So Patterson s have this as unviable according to some.The first...

So Patterson s have this as unviable according to some.

The first thing to consider is the actual price used.
BHP into China for November was $4.65
This is believed by many to be predatory pricing ,to drive out Chinese competitors who are over $5 in costs in most cases

Once the Chinese are out and a large overhang has gone then prices could move up again.
Do BHP have the capacity to move it lower ?.There own cost curve would suggest it starts to get uncomfortable below current levels.
They would also be doing this to send warning signals to the 2 large RSA producers coming on, and possibly ourselves but we have addvantages over them as per point 2

The other thing is everyone seems to have costed on Chinese prices landed in China.This is understandable as China is the worlds biggest market.
However Europe whatever people may beleive still uses manganese.It is critical to us in times like these when price is low because we are naturally close to this market and have a competitive advantage.
If our cost to Walvis is $3.5 then our cost to China would be about 4.75
HOWEVER...... our cost to Europe would only be about 4.10.
EUROPE IS THE MARKET WHERE WE HAVE BIGGEST COMPETITIVE ADVANTAGE. I am assuming that Europe does not trade at a discount to China - grateful if someone could confirm.
India is anothe rbig market with lower transport costs but we have no advantage over SouthAfricans who have most of the worlds manganese.

Another thing is how long will this predatory pricing last.
Well we have 6 months before we go into production and if it is predatory pricing they will not cut off their noses to spite their face forever.

Another thing is how at the bottom end of the price levels this becomes a logistics game and I think we are up there with the best of them.I spoke to our Chairman (wearing his ATlas hat where he is secretary) and he certainly seems to know how many eggs in a dozen.To my admittedly amateurish eye he had an excellent grasp of logistics issues, importance and solutions.The rest of big brothers, army will give us advice anyway.

And another thing while we are onthe subject of big brother .There hsas be some gnashing of teeeth on capital raising.
Algar strike me as a man who has moral values towards small shareholders ands so does Flanagan in big brother.
The advantage of the beningn big brother is they can do so many things for us without pain or prejudice to their own holders.
This includes things like convertible notes ,or standing surety on debt.

And another thing is there is upside price potential other than from resumption of Asias inexorable march to becoming the worlds wealthiest region.
The potential comes from where 3/4 of the worlds manganese is -South Africa.Typical African underinvestment means its electricty systems are creaking at every joint- not good for Samancor.Transport systems are being tested,and the country seems to support an ANC youth leader who would like mining nationalised.
Not saying these will happen but if they do it is bonanza time for Shaw which brings me to another thing.

Price leverage..Every 50c increase in the price brings us over $15 mill AFTER TAX or about half our current market cap.Price could easily jump $2 0r 3.
If not there is always the safe and sure way and that is expanding production and getting the economies of scale which would reduce mining costs 50c.
Maybe looking at Capesize vessels could chisel a few more.

And another thing....but several people seem to have fallen asleep, so I will stop boring you and pester you another day