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cl001..re QUA: It is hard to miss firecracker's posts but while I get many of my ideas for stocks to research from boards like this and others, we both know to do our own dd on them before buying. I agree that cash flow is very important and QUA had a positive $65 mil cashflow (US) or $1.72/ share from operations in the first 9 months, not bad at all for a $6.60 stock (US) burdened by all those low price copper hedges (and those hedges ended last month). Company already announced that production easily hit a high for the year in the soon to be announced quarter plus 1/3 of last quarters production will show up as sales in the current quarter as well. I also like the fact that their operations are in the good old USA. LMC is investing over $1 billion for a minority interest in a new Russian mine and also have their eye on a huge proposed mine in Iran as well....Hmmmm...
I have seen the posts you refer to but QUA has indicated that their mining difficulties at Robinson are behind them. Hopefully there will not be a bad surprise come monday. Financing for QUA's Arizona project is an unknown but it appears to me that much of it can come from operational cash flow which will be much stronger this year with the hedges gone.
With the price of copper dropping last quarter, QUA will finally show a substantial noncash hedging gain instead of a loss. Through the first nine months, they had a $115 million derivative loss but they will show a profit for this quarter since copper prices have fallen. They also hedged some copper in October at $3.36 and that will show a profit as well. Production for the current quarter also hit new highs for the year as per a PR in January. Copper production was up 23% over the average for the first nine months and gold production was up 74% over the first nine month average. Also in the previous quarter they sold 11 million fewer pounds of copper than they produced, so I am looking for that to be added to the current quarter as well.
I sold most all of my LMC ahead of earnings this week as well. So now it will probably go to the moon tomorrow on them just to spite me. On the other hand, I have been buying QUA.TO ahead of Quarterly earnings as I expect them to be well on the north side of $1. Those come out on Monday.
AEY- Wade, Yep, sure looks like someone has been selling a boatload of shares into the rally the last two days. I picked up a bunch of shares myself yesterday and am thinking of adding more. GV acted like this a year ago. Someone always kept selling into any price increase and it went nowhere. Finally the market worked through those sales and then it doubled in a short time. Hopefully history will repeat itself here. It also seems to me that the Taglich analyst should upgrade his earnings projections and outlook on AEY soon.
I see some AEY insiders were buying last month ahead of the good news but after the quarter was finished. It seems like that is buying with inside info. Anyway, I should have followed in their footsteps.
Nickel...Supply and demand should be in balance for the next 5 years according to this analysis I saw posted on another board. Btw I'll be happy with continued high prices for 5 more years owning RNO AND LIM:
http://www.insg.org/docs/Ms_Davidson_Oct06.pdf
SMTX- Earnings won't be out until next month but I have a good sized position in this one. Management has given strong guidance and I also noticed that the increase in inventories is up substantially (49 mil latest period vs 33 mil a year ago). That is often not good but for SMTX, their finished goods inventories actually declined while raw materials were up to 34 mil vs 19 mil. That indicates that they were likely getting prepared for a booming quarter.
DWSN- This OG seismic company reported very strong results and is up 13% today. TGE is also strong today.
SAN FRANCISCO (MarketWatch) -- Dawson Geophysical Co. shares rose 13% to $40.40 in Tuesday morning trade after the Midland, Texas-based provider of seismic data acquisition services reported fiscal first-quarter net earnings of $5.44 million, or 71 cents a share, up from $2.3 million, or 30 cents a share, in the year-ago period. Revenue rose to $53.7 million from $35.5 million. Analysts polled by Thomson Financial were expecting a per-share profit of 58 cents.
RNO..Picked up some at 2.69 on the selloff this morning. Nickel inventories dropped again today and nickel prices have turned back up. Looks like a buy to me, anyway.
Zinc prices...While spot zinc prices may be lower than they were 6 months ago, I suspect that zinc futures prices have probably dropped much less. Since stock prices theoretically represent a future stream of cash flows, the change in futures prices should have more bearing on today's stock price than the spot price of zinc does. I believe that zinc futures are traded in London, but I don't have a link. Does anyone have a link to any zinc futures price charts?
Zinc..Me thinks that today's huge drop in price will soon be reversed. Inventories remain very tight, the only place with increasing inventories is Singapore but 75% of the LME warehouses have zero zinc in inventory.
Here's a breakdown by warehouse:
Antwerp 0 0 0 0 0 0
Avonmouth 0 0 0 0 0 0
Baltimore 0 0 0 0 0 0
Barcelona 0 0 0 0 0 0
Bilbao 600 0 0 0 600 0
Bremen 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
Detroit 0 0 0 0 0 0
Dubai 0 0 0 0 0 0
Genoa 100 0 0 0 75 25
Gothenburg 0 0 0 0 0 0
Hamburg 0 0 0 0 0 0
Helsingborg 0 0 0 0 0 0
Hull 0 0 0 0 0 0
Johor 2850 0 25 -25 2125 725
Leghorn 25 0 0 0 0 25
Liverpool 0 0 0 0 0 0
Long Beach 0 0 0 0 0 0
Los Angeles 0 0 0 0 0 0
New Orleans 57300 0 25 -25 55725 1575
Rotterdam 50 0 0 0 0 50
Singapore 34275 1000 75 925 30350 3925
St Louis 0 0 0 0 0 0
Trieste 775 0 0 0 700 75
Tyne & Wear 2550 0 25 -25 2375 175
Vlissingen 0 0 0 0 0 0
Total 98525 1000 150 850 91950 6575
Here is a list of the ones that had a change yesterday:
Johor -25
New Orleans -25
Singapore + 925
Tyne & Wear -25
Total + 850
HSOA- According to the post, insiders sold $12 million worth of stock last may at record high prices after a "pump" PR and then bought back about $600,000 worth of stock after 6 months had passed and that was at a price less than half of what they had sold their stock for last May.
I fail to see the bullish case from their action since they have basically kept 97% of their money in the bank (including the interest they likely earned on the $12 mil)
EZM-LMC merger..It seems to me that the problem is that if your broker (in my case, TD Ameritrade) treated the merger as a sale of EZM and purchase of LMC then that sale will also show up on your 1099 and that form is also given to the IRS. If the numbers on the tax return don't match the 1099 then it may well trigger an IRS audit down the road.
I agree it makes sense that it would not be a taxable event (I wonder why it is for Canadians?) but as I recall the merger proposal also had some verbage about it as well (basically saying that since Lundin is a foreign company and it did not follow all SEC regs for mergers of american companies, it may or may not be a taxable event and one should consult their tax advisor. In any event, I sold my stock in my TDAmeritrade account so it is a moot point for me now. Again, Scottrade did not treat the merger as a purchase and sale so I am keeping my stock in there for LT cap gains.
Just like they do with Copper, I think China is trying to "talk" the price of zinc down, so they can then acquire more at a lower price. The article says that China was a net exporter last year (2006); if so, where did all the world stockpiles of zinc go to then? Also notice that the Chinese government has started taxing exports of zinc, I assume that is to discourage them from leaving the country where they are needed. The exception is pure zinc which can be added to LME stockpiles, thus creating the impression that the shortage is disappearing. Finally, who is the Beijing Antaike Information Development Co.? From a recent article:
"Antaike is a research affiliate of the China Nonferrous Metals Industry Association. It advises the Chinese government on industry policy." Or perhaps they are the official spin doctor to represent the Chinese govt's own best interests.
>>China, the world's biggest producer and user of zinc, was a net exporter of the refined metal in 2006 for the first time in three years, reducing global supply concern that pushed prices to records.China exported 7,000 tonnes more refined zinc than it imported last year, and the country may be a bigger net exporter in 2007, said Feng Juncong, chief zinc analyst at Beijing Antaike Information Development.
The government has imposed a 5percent tax on exports of zinc with purity of less than 99.995 percent, effective January 1, according to the Ministry of Commerce. There is no export tax on zinc of 99.995 purity, which can be delivered on the London Metal Exchange.<<
Seems to me that Yahoo, with their continual screwups, may well be setting us up for a premium finance service. For a small $$ monthly fee the annoyances will disappear. Either that or the place is run by morons who know little about how to run a financial service.
Homebuilders..WCI, a florida homebuilder issued an earnings warning and said that order cancellations have actually been exceeding new orders for homes in their Florida market...OUCH...
Watch out if you own GV or one of the other builders that have been discussed here.
Zinc LME warehouse stocks went up by 5,725 today. I checked and the entire increase was once again all at the Singapore warehouse. 17 out of 26 of the official LME warehouses continue to carry zero inventory of zinc. I believe that much of the output from the huge Red Dog mine in the northern arctic is what is now showing up at Singapore. Red Dog's entire annual output is only deliverable in the late summer to fall months when the ice breaks up. It is now showing up as inventories from the smelters. The price of zinc will likely resume its upward course once the Red Dog output is no longer hitting the market, IMO.
Here is a breakdown of the only changes for the day:
Singapore +5750
Trieste -25
WTEK- Congrats...You guys are fast....The SEC filing was accepted at 13:40:32. I'm not sure how long it takes to get it on their website but the buying started with 20,000 shares at 13:44 and the first post about it here was 13:49.
http://host.businessweek.com/businessweek/Historical_Quotes.html?Button=Get+Quotes&Format=0&....
Base metals...I'm not ready to throw in the towel on metals, actually I think this is an excellent buying opportunity. Copper is the weak link as inventories have grown substantially but if one looks at 1 year charts of nickel and zinc inventories, the recent increase is imperceptible.
Also with zinc, the increase in inventories is all at Singapore. I suspect the RedDog material is being sent there. I believe that Red Dog is the worlds largest zinc mine and it is located in the northern arctic. Its entire annual production can only be shipped out in a 100+/- day period when the ice breaks up. Their output from the smelters is still showing up but that will likely end soon.
Here is a breakdown of today's changes in zinc inventories by location. Most other locations have zero inventory left:
Genoa -25
Johor -50
New Orleans -125
Singapore +3300
I continue to like BWR, BWLRF with their large increase in zinc production coming this year. I also like Lionore for nickel.
Re: EZM-LMC tax question..Nelson, It probably depends on how your broker handled it. With Scottrade, my shares were converted to LMC shares with the purchase date and cost adjusted to what I had paid for EZM. At TD Ameritrade, they treated the conversion as closing out my EZM position with the proceeds used for buying LMC. Needless to say, I preferred the way that Scottrade handled it since short term 2006 gains were created with the way TD did it.
Why LME Zinc Inventory Depletion has Paused...Here's a link to a blog discussing why the pause in the LME zinc inventory decline is probably temporary. Cause is a couple of factors that I have mentioned before...huge output from the RedDog mine in northern Alaska still is showing up after being delayed by weather this year and the uptick in Singapore LME inventories is likely due to China recently ending their export tax credit.
http://www.greatinvestments.blogspot.com/
LME zinc inventories increased but once again the only warehouse they increased at was in Singapore, indicating that inventories remain extremely tight. Picked up some BWLRF today on the selloff. OT- Sure nice to have the power back on here at home in the Pacific Northwest...6 days without power is a bit much for me.
Zinc Warehouse Stocks 21 Dec 2006
Close In Out +/- On Warrant Cancelled
Antwerp 0 0 0 0 0 0
Avonmouth 0 0 0 0 0 0
Baltimore 0 0 0 0 0 0
Barcelona 0 0 0 0 0 0
Bilbao 600 0 0 0 600 0
Bremen 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
Detroit 0 0 0 0 0 0
Dubai 0 0 0 0 0 0
Genoa 850 0 0 0 400 450
Gothenburg 0 0 0 0 0 0
Hamburg 0 0 0 0 0 0
Helsingborg 0 0 0 0 0 0
Hull 0 0 0 0 0 0
Johor 3850 0 0 0 3025 825
Leghorn 25 0 0 0 0 25
Liverpool 0 0 0 0 0 0
Long Beach 0 0 0 0 0 0
Los Angeles 0 0 0 0 0 0
New Orleans 60025 0 375 -375 57300 2725
Rotterdam 50 0 0 0 0 50
Singapore 20025 2075 50 2025 16950 3075
St Louis 0 0 0 0 0 0
Trieste 975 0 25 -25 800 175
Tyne & Wear 2800 0 0 0 2775 25
Vlissingen 0 0 0 0 0 0
Total 89200 2075 450 1625 81850 7350
510
Zinc LME inventories....Once again the increase in zinc inventories was all at the Singapore warehouse. All of the others either were unchanged or declined (including new orleans). I'm thinking that the zinc from the huge northern arctic RedDog zinc mine is showing up there. The ore from there can only be shipped out in the summer months and was delayed this year due to bad weather. If so, that is only temporary and inventories will likely resume their drop before long.
Zinc Warehouse Stocks 07 Dec 2006
Close In Out +/- On Warrant Cancelled
Antwerp 0 0 0 0 0 0
Avonmouth 0 0 0 0 0 0
Baltimore 0 0 0 0 0 0
Barcelona 0 0 0 0 0 0
Bilbao 600 0 0 0 600 0
Bremen 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
Detroit 0 0 0 0 0 0
Dubai 0 0 0 0 0 0
Genoa 1050 0 0 0 500 550
Gothenburg 0 0 0 0 0 0
Hamburg 0 0 0 0 0 0
Helsingborg 0 0 0 0 0 0
Hull 0 0 0 0 0 0
Johor 4200 0 0 0 3900 300
Leghorn 25 0 0 0 0 25
Liverpool 0 0 0 0 0 0
Long Beach 0 0 0 0 0 0
Los Angeles 0 0 0 0 0 0
New Orleans 62725 0 250 -250 57300 5425
Rotterdam 50 0 0 0 0 50
Singapore 15550 1525 0 1525 14975 575
St Louis 0 0 0 0 0 0
Trieste 425 0 50 -50 175 250
Tyne & Wear 3075 0 50 -50 2800 275
Vlissingen 0 0 0 0 0 0
Total 87700 1525 350 1175 80250 7450 510
CS.TO...Firecracker, I'm curious how you came up with those profit projections for Capstone. I noticed that their Oct production #s they recently provided are much higher than the projections they also provide in the presentation on their website.
In October, they produced 2.8 mil lbs of copper, 2 mil lbs of zinc and 176000 ounces of zinc. Yet in their projections for 2007 they expect to average only 1.25 mil lbs of copper, .33 mil lbs of zinc, and 62000 ounces of silver (converted annual to monthly estimate). Even for 2008 with production expected to double over 2007 they will not match what they produced last October. Maybe they started mining at the sweetest spot in the entire mining area but one cannot expect those recent production #s to continue from what I can see.
LME zinc warehouse stocks by location..I see the one day increase in inventories was solely due to Singapore. An increase at one warehouse hardly means a change of trend. New Orleans, the only location with any meaningful inventories was down again....
Zinc Warehouse Stocks 05 Dec 2006
Close In Out +/- On Warrant Cancelled
Antwerp 0 0 0 0 0 0
Avonmouth 0 0 0 0 0 0
Baltimore 0 0 0 0 0 0
Barcelona 0 0 0 0 0 0
Bilbao 600 0 0 0 600 0
Bremen 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
Detroit 0 0 0 0 0 0
Dubai 0 0 0 0 0 0
Genoa 1050 0 0 0 500 550
Gothenburg 0 0 0 0 0 0
Hamburg 0 0 0 0 0 0
Helsingborg 0 0 0 0 0 0
Hull 0 0 0 0 0 0
Johor 4225 0 0 0 3950 275
Leghorn 25 0 0 0 0 25
Liverpool 0 0 0 0 0 0
Long Beach 0 0 0 0 0 0
Los Angeles 0 0 0 0 0 0
New Orleans 63550 0 675 -675 57300 6250
Rotterdam 50 0 0 0 0 50
Singapore 12575 1775 100 1675 12300 275
St Louis 0 0 0 0 0 0
Trieste 525 0 25 -25 175 350
Tyne & Wear 3150 0 50 -50 2800 350
Vlissingen 0 0 0 0 0 0
Total 85750 1775 850 925 77625 8125
researcher, re nickel prices..point-counterpoint...Here's a new article out today predicting a nickel shortage through at least the end of the decade. Time will tell, but as long as inventories remain extremely low I will remain a bull on nickel (and zinc btw)
Nickel Rises to a 19-Year High in London as Inventory Plunges
By Chanyaporn Chanjaroen
Dec. 1 (Bloomberg) -- Nickel advanced to a 19-year high in London as inventory of the metal used in stainless steel dropped the most in seven weeks.
Stockpiles of nickel tracked by the London Metal Exchange fell 9.8 percent to 6,066 tons, the exchange said today. That's the largest one-day decline since Oct. 13. Supplies may not meet demand before the ``end'' of the decade, said Xstrata Plc, which bought Canadian nickel producer Falconbridge Ltd. in September.
``The challenge of nickel is, how much of this is already in the current price?'' said Jon Bergtheil, head of global metals strategy at JPMorgan Securities Ltd. in London.
Nickel for delivery in three months on the LME gained $264, or 0.8 percent, to $34,214 a ton as of 12:20 p.m. in London, after earlier gaining as much as $350, or 1 percent, to $34,300, the highest since at least 1987. That beats the previous high set on Nov. 27 by $200.
Nickel has more than doubled this year, driven by expanding demand from China and a lack of new production capacity, David Rae, vice president of sales and marketing at Zug, Switzerland- based Xstrata's nickel unit, said in a presentation yesterday. He expects a supply shortage to continue through this decade.
``Under such conditions the nickel price can be expected to remain well above long-term averages,'' Rae said. Nickel has averaged $8,228 a ton since 1987.
Copper Outlook
Goldman Sachs Group Inc., the most profitable investment bank in Wall Street history, forecast nickel for immediate delivery will average $25,000 next year, 33 percent more than its previous estimate. The global supply shortfall will be 20,000 tons this year, the bank said in a report released today.
Copper declined $95.75, or 1.4 percent, to $6,984.25 a ton in London. A close at the level would bring this week's loss to 2.4 percent.
Prices of copper, used in wires and pipes, may rise next week, according to a Bloomberg News survey, because of a shortage of concentrate, the raw material used by smelters, and after inventory of the finished metal fell, reducing supply.
Ten of 17 analysts, investors and traders surveyed by Bloomberg yesterday forecast copper will gain next week. Three expected a decline and four little change.
Mine production lagged behind smelting capacity in the first eight months of the year, the International Copper Study Group reported earlier this month. Stockpiles monitored by commodity exchanges in London, New York and Shanghai have dropped 3 percent this week to 213,570 metric tons, a two-week low, according to data compiled by Bloomberg.
Copper faces further threats of supply disruptions. Workers at Xstrata's Altonorte smelter in northern Chile will vote this month to strike following a wage dispute, union president Isidro Cabrera said yesterday.
A strike would interrupt production at the smelter because the union represents 70 percent of its 500 workers, Cabrera said. The smelter last year produced 297,567 tons of copper anode, a form of metal prior to the refining process.
Among LME-traded metals, aluminum dropped $ to $2,740 a ton and lead gained $10, or 0.6 percent, to $1,673, tin rose $150 to $10,600 a ton. Zinc advanced $9.50 to $4,384 a ton.
To contact the reporter on the story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net .
Even better, LIM is up about 70% in the last 2 months while nickel is only up about 10%. It's been terrific especially considering it is much larger than most stocks followed on this board. LIM sports a market cap of over $2 billion. IMO, it still has a long ways to go with its huge expected growth in output over the next few years plus a good possibility that someone will try to buy them out.
BETM is one I looked into a couple of days ago but decided to pass. I like their outlook particularly with the new ban on online gaming. I was thinking that perhaps there was just a personality conflict but I see that the CFO has been involved with the company since the late 80s and worked there full time since 1997 and through more than one contract renewal.
Figured I will pass until more info surfaces. Good luck.
C1001, The verbage on LME's link isn't very clear (at least not to me) but I now see you are right. As for nickel, someone sure lit a firecracker under LIM today. (no pun intended...grin..)
c1001, That is not the way I read it....Here is an excerpt from LME's own website on their FAQ page (Note the first sentence of the second paragraph):
"I wish to buy metal from the LME."
The LME is not the natural source for physical metal. It is rather, a financial market, used mainly for limiting future price risk, supported by a delivery of last resort. Consumers wishing to buy physical metal normally do so directly from producers or through merchants. Some LME members do have a physical department.
Metal to meet deliveries of LME contracts, that do go to delivery, is stored on warrant in LME-approved warehouses and must meet the specifications of the individual metal contracts as laid down by the LME. In order to ensure the quality of metal held on warrant for delivery against LME contracts, all such metal must be of a brand listed as good delivery by the directors of the LME. If a party wishes to buy metal via the LME it can do so through a broker on the LME. It should be noted that delivery is at seller's option and the location, production source and shape cannot be guaranteed. However, the metal will be of a brand and specification in accordance with LME rules and will be stored in an LME approved warehouse. The LME price is 'in warehouse' and the costs of taking up that metal will have to be met by the buyer.
Len re zinc storage, Thanks for making the LME zinc storage tables easier to read. My understanding is that zinc that is "on warrant" is material that is committed to a zinc futures contract holder who plans to take actual delivery. Deduct that from the total and there is virtually nothing left!
Here is a breakdown of LME zinc storage stocks I saw posted on another board. 20 of 29 warehouse facilities have no zinc at all in storage. New Orleans and Singapore are the only warehouse facilities with more than a mere handful of zinc left in them.
Zinc Warehouse Stocks 29 Nov 2006
Close In Out +/- On Warrant Cancelled
Antwerp 0 0 0 0 0 0
Avonmouth 0 0 0 0 0 0
Baltimore 0 0 0 0 0 0
Barcelona 0 0 0 0 0 0
Bilbao 600 0 0 0 600 0
Bremen 0 0 0 0 0 0
Chicago 0 0 0 0 0 0
Detroit 0 0 0 0 0 0
Dubai 0 0 0 0 0 0
Genoa 1050 0 0 0 500 550
Gothenburg 0 0 0 0 0 0
Hamburg 0 0 0 0 0 0
Helsingborg 0 0 0 0 0 0
Hull 0 0 0 0 0 0
Johor 4425 0 1200 -1200 4050 375
Leghorn 25 0 0 0 0 25
Liverpool 0 0 0 0 0 0
Long Beach 0 0 0 0 0 0
Los Angeles 0 0 0 0 0 0
New Orleans 65575 0 200 -200 59600 5975
Rotterdam 50 0 0 0 0 50
Singapore 10675 3300 2475 825 10225 450
St Louis 0 0 0 0 0 0
Trieste 325 0 0 0 0 325
Tyne & Wear 3275 0 50 -50 2800 475
Vlissingen 0 0 0 0 0 0
Total 86000 3300 3925 -625 77775 8225
510
Congratulations to those who have PD call options! Nothing like a 800% return on your investment in one day. On the other side of the fence are the people who followed Cramer's advise last week to buy LMC stock and also buy PD puts as a hedge against lower copper prices. LMC is finally up today but PD puts have lost about 98% of their value in one day...Way to pick'em, Cramer!
BWLRF..I also sold a bunch of my shares when I heard the news of the road closures. I read posts that the bridge had washed away in the 200 year storm and who knows how long that might take to replace. Now I see that the road where it crosses the river has already been restored to one way traffic. Another point remains closed but I no longer expect the worse. Hopefully a PR by Monday morning will provide more info. Here's a link to the BC canada website that shows the closed road:
http://www.drivebc.ca/map.jsp?mapId=56&viewFinderMapId=1&navMode=&scale=5000000&mapI...
Scottrade also charges more whenever the stock price is under $1. I believe it is an extra charge of 1/2% of the value of the trade. Needless to say, I don't use them for sub $1 trades but $7 online commish for $1 plus stocks and good service otherwise. I don't remember who tried out the Bank of America online stock trade service with zero commissions. I am wondering how that is working. B of A should notify me when it becomes available in my area.
winter zinc usage...Digitech: The principal use of zinc in the construction is as a plating over steel to reduce corrosion. The steel, not the zinc, provides the strength so I don't see how cold weather would be a factor.
I recall reading that many smelters closed for maintenance in the early fall for maintenance. That could actually account some of the recent drawdowns. Also worth noting that China is raising its export tax on base metals. They obviously want to keep as much as possible for home usage. It seems to me that will also make world supplies even tighter.
Zinc inventories and zinc miners are both down again today. Must be time to Buy..
11/22 @ 8:49 am
RNO- This one took a beating yesterday partly due to a falloff in metal prices but mainly due to earnings that fell short of what many expected (some no doubt due to overinflated expectations from the yahoo message board). Excluding noncash derivative losses, the company would have earned 15c which is respectable for a $2.57 stock. Here are some notes I took while I listened to the conf call:
Production was down in Q3 at their AqualBlanca nickel mine because:
A. A lower grade of ore was mined. (Nickel grades were 25% below the year ago period.) The company expects that combined ore grades will improve from 11% in Q3 to 12-14% on a sustained basis.
B. Production was also slowed down becasue they tested creating seperate concentrates of nickel and copper. That testing has been discontinued. Throughput in October has increased to 140,000 tons vs. a 125,000 ton average in Q3.
Copper derivative losses occurred because futures prices for the metal are also factored in. While the spot price of Cu was unchanged from the end of Q2 to the end of Q3, futures prices were higher creating the loss. (For example, March 07 futures increased from 3.15 on June 30 to 3.40 on Sept 30). Gold derivative losses occurred because put and call option premiums are also related to volatility.
Sales were again lower than production in Q3 as they were in Q2. The company expects sales to exceed production in Q4.
Production at Aqua Blanca next year, while below previous estimates due to a reduction in ore grades, is still expected to be 20% higher than the current years production.
LMC-Interesting how different TDAmeritrade and Scottrade treat the transfer of EZM to LMC shares. TDameritrade shows me as selling my EZM shares and then buying LMC at the higher basis while Scottrade merely shows the cost basis for my LMC shares at what I paid for EZM. I much prefer the way Scottrade does it as no taxable gain will occur until I sell the shares while I have a whopping STCap gain bill created the way that TDAmeri handled it. It seems that Scottrades method is the proper one since I never sold my EZM although the merger proxy warned that a taxable event may be created for US investors by the merger.
LMC-It looks like the 75c eps does not include consolidated numbers from EZM. The merger did not close until after the end of the quarter but they should have included some consolidated proforma numbers for the merged company.
I also see that TDAmeritrade is showing my old EZM shares as sold and a new cost basis for my Lundin shares, rather than a swap for the new shares at the old EZM basis. . I had not wanted to take a gain on this until next year when it would also be longterm capital gains. Grrrrr.....
Nuts, Just as the intrinsic value of an oil company is the value of the oil still in the ground after expenses, the intrinsic value of a mining stock is the value of the minerals in the ground after extraction costs. I wish that miners provided a PV10 value as the oil companies do, it would make relative comparisons easier.
I picked up more LIM today and I have been buying since August. It's production increase next quarter will be significant but it is only in the beginning. As I recall, LIM expects nickel production to triple over the next 3-4 years.