Long term buddy. I think we'll see a fairly big improvement when the next report is approaching, and after its release.
If we can hold onto these nickel prices until the end of the year then revenue will be 50% higher than last year, which will make a big difference to profit.
From what I remember, variable costs were $5/lb in 2009 and average nickel price for the year was $6.66/lb, so we had Gross Profit per lb of $1.66. If nickel stays at $10/lb for 2010 then we'll have $5 Gross Profit per lb, about triple last year's figure.
The difference in Gross Profit per lb is $3.33, or $7300 per tonne. With 32,000 tonnes of nickel production that will be $233 million extra profit on top of last year's $50m, assuming fixed expenses stay the same.
So my rough guess is $250-300m profit if nickel prices stay around $10/lb until the end of the year.
I am not so interested in the short term, more so the 6, 12, 24 and 36 month timeframes.
Will we see a quarterly report in 2-3 weeks for the period ended 30th March? I hope so.
MRE Price at posting:
84.0¢ Sentiment: Buy Disclosure: Held
