Sold 750 shares in Maurel et Prom today (Paris, MAU) at €4.13. The shares are up 35% since I bought them in euro terms but 53% in GBP and as a result Maurel et Prom had become the largest holding at £11,1622 or 6.6% of the Contrarian portfolio.

The shares are trading at close to the potential Pertimina bid price of €4.20 (admittedly ignoring the potential €0.50 kicker if the oil price exceeds $65/bbl for more than 90 days next year). With the Chairman and CEO already having sold his 24.5% stake and the board recommending the (potential) offer, there seems limited prospect of flushing out a higher bid. It seems to me this is increasingly becoming a merger-arb play with a “free” option on brent exceeding $65/bbl. And there may be value in that. But not as Contrarian’s biggest holding, so I am selling down a quarter today and may sell further.

Post the sale, Contrarian stands at £168,553 with £10,404 in cash.  Given how overbought parts of the sector are, it is not burning a hole in my pocket either.

Tricky business finding contrarian buying opportunities in the mining sector currently.

Possibly some of the gold stocks might be worth a look.That said the chart below suggests otherwise at least in the London market. It maps the gold price against the share prices of Randgold, Acacia and Centamin. The gold price today is US$1,254/oz. On 21 October 2014 it was US$1,251/oz i.e. its flat. But Centamin is up 105%, Acacia is up 60% and Randgold is up 40% over the same period. Hmmm.

So instead I bought PHPT (ETFS Physical Platinum ETF) – 50 shares at $92.30. The platinum price has fallen by 19% in the past two months as wage negotiations in South Africa appear to be reaching an amicable conclusion and so the threat of strikes recedes. But the market is nevertheless in deficit (by c7% of world demand) and has been for a years. Yes, rock bottom prices in a deficit market. Odd but true. Plenty of stocks means that the market doesn’t feel like its short of the metal and the ETFS have been net sellers rather than buyers (they tend to be momentum buyers on the up and sellers on the way down,  exacerbating the moves)

Could the platinum price go lower – sure, it’s been down to $818/oz in the past year and very briefly traded just below US$800/oz at the height of the financial crisis. But even assuming it did revisit those levels that’s only 17% downside. On the other hand in 2008 it hit US$2,196/oz in in 2011 it touched US$1,855/oz – 93% above current levels. And to me that is an asymmetrical risk opportunity. I’d like more, but with the broader mining sector so overbought I feel like I’m quite happy having £7,408 in cash so it might have to wait until I find something to sell. I also own Lonmin, Sylvania and a palladium ETF as well, so on a portfolio level I am pretty long PGMS already.

Hang on, here’s a chart of my commodity exposure for you….14% PGMS, only 9% gold (hmmm – may need to go shopping), 13% diamonds and gemstones, 28% base metals (and very happy with that), 20% oils, 16% mining equipment and services

Contrarian stands at  £168,667 today, close to its all time high. Full portfolio below.

Following today’s announcement from Firestone Diamonds, I have sold 5,500 shares  (just under a quarter of my holding) at 51.5p. The announcement was no doubt intended to reassure, but for me it raised more questions than it answered.

In their last trading update on 20th July the company said initial production was now expected in “early Q4” and in the analyst site visit presentation from 5th September the company said it would be  testing and optimising the plant during September with a “forecast production start date” of “late September / early October”. In anticipation of first production the share price ran up over the past few weeks only to fall back as September ticked into early October with no news.

And then today, the shares are up on the back of what is, to my mind a holding statement from the company (probably forced on them by their NOMAD), effectively reassuring the market that nothing has gone horribly wrong.

Firestone says today that “commissioning of the plant is now in its final stages”, the historic stockpile is being processed in “wet commissioning” (i.e the first half of the diamond recovery process) and “the Company expects to complete the commissioning of the recovery plant and sort house in anticipation of first diamond recoveries later this month”. All “major construction activities” are now complete.

All well and good, but it does not tell me:

1. Why expected first diamond production has moved back almost a month to  “in October” from late September / early October (or am I wrong to interpret previous statements about the expected date of first production as meaning the actual recovery of the first diamonds?)
2. If all major construction activities are complete, what is not?
3. Specifically, what still needs to be done to get the (dry) recovery plant and sorthouse up and running.

A further update is expected week of 17th October, and no doubt I am just being too impatient. It will probably say first diamonds have been recovered and the shares will rocket.

However I cannot shake a vague worry that something is not absolutely 100%. The shares are up today on an announcement that doesn’t reassure me enough and that seems a sensible opportunity to reduce my holding which was nearly 7% of the Contrarian portfolio (and up 168% since I bought the shares at an average of 19p).

Chicken.

Contrarian stands today at £166,470 with £11,178 of that in cash.

Having spent weeks trying to persuade myself not to sell my Caledonia shares too soon (a mistake I always seem to make) last Friday I gave up the fight and sold my remaining 2,500 shares at 123p – a profit of 193% on my 42p investment last November. Of course the shares are up another 7% since then to 132.5p today.

Still I wouldn’t be much of a contrarian if the chart below inspired me to do anything other than sell. Moving up in a pretty straight line on very little news and not much change in the gold price. Arguably there is still value in the shares. But a small underground gold mine in Zimbabwe – I’m happy to leave the last bit to someone else.

The value of Contrarian stands at £166,314 up 5% since I last posted on 9th September. Portfolio performance has been helped by strong showings from Gemfields (+29% following good results yesterday with strong growth plans); Firestone Diamonds (+17% as the company moves towards first production within the next few weeks), and ASX-Listed Panoramic Resources (+29% on no particular news). But with energy stocks hampering performance (Ophir -6%, Tullow -6%, Wentworth – 7%), that still leaves me slightly underperforming the FTSE 350 Mining Index (Total Return) which is up 7% since last post.

Still, with Contrarian at an all time high, I return to the debate as to whether it is relative or absolute performance that matters to the private investor. Chart below.

Have just bought 300 shares in Aggreko at 1013p. OK, I accept calling this a resources stock is a bit of a stretch – only c35% of revenues come from the oil and gas and mining sectors but in part that reflects the weakness in the sectors and when these rebound so should demand for temporary power solutions. Aggreko blamed weakness in the oil sector the weak H1 results announced in August which saw the stock slip 15% (it has fallen a further 6% since).

So for me it qualifies as not only 1) a very contrarian call – this is a stock which has disappointed recently and is not well loved currently, but also 2) a resources recovery play. As such it is at least a candidate for Contrarian Miner. I would love to give you a fuller explanation of my purchasing/valuation decision. But the fact is I  bought the shares without deeper analysis and will have to make up the reason later.

At the end of a volatile day for the sector, Contrarian now stands at £158,833 with cash of £5,203. Portfolio below.

A few changes to the portfolio:

• Yesterday I bought 28,000 Panoramic Resources (ASX:PAN) at A$0.205 doubling up my holding in this interesting nickel play
• Having sat on my hands for months watching it rise, I have just sold half my holding in Caledonia Mining (London: CMCL) 2500 shares at 113p. The company is set to grow production to over 75koz per annum by 2020  at AISC of US$950/oz which would give it annual EBITDA of over US$25m per annum. Arguably that means it still looks very cheap on EV/long term EBITDA of less than 3x and recent statements suggests the development of the deeper levels is very much on track. Nevertheless, located in Zimbabwe with a complex ownership structure (to comply with Zimbabwe’s 51% indigenisation requirement) political risk remains a key consideration as does a fairly limited reserve life (mine plan is based partly on inferred resources). More to the point, I was up 162% in less than a year and that seemed to me a good to time take at least some money off the table

The value of the Contrarian Portfolio currently stands at £159,388 with £8,269 in cash.

Back from a well deserved rest (yes, even bloggers take holidays) to find the value of Contrarian Miner at £157,074 – down 2% since I last posted on 22nd August in line with the performance of the FTSE 350 Mining index. Not entirely unexpected (as you may recall when I posted last I was looking for things to sell to create a cash moat), but unfortunately I didn’t get to take advantage of last week’s better buying opportunities. I did buy a further 100,000 Poseidon (ASX: POS) at A$0.056 but that still leaves me with cash of £8,821- not quite burning a hole in my pocket but not much use hanging about either.

Key fallers in the portfolio over the past fortnight have been ASX-listed Panoramic (-13%) which for me looks like an opportunity to add to my small position, Goldcorp (-8%), Antofagasta (-7%) and Lonmin (-7%). Offsetting those losses have been gains from Potash Corp (+9%), Caledonia Mining (+6%) and Firestone, Gemfields and Maurel et Prom (all +2-3%).

Portfolio below.

Early last week I was scratching my head for mining stocks in my portfolio to sell, and amidst the turbulence of the sector (down almost 3% today) the head-scratching has continued.

Now some may say today doesn’t look like a good selling day for a Contrarian. But in the context of the price movement this year, today’s sector move is small beer. What I worry about is that broader market weakness could trigger a far more significant correction in a sector that has moved very rapidly.

So continuing with the theme of selling stocks most likely to move with the index (rather than smallcaps with low liquidity and potential company-specific surprises), but this time trying to avoid stocks which have already fallen sharply, I sold today:

• 55 PHPD – a palladium ETF which holds the physical metal. At $706/oz the palladium price is up 40% since I bought the ETF, and down just 3% from its 6 month peak;
• 40 Caterpillar (New York: CAT) – up just 15% since I bought it but down only 1% from last week’s 6-month high. I might be tempted to buy these back lower down (but not within 30 days or HMRC will bite me).

Following the sales, Contrarian Miner has £12,039 in cash. A nice warchest.

The value of the Contrarian Portfolio stands £160,079 down less than 1% since I last posted which I am very pleased with.

Today I found myself faced with a dilemma – I feel like the mining sector (up 43% since the beginning of June) is overdue a short term pullback  but looking through the Contrarian portfolio I struggled to find anything to sell.

Usually I find myself selling whatever is up strongly and particularly where I’ve made >100%. But at the top of my leader-board are Caledonia Mining (+125%), Lonmin (+115%) and Firestone Diamonds (+107%) – all shares I still like, with plenty of potential upside.

There are perhaps a few shares in the portfolio I have doubts about. Keras Resources and Nevsun spring to mind as stocks where I am not sure I am aligned with the choices management have made since I invested. For Nordgold the value gap relative to peers has increased rather than narrowed since I bought and I’m now wondering whether it will ever close the gap given the lack of free float and with the proposed move to an LSE full list seemingly on the back burner. But none of these strike me as particularly good reasons to sell  – all of these stocks have significant upside potential and none look toppy.

So instead I have picked on the large caps in the portfolio that should most closely follow the performance of the mining sector – reducing my holding in Antofagasta (selling 550 shares at 558p) and selling the remainder of my shares in Rio Tinto (130 at 2512p). Nothing wrong with ANTO but not a stock I can get too passionate about. RIO was bought in late 2015 as a relatively safe sector play with the key attraction being a strong balance sheet – that now seems less of a reason to hold. The Contrarian Portfolio could probably do with at least one large diversified miner, but I’m not convinced Rio is my first choice given its commodity mix (too much iron ore) and ultra-conservative strategy.

The value of Contrarian stands at £160,795 today with £6,769 now in cash. The portfolio is up almost 61% since I started in November, compared to the FTSE 350 Mining (total return) index up 35% over the same period.

Horizonte (London: HZM) shares are down c6% today to 1.85/2.0p (you have to love the spread on some of these AIM stocks, so wide you can’t quote a single meaningful price).

The weakness seems to be on the back of closing of the Glencore deal creating a potential overhang. Given I’m buying with a 2-3 year time horizon and expectation of multiple times upside, for me the closing of the transaction is a significant positive – together with the recently announced additional licence areas cementing Araguaia as a world class development project.

So I see the weakness today as an opportunity and I have bought a further 175,000 shares at 1.9p.

Contrarian stands at £152,499 today with just £461 in cash so time to sit on my hands.