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Very bullish article in today's FT on Iron ore.

Iron ore hits 7-year high after Vale lowers output forecast Price of steelmaking ingredient has surged this year as supply restraints meet rising demand A combination of supply disruptions and strong demand from China has pushed up the price of iron ore more than 40 per cent this year © REUTERS.
The price of iron ore reached a seven-year high on Wednesday after one of the biggest global producers of the material lowered its output forecasts, giving further momentum to what has been the best-performing major commodity of 2020.
At its annual investor day, Brazilian miner Vale said it expected to produce 300m to 305m tonnes of the steelmaking ingredient this year, below a previously lowered target of at least 310m tonnes — blaming heavy rains and a delay in obtaining a regional licence. For 2021, it forecast output of 315m to 335m tonnes, below the market consensus estimate of 353m tonnes. “We prefer to be more conservative,” said Marcello Spinelli, head of Vale’s iron ore division, referring to next year’s target. Tyler Broda, analyst at RBC Capital Markets said Vale’s new forecasts would provide “significant support” to the price of iron ore “with another 20m tonnes out of market [in 2021] we already calculate is in a 50m deficit”.
A combination of supply disruptions and strong demand from China, where steel production has smashed records, has pushed the price of iron ore up more than 40 per cent this year. It traded at a seven-year high of $136.75 per tonne on Wednesday, according to a price assessment by S&P Global Platts, and remains on course to average $100 a tonne over the year for the first time since 2013.
The bull market in iron ore has generated a huge cash windfall for Vale and other big producers, a group that includes Anglo American, BHP, Fortescue Metals Group and Rio Tinto. Vale’s cost of production is just over $13 a tonne. Christopher LaFemina, analyst at Jefferies, said there was now a chance that iron ore could rise above $150 a tonne in January and February when heavy rains and cyclones typically disrupt operations in Brazil and Australia. “Based on Vale's record, we expect 2021 production to be near the bottom of the guidance range,” said Mr LaFemina. He added that other miners would also benefit from Vale’s lower production volumes. Vale’s Brazil-listed shares were down about 3 per cent in morning trading, but are still up 50 per cent this year. The shares of Rio and BHP were up about 5 per cent following the news, while Anglo rose almost 2 per cent. Vale’s production suffered in the second quarter when the company was hit by the full impact of the pandemic, wet weather and maintenance at its huge mine in the Amazon rainforest. But after a good third quarter, analysts thought the company was set to produce 310m tonnes this year, and add about 40m tonnes of additional output in 2022 as mines that were closed following last year’s Brumadinho dam disaster either restart

Big Al stated that BAMS is half way through clinical validation. We should therefore know the results in the next few weeks. If successful, it will not only validate the Affimer technology but also provide Avacta with a significant revenue stream while we wait for the LFT.

Todays news could literally knock years off the trial process for Avacta. If Avacta are able to find a partner to develop a neutalising Affimer therapy it will prove to be a game changer. Thanks to CV-19, its almost certain the trial process will be fast tracked. This is great news for the Affimer platform. Fast tracking the trial process means Avacta can prove that Affimers are safe to use in humans by a much earlier date than they otherwise would have been able to. Even if the neutralising Affimers never actually make it as a licenced CV-19 therapy, assuming phase 2 trials are completed successfully, the Affimer platform will be worth many multiples than it is today. Avacta will immediately become a major take over target for big pharma.

Thanks for your thoughts Visitor. If you get the time, I will be interested to hear what you managed to dig up re Volspruit

Despite the well documented challenges I thought today's numbers were excellent. In comparison to H1 19 net profit is up 216% from $7.53m to $23.9m. Cash balance is also up 67% to $33.8m from $20.2m. Since the beginning of the year the PGM basket price has shot up so I wouldn't be surprised if the Q3 numbers surpassed that of Q1. Taking a very conservative view, lets say net profit in H2 matches that of H1. This gives a FY20 np of $47.8 million and a PE of 3 and a cash balance > $40m. That's some margin of safety.

I can only think its because the market hates uncertainty. Fears around Samancor cuts as well as load shedding. That's my best guess.

Thanks for your thoughts. As you suggest, patience is whats needed here. If you trust the management team to deliver then I'm sure this will come good in time. The value here is undeniable. Its on my watch list for now but I'm sure I will be opening a position in the near future. The risk v reward is very good on this one.

I've no position here but if this continues to fall much further then I'm a buyer. From my initial research I can't quite understand how this is not trading at > £2. What's the most likely scenario in your opinion going forward. Do you believe the company are determined to see this through and develop the assets into production or do you think they are looking to exit long before that?

The continued weakness in the sp is surprising to me. I have no position in JOG but from an outsiders perspective it seems very undervalued to me. What am I missing here?

I agree. The content they are creating is very valuable.

A very exciting trading update from Immotion (LON:IMMO) today. They announced the installation of a 6 seater cinema at the London Eye, the UK's most popular paid tourist attraction. The installation will feature their unique VR Roller Coaster experience, Tower Coaster - London, where customers will be able to see London from 400 feet above the Thames, enjoying the sites of the city. This installation joins the 8-seater mini-theatre installation at neighbouring Sea Life Centre. Due to great demand at the Sea Life centre, the number of installed headsets has recently been increased from 4 to 8 after a short trial. This highlights the experience is in high demand and suggests Immotion have a first class offering.

The company have also announced today that in Q1 this year, they will be installing a total of 93 headsets across a further 5 entertainment sites, 9 aquariums and 1 European Zoo. The majority of these new installations will be deployed in aquariums, increasing the total number of aquarium partners from 14 to 26, with aquarium based headsets rising from 52 to 107. Average weekly revenue per headset in the Aquarium sector through 2019 was £476 and during the busy Christmas holiday period an average of £794 per week was achieved. Once all the installations have been completed the company will have a total of 394 headsets in the field.

Based on forecast costs, the company reported today that it it will reach monthly EBITDA break-even at or around the end of Q1. The company have previously stated that c.400 installed headsets is the magic number for break even, anything beyond that and the revenues fall straight to the bottom line. The business model is exciting because of its recurring revenues and the exceptional operational gearing as more headsets are installed.

Immotion are moving very quickly signing partnerships with blue chip clients like the O2 and the London Eye. They are targeting quality over quantity by only signing partnerships with customers who have high footfall. For example the London Eye attracts 3.5 million visitors every year. With this in mind, I would suspect each of the 6 headsets installed at this location should be able to achieve average revenues in excess of the £476 per week they are currently achieving from the aquarium sector.

It is still very early days but the signs are looking good. The company have a goal of 1,000 installed headsets by this time next year. I suspect this will be difficult to achieve but it I like the ambition of the management team.

I have a position in this company.

Thanks Rugs. I'm fairly new to LSE so I'm just getting to grips with it. I post a little on twitter under the handle @archer_coa

Thanks for that info. Its about time the board started to repay the long term shareholders rather than looking at ways to reward their own relatively poor performance. Here's hoping to a fruitful 2020 - in every sense of the word!

I've been researching this over the weekend and by and large I like what I see. Assuming a good harvest and continued price strength of CPO, 2020 should be transformative for Dekel. At an average CPO price of €680 and assuming 46,000 tonnes of CPO is sold revenues should be c. €31.2 million. Add a further €4.8 million in revenues from the sale of seed, PKO and PKC and we get a full year 2020 forecast revenue of €36 million. Less €25.2 million for cost of sales and we are left with €10.8 million Gross Profit (30% margin). Finally subtract, general and admin expenses, depreciation and finance costs of €5.6 million and we are left with a PBT of €5.2 million (14% margin). If the company is able to meet its forecast sales targets, achieve better margins (than I have forecast), whilst also achieving higher average CPO prices, my forecasts will be smashed. Of course, the reverse is also true.

Lets face it, the company need a bumper year or two because the balance sheet looks ugly. Very little cash in the bank, debt to equity of 126%, negative working capital and a current ratio of 0.3. These numbers would normally result in me getting my barge pole out. However, after recently refinancing a big chunk of their long term debt and the prospect of a transformative 2020 in terms of profits, the balance sheet should be looking a lot more healthy by this time next year. The cashew nut facility comes in to production in June. If the house broker is to be proven correct, this plant should become profitable by 2021. This will further strengthen the balance sheet and add an exciting new revenue stream to the company.

The only other negative I see, is the recent options scheme the Board awarded themselves. I'm all for the directors motivating themselves through options. However, in this case I think they have been quite greedy. If I had been a long term shareholder in the company I would be feeling pretty aggrieved.

Interesting times ahead for Dekel. If Q1 2020 production figures are good coupled with continued strength in CPO, I think the stock will re-rate hard. A fair value of 12p per share seems reasonable to me. I don't have a position but may well do soon!

I've taken a few of these as well. As an ex holder of Faroe Petroleum I'm very happy to back the management team again.