Another POSitive sign, page-230

My view on POS is this. Given the position of the company in its life cycle, its value is now more aligned with Ni price more than ever before. What's been happening to Ni of late is purely a knee reaction to the data that is coming out of China. Demand is slowing. We know this. But it is slowing quicker than anyone would have thought. But it's still a beast of an economy. It's growing 7% (set to be USD13T for 2015; perspective: Australia's GDP is circa USD1.56T). India's GDP is circa US$1.8T and is tipped to go through an economic shift from lower to middle class, similar to what China went through the last 20 years. Ni will see the benefits of this.

At current prices most Chinese NPI producers are well under water. I realise the Chinese govt. is (or is likely to) subsidise a lot of the shortfall, but given their stance on pollution (and all NPI producers are huge pollutants), you'd think production of NPI will slow down significantly, putting pressure on LMI stocks. Current break-even for NPI producers is USD16,000/T (US$7.25/lb), so you would think there'll be some kind of pull towards this price sometime this year.

POS has no interest bearing debt and the importance of this cannot be understated in today's environment. I realise hiring all these people is a cash drain, but a lot are on a contract basis meaning POS controls the shots here (we're not at the mercy of a bank or employment agreement).

POS may go through a water tread period while Ni recovers, but it is well placed to take full advantage when it does.