re: fat dump the next one to run? - break-out on c
Fat 277, 09 May, 2006 Minerals Corporation (MSC) has proven to be one of our most disappointing recommendations from both a charting and fundamental perspective. Despite various positive signs over the past four years, a sustained re-rating of the company has failed to materialise. In our last review during April (FAT274), we noted we were awaiting the release of the company's March quarterly update before reassessing the stock's position in the Fat Prophets Portfolio. Disappointingly, the update provided no real visibility on the progress of the Skardon River Kaolin operations in Far North Queensland. Despite claims that Skardon River is on track to achieve breakeven cashflow by the September quarter, we remain sceptical.
Over the years Minerals Corp has experienced numerous frustrating operational issues. The project's remoteness exacerbated the many challenges and added to problems with shipping logistics and container supply regularity. The latest announcement provides no concrete evidence that these problems have ceased. Management was expecting breakeven cashflow 18 months ago, however the company continues to burn large amounts of cash. Price action in Minerals Corp has deteriorated further during the last four weeks with the shares hitting an all-time low of 1.8 cents. While we have exercised considerable patience with the company, we see no indication of a sustained recovery in the stock. Given the latest bout of share price weakness and the lack of progress in the March quarter results, we can no longer justify maintaining a position in Minerals Corp. Accordingly, we recommend Members sell their remaining holding of stock and options around 2.4 cents and 1 cent respectively.
MSC Price at posting:
0.0¢ Sentiment: None Disclosure: Held
