Hi,
As an investor in MRE I'm interested in the following:
1. MRE's ability to produce nickel
2. How it's produced and at what cost
3. Demand v supply
4. LME price of nickel
5. Those interested in MRE
1/ MRE has had a history of problems getting to its nameplate production of 40,000t of nickel and the recent WA gas issue has not helped. However the gas issue is short term and production is now at full capacity with the increase in energy cost hopefully short term so nameplate production is still a realistic short term target (24k nickel MRE).
2/ From what I can gather sulphide nickel is cheapest and is best positioned on current nickel prices however its becoming more rare. Nickel pig iron is becoming more common however it has a big demand on energy making it not cheap to produce ($18kpt sounds close to production cost). Lateritic nickel (MRE) is more common however sulphur is needed and sulphur prices have soared putting LME nickel prices close to production costs.
3/ LME nickel stocks are high and metal producers are saying there is less demand as they move toward stainless steel products requiring less nickel. However LME nickel stocks have fallen from 48k to 43k in the last two months.
4/ Current LME nickel prices would be hurting producers with increased sulphur and energy costs (lateritic and pig iron) however I believe this is a dramatic fall from unrealistic prices of $30-55kpt seen in the second half of last year. You would think the cost of production would create some bottom to LME nickel prices and I think we're there heading towards a balance around $22kpt.
5/ Director increasing his interest @ $5.85 in May, $3.30 and $3.00 in June and Barclays recently increasing their interest to 8.45% at an average price of $3.62 gives me some confidence.
Summary: MRE has a massive resource and its heap leach project providing it works and within costs will reduce its production costs and increase production. Glencore has a massive interest in Murrin Murrin with a 40% interest in project and another 53% in MRE which is almost a 72% interest in Murrin Murrin.
Lets not forget that cobalt prices are still around 90kpt and MRE produced 300t last quarter.
Whilst I think MRE is hurting at the moment I think it is short term hoping LME nickel prices improve, AUD/USD hits 90c, heap leach project works and sulphur prices retreat.
Assuming Glencore sees future value in nickel they must be thinking now is a good time to move on the remaining 28% interest in Murrin Murrin (maybe what Barclays is thinking).
IMO MRE's SP has bottomed assuming the LME nickel price finds support and sulphur prices retreat.
MRE market cap is now just over $800m making the 28% of Murrin Murrin not owned by Glencore only $376m.
Please advise if I have an of this information wrong as this is what I'm basing my hold decision on.
As an investor in MRE I'm interested in the following:
1. MRE's ability to produce nickel
2. How it's produced and at what cost
3. Demand v supply
4. LME price of nickel
5. Those interested in MRE
1/ MRE has had a history of problems getting to its nameplate production of 40,000t of nickel and the recent WA gas issue has not helped. However the gas issue is short term and production is now at full capacity with the increase in energy cost hopefully short term so nameplate production is still a realistic short term target (24k nickel MRE).
2/ From what I can gather sulphide nickel is cheapest and is best positioned on current nickel prices however its becoming more rare. Nickel pig iron is becoming more common however it has a big demand on energy making it not cheap to produce ($18kpt sounds close to production cost). Lateritic nickel (MRE) is more common however sulphur is needed and sulphur prices have soared putting LME nickel prices close to production costs.
3/ LME nickel stocks are high and metal producers are saying there is less demand as they move toward stainless steel products requiring less nickel. However LME nickel stocks have fallen from 48k to 43k in the last two months.
4/ Current LME nickel prices would be hurting producers with increased sulphur and energy costs (lateritic and pig iron) however I believe this is a dramatic fall from unrealistic prices of $30-55kpt seen in the second half of last year. You would think the cost of production would create some bottom to LME nickel prices and I think we're there heading towards a balance around $22kpt.
5/ Director increasing his interest @ $5.85 in May, $3.30 and $3.00 in June and Barclays recently increasing their interest to 8.45% at an average price of $3.62 gives me some confidence.
Summary: MRE has a massive resource and its heap leach project providing it works and within costs will reduce its production costs and increase production. Glencore has a massive interest in Murrin Murrin with a 40% interest in project and another 53% in MRE which is almost a 72% interest in Murrin Murrin.
Lets not forget that cobalt prices are still around 90kpt and MRE produced 300t last quarter.
Whilst I think MRE is hurting at the moment I think it is short term hoping LME nickel prices improve, AUD/USD hits 90c, heap leach project works and sulphur prices retreat.
Assuming Glencore sees future value in nickel they must be thinking now is a good time to move on the remaining 28% interest in Murrin Murrin (maybe what Barclays is thinking).
IMO MRE's SP has bottomed assuming the LME nickel price finds support and sulphur prices retreat.
MRE market cap is now just over $800m making the 28% of Murrin Murrin not owned by Glencore only $376m.
Please advise if I have an of this information wrong as this is what I'm basing my hold decision on.