Weekly Update: Week Ending 30 December 2011

To calculate the weekly performance on my portfolio I take the close from last Friday to work out the percentage increase/decrease in each stock. This is compared to the ASX 200 (Code: XJO) and the Small Ords (XSO). The Small Ords is comprised of companies included in the ASX 300 index, but not in the ASX 100 index. I include the Small Ords in my comparison as it helps highlight the markets appetite for risk.

Market:	Close (Friday 23/12/11):	Close (Friday 30/12/11):	Percentage Change:
XJO	4140	4056	-2.03%
XSO	2264	2209	-2.43%

The market continued to lose ground this week with the ASX 200 dropping just over 2% and the Small Ords faring a little worse to close down 2.43%. Risk is still “off” for Australian Investors in my opinion. Even when the US and European markets were up our market barely took notice. Gold also continued its slide which is seriously affecting a number of gold stocks at the moment.

Code:	Weighting:	Share Price Friday (23/12/2011)	Share Price Friday (30/12/2011)	Percentage Change:	Weighted Change:
OBJ	18.70%	0.018	0.018	0.00%	0.00%
MHM	18.99%	0.900	0.900	0.00%	0.00%
KGL	28.58%	0.120	0.120	0.00%	0.00%
Cash	33.72%			0%	0.00%
TOTAL	100.00%			0.000%	0.00%

However, not one of my stocks moved. Everything was completely flat. OBJ and KGL were higher in the week by come 2pm Friday (early close) we were back to square one.

As a result there is not a whole heap to report. The announcement on Kentor Gold’s Andash project still has not been released, however, an article was posted on Hotcopper late on Friday/early this morning that indicates that things are very close. About a week ago I expected the announcement to be released within 3 weeks. One week has passed, we have at most another two to go, with Monday and Tuesday looking like strong candidates to be the release date (IMO).

Code:	Weighting:	Share Price Friday (23/12/2011)	Share Price Friday (30/12/2011)	Percentage Change:	Weighted Change:
OBJ	28.21%	0.018	0.018	0.00%	0.00%
MHM	28.66%	0.900	0.900	0.00%	0.00%
KGL	43.13%	0.120	0.120	0.00%	0.00%
TOTAL	100.00%				0.00%

Without cash the picture obviously remains the same with no change in share price.

The portfolios performance also remains the same from last week.

Code:	Weighting:	Purchase Price	Current Price:	Percentage Change:	Weighted Change:
OBJ	22.94%	0.023	0.018	-21.74%	-4.99%
MHM	22.29%	1.100	0.900	-18.18%	-4.05%
KGL	22.41%	0.098	0.120	22.45%	5.03%
TOTAL	67.63%				-4.01%

Media Speculation on MHM Metals Silica Project

The other day I wrote an article titled “Where Do I See MHM Going in 2012?” where I speculated that any significant news on the Silica Project is at least 12 – 24 months away. Anyway today there was an article in The Advocate which may shed some additional light for investors in MHM. I don’t think it necessarily means any new is close-by as getting a project of this scale off the ground will certainly take time, but it is interesting to see media speculation.

The article mentions growing investor interest in a major Tasmanian silicon smelter – possible at Port Latta and then goes on to mention MHM Metals recent announcement where they stated that they continue to “engage numerous expressions of interest” for developing a silicon smelter in Tasmania. Now these news articles are nothing new, there have been a couple in the past and MHM itself has used the line that it is talking to numerous parties for some time now.

However, what strikes me as different is the more open stance of management with Simon Wells saying that due diligence was taking place on more than one site and that the most important aspect is the cost of delivered electricity to the site. This seems to suggest that there is a little more going on than meets the eye, because in my opinion you don’t start worrying about site location and power supply requirements, etc until you have someone who is at least committed to seriously exploring the project/take off agreement.

The article also reminded me of something I previously overlooked. MHM is engaging corporate advisors. In my opinion the most likely outcome is a joint venture or spin off of the project as MHM does not have the finances or the man power to oversee two large expansion programs (silicon smelter and US salt slag projects) at the same time. So if MHM are engaging with corporate advisors then they clearly have some idea of what the project will involve and need to shore up the financial side of things to progress it further. Corporate Advisors are not cheap so you don’t just appoint them to advise you for the sake of it.

Overall it is certainly an interesting article and in reality it throws up more questions than answers. As I have previously said I think this project should be viewed as extra cream on top and with the timeframe associated with the project too hard to predict I think the focus of the market will remain on the US salt slag project.

Weekly Update: Week Ending 23 December 2011

To calculate the weekly performance on my portfolio I take the close from last Friday to work out the percentage increase/decrease in each stock. This is compared to the ASX 200 (Code: XJO) and the Small Ords (XSO). The Small Ords is comprised of companies included in the ASX 300 index, but not in the ASX 100 index. I include the Small Ords in my comparison as it helps highlight the markets appetite for risk.

Market:	Close (Friday 16/12/11):	Close (Friday 23/12/11):	Percentage Change:
XJO	4159	4140	-0.46%
XSO	2317	2264	-2.29%

Last week the XSO severely underperformed by dropping 2.29% compared to a relatively modest fall of 0.46% on the ASX 200. This clearly signals that risk is off and people are shying aware from small to mid-cap stocks. This risk aversion was evident in my portfolio with both MHM and OBJ suffering from the pressure.

Code:	Weighting:	Share Price Friday (16/12/2011)	Share Price Friday (23/12/2011)	Percentage Change:	Weighted Change:
OBJ	19.38%	0.019	0.018	-5.26%	-1.02%
MHM	20.62%	0.995	0.900	-9.55%	-1.97%
KGL	26.89%	0.115	0.120	4.35%	1.17%
Cash	33.11%			0%	0.00%
TOTAL	100.00%			-3.488%	-1.82%

OBJ closed down just over 5% with MHM having another shocking week to lose 9.55%. It certainly seems that we will get no solid gains in that stock until news on the financing and construction timeframe are provided. It is also clear that I pulled the trigger too early when I bought some more just above $1. However, we live and learn and it is something that I will be more wary of when purchasing shares in the future.

Kentor did have a good week and managed a gain of 4.35%. New on Andash, the Burnakura feasibility and Jervois update are so close I can almost see the announcement popping up onto my screen now. I expect news will be forthcoming within the next 2-3 weeks.

My cash holding continues to act as a bit of a buffer and helped the portfolio limit its losses to 1.82% for the week, which was not too bad in my opinion.

Code:	Weighting:	Share Price Friday (16/12/2011)	Share Price Friday (23/12/2011)	Percentage Change:	Weighted Change:
OBJ	28.97%	0.019	0.018	-5.26%	-1.52%
MHM	30.82%	0.995	0.900	-9.55%	-2.94%
KGL	40.21%	0.115	0.120	4.35%	1.75%
TOTAL	100.00%				-2.72%

Removing cash from the portfolio shows a drop of 2.72% which is more in line with the general mood and sentiment that we experienced.

Code:	Weighting:	Purchase Price	Current Price:	Percentage Change:	Weighted Change:
OBJ	22.94%	0.023	0.018	-21.74%	-4.99%
MHM	22.29%	1.100	0.900	-18.18%	-4.05%
KGL	22.41%	0.098	0.120	22.45%	5.03%
TOTAL	67.63%				-4.01%

The portfolio remains slightly underwater with a total loss of 4.01% (excluding the impact of cash). The main drag on performance is both OBJ and MHM. I am not as concerned about OBJ as news in the bio-tech space could easily see the stock rally by 100% or more within a relatively short space of time. And as I have mentioned before if you back management and the technology it is always better be on the train than arrive too late at the station.