I had a company that was digging up stuff and selling it in American Dollars, they were getting two Australian dollars for each American Dollar they earned. The product was selling for $2.50 lb in US Dollars we were getting $5 lb Australian for it and it was costing about 55c lb to dig out.
Fast forward a few years and we are getting about 91c US a lb for it and it is costing us 92c lb to dig it out due to huge increases in input costs such as fuel power wages lower grades etc, we now get about 98c for each us dollar we earn.
These company's have to plan many months and often years in advance, they cant just shut things down if they think a turnaround will come, they have to take informed decisions on where things are likely to go and then plough on, they have to keep drilling, digging and spending unless they are certain the turnaround is to far off.
Sometimes the crystal ball fails. but the company cant survive no matter who is in charge if circumstances that are its of our control dont change.
KZL Price at posting:
12.0¢ Sentiment: None Disclosure: Held
