MRE - Minara Resources

[tulasi74]

Low of $1.16 today. Does anyone know why share price has been hammered last two days?

Anyone think its close to bottom yet?

Tulasi

 

[gxshen]

Someone tries to push the price down. Block it to be below 1.20$. I guess they just want to wash people to panically sell. They are too greedy and ridiculous. The price has been so low, while the company is making money and of value. Let them play the "dirty" game. Ignore them!

Luckily see some force jumped in to buy.

 

[tulasi74]

Apparently UBS put out a note saying that their cost of producing nickel could rise to 8.00/lb of nickel which would effectively have them making a loss next year. I agree that its probably panic selling but volume once again is high which is not good.

Tulasi

 

[So_Cynical]

I would think that with today's low, MRE is considered to be at risk of running
out of money and producing at a loss...or worse in the longer term.

if PON continues at current levels for more than 12 months, 1 or 2 of the top 20
world producers would probably stop production, as it would be uneconomical to
continue at a loss.

Unfortunately MRE sticks out like a sore thumb as a major producer with nothing
behind it...compared to BHP, Vale Inco and Norilsk.

:dunno:

Having said that...ill top buying more tomorrow.

 

[Miner]

I would think that with today's low, MRE is considered to be at risk of running
out of money and producing at a loss...or worse in the longer term.

if PON continues at current levels for more than 12 months, 1 or 2 of the top 20
world producers would probably stop production, as it would be uneconomical to
continue at a loss.

Unfortunately MRE sticks out like a sore thumb as a major producer with nothing
behind it...compared to BHP, Vale Inco and Norilsk.

:dunno:


Having said that...ill top buying more tomorrow.

So Cynical in true form you are

If I can swap the role with you and become a cynical now or superstitious looks like this nickel plant has a jinx.

When it was Anaconda Nickel with our Andrew Forest it was jinxed with production loss, lack of name plate capacity and share price crumbled.

Now Minara was behaving good for some time and looked okay. But again the jinx has overpowered and it is going down like a speculative explorer than a producer.

Probably Mr Peter Johnson's past politics or vendetta to sack his ex WMC colleague (He is now in Rio ) is turning the circle. Probably the place needs some Feng Shui to get over the bad omen ?


Disclosure : I am still holding MRE bought at $2.8 and $2.5 and will dispose at pepper corn value !!!!

 

[Whiskers]

So Cynical in true form you are

If I can swap the role with you and become a cynical now or superstitious looks like this nickel plant has a jinx.

When it was Anaconda Nickel with our Andrew Forest it was jinxed with production loss, lack of name plate capacity and share price crumbled.

Now Minara was behaving good for some time and looked okay. But again the jinx has overpowered and it is going down like a speculative explorer than a producer.

Probably Mr Peter Johnson's past politics or vendetta to sack his ex WMC colleague (He is now in Rio ) is turning the circle. Probably the place needs some Feng Shui to get over the bad omen ?


Disclosure : I am still holding MRE bought at $2.8 and $2.5 and will dispose at pepper corn value !!!!

I'm looking closely at getting into MRE at these prices, but as you say, miner, bad karma tends to dog enterprises and so far I haven't got that irresistible urge to buy... rather the bad feeling in the gut urge to be patient.

 

[Mr Peaman]

AUD down and nickel price slightly up. Lets hope the trend reverses today and shorters get squeesed. then again. I'm hoping for $1 so i can get some more!

 

[So_Cynical]

I'm hoping for $1 so i can get some more!

And i thought i was being cheeky @ $1.09...i just missed out today.

Anyway today i was wondering what the real value of the Minara was..?
considering the 560million odd market cap. (yesterday)

Whats the replacement value of the plant?

Murrin Murrin 340mt @ 0.99% Ni
Deposit Targets
Marshall Pool 321mt @ 0.69% Ni
Weld Range 329mt @ 0.75% Ni

I'm very bad at maths, but figure that's close to 8 million tonnes of nickel
with a current ridiculous low price around 18000 USD a tonne, so about

144000 million is that 144 billion? or ?

http://www.minara.com.au/files/docs/107_Presentation_to_Investors_-_29_February_2008b.pdf

 

[prawn_86]

Murrin Murrin 340mt @ 0.99% Ni
Deposit Targets
Marshall Pool 321mt @ 0.69% Ni
Weld Range 329mt @ 0.75% Ni

I'm very bad at maths, but figure that's close to 8 million tonnes of nickel
with a current ridiculous low price around 18000 USD a tonne, so about

144000 million is that 144 billion? or ?

http://www.minara.com.au/files/docs/107_Presentation_to_Investors_-_29_February_2008b.pdf

Yep it is 144 billion

But if it cant be extracted/produced at a profit then it is virtually useless.

I dont follow these guys, but if the Ni price keeps falling they will need to cut costs or figure out a better extraction method

 

[Whiskers]

Yep it is 144 billion

But if it cant be extracted/produced at a profit then it is virtually useless.

I dont follow these guys, but if the Ni price keeps falling they will need to cut costs or figure out a better extraction method

I'm working on the nickel price from an EW perspective. At this stage I think it may have to bottom around 7.4 US cents/lb.

The good news though is I think this correction is going to be pretty sharp compared to the last of the same degree... ie was about 12 years through the 80's and 90's. So I'm working my ass off to make sure of the larger cycle situation, cos if my inital sums are correct, it will rebound as quick as a flash once it hits the low.

This one is possibly shaping up to be a good canidate to pay the purchase price in dividends, within a year or two, if it takes a few more weeks to hit it's low and the price breaks under the dollar.

 

[Thrive]

And i thought i was being cheeky @ $1.09...i just missed out today.

Anyway today i was wondering what the real value of the Minara was..?
considering the 560million odd market cap. (yesterday)

Whats the replacement value of the plant?

Murrin Murrin 340mt @ 0.99% Ni
Deposit Targets
Marshall Pool 321mt @ 0.69% Ni
Weld Range 329mt @ 0.75% Ni

I'm very bad at maths, but figure that's close to 8 million tonnes of nickel
with a current ridiculous low price around 18000 USD a tonne, so about

144000 million is that 144 billion? or ?

http://www.minara.com.au/files/docs/107_Presentation_to_Investors_-_29_February_2008b.pdf

It sounds impressive, however analyst are suggesting its going to cost $144 billion? (just a reflection of marginal cost talk) to convert it to salable nickel, turning revenue into not much profit.

Proof is in the pudding that MRE is hurting in the current climate but what 'So_Cynica'l has stated is a good reflection of future value (IMO). MRE is hurting but you can't tell me others aren't with Industrial Metallurgical Holding, based in Moscow thinking about cutting production and BHP in WA bringing forward plant maintenance (sounds timely and smart). This is likely to impact supply in the short term.

Here's my take, MRE is a high cost producer - but why - historically it had problems getting to name plate production and more recently to grow its heap leach project to reduce future cost production. This increases its cost base but does not reflect its ability to control costs when things turn ugly.

MRE's move to delay the heap leach project and put off staff is unfortunate, but a good thing to demonstrate MRE's ability to make money when margins are tight.

Here's my problem my cost basis for MRE is $3.10 and IMO its not going to get a chance to return to it - why - if MRE turns things around (production or cost wise), Nickel prices increase, demand picks up or AUD plummets (which its doing) Xstrata/Glencore will complete the transaction and buy MRE. Think about it why buy a company when its hitting the fan, you buy when it starts to show signs of recovery. This situation is known as the bottom something we (or certainly I) have not been able to find.

I'm seriously considering reducing my cost base and buying more but I can't say I'm not nervous about it.

Positive signs in the last couple of days is starting to show - AUD 87c (what happened there?) and yet Nickel held.

PS 'Miner' I agree with your comment on the 9th August 'why should the directors be PLEASED with an 80% fall in profit', whilst we expected it, call it how it is and tell us how its going to improve.

Things are ugly for MRE's SP at the moment so if you hear anything, rumor or not I would like to hear about it.

'Whiskers', my thoughts are a quick recovery to no more than $10USlb based on recent price cuts in stainless steel to generate demand and some recent supply cuts, however the fall the AUD will keep a cap on it - still a good thing for MRE. I still stand by MRE wont get a chance to recover to any real extent (Xstrata/Glencore).

Thrive

 

[Miner]

extract from Eureka Report of 15 aug

Minara, marginal cost producer
In this context, the 80% fall in December-half profit for Minara (MRE) has highlighted the industry cost pressures for the high pressure acid leach (HPAL) laterite producers. The 400% rise in the sulphur price, and the flow-on effects for the cost of sulphuric acid, have resulted in a severe first-half margin squeeze as the nickel price has plunged this year to about $US8.50 a pound.

As a result, a substantial revenue shortfall, and the suspension of the heap leach (HL) expansion, has resulted in a significant rise in the costs of nickel production. Consequently with the expected rise in second-half production costs to about $US8lb, or about the current spot price, Minara has unfortunately now become a marginal cost producer, which has been reflected in its dramatic share price fall.
In addition, unless management can reduce plant costs, or the price of sulphuric acid falls, Minara will remain a break-even producer.

 

[tulasi74]

No one has mentioned that the directors are buying stock at these levels. The last two statements to the ASX had one director buying 150,000 shares to increase his holding to 1.6 million and another director buying 50,000 shares. Of course, after what happened with Centro, it is clear that management buying up shares can sometimes just be a cover to mask serious underlying problems. But thankfully Minara doesn't have any debt yet!

In relation to cost rising, I am assuming that fixed costs associated with capital expansion is brought to account and when it is spread across nickel produced has the effect of increasing the cost per tonne of nickel produced. Unless the cost of $8.00 per lb of nickel is all a variable cost, selling down the shares based on just an allocation of fixed cost is complete stupidity and I would even suggest that there has been some market manipulation of this stock.

The short term does indeed look bad but I agree with posters who agree with management decision to lay off project and delay project expansion. It is a very prudent decision by management given the high cost of sulphur. I have read reports that said that nickel prices might rise close to 20,000 USD per tonne in the 4th qtr but the expect it to go down next year.

I don't think this company is in any danger of going under. I have been waiting to see whether any of the substantial holders had reduced their holdings and haven't seen any announcement. Does anyone know how quickly changes in substantial holdings have to be disclosed to the ASX?

Tulasi

 

[Thrive]

No one has mentioned that the directors are buying stock at these levels. The last two statements to the ASX had one director buying 150,000 shares to increase his holding to 1.6 million and another director buying 50,000 shares. Of course, after what happened with Centro, it is clear that management buying up shares can sometimes just be a cover to mask serious underlying problems. But thankfully Minara doesn't have any debt yet!

In relation to cost rising, I am assuming that fixed costs associated with capital expansion is brought to account and when it is spread across nickel produced has the effect of increasing the cost per tonne of nickel produced. Unless the cost of $8.00 per lb of nickel is all a variable cost, selling down the shares based on just an allocation of fixed cost is complete stupidity and I would even suggest that there has been some market manipulation of this stock.

The short term does indeed look bad but I agree with posters who agree with management decision to lay off project and delay project expansion. It is a very prudent decision by management given the high cost of sulphur. I have read reports that said that nickel prices might rise close to 20,000 USD per tonne in the 4th qtr but the expect it to go down next year.

I don't think this company is in any danger of going under. I have been waiting to see whether any of the substantial holders had reduced their holdings and haven't seen any announcement. Does anyone know how quickly changes in substantial holdings have to be disclosed to the ASX?

Tulasi

Hi Tulasi

From what I can tell any substantial holding over 5% where there is a change of 1% or more they are required to inform the market within 2 days.

Has Peter Johnson bought another 100,000 shares recently? I was aware of the announcement on the 14th Aug - 50,000 shares taking him to 1.5m and Peter Coates picking up 20,500 taking him to 40,100.

Does anyone know of a web site that provides an indication of movement in the price of sulphur?

Thrive

 

[tulasi74]

Thrive

Looks like I made a mistake. It was 50,000 but for some reason I remember seeing 150,000. Must have been his previous amount held.

Thanks for your reply on changes to substantial holding.

Tulasi

 

[Miner]

Hi

Please note the following

Peter Coates upgraded his holding by buying MRE at 3 to 5 in May June as well before he made investment on 15 Aug


11/4/08 Minara Resources Limited (MRE) Ivan Glasenberg On market spent +650,000 @$5.97 making his current holding to $3,880,500.00 with shares 252,124,548

18/6/08 Minara Resources Limited (MRE) Peter Coates On market +8,000 $3.04 with $24,320.00 raising the level to 40,100

17/6/08 Minara Resources Limited (MRE) Peter Coates On market +15,000 $3.28 $49,200.00 32,100

 

[tulasi74]

You definitely can't accuse them of insider trading :

I have sold half my position.

If Xstrata is stopping production because of high cost, I can see MRE doing the same. Unfortunately, I don't believe the market will be as kind as they were to Xstrata because Minara is not a diversified miner like Xstrata.

It seems it could go below $1.00 next year so I am staying away for now. The other half of my position is going in the bottom drawer.

Please DYOR.

Tulasi

 

[Miner]

You definitely can't accuse them of insider trading :

I have sold half my position.

Please DYOR.

Tulasi

Insider Trading by MRE directors - joke of the year

It is insider people doing outside trading. A bunch of idiots in the board who bought at $5 and above not knowing about their own company.

So the share price dived and they bought again

Probably they have had enough options to catch up

It also tells the story that these idiotic directors did not know about their business and not only they dived but also led others to dive

There is another so called expert who sells who all sorts of tools and recommended (Insider Trading Magazine) at $2.74 as a buy

Intelligent Investor kept on recommending BUY for MRE at all times

Bell Potters said the same story


Just like Eddie of ABS kept on buying

Disclosure I am a holder of MRE

 

[Thrive]

Insider Trading by MRE directors - joke of the year

It is insider people doing outside trading. A bunch of idiots in the board who bought at $5 and above not knowing about their own company.

So the share price dived and they bought again

Probably they have had enough options to catch up

It also tells the story that these idiotic directors did not know about their business and not only they dived but also led others to dive

There is another so called expert who sells who all sorts of tools and recommended (Insider Trading Magazine) at $2.74 as a buy

Intelligent Investor kept on recommending BUY for MRE at all times

Bell Potters said the same story


Just like Eddie of ABS kept on buying

Disclosure I am a holder of MRE

I hear you Miner.

However nickel prices are extremely volatile (found that out the hard way) making businesses like MRE rich one year and poor the next. Look at most mid tier mining companies - they're all hurting.

I have read a post somewhere in ASF about buying in on a falling SP is like catching knives (sorry for not being able to mention who you are) - I think this is true, find the bottom and you look like a hero however most of us can't. So you either wait until a recovery occurs, or get as close to the bottom as possible based on what you know.

You know as well as I do that most analyst are right with their buy predictions when a stock is performing, but how many get a buy prediction right on a SP trend like MRE's - many find it difficult to find the bottom even directors when confidence is low.

So what do we know?

• AUD 87c - pushing AUD nickel to over $22,500t ($8.92lb US at time of post)
• Nickel holding up, unfortunately on news of mines stopping/reducing production because of rising costs and low nickel prices - good if MRE is not one of them
• MRE directors buying in - at least showing commitment/confidence
• We're in a demand seasonal lull - when does demand resurface?
• We know MRE has taken steps to reduce costs eg. staff and heap leach project, will this hold production cost around $6lb if so we're ok?
• Nickel competitor (pig iron) has come to a stand still

What I don't know that makes me worry is:

??? cost of sulphur ??? no idea, and not sure where it's heading
??? benefit of sulfur contracts ??? MRE has mentioned that it has some protection because of long term contracts - how much protection?
??? Gas supply ??? Newcrest is back on line (50%) why isn't MRE?

Xstrata suspending production at the Falcondo nickel mine is timely for maintenance and it relied on the most expensive energy source (OIL). MRE will soon go back to longer term gas contracts (hopefully).

Purchased more recently at $1.25, thought I was on a winner at $3.10.

Still nervous about MRE however I don't think it will fall below a $1 or fold unless things change dramatically.

Announcement risks

Good

• MRE could announce a return to long term (cheaper) gas supply
• Nameplate production for a quarter
• Reduced cost per lb
• Takeover - although less likely and not convinced how good it would be

Bad

• Return to debt
• Stopping production until things improve - this is unlikely IMO

More chances of good news than bad IMO.

Thrive.

 

[doogie_goes_off]

Saw news on Yahoo that BHP were going to keep production status quo, not sure if this means mid tier producers should expect a good market or just market competition. I'm backing MCR for the former. $AUD/$US must be important factor I would have thought.