I’ve today sold 2,500 LMI at 91p realising a loss of 18% on these shares (my average in was 112p with the bulk of my holding bought in the rights issue at 100p), but retaining 5,200 shares for the longer term.

I initially intended to invest c£5,000 in Lonmin , but when the nil paid rights were trading near zero I bought more and subscribed for the shares in the hope of a short term bounce once the rights issue was behind the company. Far from materialising, the shares continued to plummet to a low of under 40p and I found myself in a  “short term trade gone wrong becomes long term investment” scenario.

In my view, the long term outlook for platinum is >30% above current levels and that means Lonmin offers very significant long term value. However, (despite the recent bounce in the platinum price) at spot rand basket prices Lonmin is still cash flow negative by around US$100m a year and that is clearly not sustainable even if the recapitalisation has removed the immediate funding pressure.

And so,while I am happy to remain an investor in Lonmin, I was uncomfortable with it being my biggest single investment. Following the recent sharp rise in the shares, it seemed sensible to take the opportunity to reduce my holding from c7% to <5% of the portfolio – a level at which I feel more comfortable to weather any short term volatility.

Over the next week I will be looking to do a bit more “rebalancing” of the portfolio –  reducing my gold exposure and topping up some of my smaller holdings but I am also on the lookout for one or two new things to add. Ideas welcome, particularly smallcap or non-UK.

More than 3 months since I started Contrarian Miner, I finally have the pleasure of seeing the portfolio in profit. The value stands at £105,158 up 11% since I last posted on 10 Feb. Top gainers have been Antofagasta (+25% since my last post), Amara Mining (+20%), BHP Billiton (+19%), and Fresnillo (+16%).

In the past fortnight the FTSE 350 Mining Index (TR) has outperformed the less volatile Contrarian Miner portfolio (although Contrarian is 14% above the index since inception).

I have today sold 450 of my 800 FRES at £9.62. The shares are up 39% since I bought them against the silver price up just 6%. The latest quarterly production results looked solid enough (silver production at the top end of guidance and gold exceeding guidance) and further production growth is forecast for this year. So there is no particular reason to sell. But I bought Fresnillo largely because of a solid balance sheet and the ability to generate profits even at low silver prices rather than any particular positive view on its operational outlook. As such, its significant outperformance relative to silver looks to me like a profit taking opportunity.

Contrarian Miner currently has £7,684 in cash and while that’s higher than it should be, today is more of a selling than a buying day. In fact, I am struggling to curtail the itch to sell everything that moves today.

I think I said on Monday I was fighting the urge to sell too early on CEY.

Today with the shares up a further 2% since Monday, I have given up the fight and sold half (4,000 shares at 76p each realising a profit of 24% on them).

Nothing wrong with the company, indeed if anything it is looking more solid than ever.

But I am feeling a bit more confident in the prospects for the resources sector and think Contrarian Miner needs a bit more spice (and a bit less gold). So am replacing CEY with stocks I think have further to run.

The new stocks I am adding to the portfolio are:

• Wentworth Resources (London: WRLW) – A small cap oil and gas play in East Africa. The gas is now in production with the price fixed by long term contract. Volumes will ramp up in due course with upside potential as and when demand grows. After tax NPV on their share in this is $153m (their figure) against an EV of <$110m so not only are you buying into this solid asset at a discount but you get the rest of the exploration portfolio free. I have bought an initial 10,000 shares at 29.8p and may add more;
• Firestone Diamonds (London: FDI). Three diamond stocks is no doubt too many, but I have been wanting to buy FDI for a while so am taking the opportunity. Recent updates from the company on mine development are reassuring – project looks on track and management appear confident. Funding through to first production is a little tighter than I would like it to be ($9.8m in headroom excl. the standy facility or U$25m with it) but currency remains a slight tailwind on this and there may be opportunities to bring forward first production a smidgeon. I have bought 15,000 at 17.75p.

Contrarian Miner portfolio is up 4% since 4th Feb to £94,153 – its highest level since 10th December – with precious metals stocks leading the charge (Lonmin +26%, Goldcorp +10%, Roxgold +8%, Centamin +7%, Nevsun +7% and Semafo +6% since 4th Feb).

Catching my eye is the significant outperformance of Centamin. I bought this stock primarily because of its defensive characteristics – low cash costs and all in sustaining costs and thus cash generative at spot, with net cash on the balance sheet and dividend paying.

A good operating performance in Q4 means Centamin met full year 2015 production guidance. The company expects to produce more gold in 2016 at lower cash costs and AISC. That coupled with a 10% increase in the gold price since I bought the shares has resulted in a 22% rise in the share price. It feels as though the company has put the tough year it had in 2014 behind it, and investor confidence has recovered significantly.

That makes the  Contrarian in me feel like heading for the door, but with no particular reason to do so I am fighting the urge. That said, I am looking for 100% upside for Contrarian Miner in 2 years and I am not convinced Centamin offers that so this is not a fundamental long term holding for me.

A long overdue update on Contrarian Miner, which is down 3% in the past month to £90,483 against the mining index which is unchanged on its 4th February levels, somewhat closing the previous gap between the portfolio and the index as shown in the chart below.

What strikes me more, is the extent to which today’s figure mask the meltdown of the last month. The FTSE 350 mining index has bounced back 20% from its 20th January low. And while Contrarian Miner’s greater exposure to gold and other more defensive plays has meant it has been less volatile, individual stocks have seen significant movements  – Petra Diamonds ends down just 1% to 83p but visited 69p on the way following its IMS.

Earlier this month, I thought it a good idea to add some oil to the portfolio, and in the absence of enough time to do my homework properly on oil stocks, I bought 250 shares (£2,724) in OILB.L as a shortcut (its an ETFS Brent Oil ETF). Its up 10% since I bought it.

I have £5,896 in cash in the portfolio, and plenty of ideas of what to do with it. But today does not feel like a buying day so I will sit on my hands a little longer.

For those of you about to descend on Cape Town for the annual Indaba circus, I can report it is sweltering here. Bring shorts.

The diamond market is notoriously opaque and whilst information is becoming more readily available (De Beers have promised for example to disclose the total value of stones sold at each sight from this year) getting a clear picture of where rough diamond prices are right now let alone where they may be headed remains a challenge.

What I am struck by right now is the discrepancy between:

The share prices of listed jewellers Chow Tai Fook (HKG:1929), Luk Fook (HKG:0590) and Tiffany (NYSE:TIF) down a further 18%, 12% and 6% in the last month respectively….

Polished diamond prices – down a further 3% in December according to polishedprices.com (albeit recognising Rapaport has a different view)…

And the share prices of listed diamond companies, with Petra up 47% in the last month, Dominion Diamonds +29% and Gem Diamonds +25%.

Does this mean the share prices of listed diamond companies are a leading indicator of a more positive diamond market? Will back test that later. In the mean time have sold half of my holding in Gem Diamonds (2,500 shares at 125p per share) realising a 23% profit. For the long term, I think GEMD still offers value, but with De Beers expected to reduce prices at the January sight there could be some negative noise to come nearer term in the diamond market.

Pleased to see the Contrarian Miner portfolio up 1% since I last posted on 23 December to £93,072 despite the FTSE 350 Mining index down 6% over the same period.

The portfolio’s performance has been helped by a 25% jump in micro-cap Keras Resources (on no particular news) as well as strong performances from Nordgold (+9%), Amara (+8%) and Lonmin (+6%). Bit of luck really.

I’m not entirely sure the statement out of China that “the government will make fiscal policy more forceful and monetary policy more flexible to keep growth in a proper range in 2016” has me entirely convinced it is the end of the end for the mining sector. Clearly the market feels otherwise, however, and the Contrarian Miner portfolio is up more than 3% today to £92,238 (lets not talk about the Anglo shares I sold yesterday shall we).

Although Petra remains arguably good value at current levels, its balance sheet concerns have not vanished – banks waiving the December covenants has simply bought them six months. The shares are up 60% in the last month, and that feels to me a bit too far too fast. So I sold half of my holding today (3,000 shares at 88p per share) realising a 22% profit. This is more of a trading call than a fundamental call (and I would be tempted to buy them back if they were to revisit 70p).

After weeks of vacillation, I finally decided today to take advantage of the 9% (dead cat) bounce in Anglo since last Thursday to exit my position. And so today I sold my 900 shares at 288p per share, crystalizing a 45% loss.

What changed my mind about Anglo? Since I bought it on 6th November, copper and thermal coal prices are down a further 6%, platinum 7% and iron ore 17%. By my calculations, that wipes a further US$1.1bn off Anglo’s 2016 revenue. And I am not convinced the balance sheet, which was already stretched, can withstand that additional pressure without an equity injection.

That is not really a contrarian view, however when the analyst community is increasingly in agreement the company needs equity – and at spot prices that view does not seem wrong – the risk is the share price continues to slide until an equity deal is announced. Pressure from the markets can become self fulfilling.

Following today’s trade, the portfolio stands at £89,185 – up 2% from last week’s low.