MCR - Time for the bottom drawer!

[macduffy]

From FN Arena.

Macquarie rates MCR as Outperform (1) - Mincor's Sep Q nickel production beat the broker by 8%, largely due to a better performance at Mittel. Cash costs improved but cash flow was only breakeven, and news on exploration was mixed, the broker notes. The cost of MCR's fleet replacement program is taking its toll.
Target nevertheless rises to 85c from 80c and Outperform retained.
Target price is $0.85 Current Price is $0.59 Difference: $0.26 If MCR meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Macquarie forecasts a full year FY15 dividend of 4.00 cents and EPS of 5.70 cents . At the last closing share price the estimated dividend yield is 6.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.35.

[tricha]

From FN Arena.

Macquarie rates MCR as Outperform (1) - Mincor's Sep Q nickel production beat the broker by 8%, largely due to a better performance at Mittel. Cash costs improved but cash flow was only breakeven, and news on exploration was mixed, the broker notes. The cost of MCR's fleet replacement program is taking its toll.
Target nevertheless rises to 85c from 80c and Outperform retained.
Target price is $0.85 Current Price is $0.59 Difference: $0.26 If MCR meets the Macquarie target it will return approximately 44% (excluding dividends, fees and charges).
The company's fiscal year ends in June. Macquarie forecasts a full year FY15 dividend of 4.00 cents and EPS of 5.70 cents . At the last closing share price the estimated dividend yield is 6.78%.
At the last closing share price the stock's estimated Price to Earnings Ratio (PER) is 10.35.

As a company goes, Mincor is still as solid as a rock, with lots of cash, no debt and a captain that is rare in today corporate world.
Well worth a punt .

[gazprom1]

Nickel up strong overnight....up nearly 75cents a pound since late October. MCR continues to drift lower. Have been continuing to buy but have enough. Can only think it is general market sentiment that is driving MCR lower. Still profitable at current Nickel prices and has a nice cash balance.

Gaz

[macduffy]

Any thoughts on what, if any effect the fate of BHP's nickel division might have on the likes of MCR, PAN etc?

As we know, the output from these miners is sold to and processed at BHP's smelter under contract, with a price calculated retrospectively on the world price of nickel. BHP proposed to include their nickel assets in the forthcoming spinoff of non-core operations - tentatively known as "Newco" - but the latest reports indicate that this is unlikely as the contingent liabilities associated with rehabilitation of sites would be too high for the new company's balance sheet to absorb. So instead, either the nickel ops will be sold off - unlikely, for the same reason - or, more likely, left with BHP and gradually run down. Now, where would that leave MCR etc?

[Schrodinger]

Any thoughts on what, if any effect the fate of BHP's nickel division might have on the likes of MCR, PAN etc?

As we know, the output from these miners is sold to and processed at BHP's smelter under contract, with a price calculated retrospectively on the world price of nickel. BHP proposed to include their nickel assets in the forthcoming spinoff of non-core operations - tentatively known as "Newco" - but the latest reports indicate that this is unlikely as the contingent liabilities associated with rehabilitation of sites would be too high for the new company's balance sheet to absorb. So instead, either the nickel ops will be sold off - unlikely, for the same reason - or, more likely, left with BHP and gradually run down. Now, where would that leave MCR etc?

Read some good articles about the Philippines v Indonesia v China and the current oversupply. Consensus was that the dumping by China was ending and the large stocks built up would reduce. Strong overall demand is growing yoy so this should be a good bet long term.

Was surprised how fast this stock increased earlier in the year.

[gazprom1]

Any thoughts on what, if any effect the fate of BHP's nickel division might have on the likes of MCR, PAN etc?

As we know, the output from these miners is sold to and processed at BHP's smelter under contract, with a price calculated retrospectively on the world price of nickel. BHP proposed to include their nickel assets in the forthcoming spinoff of non-core operations - tentatively known as "Newco" - but the latest reports indicate that this is unlikely as the contingent liabilities associated with rehabilitation of sites would be too high for the new company's balance sheet to absorb. So instead, either the nickel ops will be sold off - unlikely, for the same reason - or, more likely, left with BHP and gradually run down. Now, where would that leave MCR etc?

BHP look to have given up on the sale process. Obviously, there is a contract in place between MCR and BHP for the next few years....is it through to 2017? You would hope that MCR management are looking at options - I have no idea what they could be - partial purchase with another third party, etc???

IMHO it is just a matter of time before the SP of MCR moves up. I hope Indonesia does not resume exports of raw material as that would have a material impact on the price of Nickel.

Nickel up another 1.1% overnight. Selling pressure remains on MCR. PAN had some relief but has been hammered more than MCR.

Gaz

[macduffy]

Thanks for your thoughts, Gazprom.

I guess the worst possibility would be that BHP bite the bullet, accept the remediation costs, run down and eventually close the smelter. MCR etc would then be faced with the prospect of exporting the bulk Ni ore - is that economically feasible? - certainly not as profitable. Kambalda remains one of the richest Ni provinces in the world - a huge advantage as long as costs remain manageable.

[gazprom1]

Thanks for your thoughts, Gazprom.

I guess the worst possibility would be that BHP bite the bullet, accept the remediation costs, run down and eventually close the smelter. MCR etc would then be faced with the prospect of exporting the bulk Ni ore - is that economically feasible? - certainly not as profitable. Kambalda remains one of the richest Ni provinces in the world - a huge advantage as long as costs remain manageable.

You are welcome. I see PANs announcement this morning states that their contract with BHP runs until 2019. On that assumption, even if MCR's contract expires earlier (which I don't know), you would think that BHP would continue treating MCR's ore until at least 2019 in line with PANs. It would make economic sense. So nearly 5 years before a potential problem - a lifetime in the markets!!!

Gaz

[gazprom1]

Just re-read the annual report and it states that the off take agreements with BHP expire at various times between 2016 and 2019. So, some degree of certainty although MCR would be looking to extend the contracts out that are expiring to at least 2019 or beyond.

Nickel up just under 2% last night....well over A$17,000/t so profits are being made but not super profits. IF, and it is an IF, the dividend is maintained at 4 cents/ share, current yield is 7.41%.

Gaz

[tricha]

Just re-read the annual report and it states that the off take agreements with BHP expire at various times between 2016 and 2019. So, some degree of certainty although MCR would be looking to extend the contracts out that are expiring to at least 2019 or beyond.

Nickel up just under 2% last night....well over A$17,000/t so profits are being made but not super profits. IF, and it is an IF, the dividend is maintained at 4 cents/ share, current yield is 7.41%.

Gaz

page 9 picture shows Mincors profit right now would tracking along very nicely, at about $8.50 a ilb Oz


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