MCR - Mincor Resources

[doogie_goes_off]

To quote myself (see previous analysis) - "I am considering using $3.60 as a trigger over the next 6 trading days to confirm my predicted third cyclical growth band and buy in for a $5 three month target, wish me luck!"

I was a bit optimistic with the 6 days thing, but still looking for $5 target (see original graph).

 

[Col Lector]

URM this week spiked some 200% on news of high grade phosphate "grab-samples" from its Georgina tenements where it was initially targetting Pb-Zn.
Much of the focus of the sharebuying orgy was URM's Qld prospects in the vicinity of Legend's publicised deposits.Product from here would be transported via Qld.
BUT
Mention was also made of the high prospectivity of URM's NT tenements (eg,Boat Hill, Box Hole, Desert Syncline)on the SW margin of the Georgina Basin.
This area is close to Alice Springs and access to the Adelaide to Darwin Railway for despatch.
MCR holds 9000km² immediately west of Boat Hill...& encircling Box Hole where they are also chasing Pb-Zn MVT deposits.
MCR's land dwarfs Urm's NT holdings and significantly (!how?)coincides with middle Cambrian geology identified as phosphate-prospective.
From the NT Govt's Minerals & Energy Web page...

Mineralisation
The Georgina Basin is prospective for a number of mineral commodities. Known Pb-Zn prospects and occurrences are widespread and throughout the succession from Neoproterozoic siliciclastic rocks to Lower Ordovician carbonate and mixed carbonate-siliciclastic rocks. There is a wide range of mineralisation styles. At the Box Hole Mine, galena and barite occur along 6.5 km of strike in the Late Cambrian Arrinthrunga Formation. About 15 t of ore, averaging 65-70% Pb and 60 g/t Ag, has been handpicked. Mineralisation is stratabound epigenetic replacement and vug-fill in a stromatolitic dolostone, possibly localised by proximity to a feeder fault. Similar surface galena and minor pyrite occur at the Trackrider Prospect. Host rocks are vuggy, siliceous and manganiferous dolostone of the Arrinthrunga Formation, just below the contact with the overlying Tomahawk Formation. Mineralisation at both Box Hole and Trackrider is similar to Mississippi Valley-type (MVT) orebodies. Visible Zn-Pb mineralisation (up to 1.2% Zn) occurs in association with hydrocarbons in and just below a shale cap at the contact of the Arthur Creek Formation and Thorntonia Limestone in Baldwin 1 and may have affinities to Century-type, stratiform, shale-hosted base metal mineralisation. A fault breccia at the Boat Hill Prospect contains two intervals with percent levels of Zn. NTGS drilling also intersected percent levels of Zn and visible galena in Thorntonia Limestone in this area, which considerably extends the area of known mineralisation. Previously undocumented visible galena has also been recognised in the Neoproterozoic Elyuah Formation at the Mount Skinner Prospect in ALCOOTA. This core contains 2.44 m assayed at 0.3 m intervals, all of which is >2000 ppm Pb.

Economic phosphate deposits in Middle Cambrian Georgina Basin rocks are being mined at Duchess in Queensland. In the Northern Territory several deposits of collophane mudstone and pelletal phosphorite have been identified in sedimentary intervals on the Alexandria-Wonarah Basement High (see Regional phosphate prospectivity assessment project). These deposits average about 16% P2O5 and could aggregate to similar tonnages to those being exploited at Duchess. Rio Tinto has recently delineated 72 Mt of phosphate ore at the Wonarah deposit on the Alexandria-Wonarah Basement High. Smaller deposits are known at Alexandria, Alroy and Buchanan Creek.

 

[doogie_goes_off]

Will hopefully find support at ~$3 but with the nickel price sliding I'd be more inclined to think they may re-think their lower grade prospects and mothball them short term. Grades like >1.5% nickel still present strong targets though. Keep using stainless steel!

 

[Max_ob]

mcr in pre-nr

announcement is out. . . more nickel discovered or potential?

sp has been getting trashed. . . .hope this helps settle this stock. . . .otherwise going from one bad pick to another

 

[hoppielimp]

Unfortunately its only potential at this stage, but it does show the potential for further extensions. With any luck though the downward pressure on nickel prices will close or put off many pig nickel producers aswell as put all these new laterite mines under a big questionmark.

There was mention in the news that usd 25000 pmt was the range in which pig nickel does not become economical and who knows about laterite mines...all i know is that it is much more expensive thatn sulphide mines.

 

[So_Cynical]

Well after reading through all this, theres no way im buying at over $2.70.

Looks like ill just wait it out.:mexico:

MCR is paying about the same div of that other nickel producer IGO for
about half the "per share" cost...or am i missing something?

 

[oldblue]

Well after reading through all this, theres no way im buying at over $2.70.

Looks like ill just wait it out.:mexico:

MCR is paying about the same div of that other nickel producer IGO for
about half the "per share" cost...or am i missing something?

That seems about right.
"The Age" has IGO on a yield of 1.5% from a div of 12cps, SP $6-58: MCR a yield of 3.8% from 12cps div and SP $3-14.
I hold MCR but don't follow IGO so can't comment on their respective merits.

 

[nioka]

Well after reading through all this, theres no way im buying at over $2.70.

Looks like ill just wait it out.:mexico:

MCR is paying about the same div of that other nickel producer IGO for
about half the "per share" cost...or am i missing something?

Both IGO and MCR have similar market caps. IGO has about $200m cash and MCR have about $110m cash. Their value on that basis is similar.

BUT. IGO are producing only 9000t of nickel per year with a 9 year life whereas MCR are producing 17,000t of nickel, building up to 20,000t per year for 20 years.

Therefore MCR have the likelyhood of increasing dividends and maintaining them for many years. It is my opinion that MCR are the best buy in nickel that there is at the moment. DYOR & MYOD.

 

[56gsa]

interesting noika - will look into this more

weekly chart suggests support at $2.70 with current trend caught between a downtrend and upward channel - be watching this to see how it resolves...

 

[eddyeagle]

Took this from the 'Money Morning' email - it's about time Nickel lifted!



***Exploding Gas at Varanus Pushes Nickel Price up 7%

Where’s the money headed today?

Nickel. Strap in.

The explosion at Apache Energy’s Varanus gas plant is jarring the global nickel supply. Australia digs a lot of nickel. Western Australia digs almost all of it. And last year Australia’s hand in global nickel production was 183,000 tonnes. That’s 13% of the world’s nickel.

The thing about nickel smelting, though, is that in WA it runs almost entirely on natural gas.

Minara Resources (ASX:MRE) was the first to fall. The nickel miner says it’ll lose 4,000 tonnes of production from its Murrin Murrin deposit this year. It depends entirely on Varanus for energy.

No-one knows yet how much the explosion will affect Australia’s overall nickel game. But it’s really not helping companies like Minara.

Commodity traders everywhere took note, sending nickel up 7% yesterday. In short, there could easily be a nickel shortage this year.

But the metal sells for half the price it sold for a year ago. It’s a tick under US$10 per pound. Two weeks back, nickel didn’t have a friend in the world. Now it’s getting more attention than a woman at a Star Trek convention. Supply and demand is a wonderful thing.

We have a feeling there are a few more companies keeping secrets out there.

Expect more production guidance from West Australian companies. Particular of the nickel-digging variety.

 

[eddyeagle]

MCR has really tanked in the last few weeks.

Anyone got any thoughts?

Worth topping up?

What about the price of Nickle? It has also been smashed recently. Anyone got any predictions?

 

[madbull]

The drop in nickel price has really smashed a lot of the Nickel mining companies. I too would like to hear peoples thoughts about MCR...

 

[derty]

Mincor are probably the most solid of the nickel producers in the southern Yilgarn. They have good reserves, they are aggressive in finding near-mine Ni tonnes, they have some good brownfields exploration plays going and their cash cost of production is around A$14,000/Ni tonne which gives them a bit of headroom at the current prices.

But at the end of the day they are a slave to the nickel price.

I will also add something that was brought up in a conversation I was involved in. I have not been able to verify this from online sources, so please take with a grain of salt:

The economics of producing Nickel Pig Iron (NPI) to date has placed a floor under the nickel price of around US$22,000Ni tonne as the producers we only paid for the value of the contained nickel. (i.e. at less than $22k the NPI producers fall over and the Ni supply reduces and prices rise) I was told that now the NPI are being paid for the contained iron and cobalt in their product that will allow them to continue producing at a much lower cost. The figure bandied about was US$8500. If so the Ni price can potentially fall further than it has, though there would already be marginal miners at current prices so the reduction in supply would come from mines closing and a floor in prices would be at a higher level than $8500.

From looking into this, most of the articles are saying that the NPI producers would forced to close which is contrary to what I have heard. If anyone has supporting or contradicting information it would be good to know if there is any validity to the NPI producers being paid for Fe and Co credits.

 

[Whiskers]

From looking into this, most of the articles are saying that the NPI producers would forced to close which is contrary to what I have heard. If anyone has supporting or contradicting information it would be good to know if there is any validity to the NPI producers being paid for Fe and Co credits.

Wayne Ryder from EYE seems to be saying that he's counting on added value from contained cobalt in his latest report... although I don't know how they intend to process it yet. Last time I spoke to him (a few months ago) he wasn't too phased by the fall in Ni prices. He's now looking at getting into prodoction pretty quickly with a JV with POS.

We are comfortable in employing a cut off grade of 0.5% Nickel after considering the presence in the
ore of very valuable Cobalt, currently selling at approx 4.5 times the price of Nickel, and which is
readily recoverable in the processing of ore for Nickel.

 

[tech/a]

While i like rescourses for the long term future I really think that until the US gets sorted out and real growth and demand returns Rescources will continue to disappoint.

 

[doogie_goes_off]

Near to mine intercepts announced today should keep production figures on the increase for the coming financial year. I guess that there is still potential for triple figure profit if nickel creeps back above $20k/t but I guess it's a waiting game and one that many will not have the patience for.

 

[doogie_goes_off]

Fundamental base case for MCR at current nickel price.

Cost to produce 1 lb nickel $6.50, sale of 1lb nickel $7.87 (spot price Kitco base metals). This is a margin of $1.37/lb or 17.4% margin on sales.

Lets take a base case of 15,000 t Nickel (likely to be more next year)

15,000 x $17,445/t x 17.4% = 45.5 million earnings

EPS = 45.5/197 = 23c/share minimum at current spot price

Looks undervalued, there must be some real negative sentiment around nickel keeping this one down.

 

[jonojpsg]

Fundamental base case for MCR at current nickel price.

Cost to produce 1 lb nickel $6.50, sale of 1lb nickel $7.87 (spot price Kitco base metals). This is a margin of $1.37/lb or 17.4% margin on sales.

Lets take a base case of 15,000 t Nickel (likely to be more next year)

15,000 x $17,445/t x 17.4% = 45.5 million earnings

EPS = 45.5/197 = 23c/share minimum at current spot price

Looks undervalued, there must be some real negative sentiment around nickel keeping this one down.

Hey Doogie,
I would say the negative sentiment keeping MCR down is that if Ni goes below $14000/t then MCR will have to look at closing their lower grade operations!!

Don't know if that's likely?

 

[boid]

in addition to doogie info...it is worth remembering....
'Mincor maintains a healthy hedge book, and has approximately 15% of its production to March
2010 hedged at an average price of A$34,420 per tonne.'
this is taken from a feb 2008 mincor media release.

 

[treefrog]

While i like rescourses for the long term future I really think that until the US gets sorted out and real growth and demand returns Rescources will continue to disappoint.

it's all that pesky chartist fella's fault - (tech-a or something) said it would go down more and it has.

frogs were buying at 65 and selling at 75 a few years back - looking good for a bit of deja vu