sick old dog, page-13

Bacci

I have researched this with management. The business is broken into the two components Soda ash and sodium bicarbonate. As I understand it the Soda ash plant is older but the sodium bicarbonate is much newer.

They hold significant contracts and purchase stock in from overseas as well to balance the supply process. Others import directly and sell. You say you can see a major plant failure as a possible and closure of Osborne. I cannot see how you can project this - My understanding is that they have made improvements over the past 3 years and that these improvements have had possible results. You can never say never.

You are correct in saying that the exchange rate affects them as it does all exporters even resource companies however it does trend both ways over time.

It is a deeply cyclical business and the customers I presume are happy to have some protection via a local supplier.

They will make money this year and should in almost all scenarios as long as the gearing in under control. The downgrade in profit is a problem and under promising and over delivery needs to be their mantra. This will come about with Trebeck at the helm in my opinion.

At 40c the ratios are cheap if you smooth out the earnings by applying a long term average for the exchange rate. In fact it would be a very good investment even if you had to raise another $20m and issue 50million shares. They have managed risk of plant failure well over the past few years. Each year seems to show improvement. The overburden and stock piles are my main concern.

LCE is a factor because of their constant sniping - look at their last bleat about their nav. I think they will have another crack and once in will become a divisive force which will make it harder to get to the other side of their renewal programs.

The fundamental problems in the business seem to be being addressed and some credit should go to the fact that they have been addressing some of these over the years.

I would definitely be back in @40c

Only hold a few shares to be on register.