The Evil Diaries: Petro Matad, Lord Heseltine and Gold

Things got interesting latish yesterday in Petro Matad (MATD), now capitalised at £4.5m given the shares in issue of 280m at 1.65p. Essentially, Shell is due to cough up $10m by way of an exit fee and have not yet paid over the necessary. This is because there is no point in doing so if the money just gets consumed by bureaucracy.

The Mongolian government refuse to allow the licences falling to be transferred out of the Shell JV to MATD alone unless satisfied that the drilling work which has been and remains scheduled will be carried out. MATD advise that further funds will be required above and beyond the $10m. They do not specify just how much is required. It is of course possible that MATD cannot raise the necessary. In which event the licences in question will lapse.

But my guess is that MATD will raise the necessary and that Shell will pay up and that MATD will be financed for the drilling programme. Where this settles the share price I do not know. I bought 1m at 2.2p.

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There is something about Lord (Michael) Heseltine which is basically unreliable. That he has demonstrated energy with new projects is not in doubt. But he is incapable of controlling himself. He is utterly obsessed with Brexit’s not taking place. So, as a result, he talks the most amazing tosh. Yesterday evening he was at it again claiming that the Brexit vote was responsible for the destruction of savers’ funds. Even as he spoke, FTSE was headed off into a ten month high. He is mad.

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Younger readers may not know how the EU has worked in practice in the matter of VAT on horse-racing. So I offer this resume. About twenty years ago it became acutely apparent that the c. 5% rate of VAT in France and Eire was destroying the British racing industry and, perhaps even more importantly, its breeding industry since VAT was charged in Britain at 15%. EU rules blocked VAT being charged at the same rate as France and Eire. So HM Treasury was lobbied to come up with a fix. This proved to be that any owner can register for VAT and, having complied with trivial sponsorship rules, reclaim all VAT on racing expenditures. This may surprise some who thought racing was a form of consumption by the idle rich.

The trouble is that the paperwork to achieve this result is ponderous, pointless and, above all, expensive – easily £500 p.a. per horse in accountancy fees. This is a needless cost imposed by the EU. We are still set to be in this madhouse for another two years. Seemingly, nobody cares.

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Gold is really getting going, now $1,332. One should buy the spread: it is the cheapest way to go.