December 2016 UK Investor Magazine by UK Investor Magazine

UK INVESTOR MONEY // SHARES // INTERVIEWS

ISSUE 17 // DECEMBER 2016

Dear Santa: 7 tips Interviews with What our writers Conroy Gold & ECR Minerals want for Christmas PLUS

UK Investor Magazine — 1 — December 2016

INSIDE 3 Get your Golden Golden ticket Tom Winnifrith

From Intro The Editor

4 Three resource stocks to buy Gary Newman 5 A Q&A with ECR Minerals CEO Craig Brown Tom Winnifrith 7 Daft millennials and the £5 note Tom Winnifrith 8 All we want for Christmas... The ShareProphets Team 12 Company Profile: Norcros Steve Moore 13 My financial New Year’s resolutions Tom Winnifrith 14 A Q&A with Conroy Gold CEO Richard Conroy Tom Winnifrith 16 We need a bonfire of the Charities Tom Winnifrith 17 Three stocks to sell Tom Winnifrith 19 The House View

CONTACT US UK Investor Magazine 91 - 95 Clerkenwell Road London, EC1R 5BX E: info@ukinvestorshow.com W: www.UKInvestorShow.com EDITORIAL Tom Winnifrith Editor

May I start by wishing you all a Merry Christmas and a prosperous New Year. We do not do politically correct seasons greetings in this publication but however you celebrate and whatever you celebrate, if indeed you celebrate anything at all, we hope you have fun. After a one month holiday we are back with the magazine and once again we hope that it contains something for everyone - as a seasonal bonus the writers at ShareProphets have teamed up for a special article on the shares they want or don’t want Santa to give them this year. They have all been good boys, apart from uberprogressive Darren Atwater who does not believe in Santa - so with the exception of our Canadian colleague I am sure they will all be rewarded. And if you want more share tips the ShareProphets team will be serving up a dozen or more tips of the year for 2017 between Christmas Even and New Year’s Day on the ShareProphets website. Christmas is, of course, not only about what you receive, it should be a celebration of giving. After all, what Christians are celebrating is God giving to the world his only son. Whether you believe that or not, that is what the festival is all about. This year we helped make Christmas special for 181 severely handicapped children and young people by helping raise money for the Woodlarks Christmas special as you can see HERE. The work of this amazing charity continues not just for one week in December but for 52 weeks a year and if you have a few quid to spare we would ask that you consider making a small Christmas donation HERE For us at UK Investor the highlight of our year comes on April 1 with the Britain’s leading one day investor event, held in London. And the clock is ticking - it is now just under four months to the great day and we are working hard. Already more than 90 of the 120 stands have been reserved by a vast swathe of PLCs of all sizes. And we have a top flight list of speakers - you can find full details HERE. This month we have another 20 free Investor class tickets for the show to hand out to readers of this magazine. Simply go to www. UKInvestorShow.com and use the promotional code UKIXMAS when booking an investor class ticket. It is first come first served so book away now! Once again, enjoy Christmas and we will be back in the New Year Tom Winnifrith Editor UK Investor Magazine — 2 — December 2016

There is one golden golden ticket on offer have Britain’s Buffet analyse your portfolio Writes Tom Winnifrith

his year’s UK Investor Show on April 1 has a very special golden ticket offer for those who cannot get enough of investing. But there is also one golden golden ticket on offer. To recap, those buying a golden ticket at UK Investor get guaranteed seating in the front row at any main stage presentation but also reserved seats at any breakout sessions they request. As we saw in 2016 some breakout sessions were so popular that some folks had to be turned away. And there is a real bonus this year for golden ticket holders this year - the Saracens cabaret held on the evening of Wednesday March 29 at Saracens RFC. This is a chance to mingle not only with some of the Sarries star players but also with the CEOS of many of the companies attending the show in a relaxed setting over great food and wine. The entertainment includes a panel discussion

on life and business with secret millionaire Nick Leslau and Nigel Wray his long term business partner. That will be chaired by me and I will also be doing a session with Sunday Telegraph columnist and Private Eye co-founder Christopher Booker, aka Uncle Chris, on his favourite front covers of the Eye from the past 50 years. And there is a blind English “champagne” tasting hosted by Chapel Down. The Saracens cabaret is for all golden ticket holders but one golden ticket holder will be chosen at random - that is the golden golden ticket. On April 1 show day the holder of that ticket will get a private 20 minute session with Britain’s Buffett, Nigel Wray, to discuss his or her investment portfolio. You don’t get an opportunity like that very often. To book your golden ticket while stocks last go HERE

UK Investor Magazine — 3 — December 2016

Gold, frankincense and, oh, lets just stick to gold The top three resource stocks to buy for 2017 By Gary Newman

ot everything has to be Christmas related! Let’s cut to the chase. What are the three top resource stocks to buy now to make money in 2017.

I start with the biggest - Fresnillo (FRES). This FTSE100 company isn’t going to see its share price go up by multiples of the current level, in the low 1200s, it certainly has the ability to generate a return in excess of 50% during 2017.

which looks cheap considering net profit for the last quarter stood at over $2.7 million, based on an average sales price of $1,324/oz. The company produces around 10,000 ounces per quarter, and with all in sustaining costs consistently below $1,000 now, it should see good upside on any turn-around in the recent drops in gold price. The company also had nearly $5 million in the bank and very little in the way of debt – although with the San Gregorio West mine coming online imminently that cash position may be lower now, but San Gregorio adds production upside. It looks attractive to me at around 13-14p to buy. Finally an oil play: Genel Energy (GENL). This is a company I have been wrong about in the past, but still ultimately see it coming good in the longer

This is very much a leveraged play on the price of silver, as the world’s largest producer of the precious metal, but will also be influenced by the gold price over the next 12 months. Not only is it a relatively safe bet, in terms of the strength of the company, but it also pays a dividend.

term. It is a play linked to the oil price, but also to the political situation in Kurdistan and confidence in the government being able to pay producers.

If you fancy something a bit more risky but on the basis that elephants don’t gallop something which could fly my mining pick is Orosur Mining (OMI). This junior gold producer is a gamble based on what the gold price does in the coming year. Currently it has a market cap around £13.5 million,

For a company producing well in excess of 50,000bopd, its market cap of £200 million is incredibly low, even taking into account that it operates in Kurdistan. There is of course risk here – the biggest being a worsening of the situation with Islamic State or the government not being able to afford to pay – but there is also an awful lot of potential upside, especially from the two gas fields not yet in production. This still has potential to rise by multiples of the current share price in the low 70p range.

UK Investor Magazine — 4 — December 2016

company Q&A

ECR Minerals A conversation with CEO Craig Brown By Tom Winnifrith Tom Winnifrith: Craig you are relatively new to ECR, what qualifies you to reverse historic underperformance?

• Christian Dennis and Ivor Jones appointed to the Board

Craig Brown: I have worked for 22 years in three mining companies and all of them were a success while I was involved. Exploration was completed at each and a mine successfully put into production. I co-founded Kryso Resources plc, which listed on AIM in 2004 at 10p per share. The business is now known as China Nonferrous Gold Ltd (CNG), and for most of this year the price has been north of 30p, having first exceeded that level back in 2011. CNG has a market cap of more than £100 million, and poured its first gold at the Pakrut mine in Tajikistan last year. Along the way Kryso defined a five million ounce JORC Mineral Resource. Ivor Jones, who recently joined ECR as an executive director, was involved in that process as a technical consultant. So we know what it takes for an exploration company to succeed. Many of the investors who participated in placings at the low of the market in 2009 made 10 times return on their investment in the following two years.

• Review of Victorian projects and analyst visit completed in November 2016 • Consolidation of shares completed in November 2016 • Identified hard rock exploration targets in Victoria • ECR is engaged in the review of other potential new projects These strategies place ECR in a much more favorable position to reverse this historic underperformance. TW: I suppose one concern must be that contrary to what we all thought the gold price has slumped since Donald Trump defeated Crooked Hillary - do you see that trend reversing and why?

ECR’s history on AIM has not been stellar. A specific issue for ECR was its focus on the Danglay gold project in the Philippines, where the initial drilling did not result in a resource of the size expected. The political environment in the Philippines has also developed unfavourably for the mining industry. Progress with ECR’s project in Argentina was affected by a failure to deliver exploration success and past political uncertainty .

CB: Donald Trump’s stated intent is to deliver tax cuts alongside increased spending on defence and infrastructure. That could well be inflationary, which on the face of it may be good for the gold price. But once in office, Trump will have to deal with certain realities, meaning that his plans may be reconsidered. There are also many other factors which will influence the gold price. Ultimately, forecasting trends in the gold market is a job for those with the time, data and specialised knowledge to do it properly, and even then the resulting forecasts may not be reliable.

In 2016 ECR has acquired 100% ownership of promising new gold projects in Victoria, Australia, a more stable political environment.

ECR is quietly confident that the current gold price will at least retain its current position over the long term.

In recent months, ECR has refocused the company through a number of strategies: • £500,000 raised by Optiva Securities in September 2016

TW: One thing that concerns many investors is that AIM mining juniors are always just one good announcement away from the next heavily discounted placing. Are you almost out of cash?

• Reduced operating cost Yorkville Advisors convertible loan facility was repaid in September 2016

Continued on next page

UK Investor Magazine — 5 — December 2016

CB: ECR isn’t almost out of cash and does not require funding in the near term. As with all companies, success in exploration means additional funds are required to realise the potential of new discoveries. ECR hopes to be in this position in the near future. TW: There was a recent announcement that hinted at a possible legal dispute with Tiger, your partner at the Danglay gold project in the Philippines - is this a serious problem? CB: ECR’s interest in the Danglay project is an asset of the company and we are taking proportionate steps to protect that asset. We are taking matters seriously, and attempting to proceed as amicably as possible as far as Tiger International Resources is concerned. TW: What is the attraction of Danglay as an asset given the political uncertainties inherent in operating in the Philippines? CB: Political uncertainty is a fact of life in the mining industry worldwide. But even in relatively high risk jurisdictions like the Philippines, windows of opportunity occur in which companies can make progress and put deposits into production. Several international companies have developed gold mines in the Philippines in the past ten years. In such situations companies have to be prepared to take the rough with the smooth, and should always be prepared to reassess whether the potential rewards are worth the difficulties. In August 2016, ECR decided to stop earning into the Danglay project, having earned a 25% interest so far. But that isn’t to say the project isn’t of value. It sits in a world-class mining district and has produced some interesting exploration results. While ECR’s main focus is now elsewhere, we will consider all options to maximise the value of the company’s interest in Danglay. TW: Your main focus appears to be on the Avoca and Bailieston gold projects in Victoria, Australia but you have also said you are looking at new projects. Why? Where? And How will you fund them? CB: An exploration company needs a pipeline of projects. The nature of mineral exploration is that prospects are tested at the drill bit, and there is always a high risk that the exploration will not be as successful as we would have liked. An exploration company always needs to be reviewing new opportunities. TW: Back to the projects in Victoria - what is the attraction of them? CB: Victoria is one of the world’s major gold provinces. Total recorded gold production from 1851 to June 1998 is around 80.4 million ounces (2500 tonnes of gold). ECR has acquired 100% owner-

ship of two gold exploration projects in Victoria; both projects have excellent access and local infrastructure, and are located less than two hours’ drive from Melbourne, but in areas of relatively low population density. The Avoca project is located in an area of significant historical hard-rock and alluvial gold production. The Bailieston project is 40km from the Fosterville gold mine, which produced its one millionth ounce of gold earlier this year, and 30km from the Costerfield gold-antimony mine, which is also a substantial modern operation. We are firm believers in the aphorism that a good place to explore for a new gold mine is nearby an old one. Or even better, nearby an operating mine with which there may be synergies for the development of a significant deposit discovered in the vicinity. Another factor is that with the weakening of the Australian dollar over the past few years and the strong US dollar, plus reduced costs of certain key mining inputs like diesel and labour, the economics for gold production in Australia are now comparatively favourable. TW: And can you explain what are your drilling plans over the next six months? CB: At this stage ECR is planning 550 metres of reverse circulation (RC) drilling at the Bailieston project, to begin in early 2017. Numerous drill targets have been identified at Bailieston based on historic workings and information, and the principal target is the area of the historic Byron mine. Historical drilling results (indicative only) from the Byron area include 3m at 14.74 g/t from 35m; 3m at 13.80 g/t from 40m; and 30m at 0.75 g/t from 24m. ECR also has drill targets at the Avoca project, but we haven’t timetabled any drilling at Avoca as yet. However, we have applied for the necessary drilling permits. At Avoca our highest ranked target is the mineralisation near the old Pyrenees mine. The Pyrenees reef has never been drilled, but its recorded production is 16,199 tonnes yielding 16,602 ounces (equivalent to 31 grams per tonne), with bonanza grades mined in the near surface workings (2,920 tonnes for 7,805 ounces to 48 metres depth, which is equivalent to 83 grams per tonne). We would look to place drill holes around the old workings to test for un-mined mineralisation below the near surface bonanza grade zones. TW: So when should we get the first results from Australia? CB: We are targeting results from the drilling at Byron (in the Bailieston project area) in the first few months of 2017. TW: Thank you vey much and good luck.

UK Investor Magazine — 6 — December 2016

Half a Cow, Mad Vegans, Daft Millennials and the new £5 By Tom Winnifrith

t appears that the new five pound note contains traces of tallow which is fat from a cow. Very small traces as I shall demonstrate below but that has not stopped more than 100,000 snowflake millennials signing an online petition calling for the notes to be withdrawn and the bankers responsible to be hung drawn and quartered. Okay I made the second bit up but an awful lot of folks are getting angry on behalf of vegans, Hindus, Jews and all sort of other minorities. As it happens the Jews are quite cool about it. The board of deputies says no Jews would have a problem unless they tried to eat the notes. How sensible but elsewhere the faux anger grows. It is the sort of faux anger Dan Hannan discusses in his super video of yesterday here. Even if some daft vegan was unable to handle this dirty money there are ways around it. They could send any dirty fivers in the post to me. Or they could just refuse to accept fivers demanding change or tenners instead. Or they could put it into context. Vice Magazine does the maths for the vegans below: Tallow is rendered cow or mutton fat, but for the sake of argument let’s go with cows here. How much do cows weigh? Between 1,100kg for a male (bull) and 720kg for a female. So, on average, a cow weighs 910kg. The body fat content of an average cow is 25 percent. Therefore, the amount of fat in an average

cow’s body 227.5kg.

How many kilograms of this fat is contained in offcuts you could use to make tallow? About 40kg, according to a man at the James Elliott butcher in Islington. How much tallow is used in one note, according to the Bank of England? “A trace”, which chemically means less than 100 parts per million, or 0.01 percent. A polymer consultant I called confirmed that the tallow present in a given polymer would be a fraction of a single percentage. New £5 notes weigh 0.7g, therefore there is roughly 0.00007 g of tallow present in one £5 note. How many fivers are in circulation now, and therefore will be around by May of 2017, when all the old paper ones have been phased out? 329 million notes. To work out how much tallow will be used in total in all of these fivers, we need to multiply 0.00007g by 329 million, which gives us 23,030g, or 23kg. And if you get about 40kg of tallow-worthy fat from the average cow, how many cows would you need to make every single £5 note in circulation? JUST OVER HALF OF ONE COW All this energy over half of one cow? Are there no more pressing issues in the world of animal welfare today? But as Hannan notes, the point of this protest is not about changing anything it is about giving a feeble generation a chance to say how fucking pious they are and how it is all about them.

First published on TomWinnifrith.com UK Investor Magazine — 7 — December 2016

Dear Santa: What I want for Christmas is… By The ShareProphets Team

e asked each of our writers what they were hoping Santa will bring this Christmas. They are each allowed £1000 of shares in any company for themselves, £1,000 of shares in any company for the mythical mother-in-law (i.e shares that will tank so annoy her in 2017) and one non shares based gift. We start with Gary Newman who says that for him, £1,000 worth of shares in Canadian Overseas Petroleum (COPL) would be a great present as I’ve always liked a gamble on big oil exploration drills. I wouldn’t be risking buying myself at the current level, but would be nice to have some freebies to run for the drill result! For the mother-in-law: there’s a huge choice for this one and some of my small AIM favourites are already suspended, but I think I’ll have to go for Powerhouse Energy (PHE) based on market cap

compared to assets. And as a non shares present Gary wants some new fishing tackle. Getting away from the markets and relaxing helps avoid burn-out, and you come back feeling refreshed and often with new ideas. Tom Winnifrith says that rather boringly he’d like £1000 more shares in a company he already owns and that is Anglo African Agriculture (AAAP). Big Dave Lenigas has recently taken control and it is heading to the Standard list from Plus

UK Investor Magazine — 8 — December 2016

soon. There is sure to be a big promote on and that should mean that the shares are sellable by his birthday on January 12 for a big gain. For the mother in law it has to be Cloudtag (CTAG) since she is a doctor and loves the NHS. So she is well versed with the idea of health related black holes. This is a fraud and will be at 0p well before Easter. And for a non shares present Tom would settle for a range of Wisdens from the 1860s to help get his collection of the cricket annuals to an almost complete stage. Wisden’s have proved an amazing long term alternative investment but the key is getting a whole set because, as Rob Terry might have said, 2+2 really does = 5. Cynical Bear wants £1000 of shares in Hermes Pacific (HPAC) to be sitting under the Christmas tree at Bear towers with his name on the certificates. He says “ As one of a bearish nature, picking a share to buy is always tricky. I was tempted to go for Fastjet (FJET), in part to wind up Tom, but also as it may be a turnaround play after the next funding round is completed. I will reassess once announced. Instead, I thought I would embrace my inner BBM and go for an illiquid, investment company, Hermes Pacific (HPAC) with a poor track record but with one saving grace, the cash balance is close to twice the market cap. Will try and get in at 90p in the hope that it gets some people excited at some point reducing the discount to net assets with the aim of selling out with a huge sigh of relief at around 150p. What on earth could go wrong? For the mother in law Bear writes about Nektan (NKTN): “ I can see my short pick of the year coming to a head shortly. The share price has plunged from 130p to 36p since the start of the year but the balance sheet remains as stretched as ever with over £10 million of convertible debt and no sign of profit anytime soon. Cash will be getting tight again around now and with final results due by the end of the year, further funding will need to come from somewhere....but will it be forthcoming. Mother-in-law could be down to a packet of crisps before she knows it And the non shares present? Bear says “I know that AIM Regulation gets a frequent pounding on ShareProphets but I have impressed by its crack down on cash shells and investment companies: more money needs to be raised, time limits have reduced and companies actually need to comply with their investment policy. My gift would be

for the FCA to take a similar approach and to crack down on the blatant abuse of the Standard Segment of the Main Market which leaves thousands of PIs high and dry in either suspended shares or absolute lobster pots. Please sort it out Pizza Hardman Darren Atwater is a Godless liberal who will be celebrating winterval or some such nonsense but as with all liberals he wants to have his cake and eat it too so expects a black lesbian Santa to deliver his presents anyway. The Godless one writes: The other contributors will be offering their picks and pans for investments on the known markets, usually AIM. For a contrary investment idea, I’m suggesting a company on a crowdfunding site. Crowdfunding, legal in the UK since 2011, allows punters to invest in private companies without having a personal relationship with the equity holders. The company is the London Crisp Co, maker of posh crisps and popcorn. Unlike some makers of health devices, this completely unnecessary product actually exists and is distributed in (selected) Tesco, Asda, Waitrose, and Selfridge’s stores. This is a product whose material cost is negligible—I so wish I could say a peppercorn— but is sold at a premium price. The key to the belief in this company’s success is if you believe a sizable number of the population would pay extra for branding for something that can be purchased much cheaper in a naff wrapper. This is the UK, you know the answer. London Crisp Co. If I was willing to take a moonshot with my £1000, that is, invest merely to encourage the company founders my retirement be damned, I’d go with JetPack Aviation. They are literally making a personal jetpack. The safety, liability, and engineering limits are sure to be insurmountable. But we can dream. JetPack Aviation In terms of £1000 of shares for my worst enemy who is not my mother in law, my crowdfunding choice is Hurree. Self-described as ‘a marketing automation platform for brands to improve engagement and retention of their app users’ is the kind of tech horseshit that is designed to separate money from punters and deposit directly into some nerds lifestyle company. I’d be shocked if the boardroom did not have inflatable furniture. Hurree

UK Investor Magazine — 9 — December 2016

As for my Christmas gift, I’d like for Saint Nick to immediately recall Parliament and order the repeal of the Snooper’s Charter. It’s an unwritten constitution, people, so don’t say it cannot happen. Now that the Investigatory Powers Bill is law, the cops, various ministries, and Theresa May’s nephew who installed her Windows 8 can examine your search history and sites visited for one year. George Orwell would have laughed at the ludicrousness of this scheme. Yet, now it’s the law of the land. It’s a bad law and should be repealed. Nigel Somerville says that “£1000 worth of shares for me: a bit of a tricky one as I tend to think that most of the stocks I look at are an outright sell for one reason or another, and in any case the market is horribly overvalued. For short-term gains I fancy Ariana (AAU), Wishbone (WSBN) and Optibiotix (OPTI). Actually all three could deliver well longer term but I’m plumping for Ariana (AAU) as its new mine is at time of writing “substantially on time and on budget” and set for production commencement in the weeks after mid-December. I read that as Jan/Feb and the gold price just might oblige too. £1000 worth of shares to collapse (ie a short) – there is such a wide choice here. A China fraud? CloudTag? No, not on this occasion. I’m gunning for Igas Energy (IGAS) – at best it has to refinance and that will involve a massive haircut for shareholders as secured bonds get their pound of flesh. At time of writing the unsecured bonds trade at about 20% of par, offer a yield of heading for 50% and are due for repayment in two years. The bonds are that cheap for a reason: they’ll get shafted when Igas runs out of cash and/or defaults on its secured bonds. And that means only one thing for Igas’ shareholders, who rank below the unsecured debt. As for a prezzie from Father Christmas, I just want one of those CloudTag (CTAG) fitness devices. I have to convince my kids that Father Christmas (and the tooth fairy) are real. It is so much easier when you believe it yourself. And now for young Steve Moore who starts with a request to Santa for £1000 of shares in serial issuer of profits warnings and Steve’s 2016 tip of the year, Interquest (ITQ). Steve admits: “Following another profit warning

recently, this has been a disastrous tip for 2016! (Thankfully outweighed by a current 180% return on my other one, Avesco). True, but the digital technology markets-focused recruitment group InterQuest is still seemingly strongly cash generative – with net debt forecast to be reduced from £9.9 million at the half-year stage to around £7 million by the end of 2016. With also strong action reported to have now been taken in the company’s ECOM business from which the recent profit warning emanated, a sub £12.5 million market cap – with the shares having fallen to 33p – looks to me too harsh an appraisal. So please Santa get me some shares. As for the mother in law, I recently reviewed an AGM update from boiler technology company Sabien (SNT). This noted, reflecting mainly “ongoing discussions” with prior pilot programme clients, “results for the half year to 31 December 2016 will show a loss”. Particularly problematic as despite a net £0.70 million placing (at 4p per share) in September, net cash was already down to £0.67 million at 14th October. Surely not cash crunch ahoy AGAIN? And a non shares present is a book, ‘The Intelligent Investor’ by Benjamin Graham. Investment great Warren Buffett, who was taught, and early on in his career employed, by fellow investment great Benjamin Graham, describes The Intelligent Investor (original publication: 1949) as “by far the best book about investing ever written” – and the good news is that as well as remaining as relevant today as it ever has been, this book will retain such relevance. The reason: the underlying principles of sound investment, the outcomes the book seeks to establish in its readers, do not change from decade to decade. Finally we turn to Malcolm Stacey The best way to make fast money is through holding the right cheapo penny share. So my top tip Xmas request from Santa is a £10 million firm called Creighton (CRL). It makes smelly things, including the comical named Go and Glow. This is not a travel firm for nuclear victims, but a fake tan, selling by the bucket load in Lidl. It does other small luxury items too, like car fresheners, shampoos, shower lotions and other bubbly things. Creighton profits grow every year and yet the PE ratio I have is only 8. I first bought the shares ten years ago when it slowly crashed by 80%. It’s made up the lost ground and is now up by nearly 100% as the penny finally drops among private

UK Investor Magazine — 10 — December 2016

investors. The rally will accelerate now, I fancy. It’s already nearly doubled in the last three months. My mother-in-law passed 38 years ago, but for my worst enemy - sometimes myself - I would suggest buying stock in TalkTalk (TALK). There’s too much competition out there and it’s recently put up prices, which won’t keep its big rivals at bay. BT (BT.A) has just avoided having to sell its Outreach engineering arm and that probably won’t help the fees Talkie has to pay them. Much as I would rather prefer the smaller firm to succeed rather than the giant BT, I just don’t think it will happen. For myself I would like a special subscription to the Financial Times - every edition to be the next day’s. I would also like a time machine, so I could sell a few lemons earlier than I did. And I would like a free ticket to Mars - so I could encourage a few of my critics onto the rocket. But only after they’ve settled their slate at the Punter’s Return. And with that the whole team wishes you a Merry Christmas.

Tom Winnifrith’s

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newsletters.advfn.com/tomwinnifrith UK Investor Magazine — 11 — December 2016

company profile

Norcros plc

Turning the taps on a share price recovery story? By Steve Moore

aving commenced 2016 at above 200p, shares in Norcros plc (NXR) sunk below 140p in October and were still below 147p on a 17th November announcement of results for the six months ended 30th September 2016. The following profiles with the shares seemingly now on the recovery trail… Main market-listed, Norcros describes itself as “a leading supplier of high quality and innovative showers, taps, bathroom accessories, ceramic wall and floor tiles and adhesive products”. In the UK it has the brands Triton Showers, Vado, Croydex, Abode, Johnson Tiles and Norcros Adhesives. It also operates under three brands in South Africa; Tile Africa, Johnson Tiles South Africa and TAL. The recent share price decline-arresting results showed, despite like-for-like revenue 0.2% lower (0.8% on a Sterling basis), an adjusted pre-tax profit of £10.5 million on revenue of £128.8 million, generating earnings per share up from a corresponding 2015 period 12.2p to 13.2p. Net debt was reduced by £5 million to £27.5 million (after particularly £2.7 million on acquisitions and £2.7 million of dividends paid) and net current assets increased to £57.7 million. Non-current liabilities were more than £40 million higher to £138 million – though this due to a more than £42 million increase in the pension scheme liability principally reflecting “bond yields which are at historic low levels”. The UK market was noted to be “challenging”, with the improvement coming from performance in South Africa – it then stated “with our strong brands, leading market positions and continued self-help initiatives… the board remains confident that the group will achieve underlying operating profit in line with its expectations for the year to 31 March 2017”.

ahead of last year’s 28.5p and a dividend per share (including a 9.1% increased - to 2.4p - interim payout) of circa 7p, up from 6.6p. With the shares currently around 175p (capitalising the company at not far over £100 million), there looks particularly attractive price/earnings and income value on offer here at present.

Management Following a number of other senior financial management positions, Chief Executive Nick Kelsall joined Norcros in 1993 and was Finance Director from October 1996 to taking his current position in 2011. He is a member of the Institute of Chartered Accountants in England and Wales. A qualified Corporate Treasurer, Finance Director Shaun Smith began his career in retail management and corporate treasury at Marks and Spencer and was most recently Finance Director at AGA Rangemaster. He joined Norcros in April.

This should translate into earnings per share UK Investor Magazine — 12 — December 2016

company Q&A

Conroy Gold A conversation with CEO Richard Conroy By Tom Winnifrith

Tom Winnifrith: I must start with the macro question of why gold has slumped since the election of Donald Trump? And where will it go from here?

tors’ support in personally contributing to fundraises and their willingness to forego immediate payment of amounts owed to them.

Richard Conroy: The immediate markup of the price of gold on the unexpected news of Trump’s election and the subsequent fall are probably equally irrelevant to the long term gold price which relates more to gold being the ultimate hedge against crisis and inflation. It is highly doubtful that Mr Trump is going to solve the looming global financial problems of huge budgetary and trade deficits.

TW: What is the basis of the geological belief that your acreage in the area just south of the border with Northern Ireland, might contain a major gold deposit? Is it on trend with any other major deposits? So why did you look there in the first place?

I would think that further financial crises are, unfortunately, highly likely and that the price of gold will tend to rise over the coming years. TW: Turning to Conroy specifically, there has been criticism of the remuneration levels at the company. as a major shareholder yourself how do you respond? RC: The remuneration levels of the Company are appropriate in my view as a major shareholder in the Company. I particularly appreciate the direc-

RC: The nature and style of the geology together with the gold - in - soil, trenching and drilling results to date is the basis for the geological belief that Company acreage in the area south of the border with Northern Ireland, might contain a major gold deposit . The initial exploration was based on the geology of the area and the discovery of gold at a historic Antimony Mine at Clontibret where the Company’s initial resource has been delineated. The Company has discovered a 30 mile gold trend in the area including a further potentially major deposit immediately to the North at Clay Lake. Continued on next page

UK Investor Magazine — 13 — December 2016

TW: You have been drilling the area at Clay Lake and Clontibret for what seems like many years and you now have a resource of 600,000 oz I believe. Is it JORC compliant? RC: We have indeed been drilling the area at Clay Lake and Clontibret for many years. When we started only a few thousand oz had been delineated at Clontibret, and Clay Lake was undiscovered . Now we have a JORC Compliant gold resource at Clontibret of over 600,000 ounces on part of the Clontibret end of the overall Clay Lake - Clontibret target. Drilling and results to date indicate a multi-million oz targeted gold potential at Clay Lake- Clontibret, a thirty mile gold trend and many other gold targets. TW: We both know that it will cost quite a bit to develop a mine if there is a commercial asset on your acreage and that would require investment from a major but that will not happen until you can demonstrate a resource of 2 million ounces. Is that statement unfair? RC: A PEA by Tetra Tech has already demonstrated that a mine at Clontibret is technically and financially feasible with an IRR of 49% - as the Euro price of gold is currently higher than when the PEA was done and as most of our costs are in Euro, the IRR would still be valid. We have prepared a phased mining plan that minimises the costs involved and allows for a two year pay back of initial capital. We do not require a resource of 2,000,000 ounces in order to bring in a mine however at the moment we believe, based on our knowledge of the area, that there is more value to our shareholders in continuing with a drilling programme targeted at

achieving a potentially greater resource. TW: What is the basis of your belief that Conroy does own an asset with at least 2 million ounces and how big could it be? RC: Our belief is that the Clontibret - Clay Lake area alone has multi-million oz potential based on the exploration results and are targeting up to 5 million ounces with our exploration plan. TW: What sort of timescale will see Conroy build up its resource towards the 2 million ounce level? RC: The time scale to build up the resource depends on the finance available and similarly the drilling activity for the next 12 months TW: What drilling activity is planned for the next 12 months? RC: As above TW: How much, roughly , would you expect a mine to cost to build and, noting the issues Galantas has faced North of the border, are there going to be any political or environmental issues? RC: The PEA figures indicated a cost of US$ 72.7 million, however the PEA was done when the exchange rate used was over US$ 1.35 to the Euro. As most of our costs are in Euro, that figure is probably at approximately 20% less. Similarly, the gold price in Euro is higher now. Using a phased approach should reduce the initial costs significantly. A larger mine, as now appears likely, will obviously cost more. We do not anticipate any overriding political or environmental issues. TW: Thank you very much, professor.

Open Pit Gypsum Mine, County Monaghan UK Investor Magazine â&#x20AC;&#x201D; 14 â&#x20AC;&#x201D; December 2016

My New Year Financial Resolutions Writes Tom Winnifrith

think that I fared fairly well with my 2016 New Years resolutions both financial and non financial. This was the year that I finally quit smoking! After that triumph what to resolve for 2016?

. Back to shares. I seem unable to resist taking part in placings. There is another one we have just done which will, I am sure, be a total stormer. But given my fundamentally bearish market view to be running a low cash position but a large equity portfolio seems unwise. I have got to start top slicing a few positions. And that brings us to debt.

My pension was almost entirely wiped out five years ago which as I am 49 next year was less than helpful. I really do not plan to be working for anything other than fun and pocket money by the time I turn 55. Writers never quit they just keen on writing until they lose their marbles or get RSI. So I resolved twelve months ago to start sorting this out. My contributions have been relatively modest but have gone into a handful of shares (mainly Concepta and Wishbone Gold) which have done very well indeed. So for 2017 what to do? Firstly I must start to max out my contributions. I actually need to speak to someone who knows what maxing out means but I need to start putting in some serious money as 55 will be just six years away come January 12. I have done well on higher risk growth plays in 2016. Okay, very well. But that is not a guaranteed rout to success so I must make a conscious effort to slightly de-risk. that means holding more cash but also, I think, putting some funds into Unit Trusts. I think I may well be entrusting my friend Mark Slater with some of my future.

Building up my alternative income streams here in Greece. It looks as if the building work on the Greek Hovel will start and may even finish this year. And at that point I need to work with my friend George the Albanian who assists me with the olive harvest to cut down about 20 trees that produce little or nothing and to replace them with new young saplings and also to plant out new trees on acreage which was once all gorse bushes (frigana) but which I have now cleared. That would improve my yield so that my olives covered all my property and flight costs here. Maybe in retirement I might buy some more acreage and really get serious?

. The Greek hovel is mortgage free but the Mrs still has a relatively small - mortgage on our home in Bristol. Base rates will rise in 2017 and thus paying down debt seems a sensible move. I know I talked about the same thing in December 2016 but progress this has been slow.. There were all those placings to support. Okay the strategy worked but I hate being in debt and it will not be a good place to be when rates increase. So 2017 is the year to try and clear as many of those debts as possible. I have cleared out a stack over the past four years but I need to up the ante. The Mrs will not consider me going into semi retirement to talk to my olive trees while there is any debt left at all.

EIS. The Mrs has not done an EIS since the 2014 tax year. The trouble is that most EIS investments are awful. I should say that her 2014 investment matures this coming year and, right now, it looks like being an absolute scorcher. I do not want to count my chickens but that could well deal with point four and some. But we need to find an EIS home for some of my better half’s cash for both the 2016/17 tax year and for next year. I don’t suppose anyone has any bright ideas? 6. Try to add a few books to my Wisden collection. I am ten short of a full set. And a full set is worth much more than the sum of the parts. As such I really need to crack on and get a couple of books a year so that at 55 I have an asset that could fund an awful lot more new olive trees. I think that is it. Have I missed anything?

UK Investor Magazine — 15 — December 2016

I’m not Scrooge but why I don’t give a penny to Children in Need - we need a bonfire of the Charities By Tom Winnifrith

his will be seen as the written equivalent of clubbing to death a sweet baby seal. For many in the UK Children in Need is a sacred cow. But Children in Need sucks at almost every level and that is why I don’t give it a cent and urge all others to boycott it too. This year’s effort has so far raised well over £50 million. We are told that “every penny goes to Children in Need” but does every penny go to children in need? No. The CEO of this body, which employs c100 well paid Guardian readers, earns £360,000 a year. In the year to June 30 2015 CIN spent £62 million but only £55 million of that went on grants to children in need the rest was on admin costs. And one wonders how much of the £55 million handed out went on admin costs at various charities and how much actually went on children in need (lower case). It is all very well the BBC saying that admin costs at CIN are well under those for the (bloated) charity sector as a whole but CIN does not actually do any charity itself it just doshes out cash to others so it is comparing apples with pears.

Moreover I bitterly resent folks who are worth tens of millions of pounds such as Eddie Redmayne and Britney Spears, earning brownie points by “giving their time” to CIN where they then sanctimoniously suggest to poor people that they need to hand over their cash. How about if all the celebs who appeared last night tithed their income to CIN. They would not notice the difference and CIN would be rolling in it. Britain is drowning in Charities nearly all of which duplicate the work of many other charities and nearly all of which are burdened with a cost base that cannot be justified. Children In Need is just another layer of that management overhead. A bonfire of the Charities would mean more money going to actual children in need and other good causes. If we are looking for some charity fat cats to be the first to walk the plank Children In Need is a great place to start.

First published on TomWinnifrith.com UK Investor Magazine — 16 — December 2016

Three to sell for Christmas By Tom Winnifrith

t is an almost golden rule that companies that commit fraud - and raising cash on a false prospectus is fraud - eventually run out of other people’s money and go bust. Sure, their shares can fly for a while but, in the end, gravity cannot be avoided. Quindell bucked that trend in that in managed to pass the parcel of its fraudulent businesses onto Slater & Gordon. And so it will be the Australian firm that goes bust in 2017. It is not one of my three to sell as I have covered it often enough here but it does have toast written all over it and is a zero in waiting. It is another golden rule that such frauds are followed by a devoted army of private investors who willfully ignore the red flags because they believe they really do sit on a “golden ticket.” They think that they have the winning lotto slip. They know that it is actually two lotto slips glued together but they are in denial. One such devotee recently described a clear case of fraud in terms of management not releasing vital information (bad news) during an open offer period as merely “gilding the lily” - that is like saying that Harold Shipman merely ensured that his patients had a painless pathway to death. It is wholesale denial.

And it is clearly running out of other folks money while drowning in debt. It fits the bill in many ways but has featured here so often that I offer up alternative ideas. But Avanti is also a zero in waiting and that zero could happen within weeks.

I start my three to crash selection with the private investor ramp de jour Cloudtag (CTAG). This company claims to have a superior fitness band but despite “launching it” almost a year ago it has not actually, er... launched it into any retailers. It told investors that it had “guaranteed” 2016 sales of $5.2 million on 25 January 2016. Four days later it started a series of placings. Mug punters lapped it up and the stock has flown. But 2016 sales will be nil. So Cloudtag lied to get placings away and also to allow its shady founders to dump all their shares. A dodgy death spiral has given Cloudtag some cash but it burns other folks money at an alarming rate on heaven only knows what. This will end in tears and at 0p.

Avanti Communications (AVN) is also not one of my three sells for Christmas but it is a company that has consistently mislead investors with accounting chicanery which has created profits which any sane man would describe as bogus. Its founder has admitted to hoodwinking investors with faked product demonstrations.

Next up is an old favourite Eden Research (EDEN) which has committed accounting fraud for many years. Indeed it was committing fraud back in 2005 when it first sent me a lawyers letter. That, by the way is another red flag, good companies ask for factual inaccuracies to be changed. Frauds try to bully and smear journalists and Eden did both. As you can see, it was with limited success in terms of shutting me up.

UK Investor Magazine — 17 — December 2016

for what it has done and it is a zero in waiting.

Its big fraud was in August last year when it announced an order worth £600,000 from a sham - and related - company Terpenetech. At the same time it bought 29.9% of Terpenetech by issuing shares to Terpenetech which it then sold allowing it to pay the £600,000. Terpenetech is of course worth nowhere near £2 million as its historic accounts show. This is a panama pump fraud Rob Terry did many such frauds at Quindell. Eden will again run out of money in 2017 and at some stage we will get a set of accounts from Terpenetech - it is not hurrying - which will show the fraud clearly. This firm should be shut down

Finally we come to Advanced Oncotherapy (AVO) which has raised tens of millions on the promise that it has a proton beam therapy machine to save little kids with cancer. Aaaah diddums, I really must buy the shares on ethical grounds. Except that Advanced does not even have a working prototype as recent confidential emails leaked (via me) demonstrate. What they also show is that while conducting its most recent fund raise Advanced was made aware that customers for the only two machines “sold” externally were walking as Advanced had not come anywhere close to delivering on schedule. Advanced did not disclose that news but went ahead with the fund raise anyway. That is securities fraud. It has form. Back in 2013, to get placings away, it announced it had Letters of Intent to buy six machines from big British firms BMI and Spire. Where are the contracts? Of course there are none but has Advanced fessed up? Of course not. Advanced will, like the others, eventually run out of other people’s money. Or the regulators could ensure a rather swifter mercy killing. It is a zero in waiting. On that happy note I wish you a Merry Christmas.

Hot Stock

ROCKETS Stocks Ready to take off hotstockrockets.com UK Investor Magazine — 18 — December 2016

the house view

Do not bank on the Santa rally - Donald Trump was Santa in 2016 The papers are already full of articles urging investors to get invested ahead of what they term “the traditional” Santa Rally in shares. Our own Malcolm Stacey believes in this rally almost as young children believe in Santa himself. But both Malcolm and the newspapers are barking up the wrong Christmas tree. There is nothing “traditional” about a stockmarket surge in December. Whereas you can pretty much bank on the Turkey or Goose being on the table on December 25th, on the BBC showing the Sound of Music again and on Aunt Lucy sending you some socks to open under the tree, the Santa Rally does not happen every year. Sometimes shares go up. Sometimes they go down. December is just like any other month of the year except that as volumes thin out as traders head home for the break, or head home after another liquid festive lunch, share price movements of individual stocks off of the market as a whole can become more erratic and violent. So will there be a Santa Rally this year? We start from the premise that equities remain fundamentally over-valued. In the face of a slowing global economy, with base rates set to rise again in the US and for the first time in yonks in the UK and with real political concerns not least in the zombie Eurozone, historically high PEs cannot be justified. At this stage of the economic cycle valuations look to be extreme. Of course bubbles can become even more inflated before they pop. So who is to say that we will not see a further spring ahead pre Christmas just to set us up nicely for an even bigger stockmarket hangover come the New Year? It is possible but then again we have just had that sprint. Shares - much to our surprise - have raced ahead since the Americans wisely decided to elect Donald Trump rather than crooked Hillary as their next President. The Trump rally has happened already. This year Santa was played by Donald Trump. There will not be a second such rally, in our view. UK Investor Magazine — 19 — December 2016

UK Investor Magazine — 20 — December 2016