Think about the PE multiple, MRE must already be priced by the...

Think about the PE multiple, MRE must already be priced by the market (supply and demand) to match $5 profit per lb of production. If prices rise further or production increases or dividends are reinstated then we can see a rising share price...but stable nickel prices won't make a rising share price.

Lately nickel prices have been strong (but stable), but the USD has become worse for us.

Let me take a wild guess and say this -

30k tonnes of nickel production
Minara owns 60% of that, 18k tonnes for MRE.
$22,500 revenue per tonne which is ~$10/lb. We'll assume the year averages at this price.
$11,000 costs per tonne
= $207m profit

This calculation does not account for exchange rates for inputs and outputs...I don't understand that well enough. Possibly we could add 5% to profit to account for the exchange rate.

Production should be higher next year because of less outages and the new additions to the plant. Maybe next year will be 33-35k tonnes of production, 15-25% higher than 2010. If nickel price and the exchange rate are the same next year then we could expect ~$250m profit next year.

Now back to PE. The current market cap is 930m with profit of $200-250m for 2010/2011. That is a PE of ~4 (good value).

I think MRE will pay dividends this year and next year, lets assume 50% of profit paid as dividends and 50% retained for growth. That's $100-125m returned to shareholders and $100-125m used for growth, a 12% dividend yield based on the current SP, with additional potential growth.

All of the above figures were assuming a yearly average of $10/b nickel prices. If the average is below that then reduce all of my estimates...

I am happy to hold. MRE remains tied as my largest holding. I'm just waiting for a report now, I expect to see something along the lines of "profit is solid, we are looking to reinstate dividends, production guidance for 2011 is 35k tonnes" hehe. Also just hope for the best with nickel prices...