Mincor is getting very close to my preferred entry price. One wonders if it will ever get there. Market sentiment is pretty bad, but as I break apart these arguments that say we are headed for another Great Depression, I continue to maintain that the market is not at that point yet. I believe that there is another rally in this market.
The fundamentals for Mincor look very good. Firstly the company produces 16,500 tonnes of nickel concentrate, it controls a large mine which is generating good cashflows, even if nickel prices are falling. There are some salient features:
1. The company last year generated earnings of $64 million, or around 16c per share, so at $1 share price thats a yield of 16%, before consideration of the nickel price falls since.
2. Nickel prices have bottomed based on my technical analysis. They have fallen to a solid support level
3. The company is under-geared. They have no debt, and $112 million in cash despite having capital expenditure requirements of around $36mil per annum for their Mittal mine. This means that their capital resources are under-utilised
4. The company is is a very good position to make an acquisition, or itself be the target of an acquisition. The share register is open. J.P. Morgan is the largest shareholder at 12%. From its perspective, there could not be a better opportunity to invest in this company, both for its nickel production assets, its strategy, plus the promise of using its $112 million cash kitty.
5. The mine has a good mine life expectancy, and the company is increasing resources
I will generate more analysis on this company over time.
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Andrew Sheldon www.sheldonthinks.com
The fundamentals for Mincor look very good. Firstly the company produces 16,500 tonnes of nickel concentrate, it controls a large mine which is generating good cashflows, even if nickel prices are falling. There are some salient features:
1. The company last year generated earnings of $64 million, or around 16c per share, so at $1 share price thats a yield of 16%, before consideration of the nickel price falls since.
2. Nickel prices have bottomed based on my technical analysis. They have fallen to a solid support level
3. The company is under-geared. They have no debt, and $112 million in cash despite having capital expenditure requirements of around $36mil per annum for their Mittal mine. This means that their capital resources are under-utilised
4. The company is is a very good position to make an acquisition, or itself be the target of an acquisition. The share register is open. J.P. Morgan is the largest shareholder at 12%. From its perspective, there could not be a better opportunity to invest in this company, both for its nickel production assets, its strategy, plus the promise of using its $112 million cash kitty.
5. The mine has a good mine life expectancy, and the company is increasing resources
I will generate more analysis on this company over time.
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Andrew Sheldon www.sheldonthinks.com
