Good News & Bad News, page-2255

Twiggy’s second coming was a mixture of luck and determination. Luck from this Chinese once in a life time economic growth and his ability to Fung billions to built the rail.

Like all booms, companies usually pile on debt because it is freely available and spend less time worrying about coatings. He survived the downturn in IOP twice and in both occasionss Chinese came back to rescue rescue from mutual benefit as they wanted a continued economic growth.

Both Ken and Twiggy are sitting on solid geology and both had teething problems with extraction. FMG had to completely change their mining method in order to control cost. Ken is just starting to address operational issues with the rapidly falling Spod prices. AGO resource was fine as stand-alone but bulk mining require transport infrastructure and we can see road trains was only a solution in fat margins.

The lesson here is alll about cost to survive a down turn. ORE today showed the hydroxide prices it receives is still falling from last qtr. If PLS can survive this down turn it will have a bright future provided the external macros being global growth finds a recovery. As it is economic modeling theory has now evolved to the 3rd generation and I don’t know how the debt pile can be mitigated.