UK Stockmarket 2009 and beyond

sabretoothtigger

Awesome stuff, unfortunately people get a bit macho on stuff like that. They are very powerful so killing one makes you feel like a big guy I guess

Also saw a documentary on a guy who got a bit too close to those bears, he survived for 15 years every year walking along black bears but one year stayed too late before hibernation and learnt how hungry bears can get


http://www.google.co.uk/search?q=the+maze+black+bears+&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-GB:official&client=firefox-a

[FONT=Arial, Helvetica, sans-serif]BAE Systems (BA.) a buy at 316.25p[/FONT]

[FONT=Arial, Helvetica, sans-serif] Says cautious, long-term blue chip investor Robert Sutherland Smith of UK350.com.

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[FONT=Arial, Helvetica, sans-serif]Pssst! Ello mate! Want to buy some equity going nice and cheap? About 7.6 times prospective earnings estimated for next year! They reckon them consensus analysts they talk about, estimate that last year's earnings of 37.1p will increase 6.7% this year and 6% next year to 42p or thereabouts. Yours for 324p, a share mate!. Look 42p into 324p and Bob's yer uncle and you've got your forward P/E of 7.6. What's the catch?. Well of course the directors and the managers are going to be investigated by them blokes - sorry girls! - and ladies at the Serious Fraud Office. All right they sold some things at high prices to the governments' of poor countries that did not actually need them, but that's business, see! The name of the equity? BAE Systems Plc. You can never have enough military equipment! What's a few air to ground missiles between friends? (Dubious characters exit right and left.)


It is extraordinary that a leading British company like BAE should have reached a stage where it has a price, rating and reputation of a dodgy enterprise with little future? The share price in a strongly rising market has been trending south, whilst most others have been heading north. Long term, over the last five years, the share price of a BAE share has outperformed the FTSE100 index by 22%. But because of recent events, the BAE share price in the last year has fallen 11% whilst the Index has moved up 23%. It has lagged behind other shares and lost the premium it had a short time ago as a relatively predictable share in absolutely unpredictable world. Consequently, it is a cause for intelligent curiosity; but is it a proper object of investment interest for those who buy equity for profit? I might add the report, if true, that few or any institutions now own the shares. That provides two hidden attractions; the big sellers are gone leaving too few shares for hedge funds t o borrow. [/FONT]

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The key issues in answering the latter question about investor interest include the following. How probable is it that the Government Attorney General will put the SFO to work? Not very probable, in my personal opinion? This is a big British industrial name, exporter and employer in a deflated national economy with, relatively speaking, not enough businesses that are not banks. The UK economy and the government need companies like BAE despite any deplorable now historic commercial practices. No one with a spark of decency can condone what it is alleged of a previous management. But on the other hand no one, particularly the company can risk the long term consequences of a blackened reputation of a famous trial for bribery and corruption. That is what is called a no win situation. The company with shareholder assets to look after, has evidently been advised by its lawyers that it has a case strong enough to justify a smaller if still large voluntary fine. And enlightened public opinion has a cause that needs addressing. But few will wish the matter to pass out of the hands of businessmen and government, into the hands of QC's and eventually judges. In short, it is my rational hunch that after more haggling and plea bargaining, a fine will be found that is acceptably small enough for the company to assuage shareholders (who ever they may be these days) and sufficiently large enough to meet government expedience and satisfy justice and public opinion. Financially, a company like BAE with 16.7 billion pounds of revenue last year, total assets of 25.6 billion pounds and shareholder equity of 7.3 billion pounds can finance a very large penalty which will arguably have to be reasonable, equitable and proportionate. Such an eventuality looking at the price to earnings ratio looks fully discounted in my judgement.[/FONT]

Click for Full Charting facilities from ShareCrazy.com [FONT=Arial, Helvetica, sans-serif]


Second, are there particular attractions in the equity at this stage? Apart from the estimated low price to earnings ratio of 7.5 there is also an historic two and a half times covered dividend yield payout of 4.55% expected on the recent price of 316.25p to rise to an estimated 4.8% for this year and 5.2% for next year; high enough to useful to investors but not too high to look unsustainable on a related prospective 2.6 times forecast earnings cover.


Third, although this is the balance sheet of a highly geared company and dominated by goodwill and intangible assets, the value of those assets attributable to shareholders was, last seen, 7.3 billion pounds; nearly two thirds of the market capitalization of BAE equity at 11.24 billion pounds or near 206p as share. That goodwill reflects the scarcity value of one of the world's leading defence contractors and a business that has been built up over the years, to the leadership it now has worldwide. The barriers of entry to such business and the defence markets of the world are high are high. If estimates are near right, BAE will have high quality revenue income stream of over 21 billion pounds next year, an increase of 27% on the figure reported last year, and worth to a shareholder who buys shares at near or about 316.25p, an amount getting on for 600p a share.


Fourth, and most topically of all, it is a company which derives great benefit for equity holders from the weakness of the pound. Although a big user of cash for investment and capital expenditure, it is also a big generator of cash from its operations. Last year operating cash was just under 1.5 billion pounds and there was cash and near cash in the last annual balance sheet of 3.3 billion pounds. At the recent price of 316.25p the equity of BAE Systems is only a 3.3 time multiple of that cash reserves and a 7.5 times multiple of operating cash flow. There is a nice symmetry about these number; the historic operating cash flow number almost the same as next year's earnings multiple.[/FONT]




[FONT=Arial, Helvetica, sans-serif]Finally, I like companies that grow dividends at an attractive and orderly rate. Since the year 2004 to last year, dividends grew each year at an average compound rate of near 10.5%. Next I like companies that grow revenue in a similar way. In those four years BAE revenue increased each year at an average compound growth rate of 17%. And earnings themselves grew at an average annual rate of around 20%. Not bad for a company selling on an estimated multiple of 7.6 times earnings for next year.



BAE shares had earlier come down because institutions had sold them to improve their weightings in riskier but appreciating cyclical shares, pushing the BAE share price to the unreasonably rating it now has. These shares lookvery good value in my judgement, and are a buy for recovery and re-rating. BUY[/FONT]

[FONT=Arial, Helvetica, sans-serif]Key Data[/FONT]
[FONT=Arial, Helvetica, sans-serif]EPIC:[/FONT] [FONT=Arial, Helvetica, sans-serif]BA.[/FONT][FONT=Arial, Helvetica, sans-serif]
Market: [/FONT][FONT=Arial, Helvetica, sans-serif]Full
Spread: 316p - 316.275p (.09%)[/FONT]

UK350.com produces a detailed newsletter 26 times a year with one stock analysed in great detail with an explicit recommendation. That stock will be a member of the FTSE 100 or FTSE 250 Index and Robert Sutherland Smith will keep you updated on its every development and advise you when you should sell. For more information about UK350.com click HERE.

tradetime

Ok my 1121 - 1158 may now be off the table! We got to 1101 and my target may now be shot. As a short term technical trader I have to respect the short term Friday trade caused a lot of damage to the technical picture across many of the indices I watch.
S&P first target is now 1019 unless we can close above 1043
Downside target for the intermediate term would be 950. Unless buyers step in, the picture will deteriorate quickly. First bounce should come 1020 -1025 tomorrow resistance 1042
My position as a short term trader has now moved from a buyer of dips to a seller of rallies unless there is a close as described above

sabretoothtigger

CIT has actually filed for bankruptcy btw, 4th largest ever but also a long time coming. FED loses 2.3bn TARP money

http://www.marketwatch.com/story/citto-file-for-bankruptcy-after-rescues-fail-2009-11-01


aussie and japan down over 2% but creeping up. Wouldnt surprise me if there was another wave up as the tide goes out, hard to tell these things
Generally I think ftse closes year lower then we are now but who knows

EMED Mining*
Rio Tinto Production Primed for End of 2010
Buy at 11p – target price increased from 23p to 39p


Almost a million tonnes of copper and in excess of one million ounces of gold, both to JORC standards, characterise this European company on the brink of production. While sceptics would rightly claim that EMED has appeared on the threshold of reopening the famous Rio Tinto mine in Southern Spain for more than a year, robust commodity prices and the almost unanimous support from both the local community and the Junta de Andalucia (local authorities) means EMED is justified in expecting commissioning of production at the end of 2010. EMED however has stated that it is no position to dictate deadlines to the authorities who are especially cautious in their due diligence. In reaching our conclusion we have also considered the valuation effect of further delays of 12 months due to the due diligence of the regulatory authorities.

Listed on AIM with interests in Spain, Slovakia, Cyprus and, indirectly, in Turkey, EMED was founded just five years ago in September 2004 and already has two company sustaining projects and a host of prospective licences. Rio Tinto is the company’s primary focus, although its gold interests in Slovakia also have a clear commercial value.

In Cyprus, EMED is the holder of the largest geological database in the country, as well as a number of exploration licences including Klirou which has a small copper and zinc JORC Inferred resource. Having spun off KEFI Minerals in 2006, EMED retains a 29% interest and a continued close affiliation in the Turkish and Saudi Arabian focused exploration company.

Our sum of the parts valuation of Rio Tinto ($341 million, based on $2.50/lb copper), Biely Vrch in Slovakia ($28.5 million), Klirou ($3.9 million) and the 29% interest in KEFI Minerals ($2.6 million), after applying a USD/GBP exchange rate of $1.7, secondary risk weighting of 7.5% and dividing by the 523 million fully-diluted shares in issue, values EMED at 39p per share.

An accelerated production ramp-up at Rio Tinto, increased resources across the portfolio, and corporate structuring arrangements used to optimise tax liabilities, provide material upside. Largely as a result of revisions to our model based on a higher copper price we are increasing our valuation from 23p to 39p and at 11p our stance is buy.



*EMED is a corporate client of Bishopsgate Communications which is owned by RSH, the ultimate owner of GE&CR. KEFI is also a Bishopsgate client. Another RSH subsidiary manages the t1ps SF Growth Fund which owns shares in EMED.






Background
EMED was established by the current managing director Harry Anagnostaras-Adams and his associates, being incorporated in September 2004 and listed on AIM in May 2005. The initial focus of the company was in Cyprus. The Mediterranean island was seen as a desirable destination for a junior miner given its political stability (partial Turkish occupation aside), attractive tax regime and geological attraction at the heart of the Mesozoic to Tertiary age tectonic belt that winds from Austria through to Iran.

Historically the world’s most productive source of gold, silver and copper, the belt has been relatively under-explored in modern times due to the region’s recent political issues. Having targeted Cyprus, EMED set up its head office and acquired the Klirou Copper-Zinc project from leading Australian miner Oxiana.

Rapidly moving to the acquisition path, EMED was granted a license covering the Slovakian Stiavnica-Hodrusa permit in the summer of 2005. February 2006 saw EMED move into Georgia and the highly pro!spective Zopkhito Project, while the company’s Turkish assets were divested into a separate company - KEFI Minerals which was floated on AIM in December 2006.

The purchase of an option to acquire a 100% interest in the Spanish PRT (Proyecto de Rio Tinto) project in May 2007 was the defining point in the company’s history as, at a stroke, it offered the potential to move EMED forward into becoming a mid-tier producer. Mining, in what is now the Rio Tinto Mine, dates back to Roman times and, while modern production records begin in 1725, it was the Rio Tinto Company Ltd’s formation in 1873 that brought the site into the public’s conscious. Between 1873 and 1954 the Rio Tinto Company mined 957,783 tonnes of copper at Rio Tinto, with the mine becoming such a fundamental part of Spanish folklore that its mining became enshrined in the Spanish constitution. At acquisition EMED believed that the mothballed facility could be brought back into production within 18 months, i.e. in November 2008, and while that initial target was thwarted by an extended permitting process, low commodity prices and, latterly, the global economic slowdown, if it can also secure financing EMED is now in a position to commence production 6 months after the granting of the principal permits (expected in the first quarter of 2010).

Apart from the requisite formal approvals from the Andalucian government including of mining assessment & operation plans, an Environmental Impact Assessment (EIA), a tailings dam assessment, a waste dump assessment, OH&S procedures, the rehabilitation plan and the tender documents of main mine contracts, the issue of one landowner thwarting the company’s efforts to restart production is set to be resolved by way of a compulsory acquisition through the courts. The contentious area comprises pockets of land upon which the existing tailings dams exist, and are of limited value to anyone other than the mine. While the court resolution could take an unspecified length of time, this is of little concern to EMED as the mine can operate unimpeded under what is called ‘provisional occupation’.

Operations
Spain
Proyecto de Rio Tinto lies within the Iberian pyrite belt adjacent to the town of Rio Tinto, 65 kilometres northwest of Seville, in the Andalucian region of Spain. PRT has been mined for over 150 years for copper, sulphur, gold and silver and is a historically important operation in the Andalucia region and Spain in general. Its closure by then operator, a workers’ cooperative that operated unsuccessfully in the 1990’s, in 2001 was due to the then low copper price (below $US1/lb – compared to today’s $US3/lb) and caused social and economic problems which thrust the project into the political spotlight.

Initially co-owned with the remnants of the workers’ cooperative and then with that entity’s financier MRI Group, EMED achieved full control in October 2008 and with it operational, managerial and financial flexibility, as well as being a more acceptable situation for the authorities who demanded a transparent ownership and responsibility structure for this historically enigmatic project.

The PRT project comprises the open pit mine, copper concentrator plant, plant infrastructure, mineral rights within the main tenements and exploration assets. The Cerro Colorado deposit and open pit areas, plant, offices and other maintenance and general infrastructure are all included. Large areas of waste dumps, tailings and water facilities are owned by third party landholders and the regulatory process needs to be applied to provide provisional licensing and, in due course, compulsory acquisition. Cerro Colorado contained one of the world’s largest sulphide concentrations, with an estimated 500 Mt of massive sulphides of which 20% were leached to form gossans. The Rio Tinto Mine plant was expanded in 1996 and had a peak throughput rate of 9Mtpa (million tonnes per annum) in 1998, with a head grade of 0.49 - 0.61% Cu and concentrate recovery of approximately 23% Cu. As the base case for its restart, EMED is planning to operate the mine at the same maximum capacity it operated at prior to its closure eight years ago - approximately 9 million tonnes per annum (MTPA) after a ramp up period of 2 years.


In order to be in a position to restart the Rio Tinto mine, EMED requires £50 million in funding, broken down as follows:

• £6 million (€8.8 million) – the initial instalment of the deferred project acquisition consideration to MRI. Total consideration is €62 million (£42 million), and will be paid in 7 instalments of €8.8 million. Instalment one is due upon the drawdown of a bank debt & guarantee package, after final permits are received and the restart commences. The remaining 6 instalments are due annually after production starts;
• £14 million (US$25 million) – an estimate of the guarantees (e.g. bonding guarantees which include environmental, personnel protection and past unpaid social security obligations) to be provided to Government Agencies, but are subject to negotiation;
• £30 million (US$50 million) - other post-final permitting expenditures, such as repairs, plant improvements, working capital, critical spares and start-up funding.

EMED has appointed Goldman Sachs to raise the necessary funds as and when they are required, but the current leading options are from current major shareholders RCF and RMB (both mining financiers), Fidelity and Standard Life (institutional), other mining lenders in Europe, UK brokers and a dual listing in Australia. While EMED currently has around €4.3 million worth of convertible notes (hybrid debt/equity) in issue, the company expects to remain debt free (in a pure debt sense) until project commencement, with current funding needs of €0.5 million per month, being provided by cash reserves and a £10 million SEDA (Standby Equity Distribution Agreement) facility agreed in June 2007.

At Rio Tinto Mine’s current full production rate of 9 Mtpa, EMED estimates total cash operating costs, which include smelting, refining, marketing and product freight, of US$1.30 per pound of copper. While these costs are above the industry’s average, total costs, which include total project acquisition costs, life of mine operating costs, capital investment and provisions for rehabilitation and retrenchment entitlements, have been estimated at US$1.47 per pound of copper and compare very favourably with those of its peers.


Head geologist at EMED Ron Cunneen has the remit of increasing Total Reserves at Rio Tinto from the current 123 million tonnes to in excess of 220 million tonnes. 60 kilometres of drilling, costing an estimated €8.3 million, is planned during the first 3 years of Rio Tinto’s operation, with several un/under-explored areas under and around the current pit expected to yield the requisite ore. Of particular interest are the areas under the south west dump, on the western side of the Av de la Concha Espina (A-461, the main road from the processing plant into the town of Rio Tinto), and adjacent to the currently defined resource.

In terms of infrastructure, roads are fully sealed all the way up to the mine entrance, with the drive from Seville taking about an hour. The nearest smelter and sea port is 100 kilometres south of the mine at the industrial city of Huelva. PRT has access (subject to regulatory support landowner resolution) to two nearby dams with a combined capacity adequate (at average rainfall levels) to cover the project’s water needs at over the 9 MTPA base case production level. Mains water is also available and could
supplement dam supply if necessary. Tailings capacity has been assessed as adequate for 10 years at base case production levels.
In June 2009 EMED handed its laboratory facilities at the Rio Tinto Mine to ALS Environmental Services. ALS will refurbish and expand the existing facilities to the accredited ISO 17025 level as well as establishing a new Mine Environmental Control Laboratory.
EMED’s motivation for this gesture was to have a world class facility on its doorstep as well as delivering on its social commitments by creating sustainable industries in and around the Rio Tinto Mine project. ALS will offer its services to the growing local mining industry in addition to other international clients.

The team now includes some highly experienced local and international copper production managers, led by Bill Enrico – highly respected 3rd generation copper executive.

Slovakia
Covering an area of 1,189 square kilometres in central Slovakia, EMED owns 100% of the Detva and Stiavnica-Hodrusa licences. The two licences are approximately 25 kilometres apart and EMED has identified in excess of 20 prospects across the two. The Biely Vrch prospect in the Detva licence is the most advanced, with a Scoping Study recently completed by AMC Consultants (UK) Ltd, while current copper-gold exploration targets are also on these licences.

An exploration programme at Biely Vrch involving 34 diamond drill holes totalling 10.6 kilometres of drilling bore fruit on the 23rd of February 2009 as the company announced an initial JORC compliant resource estimate of 41.7 million tonnes at 0.79 g/t gold for 1.1 million ounces of contained gold. The defined resource measures 350 metres North South, 300 metres East West, remains open at depth from 250 metres and appears conducive to an open-pit operation. The Scoping Study, released on the 12th of October 2009, indicated the viability of a ten year, 3 million tonne / 60,000 ounces of gold per annum operation. Other Scoping Study estimates were initial capital costs of $45 million, average cash operating costs of $590 per ounce and a recovery grade of 0.6 – 0.7 g/t gold. However, before a Definitive Feasibility Study can be initiated EMED needs to complete a Reserve drill out and detailed engineering study, which in turn are reliant on procuring the land sites for mine infrastructure, confirming any operational restrictions given the nearby industrial complex (a largely dis-used ex-Soviet tank facility), the sale of waste material as gravel and negotiating the government royalty rate and agreeing with the authorities on permitting timetables and conditions.
Elsewhere in central Slovakia, EMED is stepping up its exploration work in an effort to add to the success at Biely Vrch. Assay results from the first-pass diamond drilling at Zlatno are in the pipeline, while EMED’s own drill rig will move on to Pstrusa once it has finished at Beluj.

Having formed an exploration alliance with Slovenska Banska in December 2006, the two companies renewed their alliance in May 2009. Slovenska operates the small high-grade Rozalia gold mine within EMED’s Stiavnica-Hodrusa licence, with EMED providing technical insight into exploration targets and Rozalia supporting EMED with data, community liaison, underground infrastructure and ore processing.

EMED is, as per its stated corporate standard, applying its social and environmental policy to Slovakia where such issues are given priority alongside the technical and economic parameters. The company has built up strong relationships with the Slovak government, local community, business chambers, scientific societies and other stakeholders. Current timeframes have development of the Biely Vrch deposit being undertaken in 2012 and funded from Rio Tinto Mine’s cash flows.
KEFI Minerals

KEFI Minerals is an AIM listed copper and gold exploration company with 7 licences in Turkey, an exploration database with information on a further 100 Turkish prospective sites and a recently announced joint venture in Saudi Arabia.
KEFI’s 7 Turkish projects are 100% owned - Artvin and Gumushane in the North East; Hasancelebi in the centre of the country; Derinin Tepe, Muratdag and Yatik in the West; and Bakir Tepe in the South West.

Centera Gold will spend $6 million over a 5 year period to earn a 70% interest in the gold and base metal mineralised Artvin prospect, while at Gumushane, the company believes that geographical anomalies merit further attention. Hasancelebi is prospective for gold mineralisation and Iron-Oxide Copper-Gold (IOCG) mineralisation. Gold and silver mineralisation has been identified at Derinin Tepe, Muratdag is prospective for gold, and gold and silver mineralisation has been discovered at Yatik. Finally, Bakir Tepe has high grade gold and copper shows.

In May 2009 KEFI signed a joint venture agreement with Saudi-Arabian based construction company ARTAR to explore for minerals in Saudi Arabia. With an initial focus on gold and copper, upon the granting of exploration licences, 40% partner KEFI will commence an exploration programme in an effort to replicate the region’s Sukari (13 million ounces gold), Dhahab (6 million ounces) and Ad Duwayhi (2 million ounces) deposits.

KEFI was spun off from EMED in 2006 with EMED retaining a 29% interest in KEFI as well as providing technical and administrative systems and personnel on a cost-recovery basis. KEFI currently has net cash of approximately £300,000 and a market capitalisation, at 2.125p, of £5.0 million.
Cyprus

EMED owns a 95% interest (5% owned by Hellenic Mining Company) in the largest geological database and portfolio of exploration licences in Cyprus. Located 20 kilometres south west of Nicosia, the Klirou copper-zinc project shows the most potential at this early stage and as such has received the bulk of the company’s attention on the island. A JORC compliant inferred resource estimate of 4.5 million tonnes at 0.41% copper and 0.74% zinc at Klirou and 2.1 million tonnes at 0.95% zinc at South Mathiatis has been confirmed thus far. AMC Consultants conducted a review of Klirou and suggested EMED’s internal feasibility study be complemented with resource expansion, resource category upgrade, further assessment of the nearby Mitsero processing plant and firm cost estimate collection before a full feasibility study could be justified. Klirou is dwarfed in scale by Rio Tinto Mine and therefore until the Spanish project is producing at maximum capacity, EMED’s activities in Cyprus will be operated only on a care and maintenance basis.


Strategy

EMED’s focus remains on recommencing operations at Rio Tinto and, while the company has continued with a twin track development/exploration approach, progressing Biely Vrch’s resource to a JORC compliant standard, Rio Tinto underpins EMED’s ability to become a cash generative and self sufficient production and exploration company.

Speculation in the past has suggested that an alternative route to delivering value for shareholders is to hive off the non-Spanish operations into a separate pure exploration play so as to avoid having their value overshadowed by a fully productive Rio Tinto. Similar to the situation with KEFI, such an operation would need funding for the pure exploration projects and, while this would have been difficult to arrange in the recession, may come back into play as the economy improves or if the gold price moves ahead sharply. EMED has indicated that this will be considered once the Spanish project is fully permitted and the Slovakian project better defined.

sabretoothtigger

Hopefully some useful info here, impressive surge happening today so I wonder if the significant trend being broken on friday will affect behaviour or does it not matter now Ford makes a profit.
I guessed they were a good buy when gm was going broke, so Im pretending not to be surprised


Also more positive figures in manfacturing which matters alot to usa as it pairs with dollar weakness and trade deficit, etc

The Institute for Supply Management’s factory index rose to 55.7, the highest level since April 2006, from 52.6 in September, according to the Tempe, Arizona-based group. Readings above 50 signal expansion.

Economists projected the index to rise to 53

http://www.bloomberg.com/apps/news?pid=20601087&sid=avr0v0gXRkB8&pos=1

Board of Directors

Non-Executive Chairman - Ronnie Beevor. A qualified Chartered accountant, Beevor is a former investment banker and previous Head of Investment Banking at NM Rothschild & Sons (Australia) Ltd. With a long history in and around the international resources sector, Beevor is also non-executive director of Bendigo Mining Ltd, Oxiana Ltd and QMAG Ltd. A dual citizen of Australia and Britain.

Managing Director - Aristidis (Harry) Anagnostaras-Adams. Having served as Deputy Chairman of the Australian Gold Council and as Managing Director of Gympie Gold Ltd, Executive Director of Pilatus Capital Ltd, General Manager of Clay!ton Robard Ltd Group and Senior Investment Manager of Citicorp Capital Investors Australia Ltd, Adams has over 25 years of senior management experience. A Fellow of the Australian Institute of Management and of the Australian Institute of Company Direc!tors as well as a Chartered Accountant, Adams is based in Cyprus and Spain.

Finance Director - John Leach. With in excess of 25 years of experience in international senior executive positions in the mining industry, Leach is also executive chairman of Resource Mining Corporation Limited and Finance Director of EMED offshoot KEFI Minerals. A Chartered accountant with Canadian and Australian citi!zenship, Leach divides his time between Sydney and Cyprus.

Non-Executive Director - Dr Ross Bhappu. Previously Director of Business Development for Newmont Mining Corporation and Chief Executive of GTN Copper Corporation, Bhappu has in excess of 20 years experience in both large and small cap mining companies. A partner with the Resource Capital Fund (RCF), Bhappu is also on the boards of RCF’s portfolio companies Traxys SA, Molycorp Minerals LLC and Anglo Asian Mining plc. Bhappu is Chairman of the Remuneration Committee.

Non-Executive Director - Gordon Toll. A mining en!gineer and mining company executive for 36 years, Toll has worked for multi-nationals including BHP Billiton Ltd, ARCO Coal Inc and Rio Tinto plc. Having retired as Deputy Chairman of Ivanhoe Mines Inc in 2004, Toll is now Chairman of Compass Resources NL and LinQ Resources Fund Ltd, as well as a non-executive director of Avocet Mining Ltd and Chairman of EMED’s Physical Risks Committee.

Non-Executive Director – Ashwath Mehra. Representing the MRI Group on the board of EMED, Mehra is MRI’s CEO. Previous appointments include roles with Philip Brothers and Glencoe, the latter of which Mehra headed up the nickel and cobalt division. Experienced in mining projects and project finance, Mehra has worked in the minerals industry for 22 years and is now heading a group with annual turnover in excess of $US3 billion. Mehra is also Chairman of EMED’s Audit Committee.

Significant Shareholders
At the date of publication there were 308.8 million EMED shares in issue. In addition there is the potential issue of a total of 214 million shares – 154.8 million shares under the $8.5 million Convertible Loan facility provided by RCF and RMB Australia; and 59.2 million shares from the various options and warrants in issue, with exercise prices ranging from 4.1p to 22p and expiry dates from 9th May 2011 to 1st September 2014. The table below represents the fully diluted significant shareholder position.




SWOT Analysis
Strengths
Large copper deposit – at the current spot copper price of $3 per pound, the in-situ value of Rio Tinto’s 585,000 tonnes of copper reserves is $3.87 billion and value of its 940,000 tonnes of copper resources is $6.22 billion.

Large gold deposit – 1 million ounces of gold is an industry benchmark for junior miners looking to gain recognition and interest. With a JORC compliant 1.1 million ounce gold resource and positive Scoping Study at Biely Vrch secured, the project now represents a significant compliment to Rio Tinto.

Low capital costs – because of the issues surrounding the Rio Tinto mine, and the fact that the processing facility is already built, EMED has gained a valuable asset at a relatively low cost and will have relatively modest upfront capex needs of £50 million. The cash flow projections include significant drilling and project improvement expenditures.

Diversified asset base – despite the majority of EMED’s value currently being in Spain, the fact that a 1 million ounce gold resource has been defined in Slovakia together with the JORC compliant resource in Cyprus and significant stake in KEFI, means that long term value can be derived from a number of assets.

Access to cash – while EMED has enough cash to finance the company to early 2010, a further £10 million is accessible through the SEDA facility and should be sufficient to sustain the company until project finance is secured.

Weaknesses
Historical hangover at Rio Tinto – having been burnt in the past by previous operators of the mine, the local community has taken some convincing about EMED’s proposed restart of operations. While EMED has made major progress in reinstalling confidence and proving its own credentials, only the successful operation of Rio Tinto will silence the doubters. In the meantime the conservative Andalucian bureaucrats will make EMED jump through many hoops to earn its licences.

Higher operating costs – given the lowish grade / high volume profile of the Rio Tinto mineralisation, a large amount of ore has to be processed to produce a given amount of metal. Consequently the variable costs at Rio Tinto are relatively high.

Potential equity dilution – EMED has in excess of 200 million potential shares to be issued as the avoidance of long term debt and conservation of cash has necessitated equity based financings and incentives. It has been assumed that these potential shares are converted and the impact taken into account in the valuation.

Opportunities
Accelerated production at Rio Tinton – the opportunity exists to expand the throughput of the crusher and concentrator to close to 13 MTPA. This would bring revenue forward and result in a higher discounted value of the project.

Increased resource at Rio, Biely Vrch and Klirou – while the undoubted focus has been on getting Rio Tinto into production, when this occurs EMED will look to accelerate progress in both Slovakia and Cyprus, as well as expanding the resource base at Rio Tinto.

Threats
Failed / delayed approval at Rio Tinto – despite EMED’s meticulous planning, until final permits are granted, there remains the risk that operations can’t recommence or are further delayed.

Funding requirement – EMED requires £50 million to begin operations at Rio and, while there appear several interested and capable financiers, the amount and conditions of the debt are uncertain. There can be no ultimate guarantee that funding can be secured.

Commodity price volatility – copper has recovered from its sub $1.50 / lb price earlier this year, and although many commentators feel that a global economic recovery is underway, the risk of significant adverse commodity price movements is inherent within the industry. Rio Tinto’s predicted operating cost in the region of $1.30 / lb gives it some margin of comfort at current prices, but Rio’s success is sensitive to the copper price.

Valuation
Our valuation is derived from operations at Rio Tinto, the Biely Vrch project in Slovakia, Klirou in Cyprus and EMED’s interest in KEFI Minerals. As for the company’s remaining prospects, we have not attributed any value here due to their embryonic stage.
Rio Tinto Mine is where we begin and where we attribute the majority of EMED’s current value. Underlying our valuation model is the assumption that production will commence in January 2012 at an annualised rate of 5 MTPA for the first year, with 22,000 tonnes of copper recovered. In 2013 throughput increases to 7.6 MTPA (33,440 tonnes of copper recovered), and then full base rate production of 9 MTPA is achieved from calendar year 2014 (39,600 tonnes of copper recovered). During the 20 years of our model, a flat copper price of $2.5/lb, total production costs of $1.45/lb and a Spanish corporate tax rate of 30% have been used. In order to establish production, we have assumed £50 million in debt is secured with 5 year duration at an annual 9% interest rate. Using a 10% discount rate, we derive a valuation on the Rio Tinto project of $341 million.

At Biely Vrch and, based on the company’s current estimate of a 1.057 million ounce gold resource and using a gold price of $900 per ounce and in-situ attribution of 3%, we value the project at $28.5 million. The Scoping Study would allow a discounted cash flow model valuation, but with distant timeframes prone to inaccuracy, we will persist with an in-situ valuation for now.

The Klirou prospect in Cyprus currently has a JORC inferred resource of 18,500 tonnes of copper and 53,600 tonnes of zinc. Using a copper price of $2.5/lb, zinc price of $0.9/lb and in-situ attribution of 2% we value the project at $3.9 million. We believe that once Rio Tinto is up and running progress at Biely and Klirou will be expedited and a clearer path to production revealed.
Adding the $341 million valuation of Rio Tinto to the $28.5 million valuation of Biely Vrch, $3.9 million valuation of Klirou and 29% interest in AIM listed KEFI Minerals (valued at $2.6 million), after applying a USD/GBP exchange rate of $1.7, secondary risk weighting of 7.5% and dividing by the 522.8 million in fully diluted shares, we value EMED at 39p per share. Upside to our model is provided by an accelerated production schedule and silver credits at Rio Tinto, increased resource definition at Rio, Biely and Klirou, and corporate structuring arrangements to optimise tax liabilities. We would also note that the gold price is now $1,043 and we believe that it will head higher but we maintain a $900 assumption in valuing Biely Vrch.

On the basis of our, conservative assumptions, but using a higher copper price than in our previous model we have increased our target price from 23p to 39p. Permitting issues have tarnished the Rio Tinto mine in the eyes of many retail investors, but with strong institutional, local authority and community support, the current modest share price provides an attractive entry point for value investors. The stance, at 11p, is buy with a 39p target price.

cloud_dog

tradetime wrote: »

Ok my 1121 - 1158 may now be off the table! We got to 1101 and my target may now be shot. As a short term technical trader I have to respect the short term Friday trade caused a lot of damage to the technical picture across many of the indices I watch.
S&P first target is now 1019 unless we can close above 1043
Downside target for the intermediate term would be 950. Unless buyers step in, the picture will deteriorate quickly. First bounce should come 1020 -1025 tomorrow resistance 1042
My position as a short term trader has now moved from a buyer of dips to a seller of rallies unless there is a close as described above

I'm not a short-term trader like yourself but I have been sat waiting to get back in. Most of my interests, excluding CEY, are below my bailing out price so, I am waiting......

There have been a number of articles published recently, some by respected (sic) and some unknown authors talking in terms of a possbile large(ish) shake out of the indicies; lots of them having turned negative.

tradetime

Hi cloud_dog, it is a very challenging time in the markets particularly for the intermediate term trader, that is to say, swing (days - weeks) and Position (weeks - months) The alleged amount of money waiting on "the sidelines" poses considerable risk to those betting on a significant correction. I suspect if you are a long only player, and more investment orientated then as long as you can make a reasonable assessment of the fundamentals of the companies you are interested in, then I guess there should be some good accumulation opportunities around the corner.

I have now turned somewhat bearish based on the technical picture as presented in the charts, having been bullish for the past few months, sentiment in the markets had become quite bullish and upbeat recently, this usually signals a time to be cautious of the longside.
It is also interesting that the "sell in May" and the historically troubled months of September and October, have all been very positive for the markets, despite much expectation to the contrary, I find myself wondering how the market will handle the "seasonally good" months of November December.

950 / 960 was a big level for the S&P500 back in June / July, we had the now infamous and widely publicized head and shoulders pattern which reversed and lead to the breakout leg of the rally to it's recent high. Ordinarily the 950 level would have been retested from above to confirm as support, but this did not happen and I believe we may attempt to make that retest now, over the next few months, a weekly close above 1074 would likely negate that scenario. Currently after the brief morning bounce the S&P and Nasdaq are setting new lows below Fridays selloff lows.

JonnyBravo

Thanks for those great posts on EMED stt.
Nothing new in there but good to see it all written down and re-affirm it's essntially just a play on permitting for PRT.
When they get the "initial transmission of mineral rights" the share price will jump to 20p+ IMHO but of course this is currently viewed as an "if" by lots of people. I have to say I view it as a "when" but that "when" may or may not be imminent.
All IMHO of course.

sabretoothtigger

Did Tony say when he is back from holiday, I need to know when the market will stop falling :laugh:


The counter for RBS on moneyam is flashing constantly, a ton of shares being traded on that one.

Offically alot cheaper then they were by my reckoning, nows the time to consider buying if there was ever a case but Im not sure what their value should be & neither is anyone else I suspect, maybe it'll be back to the twenties.
Barclays & lloyds had similar share prices after recovering and rbs has a similar market cap so I guess its best compared to them in some way

Barc might seem safer but I remember selling at this price
http://newpf.iii.co.uk/articles/articledisplay.jsp?article_id=10059130&section=Markets

http://www.iii.co.uk/articles/articledisplay.jsp?article_id=10059111



HDY is clinging onto 250 desperately but this is the third test of that level now, I wonder how low it could go if that should fail as Im not sure of their big share holders


green on my screen: wmh, emed, hgm, lgen & shanghai

Still, the pound posted some gains against the euro after the European Commission forecast U.K. growth will outstrip that in the euro zone in both 2010 and 2011. The Commission forecasts UK GDP expanding 0.9% in 2010 and 1.9% for 2011 compared with 0.7% and 1.5% respectively for the euro zone.

ses6jwg

Although my portfolio has taken a hit the past couple of weeks, personally I am fairly relieved to see this correction.

The FTSE was recovering at an alarming rate and I think its a good thing to have a slight pull-back, though hopefully not below 4800.

It may signal new growth in Q1 2010.

UMECO interims are out tomorrow - I bought in at £2.27, they rose to £2.96 the other week but have retraced back to £2.57.

Paying a good dividend so if results are promising tomorrow I will stick.

JonnyBravo

sabretoothtigger wrote: »

green on my screen: wmh, emed, hgm, lgen & shanghai

Didn't realise you were now holding stt.

Good interview with Harry here, recorded last week, covering much of the ground covered in the note you posted.


http://www.emed-mining.com/site/media-articles/board-talk-interview.html