Ariana Resources - Evaluation of Turkey Gold Projects

A report by Growth Equities & Company Research

Red Rabbit Gold Project looks likely to see construction begin in the 4Q 2013 pending a postive Environmental Impact assessment with production in 2014. Going forward joint venture partner is funding to gain a 50% stake.

Big potential uplift in value from a major gold discovery in Turkey through joint venture with Eldorado Gold Corportaion in NE Turkey and a 11.5% stake in Tigris Resources in SE Asia. Agreement with Newmont will give Ariana access to a database on Turkey that took twenty years to assemble.

Valuation based on Ariana’s interest in the Kiziltepe Sector of Red Rabbit and the 49% interest in the Eldorado joint venture is 5.1p.

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What Effect will the Cyprus Bailout have on the Equity Market?

by Joe Rundle, head of trading at spread betting firm ETX Capital.

Cyprus has avoided a calamitous Eurozone exit and a collapse of its banking sector for the time being, but its long-term future remains uncertain. The Cyprus debacle has epitomised the collapse of confidence in the Eurozone since the start of 2013.  Contagion is now the big issue, which could see pessimism belatedly enter the equity and indices front.

While the deeply unpopular ‘tax’ on deposits has been avoided for those with less than €100k, those with more than this amount are still very much in the dark. The broad view is that trust in the Troika and other policymakers has been severely hit. Despite the recurring rhetoric that Cyprus is a one-off, or a special case, the speed of which the U-turn to tax all depositors came does not install the greatest confidence. It does show, however, that the policy makers will do almost anything to avoid a sovereign default and a country’s Eurozone exit.

The worry over contagion comes largely from the bank runs we witnessed in Cyprus last week, along with the precedent of tax on depositors now being sent. The pessimists out there will be wondering how banks in Italy and Spain will be any different – indeed, Monday morning has seen shares in Spain’s Bancaria take a hit already. Other banks in troubled Eurozone sectors could be ones to watch.

This all means that confidence will remain low, with regards to the European banking sector, until those people at the Troika can assure investors that Cyprus is just an isolated incident. So far, those arguments have fallen on deaf ears. After all, the threat of Eurozone exit remains high with Cyprus, with growth set to be a distant memory once the strict austerity measures have been implemented, as per the bailout agreement. Cyprus is set to have a “good bank/bad bank” system set in place, threatening the island’s status as a tax-haven due to a probable decline in foreign investment. As always, while Cyprus’ contribution to the Eurozone’s GDP would not be missed that much, the contagion effect over which nation would be next to leave would shake the Eurozone to its core.

On the whole, the financial markets have rallied on the news that the bailout is forthcoming, but I believe the rally is set to be short-lived. The political impasse in Italy will likely be the reason for that. However, a look at Italian bond-yields will show that they are currently back to pre-election levels, despite no progress made whatsoever with regards to forming a government.  Markets appear to be optimistic that the Eurozone crisis can be resolved. I would advise caution on this sentiment, given the number of reasons that are amounting against it. Any potential flair up in Spain, Italy, Greece or Cyprus could stop this risk sentiment in its tracks, with shares in European banks the likely primary target.

In reaction to the Cypriot bailout deal, risk sentiment has improved but it must be noted that markets reacted relatively well during the build up to the bailout. Hopeful optimism was the driver behind that as investors were certain that the Troika will drum up a plan to avert a financial collapse in Cyprus. The rally will however be short-lived given the wider implications of the deal – for now however, the euro is back above the $1.30 level against the dollar while European stock markets are registering modest gains. The FTSE 100 is firmly above the 6,400 level while the DAX in Germany remains above the 8,000 level. Both levels, respectively, offer strong support to these two indices.

In terms of sector, unsurprisingly, financials are back in vogue but the question is how long as the euro zone’s troubles are far out of sight.

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AIM shares' stamp duty abolition - Not even enough to buy a pint of milk!

by Richard Gill

The decision by George Osborne to scrap the 0.5% stamp duty on AIM shares in yesterday’s Budget was quite rightly welcomed across the investment industry. From April next year buyers of shares on both AIM and the ISDX (the old PLUS Markets) will no longer have to pay the 0.5% charge which comes with every transaction and goes into the Treasury’s coffers. According to stats from the LSE (based on last year’s figures) this could put back £72 million into the pockets of AIM investors, many of which have experienced poor returns from lower quality AIM companies and incompetent fund managers in recent years.

However, I have a number criticisms of the decision from the perspective of both AIM quoted companies and the typical private investor.

In his Budget speech Osborne claimed that the scrapping of stamp duty would, "directly benefit hundreds of medium-sized UK firms, lowering their cost of capital and supporting jobs and growth across the UK.”

Quite how it will reduce a firm’s cost of capital is unclear.

Firstly, stamp duty is only charged on the transfer of assets from one investor to another, in this case when shares are bought on the stock exchange, with the buyer footing the bill. These trades obviously have no effect on the amount of money in the coffers of a business. No benefit for smaller companies there then.

Secondly, when companies raise money via the issue of new shares (ie those which have never been owned by anyone before) either via an IPO or secondary raising, no stamp duty is charged. Again, there is no direct benefit due to Osborne’s decision.

You could argue that the abolition of the tax on the secondary market would increase confidence and that companies would thus see higher demand and thus higher prices for any fundraisings. But I am failing to see exactly how AIM companies will directly benefit, especially given the minute benefits which private investors (those who actually move shares prices) will see from the stamp duty abolition.

From the perspective of the average private investor Osborne has clearly not gone far enough. According to our own internal stats at t1ps.com the average investor typically trades around 6 times a year, investing just under £2,000 a time. Coincidentally, this equates to round about the total £11,520 which they will be able to put into a stocks & shares ISAs from April this year. So based on these stats the annual savings from the scrapping of stamp duty for a typical private investor will be just £57.60.

Is this really going to attract significantly more investors to the market? I don’t think so. Investors are typically looking for high double digit and even three figure gains from AIM listed shares so an extra 0.5 percentage points on their return is really quite insignificant in the scheme of things. Every little helps but £57.60 a year isn’t even enough to buy a pint of milk every day!

What the Chancellor should have done is bow to pressure from many in the industry and make AIM shares eligible for inclusion in a stocks & shares ISA. The higher returns that this could bring are much more significant. Say for example a private investor puts £11,520 into AIM shares and makes a 10% (or £1,152) annual capital gain. If AIM shares were eligible for the tax wrapper then investors would be a much more significant £207.36 better off compared to the current regime if the shares were sold at the end of the year.

To properly increase the benefits of junior stock exchanges (for private investors and companies) both government and the exchanges themselves are responsible for introducing new measures. The easiest and most obvious for the government would be to allow AIM shares in an ISA, while the LSE and IDSX need to address the sometimes ridiculous spreads which many listed companies suffer from (up to 20% at times).

In my opinion these measures would be much more effective at benefitting the private investor, smaller companies and the economy as a whole.

 

 

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Onwards to Glory, is My View

Hello Share Fans,

Bull markets usually last longer than bear ones. We have had a bull market for some time now. That even takes into account the softening in the market of about a month ago which stopped the Footsie reaching its all-time high.

So we have a bull market now, but how long will it last before the bear market, which always follows a bull market, begin?

Well, the good news is that the present positive market should last a heck of a lot longer yet. And that is because the recovery has been so lacklustre so far that it will take an awfully long time to finish the course. In other words, we have a lot longer for shares to rise in value, before we put the nasty recession which began in 2008 to a final rest.

How will this affect share-shifters like us? Well I think, we should consider holding onto the shares we have, while investing any spare cash in new companies. Selling could be put on hold. This does not mean, of course, that we should hang onto shares which are falling for reasons of their own.

There will always be companies which lose their way even in the healthiest of stock market situations. These shares should be jettisoned before they do any further damage to our bank balances. But generally speaking, if the market softens a bit in the next few weeks, it should get back on track fairly soon. So I am looking to buy shares, rather than sell them. But if I’m wrong chums, please don’t blame me.

Rocking on

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