficient steel production.
• Demand could also expand into next year as rising profits encourage steel mills to increase production

Rio Tinto embarks on automation roll out at Pilbarra iron ore operations

• Rio Tinto continues to expand its fleet of autonomous haul trucks with a new agreement with Caterpillar and Komatsu to convert traditional trucks to autonomous vehicles
• Project scheduled for completion by mid-2019 should increase the number of autonomous trucks in Rio’s fleet by 50%, allowing its mine to run entirely in AHS mode once fully deployed, projects are expected to make significant contribution to $5bn productivity programme

Chinese steel rebar 25mm US$742.7/t vs US$742.3/t   Thermal coal (1st year forward cif ARA) US$90.6/t vs US$89.1/t

• Mining giant BHP Billiton announced the preliminary withdrawal from the World Coal Association citing a disagreement over climate change mitigation. The company may also remove its status within the US Chamber of Commerce over concerns from investors over membership of groups which actively criticize the Paris climate accord and rejected targets to increase use of renewable energy sources.
• While BHP has cut emissions by c. 61% over the last six years to 2016, it still remains among the world’s top emitters, with 21% revenue from coal operations. The company, which is targeting net zero emissions from its operations in the second half of this century, aims to “continue to call out material differences where they exist and will take action where necessary” BHP chief external affairs officer, Geoff Healy.
• While a positive move, activists on climate change foresee slow progress, with a need for coal-producing companies to “realise thermal coal must be phased out faster or the world can’t meet its Paris climate targets” (Ian Dunlop, former president of the Australian Coal Association).

Adani Group cancels A$2bn contract to build the Carmichael coal mine in Australia

• Adani has cancelled a contract with Downer, the Australian services company for the construction of the Carmichael coal mine.
• The decision comes after the vetoing of a A$900m low-cost loan to Adani by the Queensland state government and the failure of Chinese investors to also back A$15.5bn construction of the new mine.
• The fall in thermal coal prices, international environmental opposition and the failure of Chinese investors to fund the project are significant impediments to the project.

Premium hard coking coal Aus fob US$236.1/t vs US$236.1/t             Other:   Tungsten APT European US$295-300/mtu vs US$293-300/mtu last week Cobalt LME 3m US$72250/t vs US$72250/t yesterday

• Automaker BMW added fuel to the fire for rapidly growing cobalt demand as it announces the plant to offer 25 electrified vehicles by 2025, drawing a 10-fold requirement for car-battery raw materials such as cobalt and lithium. CEO Markus Duesmann notes that BWM are set to sell a minimum of 100,000 cars this year which are at least partly powered by the technology and notes growing competition to secure five- and 10-year supply contracts.
• With VW and Daimler AG boosting European investment into battery-powered vehicles, committing over $40 billion in the next five years, booming EV demand is forecast to quadruple demand in excess of 450,000 tonnes by 2030.

  Company News Acacia Mining (ACA LN) 181 pence, Mkt Cap £743m – US$45m sale of Hounde royalty

• Acacia Mining reports the sale of its 2% net smelter royalty over the Hounde mine in Burkina Faso for US$45m.
• The company has held the royalty over the mine, which is owned by Endeavour Mining and reached commercial production in October, since 2010.
• The disposal of the royalty, which was purchased by Sandstorm Gold in a competitive tender. We note that Sandstorm Gold merged with the discoverer of the 3moz Hot Maden deposit in Turkey, Mariana Resources, in July this year.

Conclusion: The disposal of the Hounde royalty, in conjunction with the remedial action taken in response to the new measures on concentrate exports from Tanzania at the Bulyanhulu and Buzwagi mines, should inject further resilience into Acacia Mining’s balance sheet.   Avesoro Resources  (ASO LN) 1.95pence, Mkt Cap £104m – Completion of Youga and Balogo acquisitions

• Avesoro Resources reports that it has now completed the previously announced US$20m (£15.2m) acquisition of the Youga and Balogo gold mines in Burkina Faso from its 73.5% owner, Avesoro Jersey Limited.
• The company describes the transaction as “transformational” adding the expected 110,000oz pa of gold production from Burkina Faso to the 70-80,000 oz from the New Liberty mine in Liberia, and offering additional future production growth opportunities.
• Commenting on the conclusion of the acquisition, CEO, Sam Umurhan, said “With the completion of the acquisition and resulting growth in our portfolio, the Company will end the year having taken a significant step forward in achieving its stated plan to become a premier mid-tier African gold producer.”
• The acquisition was financed by a placing of new shares at 1.9p/share.
• Since gaining control of the former Aureus Mining, Avesoro Mining has significantly improved the New Liberty gold mine in Liberia with improvements to the process plant to boost recovery and eliminate bottlenecks and has re-engineered the mine plan to improve returns through a shorter mine life at higher throughput.

Conclusion: The acquisition of an additional 110,000oz pa of gold production in Burkina Faso should put Avesoro in the thinly-populated 200-250,000oz pa, mid-tier gold producer range in the London market and hence offer a wider range of options to investors.   Base Resources (BSE LN) 16.5 pence, Mkt Cap £123m –Toliara Sands acquisition and A$100m fundraising

• Base Resources has announced a binding agreement to acquire the Toliara mineral sands project in Madagascar. The company is to acquire an initial 85% interest for US$75m and the remaining 15% interest for a further US$17m payable as specified milestones in project development are achieved. The vendor is World Titane Holdings.
• The deposit contains a measured and indicated resource of 612m tonnes at an average grade of 6.7% heavy minerals with a further, implied, inferred resource of 245mt at an average grade of around 5%.
• Mining trials and metallurgical test work completed to date “support a simple dry mining operation and technically straight forward process flowsheet.”
• “Base Resources’ development plan should see the Toliara Sands Project in production in mid-2021.”
• In order to finance the initial US$75m tranche of acquisition funding, Base Resources has announced a partially underwritten share placement to raise A$100m at a price of A$0.255/share. We note that “This acquisition is conditional only on Base Resources completing an equity raising for a minimum of A$80 million to partially fund the acquisition costs.”

Conclusion: The Toliara acquisition provides Base Resources with an alternative asset to the declining Kwale mineral sands operation in Kenya.   Bluebird Merchant Ventures (BMV LN) 2.25p, Mkt Cap £4.2m – CEO commits to fund Feasibility on Gubong gold project in South Korea

• The CEO of Bluebird Merchant Ventures, Mr Colin Patterson, has personally undertaken to fund Feasibility Study work on the re-opening of the Gubong Gold mine in South Korea.  Bluebird has a commitment with Southern Gold to spend US$0.5m on this work to qualify for the 50% stake it holds in the mine.
• Patterson has also taken the A$250,000 placement in Southern Gold on behalf of Bluebird, which was also part of deal for the 50% stake.
• The directors reiterate that they do not intend to place shares in Bluebird till the share price reflects reasonable value for the Gubong project
• Other soft loans of US$0.5m to the company by management and key associates have also been extended to various dates from May 2018 and carry a coupon of 8%.
• Assays from the recent underground and surface sampling programs are due in January.
• Colin Patterson and Aidan Bishop are also taking 100% of their respective remuneration in shares with the company also implementing a salary sacrifice mechanism for other members of the board and key management reducing cash outflows to minimal levels.
• The Bluebird team recently re-opened a number of portals into the Gubong gold mine abseiling 50m down a 2x4m concrete lined incline shaft which may have been the main production shaft for the mine.
• Bluebird also accessed ‘adit 4’ for a total distance of 250m which appears to give access a number of unmined narrow veins.
• Former drill results show high grade gold intersections with 17,715m drilled in 52 holes from 1968-2013
• Southern Gold, which holds the licenses, drilled a further five drill holes from 2014-15.
• Best results include:
  • 1.6m at 27.9g/t Au from 845m, 1.5m at .9g/t from 347m, 3.0m at 15.2g/t from 442m, 0.9m at 8.4g/t from 111m
• The ability to see and sample ore from underground should enable the company to fast track its way through exploration to production enabling early cash flow generation from small scale mining if and when permitted.
• The Gubong mine was South Korea’s second richest gold mine and was closed in 1971 at a time when gold prices were around US$38.9/oz.
• The company also has a new website at www.bluebirdmv.com

Conclusion:  It is unusual to see a smaller mining company CEO make such a positive and firm commitment to his company.  Today’s statement sets Bluebird apart from many other juniors as it indicates significant confidence in the Gubong project as well as a commitment by management to preserve shareholder value through the ongoing funding of the Feasibility Study through internal finance.  We look forward to further news flow in the new year on underground and surface sample assays. *SP Angel act as broker to Bluebird Merchant Ventures   European Metals (EMH LN) 37 pence, Mkt Cap £47.9m –Cinovec Northwest resource and update on metallurgy

• European Metals Holdings reports that “the Cinovec NorthWest Reasource has … been added to the Czech State resource register.” A similar status was granted to the Cinovec South resource in February this year and was described as “the first step in the process for the granting of a mining permit.”
• The overall Cinovec deposit currently has 372m tonnes of indicated resources at an average grade of 0.44% Li2O and a further inferred resource of 324m tonnes at an average grade of 0.39% Li2O, making it one of the world’s largest lithium deposits. The split between the different parts of the deposit is not disclosed in today’s announcement.
• The company has also provided an update on recent optimisation studies which “has demonstrated the ability to reduce roast temperatures and duration which can result in significant cost savings both in CAPEX and OPEX.”

Conclusion: The announcement today provides encouragement on progress towards applying for a mining licence and on potential cost savings in the process plant. There appears, however, to be no indication of the timetable for either the completion of feasibility work on the project or on the possible application for mining permits.   Sunstone Metals (STM AU) A$0.023p, Mkt Cap £26m – Bramaderos shows interesting copper and gold grades in trenching in Ecuador

• Sunstone Metals report long intersections of gold and copper in surface trenching at their Bramaderos project in Southern Ecuador.
• Trench assays show:
  • 74.3m grading 0.69g/t gold and 0.15% copper, including 51.1m at 0.81g/t gold and 0.18% copper.
• Previous drilling done in 2001 also shows:
  • 248.1m grading 0.56g/t gold and 0.14% copper to the end of hole starting at just 9.14m depth
• Furthermore, mineralisation at the end of the hole returned 0.93g/t gold and 0.22% copper over 2.2m.

Conclusion:  These are promising results given their near-surface location. The challenge is now for Sunstone to show bulk tonnage potential with further drilling. The Sunstone press release contains a cross section of the drill hole and how the geology potentially connects between the trench results and previous drilling at Bramaderos.     Analysts John Meyer – 0203 470 0490 Simon Beardsmore – 0203 470 0484 Sergey Raevskiy – 0203 470 0474 Phil Smith (Technology) – 0203 470 0475 Zac Phillips (Oil & Gas) – 0203 470 0481   Sales Richard Parlons – 0203 470 0472 Elizabeth Johnson – 0203 470 0471   SP Angel                                                             Prince Frederick House 35-39 Maddox Street London W1S 2PP   *SP Angel are the No1 integrated nomad and broker by number of mining brokerage clients on AIM according to the AIM Advisers Ranking Guide (joint brokerships excluded) ⁺SP Angel employees may have previously held, or currently hold, shares in the companies mentioned in this note.

WTI $57.16 -14c, Brent $63.41 +18c, Diff -$6.25 +32c, NG $2.74 +13c Oil price Mixed fortunes yesterday, Brent rallied when the Nigerian strike was announced and even when it appeared to be off, still gained on the day. I expect more strike action into the new year with elections in January ensuring political grief. Range Resources Range has returned from a long suspension and whilst the inevitable selling by investors who had been waiting for this opportunity to happen has occurred I think that when the story is told about ‘new Range’ it will be quite interesting. At the moment there is a well drilling on Beach and I expect the waterflood to be delivering about a third of production going forward. Expect plenty of news in the new year, a full update on the Indonesia asset should be forthcoming and of course a detailed update on the Trinidad work programme. Along with how the drilling company is going to fit in and create value for Range, complete with a corporate update and an analyst visit 1Q there will be much to hear from the company. Zenith Energy Zenith has released an operational update on wells Z-28 and Z-21 in the Zardab field in Azerbaijan. This where I recently visited and despite having some continued technical problems the prize is now definitely in reach. Having cleaned out to 3,574m it can now be cleaned to TD of 3,944m which is a ‘major accomplishment’ and they are ready to run a CTU to TD. They have encountered a leak from the wellhead which is unfortunate but repairable, with the holidays coming up it may be January before the resin compounds are able to be sourced and installed. With the well showing very strong prospective pressure there is a serious incentive to achieve success in the well and it looks like once the repair is completed this may happen. At Z-21 the civil works are complete and with the wellhead pressure up to 4,115 psi and the workover rig being mobilised right now this also looks very promising. Sorting these historic problems isn’t easy but are potentially very rewarding and the company remains a very attractive play with its low cost model with serious upside. Hurricane Energy After the company raised well over $500m in the summer the shares were bound to mark time as indigestion set in and newsflow seemed a bit scarce. In recent days however there has been plenty for investors to get their teeth into with the better than expected CPR followed by news from the visit to Dubai by shareholders and analysts. The visit was extensive and we had full access to the Aoka Mizu in Drydocks World in Dubai where the transformation is taking place. With extensive presentations on the whole of the West of Shetlands portfolio reminding us of the potential upside and technical evaluations showing how the EPS at Lancaster is on track for 1H 2019 we were ready to see the FPSO. The advantage of having visited a number of shipyards around the world is one of comparison, in this case Drydocks World came out with flying colours on all fronts. Boxes that need ticking in my view include good quality and plentiful workforce at all levels, above average spec kit, including some of the biggest cranes anywhere and an air of efficiency by the Hurricane operations team. Now, the company line is that the Aoka Mizu needs to sail away by 2Q 2018 in order to be on site ahead of the weather window closing and whilst I dont expect any change of schedule from them, I would say that barring any unforeseen problems they are probably  somewhat ahead of the game at the moment. As we move towards the Lancaster EPS becoming more of a reality, I expect the Hurricane share price to start to reflect that and whilst I understand that with some, if not most of the potential partners keeping their powder dry it will not fully discount that although speculation should rise in due course. It needs only one potential early mover to change the basis and that should be priced into the shares, accordingly I remain convinced that at below 30p the shares are extraordinarily good value. Link Yesterday I had a long chat with Andrew Scott of Proactive Investors. We touched on a number of companies including Echo Energy, Hurricane post my visit, SDX Energy, Savannah Petroleum, President Energy, VOG and Reabold Resources in a wide-ranging discussion about the sector. The link is below… Proactive Investor interview: Echo Energy resumes trading on AIM after proposed Argentinian acquisition And finally… Tonight it’s the Haribo Cup where the Hammers go to the Gooners and the Noisy Neighbours are at the Foxes, will the junior cup provide the chance to end the unbeaten run? And drug cheat Justin Gatlin is ‘shocked’ over doping allegations regarding his coach in today’s papers, funny that Gatling being in a drug story….

WTI $57.30 +26c, Brent $62.23 -8c, Diff -$5.93 -34c, NG $2.61 -7c

Oil price

For a benchmark crude that is facing 2/3 weeks of production down by around 450/- b/d Brent is surprisingly flat, it probably gives off warning signs that the market feels that any temporary shortage of supply can be handled from existing resources. This is not brilliant news for bulls in the market as in the New Year there will have to be an iron discipline to even mark time. Having said that the very fact that around 20x 450/- isnt coming into the market has got to help. With Christmas, month, quarter, half and full year periods coming up there is little for traders to get overly brave about.

Echo Energy

Echo has confirmed its Argentine deal and announces a placing, Open Offer and the suspension of its shares lifted this morning. The deal is as it was first announced on November 1st as a ‘compelling blend of multi TCF exploration potential, appraisal and production’. This is almost an oven ready, de-risked E&P company that can deliver to shareholders from a standing start, indeed I expect drilling and seismic work to be under way early in the new year. Newsflow will not be a problem and looking at what must be conservative numbers neither will be the size of the prospects. The company are raising £6.4m via a placing of 36.4m shares at 17.5p which was the pre-suspension price and existing shareholders will get an Open Offer in January to subscribe for another £2m worth of stock at the same price. I have written up the deal at length in previous blogs and think that this is an interesting opportunity in a country that is very much a hot destination in the industry. I managed to have a chat with CEO Fiona MacAulay and the link is here. Core Finance CEO interview: Fiona MacAulay of Echo Energy

Zenith Energy

I mentioned last week that I had been to visit Zenith Energy and spend some time with senior management in Azerbaijan, ZEN is a low-cost onshore producer in this mature but substantial oil province. Zenith has production of around 350 b/d with impressive plans to substantially increase this number through development and using technological expertise and has plans to get to 3/- b/d by 2020. The company has very low costs and thus these cash generative assets can work at oil prices significantly lower than those of today. I visited the Muradkhanli oilfield which was discovered in 1971 and has produced over 16m bbls of oil to date and saw the wells M-63, M67 and M87 all of which are being worked over. The company has decided that there is a need here for electrical submersible pumps and are sourcing these at the moment. The wells have a high water cut but the field performance has so far been predicated on such behaviour and once up and running will be very profitable and close to a pipeline. I also visited the Zardab field where well 2-28 has a high impact workover under way and also well 2-21 which had a freak blow out in October. Pressure here continues to rise and is being monitored before being reentered. The field shows scope for sand management to avoid build up and could become very profitable indeed. At present Zenith is concentrating on workover of these wells and achieving cash flow from them, in due course ambitions are much higher, with the opportunity to get ahead with an infill drilling programme that could make serious inroads into the substantial reserve base. This will be helped by the fact that Zenith is in the process of buying its own new rig which when on site make a significant difference. That reserves figure of 2P proved and probable is 32.1m in a CPR this year and it carries an NPV of $435m at a 10% discount. You wouldnt have to make many inroads into that to make the company look extraordinarily cheap. Despite publicised difficulties with old Russian wells looking like a fly tipping operation, staff on site are confident of ultimate recovery. I met with Mike Palmer, COO who is very impressive and also a number of other senior geologists who are amongst a number of highly respected operators in the region. Senior management, including Andrea Cattaneo the CEO, are clearly not averse to working on site and pooling intelligence in order to improve operational results. Zenith has a good management team, strong enough finances and a very substantial reserve base all of which give the company substantial growth potential. Very much one for the watch list…

Savannah Petroleum

Savannah has announced that it has put in place a strategic partnership with ASMA Capital Partners, who manage the Islamic Development Bank’s IDB Infrastructure Fund II.  The partnership also comes with an equity investment of up to US$90m, of which US$30m will be done initially. With announcements on the price and the re-emergence from suspension expected very soon it is a busy time for SAVP but it all looks highly promising, and looks like a vote of confidence in their deal to have a long-term developmental institution getting involved in the Savannah story.

Hunting

A trading statement from Hunting this morning, unsurprisingly trading is ‘in line with expectations’ and EBITDA is towards the upper end thanks to Hunting Titan in the 2H. This perforating business is at the heart of the high end onshore service offering and pretty much my favourite part of Hunting. Elsewhere a bit mixed but heads above water and you can see the company working hard to strengthen the balance sheet probably with an eye to a return to the dividend list some time next year.

Ophir Energy

A pre-Christmas Fortuna update from Ophir who announce that they are ‘prioritising’ one of the alternative funding solutions after the disappointment of the Chinese. This time it is a ‘leading asian bank’ for the order of $1.2bn but the bad news is that it won’t happen until the new year.

And finally…

In haste, the gutless spineless English cricketers who spend more time in the bar or in the nick than they do at the crease surrendered the Ashes this morning. Never one to complain about losing fair and square but this was a pathetic capitulation that was almost entirely avoidable… In the footy the Noisy Neighbours devoured Spurs 4-1 whilst the Red Devils saw off the Baggies 1-2. Chelski beat the Saints 1-0 and the Gooners did the Magpies by the same score. With the Cherries conceding 4 against the HubCap Stealers and Stoke 3 against the Hammers there were plenty of goals around.

Ep. 82:  BIG Changes for Retail Traders in 2018
Trade Forex and Cryptocurrency CFDs with XTB and get a 15% spread rebate – exclusive to TBT listeners! www.twoblokestrading.com/xtb

In this Episode:
 

The Crypto Trading Competition is finally complete and we sit down with the winner.  Listen and discover what his trading strategy is (SPOILER ALERT…..his method may shock you as it did us).
Not shockingly, we learn that Tom was not the winner of the Crypto Competition!
We chat with Andrew Saks-McLeod, CEO of FinanceFeeds, about big changes to the retail FX landscape for the New Year and how you can prepare yourself.  
Brandon is back and we set you up for some really cool things to come from the Blokes.


Trader interview – Andrew Saks-McLeod – Around the World in 30 Minutes
 

Andrew Saks-McLeod, CEO of FinanceFeeds, a veteran of over 25 years in the financial sector, with deep connections to some of the most influential people in the FX space, is back on the podcast dropping more bombs that you need to know to stay up to date.

 

This time Tom passes out while Andrew unleashes what you need to know about the upcoming MiFID 2 (Markets in Financial Instruments Directive) rules for the New Year.

 

Come January 3rd the rules are changing across continental Europe and the UK.  This new legislative framework will strengthen investor protection and improve the functioning of financial markets making them more efficient, resilient and transparent.

 
MiFID 2 sets out:
 

Conduct of business and organisational requirements for investment firms.
Authorisation requirements for regulated markets.
Regulatory reporting to avoid market abuse.
Trade transparency obligation for shares. 
Rules on the admission of financial instruments to trading.

 

Andrew breaks down all of this and fills our brains with why these changes are a GOOD thing for retail traders, how it will impact the average person, and what you need to do to stay safe and take advantage of these increased protections.

 

Make sure to sign up for FinanceFeeds weekly newsletter so that you can stay clued up on what is happening across the FX space

 

https://financefeeds.com/ – Stay up to date with the latest breaking news in the FX space.

https://financefeeds.com/jobs/ – Looking for a career in the exciting financial space?  FinanceFeeds has you covered!

https://financefeeds.com/women-of-the-industry/ Maybe you are a woman who wants to get into the FX space too….FinanceFeeds has a place for you too!

https://financefeeds.com/love-financefeeds-how-about-you-share-the-love/ if you think Andrew and the FinanceFeeds team are doing excellent work then why not buy them a Pint!

 

Cryptocurrency Trading Competition

 

You can check out the Final results here:  www.twoblokestrading.com/crypto

 

If you want to get involved in trading cryptocurrencies yourself, but missed out on the competition then click that link and sign up for your own demo or live account to get started right away!

 

WTI $57.04 +44c, Brent $63.31 +87c, Diff -$6.27 +43c, NG $2.68 -3c Oil price At this rate with crude up modestly this morning the week may end up being flat or even up a touch, news in the market has tugged the price this way and that reflecting diverse sympathies. The downward pressure has come from agencies reporting higher US shale production and today the EIA  reported that Brazil’s production had reached 3.3m b/d of liquids so far this year which would make them the 9th largest producer worldwide. The inventory numbers provided food for both bulls and bears, the latter didnt like one bit the huge build in gasoline stocks (not unusual ahead of the Christmas holiday) whereas the bulls liked the crude draw, especially at Cushing. Finally, what matters maybe most and that was the closing down of the Forties pipeline taking 450/- b/d off the market for 2-3 weeks for the UK marker crude. SDX Energy Another Morocco update from SDX where the KSR-15 well on the Sebou Permit has now been completed and tested at restricted average flow rates of conventional natural gas into the sales line of 7.52 MMscfd and is now on production. The KSR-16 well has been connected to the existing infrastructure and should be starting test production in around ten days. To try and get some perspective on quite how successful SDX have been at the start of this campaign these two wells ‘now exceed our daily commitments of 6 MMscfd on a stand alone basis. We are now very confident in delivering on our planned natural gas sales rates of 10-11 MMscfd in 2018’. SDX has been very successful in 2017 and with a big campaign of drilling planned next year and with upside potential across the portfolio the shares remain remarkably cheap under these circumstances. President Energy Another company on a roll is President Energy where they announce today significant workover success from the first two Puesto Flores Field wells,, ahead of expectations. PFO-50 tested new intervals totalling 11m net perforated metres giving production of 400 b/d which is 100% better that pre shut-in output. The formerly producing interval has been repaired and successfully tested but is being kept in reserve for future production  due to the success of the new perforated section. There was always a chance that diligent drilling would find such new intervals and it is good news that this has been found so early on in the drilling process. With the PFO-9 producing at 100 b/d the total current gross field production is around 1,500 b/d with two remaining workover wells yet to come. With the December price to PPC of $60.80 per barrel from this field cash flow is growing and looks increasingly positive, and there is much more to come. Savannah Petroleum Months of hard work is coming to a climax as yesterday SAVP announced the indicative price range and formal launch of the placing yesterday. They confirmed that there is to be a placing for institutional investors for the cash consideration portion of the Seven acquisition and that book building has started and is expected to finish today at 5pm. The indicative pricing is 40-50p and at those prices the SAVP market capitalisation would be in the region of £375-400m. The final price should be announced on the 18th +/- and dealings are expected to commence on the 19th. With this transaction close to finalisation and with book building under way SAVP will go into 2018 in a very strong position with substantial production, a stake in a midstream company and significant upside from its Niger drilling campaign which gets underway in Q1. This announcement gives an idea about newsflow and timeline for the transaction, all very positive steps. At that stage I suspect that it will finally take its place in the bucket list initially planned back in June… Amerisur Resources Another catch up after my few days away, yesterday AMER announced a Platanillo-27 update, this well is the 4th on Pad 2N to test the northern extension of the field. This is the 21st well of the Platanillo drilling campaign and has been successfully completed as a medium deviation directional well at a TD of 9,600′ ‘on time and on budget’. Log interpretation indicates 12′ of net pay in the U sand formation and 9′ in the T sand, the N sand was not a target in this well. The company also states that the well intersected the M2 sand and the A limestone and the log data is being evaluated ‘to determine their potential as pay zones’. With a regular procession of good news from AMER and the expected hitting of  production targets which should continue to rise, I am perplexed at the very least why the shares remain at current levels. Sundry Petrofac announced its trading statement yesterday which was in line with expectations at both the profit and debt levels. Order intake is $5.2bn in the ytd and the company is seeing ‘high levels of project activity’ and are ‘maintaining cost competitiveness through operational excellence’. Orders just this week from Basra Oil and BP totalling around $1bn prove that operationally at least PFC is up with, if not ahead of the game. Independent Oil and Gas has announced that it has received a 12 month extension of its licence for the Blythe gas discovery to end December 2018. With first gas expected in mid 2019 life is about to get busier for IOG and I think that the shares are an interesting play having drifted back in recent weeks. And finally… The third Ashes Test in Perth was looking like a strong performance from England until the familiar late order collapse led to a score of 403, probably below par on this track. Failure to build on the centuries by Malan and Bairstow may prove a bad mistake if they can’t get Smith out… The weekend’s outstanding fixture in the Prem sees Spurs visit the Noisy neighbours, many have tried but few have succeeded in recent weeks…The Red Devils go to the Baggies, the Saints visit Stamford Bridge, the Cherries welcome the HubCap Stealers, the Magpies go to the Gooners and the Seagulls host Burnley. With good jumps racing at Cheltenham and Donny and the Sports Personality of the Year on Sunday there is something for everybody this weekend.

TODAY’S FAYRE – Friday, 15^th December 2017

 

 

“I wish I could remember that first day,

First hour, first moment of your meeting me,

If bright or dim the season, it might be

Summer or Winter for aught I can say;

So unrecorded did it slip away,

So blind was I to see and to foresee,

So dull to mark the budding of my tree

That would not blossom yet for many a May.

If only I could recollect it, such

A day of days! I let it come and go

As traceless as a thaw of bygone snow;

It seemed to mean so little, meant so much;

If only now I could recall that touch,

First touch of hand in hand – Did one but know!”

 

 

Christina Rossetti – poet – 1830-1894

 

This has all the hallmarks of making a very exciting game of test match cricket. How typical of England to lose its last 6 wickets for less than 50 runs after magnificent efforts from Malan and Bairstow – all out 403. With Warner and Bancroft happily back in the pavilion, Australia’s Smith is 92 not out and looking in ominously good form – 203 for 3 at the close!

 

Quote of the day from Ian Dale of LBC on twitter – Love the hypocrisy of EU leaders who keep telling us “the clock is ticking” then tell us they’re not ready to start trade talks until March. So glad we’ll soon be out of this corrupt organisation.

 

Yesterday Walt Disney agreed a deal, but yet to be confirmed by the regulators, to acquire many assets from 21^st Century FOX for a consideration of about $60 billion. This news kept the Street of Dreams bubbling over, whilst most investors were suffering from a dose of the collywobbles! Why? President Trump might just NOT get his taxation reforms through the Senate and Congress. Marco Rubio has made it clear he will not support these proposals and dear old Jon McCain is gravely ill. So he may not be able to get Capitol Hill to vote! So unsurprisingly some risk was taken off the table! When the clanger went at the end of the session the three main markets closed as follows – DOW -0.31%, S&P -0.41% and the NASDAQ -0.28%. Oracle (-4%) and Costco posted numbers (+2.34%). The former did not please its acolytes and even though Costco has had a decent run on the rails it cracked on adding 2.34%. The Asian markets were also out of sorts, taking their lead from New York – ASX -0.25, Shanghai Composite -0.8%, Hang Seng -1.1% and the NIKKEI -0.6%

 

Yesterday, London’s main index lost 48 points at 7348, with Sports Direct and Capita both the big losers on the day easing by 10% and 12% respectively. With Mike Ashley having lost his case to pay his brother John another £11 million as back pay from 2007, investors were greatly irritated with the measurable drop in profits despite a 4.7% increase in revenues. Ashley is probably more pre-occupied in attempting to sell Newcastle United for between £250 million and £300 million to Amanda Staveley’s consortium, which may come from the Middle East or the Far East. Since 2014 Sports Direct’s share price has dropped from 900p to circa 350p. Since Ashley owns about 61% of the company, selling the Magpies well would have significant merit by adding to his depleted coffers.

 

This morning in London has been all about the options market where there were huge positions up for renewal. Again the Main 100 index has bobbed around between 20 down to 5 up, where it currently stands now at 7448. Glencore, on a buy note from JP Morgan, has been all the rage for the last few days. BATS were in demand and HSBC has shed a few pennies. Barclays has also been weak on a sale note from Investec. Hennes & Mauritz posted some deeply disappointing sales numbers today – down 2% for the last trading period. The shares, unsurprisingly “suffered the slings and arrow of outrageous fortune!” – Down a whopping 15% – suffering as NEXT has, starting in September 2015 (£79). Today NEXT shares stand at £43.

 

What of the possibility of a ‘Santa Rally?’ I won’t necessarily say that Trump’s tax reform issues have put the kibosh on it. A ‘Santa rally’ has occurred 75% of the time between 16^th and 18^th December over the past 40 years. There is probably more concern about valuations than before. Let’s face it the DOW and the S&P have rallied by 20% or so this year and the NASDAQ by nearly 30%. However London is only up 4% this year as it has been an FX play. The Pound stood at $1.25 in January and it is at $1.33 today and 60% of the stocks are Dollar earners.  But remember there is plenty of money sloshing around and when gilt yields for 10 years only stand at 1.23% and dividends on decent growth companies command yields of between 3-6%, it’s a no-brainer unless one thinks interest rates are seriously on the march. Most fund managers and investors have ruled off this year. However others come into funds at this time of year and consequently tracker funds attract surpluses. My own reading of the situation here in ‘Old Blighty’ is that the rally if there is one, will rather be measured! – Merry Christmas!

 

 

Economic data due this coming week – Friday – US industrial Production

 

David Buik

Market Commentator – Panmure Gordon & Co

 

  D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF ​

Inflation rose to 3.1% in November, the highest in nearly six years, as the squeeze on households continued, though it was mainly down to transportation (airlines) cost, with some carriers capitalising on the demise of Monarch, according to the Office of National Statistics, which posted this data at 9.30am. Also the cost of computer games is on the march. Core inflation remains steady at 2.7%

The most recent data shows that average weekly wages are growing at just 2.2%. Mark Carney, the Governor of the Bank of England, will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2% target. Mr Carney has to write a letter to the chancellor if the Consumer Prices Index (CPI) inflation rate is above 3% or below 1%. With the Pound more resilient than it was last year many economists are of the opinion that inflation should start to come down in 2018. Therefore it would be a surprise if the MPC were to hike rates by 0.25% on Thursday.

Though we have seen signs of a ‘Santa Rally’ at the start of the week, it is hard to be really positive in thinking there is some measurable momentum behind this push, though fund managers will come in to cash resulting in tracker funds benefitting from this largesse. At 11.35am the FTSE 100 is up 19 points at 7472. Oils in the form of BP and Shell are strong on the back of a firmer crude oil price. The everyday perennials such as GSK, Astra, Diageo and Reckitt Benckiser have all added a few coppers here and there. Banks have been uninteresting and as a sector are down 0.25% on average.

 

Of those companies that reported today, sadly Carpetright came out with another marginal profits warning – down 6%. Robert Waters posted an encouraging outlook with more contracts in the bag – +7.5%. Drax’s efforts were uninteresting – down 2%. Balfour Beatty’s show looks like it may be back on the road – +1%. The DOW futures are up 25 points at present.

TODAY’S FAYRE – Tuesday, 12^th December 2017

 

 

“Circling the Sun, at a respectful distance,
Earth remains warmed, not roasted, but the Moon
Circling the Earth, at a disdainful distance,
Will drive men lunatic (should they defy her)
With seeds of wintry love, not sown for spite.

Mankind, so far, continues undecided
On the Sun’s gender – grammars disagree –
As on the Moon’s. Should Moon be god, or goddess:
Drawing the tide, shepherding flocks of stars
That never show themselves by broad daylight?

Thus curious problems of propriety
Challenge all ardent lovers of each sex:
Which circles which at a respectful distance,
Or which, instead, at a disdainful distance?
And who controls the regal powers of night?”

 

Robert Graves – poet and author – 1895-1985

 

 

 

I understand the rationale behind wanting to decentralise Government, thus spreading growth industry and commerce more evenly around the country.

 

My colleague Simon French, Chief Economist at Panmure Gordon has long championed the idea of moving Parliament outside of London for that very reason and no time like the present for starting the move in a couple of years’ time when a purpose made building can be erected in the UK’S second city! That would allow the House of Commons to be restored as a historic palace at a cost of much less than the £6 billion estimate to the tax payer for renovating Parliament for the 21st century!

 

However Shadow Chancellor John McDonnell’s idea of moving the Bank of England to Birmingham is utterly ludicrous! The Bank of England is an extension of the Treasury. Apart from its independent role in setting interest rates, its job is to provide liquidity for the banking fraternity in the World’s largest financial centre! It is also responsible for overseeing regulation and financial stability. If all the major banks are in London, how could the Bank of England do its job effectively and efficiently from Birmingham? Also people who think that technology is the ‘be and end all’ in life are wrong! Inter-personal relationships between market, banking protagonists and regulators are fundamental to sustain an orderly banking system. This nonsense idea to grab a few cheap headlines! In the immortal words of John McEnroe – ‘You cannot be serious!’

 

CityAM’s Jasper Jolly told us yesterday that the London Stock Exchange (LSE) is set to end the year to top the European podium for company floats, bouncing back from a weak 2016 at a crucial time for the exchange. Proceeds from initial public offerings (IPOs) on the London market have been 75 per cent higher than 2016, according to data from accountants PwC. Total funds raised in 91 floats broke through the £10bn mark for the year so far at €11.7bn, well above the €6.7bn raised last year. Who said the City of London’s professional prowess will be trashed by Brexit?

 

The tech sector and telecoms lead the charge to new records on Street of Dreams despite FED rate hike likely on Wednesday. The 3 markets finished as follows – DOW +0.23%, S&P +0.32%, NASDAQ +0.51%. With access to futures on CBOE, Bitcoin traders saw this crypto-currency surged 19% yesterday. Apple will be acquiring the popular song-identification app Shazam for $400 million. Prior to the deal, Shazam was profitable and was used 20 million times a day around the world. Shazam sells ads and makes revenue by referring users to download or stream songs on apps such as iTunes and Spotify.

 

Yesterday the London’s top index gained 59 points to 7453. It looks like a bit of a ‘Santa Rally!’ with insurance companies and energy stocks leading the charge. Market makers went about their business though volumes were nothing out of the ordinary.  This morning higher energy costs seem to blight progress in Asia where most bourses were rudderless, with investors lacking conviction Towards the close markets looked as follows – ASX +0.17%, Shanghai -0.57%, Hang Seng -0.46%, Nikkei -0.21%.

 

The US department of justice has dropped its deferred criminal charges against HSBC. This action is probably due to the fact that management team headed by Douglas Flint and Stuart Gulliver have made sure the bank has complied with all its regulatory requirements since its fine of $1.9 billion for money-laundering in countries such as Mexico and possibly Iran and North Korea back in 2012 . London’s No 1 index is set to open up 16 points.

 

 UK Companies posting numbers this week – Tuesday – Carpetright, Drax, Polar Capital, Balfour Beatty, NCC, Wednesday – Bellway, Dixons Carphone, PurpleBricks, Wood Group, Thursday – PZ Cussons, Capita, Sports Direct, 888 Holdings, Bunzl, Ocado, Petrofac

 

US companies posting interim results this week – Thursday – Oracle, Adobe Systems, Jabil Circuits, Costco

 

Economic data due this coming week – Tuesday – UK Inflation Data, UK House Price Index, US PPI, Wednesday – UK Wage Growth, UK unemployment data, US CPI, US Federal Reserve monetary policy decision, Thursday – UK Retail sales, MPC Decision Meeting, US Retail sales & US PMI Composite, Friday – US industrial Production

 

David Buik

Market Commentator – Panmure Gordon & Co

 

  D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF ​

Ep 81 – How to Professionalise Your Trading
Trade Forex and Cryptocurrency CFDs with XTB and get a 15% spread rebate – exclusive to TBT listeners! www.twoblokestrading.com/xtb

In This Episode:

Owen goes AWOL
Tom earns his pay
Brandon unloads with the top 5 tips for professionalising your trading

Trader Interview – Brandon Turner on “How to Professionalise Your Trading”
As Owen as now sadly moved on to pastures new the new ‘Bloke’ Brandon is put under the spotlight in order to prove his credentials and enlighten the UBER sophisticated TBT listeners… Scores out of 10 to blokes@twoblokestrading.com 😀

Key Points Covered:

Have a trade plan and journal from DAY 1
Stick with ONE strategy until successful
Once confident look to ‘Size Up’
Your account size has no bearing on your future earnings potential
“Resilience and the ability to eat shit and not give up” Trading is not easy (else everyone would do it)… stick at it and suck up the bad times… they will come!

Crypto Trading Competition (Just Hours to Go!)
Although at the point of publication the competition has finished at the point of recording there are just hours to go… take a look at the final results here: www.twoblokestrading.com/crypto

WTI $57.36 +67c, Brent $63.40 +$1.20, Diff -$6.04 +53c, NG $2.77 +1c Oil price Even with a decent bounce on Friday the week ended on a downward note, WTI lost $1 and Brent 33c as geopolitics wrestled with inventory oddities and of course the strong greenback encouraged by a likely rate hike didnt help. I am in Dubai for a few days so will try and test the mood out there. Hurricane Energy The long-awaited CPR from Hurricane is out this morning covering all the Rona Ridge assets excluding the Lancaster field and delivered by RPS Energy Consultants Limited. By any yardstick this is a very substantial resource increase, Hurricane’s total 2P reserves and 2C contingent resources are increased by ∼231% to 2.6bn barrels of oil equivalent. At Halifax, RPS concludes that it has similar reservoir properties to Lancaster, and importantly, similar oil types which may even come from the same aquifer. 2C contingent reserves at Halifax of 1,235 million barrels of oil equivalent is another piece of independent evidence to back the case for this discovery. As for Lincoln, again RPS report that similar reservoir properties to Lancaster and again, similar oil types. This confirms the Hurricane view that the Brynhild Fault Zone separates Lancaster from Lincoln and that the O/W contact is materially deeper than at Lancaster. Looking at Lincoln compared to Warwick, whilst RPS ‘recognises that they have the potential to be a single hydrocarbon accumulation’ they have elected to take a more conservative approach by evaluating them as separate structures, at least until a well is drilled at Warwick. Nevertheless, RPS give 2C contingent resources at Lincoln of 604m barrels of oil equivalent on its own. With Warwick as yet undrilled, it is assigned prospective resources of 935m stock tank barrels of oil and a chance of discovery of 77% given the proximity to the Lincoln discovery and the Lancaster field, very promising indeed. One can draw from this that whether or not they are separate structures or a single accumulation, the Greater Warwick area are comparable in resources potential with the Greater Lancaster area with a combined recoverable resource potential of 1.5bn barrels of oil equivalent. I have spoken to CEO Dr Robert Trice this morning and he is clearly delighted with this CPR, he feels it has been done fairly and specifically with regard to Warwick, has assessed the potential objectively. The fact that the same type of oil is prevalent in Lancaster, Lincoln and Halifax franks the company’s initial work and the testing programme. On that note he fully understands that further test wells will need to be drilled and oil will have to be flowed to surface in order to further de-risk the whole project. What can be said is that this independent corroboration of the information that has been placed in front of shareholders over the last two years or so ‘validates the geological model’ and makes Hurricane a very exciting vehicle in the next year or so. I say that because with the plan to go to EPS of Lancaster straight away now looking eminently sensible, the de-risking of the rest of the project could have a significant value add to the company. At this stage they have confirmed that they are ‘committed to achieving maximum shareholder value’ and to monetising the ‘vast resources’ via farm-out and ultimate sale of the company ‘at the appropriate time’, ie when it receives an offer it believes reflects that value to shareholders. SDX Energy SDX has announced that the KSR-16 development well is a gas discovery with 14.2m of net conventional natural gas pay in the Hoot formation. As with previous wells this will be connected to existing infrastructure and on production within 30 days. This is another successful well from SDX and again exceeded pre-drill estimates, this time by around 50%. The rig now moves off to drill ELQ-1 on the Gharb Centre Permit, a recently acquired licence. In the meantime the company expects KSR-15 to be on test production early next week. This success has allowed the company to ‘accelerate new customer acquisition activities’ and may result in them bringing forward the start of their forecast gas sales. All in all further success for SDX and with ambitious plans for drilling and development across the portfolio I may have to bang on again about how exceptionally good value the stock is. Pantheon Resources An operational update from PANR this morning on the logging operations at VOBM#4 where Schlumberger has completed its work. Electric logs indicated the presence of hydrocarbons in a ‘potentially significant reservoir in the targeted Wilcox formation confirming the natural gas flows encountered during drilling’. All the usual caveats apply as until flow testing is completed nothing can be taken for granted but this looks pretty good to me. The only drawback is that they are bringing in a cheaper workover rig for that process which will add to the timing of the next news. However, given they werent even looking for the Wilcox this is highly encouraging news. Genel Energy Genel has confirmed that the Peshkabir-3 well has been extremely positive and the field, in the Tawke Licence is now has now tripled to 15/- bopd.I am seeing Genel before Christmas and looking forward to an update. Premier Oil The E.ON acquisition is the gift that keeps on giving to Premier and there is plenty more where that came from. Today the company announce the sale of its 30% stake in the ETS pipeline to CATS for $31.6m, for an asset that is totally core it is a great piece of business, not as good as buying the whole E.ON business for $120m in 2016. Even Dick Turpin wore a mask….. And Finally… In some haste after last night the Prem looks wrapped up as an early christmas gift for Pep. In the Champions League draw they got Basel which is ok, the Red Devils got Sevilla, Spurs will play Juve, the HubCap Stealers Porto and Chelski pulled out Barca…

 

TODAY’S FAYRE – Monday, 11^th December 2017

 

“The Love a Life can show Below
Is but a filament, I know,
Of that diviner thing
That faints upon the face of Noon—
And smites the Tinder in the Sun—
And hinders Gabriel’s Wing—

‘Tis this—in Music—hints and sways—
And far abroad on Summer days—
Distils uncertain pain—
‘Tis this enamors in the East—
And tints the Transit in the West
With harrowing Iodine—

‘Tis this—invites—appalls—endows & mda sh;
Flits—glimmers—proves—dissolves—
Returns—suggests—convicts—enchants—
Then—flings in Paradise— 

 

Emily Dickinson – poet – 1830-1986

 

Now that last week’s frenetic activity over the EU/UK negotiations has settled down with the greatest political compromise in living memory, I think it is fair to say that there is no more than an agenda to talk about over how the UK leaves the EU, at what cost plus the continuing influential role of the ECJ as well as a basis of retaining the status quo over the Irish border and that of Northern Ireland.  I think a sieve has rather less holes than this rather nebulous agreement.  ‘Hard Brexiteers’ will almost certainly pick up the cudgel and make their feelings very strongly felt.  I cannot see anyway that the Cabinet hardliners and their key back benchers will buy this potential basis for agreement in a month of Sundays, despite Michael Gove’s surprisingly conciliatory tone towards the achievements of PM Theresa May. However I am very much of the opinion that compromise is the only way of achieving a satisfactory outcome to BREXIT in the light of the Government’s wafer-thin majority and the EU’s uncompromising attitude and reluctance to negotiate meaningfully. Of course, it would say why should it? However what I think has become clearer is that ‘NO DEAL’ would not really suit the EU.

 

When all factions have time to look at the small print and with only just about 14 months to ago to agree a tortuous and unbelievably complicated trade agreement that has over 1400 tricky clauses to be successfully dealt with, it would come as no surprise, if a push came to a shove, a very strong case for ‘NO DEAL” was made by the hardliners.  PM May deserves a great deal of credit for agreeing an accord that prevented the EU from throwing its toys out of its pram and allowing both parties to push on with trade talks, subject to a ratified and tacit agreement from the other 26 members. Ireland will be clearly disappointed for being potentially hoodwinked over its borders and potentially a single market, which has no chance of being accepted. Also a wedge seems to have been driven between David Davis, the BREXIT Secretary and Chancellor Hammond.  Mr Davis tells us there will be no divorce settlement without a trade agreement, though the Chancellor believes there is a moral obligation to pay these dues regardless of any agreement.  Also it appears that Mr Davis has backed down over the border deal with Ireland suggesting it was an expression of intent, and not legally binding. Let’s hope that this is not the first of a slew of cracks appearing in a rather flaky agreement? There was also talk of full-alignment in terms of regulation associated with the ‘Single Market and also a continuation of payments to be made to the EU.  That won’t go down well in many quarters of a deeply divided government and country on this fraught issue.

 

Last week, despite huge concern expressed over President Trump’s rather undiplomatic behaviour in calling Jerusalem the new capital of Israel, (despite the fact that investors were buoyed by US tax reforms) and the fraught EU/UK negotiations, which went down to the wire, global equities managed to keep their poise and the main indices closed last week as follow – S&P +0.21%, FTSE 100 +1.28%, European bourses an average of +1.62% and the Nikkei -0.03%. Gold eased by $33 to $1247.00 an ounce, with Brent Crude down by 2.15 to $63.53 a barrel. Non-Farm payroll data was on the whole positive with 228k jobs being created in November and the unemployment rate remaining at a 17 year ‘low’ at 4.1%.  However wage inflation remains anaemic at 2.5% but it is expected to rise to 3% next year. Against that background, the FED is still expected to raise rates by 0.25% on Wednesday of this week. With tax reforms very much on investors’ agenda, banks were in demand and there was ‘buying’ interest in the likes of Boeing, Lockheed Martin, Caterpillar, Honeywell and the tech magnates – Apple, Alphabet, Amazon and Microsoft.

 

Back here in Old Blighty, Sterling bounced around like a cork in a bath between $1.35 down to $1.3390 with punters taking a mixed view on the Brexit negotiations. There was plenty of M&A activity around last week, with GVC bidding £3.9 billion for Ladbrokes which saw the latter’s share price rally by 28% on the day of the announcement.  21^st Century may now sell assets including Sky (ex-news) to Disney for a consideration of approximately $60 billion. Hammerson have joined hands controversially as far as fund managers are concerned, with Intu in a retail property enterprise, which may require a change in business plan with more emphasis on entertainment and leisure, rather than shopping units. Investors were not wholly convinced. Later in the week Vodafone bounced on a ‘buy’ recommendation as did Tesco.  There was some interest in house builders, Barratt and Taylor Wimpey. Saga posted a poor profits warning – down 23% on the week. House of Fraser had its credit rating lowered, as did the owner of Poundland, the South African firm, Steinhoff, to junk status. BAE Systems has landed a contract with Qatar value at £5 billion for 24 Typhoon combat jets. Airbnb is threatening to lay out £1 billion to buy UK luxury travel agents – Hoseasons (70 year old camping business), James Villas Holidays, cottages.com plus brands in Greece, Italy and Croatia. Airbnb carries listings of 3 million properties in 65K cities and towns across 191 countries. Wyndham’s European Villas rentals is also vying for this business. Dixons Carphone posts numbers on Wednesday and investors are expecting to see a 50% drop in profits, thanks to the increasing cost of mobile phones, which has resulted in people retaining their old phones for longer.

 

Finally the CBOE has opened its futures contract for BITCOIN today. Initially it triggered a 19.8% rise in the price of Bitcoin from $13853 to $16609.  There is a school of thought that suggests it may not be easy to ‘short’ a Bitcoin futures contract, according to the US luminary on the subject Nassim Taleb, who has over 200k followers. This is not an investment product for the faint hearted!  

 

UK Companies posting numbers this week – Monday – Photo-Me, Capita, Tuesday – Carpetright, Drax, Polar Capital, Balfour Beatty, NCC, Wednesday – Bellway, Dixons Carphone, PurpleBricks, Wood Group, Thursday – PZ Cussons, Capita, Sports Direct, 888 Holdings, Bunzl, Ocado, Petrofac

 

US companies posting interim results this week – Monday – Casey’s, Thursday – Oracle, Adobe Systems, Jabil Circuits, Costco

 

Economic data due this coming week – Tuesday – UK Inflation Data, UK House Price Index, US PPI, Wednesday – UK Wage Growth, UK unemployment data, US CPI, US Federal Reserve monetary policy decision, Thursday – UK Retail sales, MPC Decision Meeting, US Retail sales & US PMI Composite, Friday – US industrial Production

 

David Buik

Market Commentator – Panmure Gordon & Co

 

  D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF ​

 

TODAY’S FAYRE – Wednesday, 8^th December 2017

 

“He would declare and could himself believe
That the birds there in all the garden round
From having heard the daylong voice of Eve
Had added to their own an oversound,
Her tone of meaning but without the words.
Admittedly an eloquence so soft
Could only have had an influence on birds
When call or laughter carried it aloft.
Be that as may be, she was in their song.
Moreover her voice upon their voices crossed

Had now persisted in the woods so long
That probably it never would be lost.
Never again would birds’ song be the same.
And to do that to birds was why she came.” 

 

Robert Frost – poet – 1874-1963

 

So at 6.50am this morning we heard from the PM that a basis for agreement on the Divorce Bill, Citizens Rights, the on-going roll of the ECJ and the Ireland/NI border issues, had been cobbled together, allowing trade talks to start. Genuinely well done PM May!  You were dealt a horrible hand of cards. Your partner put you in to 4 spades and you only went down one, which metaphorically speaking was a great achievement.  I like the fact that M Juncker paid tribute to you for your tenacity and gentle handling of tricky negotiations.

Not everyone will be pleased.  The issues that will concern people the single market and customs union issue will remain an imponderable as a result of agreement in principle on the Irish border with NI and the question of the on-going roll of the ECJ particularly on regulation throughout the two year transition period.  It has been the start of the end of the beginning. HOWEVER the trade negotiations are fraught with danger and provide a seriously surmountable challenge.

My colleague, Simon French, Panmure’s chief economist makes the point – “The one thing to remember about this deal is that it still doesn’t tell us what kind of UK-EU relationship occurs post-Brexit. For businesses to know that arrangements on migration/ regulation are far more important than the divorce settlement.”  He also makes the following valid points – “A trade deal may not be agreed until well into Q4 2018/ Q1 2019. The EU will ask the UK what type of Brexit it wants in terms of

 

1) Regulatory alignment – That would keep NI/RoI happy and soft Brexiteers content; but it would limit the ability of the UK economy to look markedly different from the EU and get 3rd country trade deals.

2) Regulatory divergence – this calls into question the viability of no hard border, imposes trade frictions between EU/UK but does allow negotiating room on 3rd country trade (think chlorinated chicken and the US).

 

The problem for the government is that the Cabinet and Parliament are divided on this and when the PM has to opt for one it will cause fury amongst the other group. So whichever way you look at it this is a case of difficult conversations kicked down the road.

 

I always try to attend the Spectator’s Carol Service at St Bride’s Church, off Fleet Street – It is the place of worship for journalists.  For those who don’t know it, it is the most beautiful but simple Wren church tucked off the Eastern end of Fleet Street near Ludgate Hill. By attending this service of all the favourite carols, led by a superbly balanced choir with readings from this brilliant magazine’s contributors such as Andrew Neil, Fraser Nelson and Rod Liddle, I always feel that Christmas Festivities are up and running!

 

A decade or so ago, if investors had been looking at the equivalent of Trump, without any legitimacy, declaring Jerusalem as the capital of Israel, the UK and the EU indulging in unholy and unpleasant negotiations, thorough badly handled from a diplomatic perspective by both sides and the added dimension of North Korea not far off antagonising and needling the US into war, equity and bond markets would have fallen out of bed with everyone fleeing for the hills.  Not so today – almost total peace and tranquillity prevails. In fact yesterday the Street of Dreams posted a perfectly satisfactory trading session – the three main markets closed as follows – DOW +0.29%, S&P 500 +0.29% and the NASDAQ +0.54%.  The Dollar gained strength during the session and it was the tech sector together with industrials that gave the market a little impetus. Caterpillar +1.8%, Boeing +1.3% and Nike +1.4% captured the imagination. Coca-Cola -1.4% and Procter & Gamble -1.2% were the main laggards.

 

Asia redressed yesterday’s quite measurable losses with the NIKKEI leading the charge thanks to a weaker Yen and some better than expected Chinese trade data – exports Y/O/Y +12.3% against expectations of 5% and imports +17.7% against expectations of 11.3%. Asian markets finishes as follows – NIKKEI +1.39%, ASX +0.28%, Shanghai +0.55% and Hong Kong +1.19%.  In London yesterday the FTSE 100 eased by 27 points to 7320.  Apart from the CVC/Ladbroke acquisition deal which saw the latter’s shares rattle up by 28% it was DS Smith’s performance, a new entry in to the FTSE 100, which caught the eye.  Thanks to Amazon making a huge contribution to their packaging business, yesterday’s results saw shares up by nearly 3% and 37.2% on the year.

 

Initially, Bitcoin made headline on the business pages.  Today it was the front pages.  This crypto currency which has attracted 6 million traders since 2009, and whose share price has rallied from $234 19 months ago to $15476 as I speak, has attracted warning notices from Sir Howard Davies, the Chairman of RBS and Robert Shiller the Nobel prize winning economist.  Both think this asset is heading for a big fall. Sir Howard used an analogy from Dante’s Inferno – “Abandon hope, all ye who enter here!”  Maybe a bit strong but a ‘prenez-garde’ notice for this relatively unregulated market.  It will be interesting to see if a futures contract gives the product more liquidity.  Last night’s volatility was humungous. Bitcoin’s price hit $17139 at 1.55am this morning.  By 4.35am this morning it was down to $14749. As I speak at 10.10am it is $15475.  This is not a market for the faint-hearted. Traders need to know exactly how many beans make four!

 

At 10.10am the FTSE is up 18 points at 7339. The Pound has eased a smidgen from its high to $1.3481 from a high of $1.3512.  UK posted decent industrial production numbers at 9.30am and the sun is shining! Non-farm payrolls will be posted at 1.30pm GMT.

 

UK Companies posting numbers this week – Friday – Berkeley Group

 

US companies posting interim results this week – Friday – Johnson Outdoors

 

Economic data due this coming week – Friday – UK industrial production & Construction output

 

David Buik

Market Commentator – Panmure Gordon & Co

 

  D +44 (0)20 7886 2775

Mobile – 0044 7788 144 877

Panmure Gordon & Co

One New Change | London | EC4M 9AF ​

WTI $56.69, Brent $62.20 +73c, Brent $62.20 +98c, Diff -$5.51 +25c, NG $2.76 -16c Oil price Further signs of a bounce back from crude oil yesterday as markets thought that the immediate past of a shake out had been overdone, and so it should. Not much detailed news and recent shorter term sellers closed off their bear trades in case inventory numbers recover next week, which they might. Sound/Echo/Coro Wednesday night saw all of the Sound family presenting and for pretty much the first time showing the across the board strategies indicating the direction and significant potential in their individual markets. Sound started with CEO James Parsons reinforcing the company’s gas focussed, private investor centric strategy and with it the policy of developing its existing discoveries in Morocco. Combining those discoveries with further exploration drilling gives an exciting combination of risk and reward, monetising assets whilst at the same time giving some very decent upside. CFO JJ Traynor went down well with optimistic news that for every 1 TCF of gas in the portfolio the shares could add £1.50, news shareholders lapped up. Overall this presentation confirmed, if any was needed that Sound is the more mature part of the family with discovered gas assets in two plays with significant upside, a very crowded room as usual were happy with what they heard. As for Echo, Fiona MacAulay was slightly restricted with what she could say as the shares are suspended and the authorities are understandably keen that no unpublished information shouldnt be revealed until the shares return to the market. Having said that she was able to talk about the two deals that have been done in Bolivia and Argentina. Overall, the Echo strategy is to be a leader in a LATAM exploration led, gas focussed business, value driven and with potential for significant returns. FM also had a new board, well financed and supportive shareholders to rely on and happy with the ambitious growth strategy that she has put in place. Starting with Argentina, it is a much bigger play after all, the plans are clear, the asset is significant and an exploration led, but full cycle business capable of very significant upside. The financing of the deal was innovative and meant that for a modest up front payment the cash need to carry CGC and its aggressive work programme Echo will get more than its bang for its buck spent. I expect a lot of newsflow from Echo from the front line as well workovers, exploration and a great deal of seismic reprocessing should create the makings of a very proper E&P company with lots of upside. In Bolivia where its initials bucks were spent all is going well and the signs emerging from the reprocessing are initially pretty good although there is much to be done. Overall I expect plenty of news on all fronts, with the shares returning to the market imminently, investors will get a chance to participate in what looks like a very good play in an a gas rich region of a massive hydrocarbon geography. Finally Sara Edmonson of Coro spoke although with even more regulatory restrictions it was by necessity somewhat cautious in content, I am sure over the next weeks and months shareholders will get a much more detailed idea of the direction and pace of the strategy as Sara expands the portfolio in and away from its Italian base. Initially that policy is to expand its daily production and expose the EBITDA potential, thereby exposing the de-risking of the developments and creating a value driven approach to the business. Coro will before long be re-admitted as a full cycle E&P company, with significant strategic potential and confident of further deals to be done and geographically away from Italy but not conflicting with any of the family assets, crafty investors may be able to work out which point of the compass the Coro management are pointing the telescope at in their hunt for value adding assets. Whether investors hold one or all three of the family, I’m sure that overall these stocks look like a package of high quality assets with short, medium and long term upside and with management that is committed to delivery and return in a significant manner… Zenith Energy I recently had the opportunity to visit Azerbaijan and see Zenith’s assets in the country, as the company is going through an exciting period of change I thought it would provide an opportunity to evaluate both the portfolio and its people. I will be putting out a fuller piece in the blog, hopefully on Monday but had noticed a bit of share price weakness and with incoming mail asking me if all was well wanted at first to say that on the ground I was very impressed on both counts. With a significant portfolio of differing assets to drill or workover in the next year or so, and having established a very high quality team on the ground my initial prognosis is  very promising. I will detail more very shortly but holders should sleep easy in their beds, Zenith is a well run, asset rich play with significant upside. Empyrean Resources Empyrean has announced initial flow testing from its Dempsey 1-15 well, where the second deepest zone of gas shows is complete and flowed gas. The difficult bit to work out is how it will be flowed as the company itself says, This zone is interpreted to be a significant gas discovery with high pressures but low permeability over the zone of perforations. In my view this means it will be a frac job but until I speak to the company I won’t speculate. And finally… In haste today i’m afraid, the big matches are clearly the north west derbies, the Noisy Neighbours are going across town to the Theatre of Dreams whilst down the road the Toffees are going Fortress Anfield. Elsewhere London has a derby too, Chelski are at the Olympic stadium to play the Hammers and in other games the Eagles play the Cherries, Spurs host the Potters and the Gooners are at the Saints. And the Tingle Creek at Sandown is a classic and with great jumping cards all over the country all offering top class jumping punters are spoilt for choice…