I agree, it would be nigh on impossible for MCR to be mining and making any money in the current price environment. As Gavin sadi - the company has stated a few times - they wont mine the stuff if it isn't profitable. I am "happy" for then to do this minimal margin, as it would ensure that quality staff can be retained (as evidenced by the last 1/4ly ....60,000).
since just before Xmas, we have seen abt 40k T of metal "come out" .......and we have also seen credit downgrades for a few other trading houses (Noble etc).
most would know that China new year sees a "closure" in sunny China (which is having its own issues at present) .....so any big price moves are less likely prior to mid Feb .......
the bigger issues
1. china essentially devaluing its RMB in response to US trying to force its own currency down (relative country competitiveness....)
2. some reduction in Fe_Ni prod in sunny Indo .....
3. Admission from major china Ferro-nickel producers that its basically cheaper to buy refined metal, than produce Fe-Ni at current prices .......
4. big traders having reduced access to cash to fund their operations.......quite a few are of the "offtake" and sell fwd prior to delivery (and arbitrage the difference between borrowing costs and forward curve spread)....
5. reduction in funding for new projects ......banks wont lend if they cant see a return ......same thing applies in shale oil players in the usa .....
however - 11m for 120Kt of resources (plus whatever you think is at cassini) is a "smidge" cheap ........lol !
mr market wont give a flying until the commodity price starts to move ........have noted that even while lme tonnes "flattish" ....cancelled warrents % is increasing ........this does imply a slight tightening of market .......(yaaaah) ......but a looooong way to go .......
I rekon mk will self correct by mid-year ......
rgds
V_H
MCR Price at posting:
21.0¢ Sentiment: Buy Disclosure: Held
