Quote Sally_Will: "Only some will understand the history, but thanks Vale (to a certain extent) for presenting this tremendous opportunity to Ardea for further critical mineral exploration".
Decisions made by strangers in the past have affected us financially now.
What does the future hold for us as present-day strangers continue to make decisions?
Another giant, BHP, is clearly changing focus due to global pressure on decarbonisation.
It has sold its O&G business to Woodside, and has stated that it will sell its coal business in the near future. Whether that's just the energy coal or includes metallurgical coal is not yet confirmed.
What's left at BHP are the iron ore business generating 71% margin from US$21.7B EBITDA, copper business generating 61% margin from US$8.6B EBITDA and nickel business generating 23% margin from US$0.4B EBITDA.
Due to the relatively small EBITDA and low margin, BHP has tried unsuccessfully for years to sell its nickel business, but there were no takers for the asking price.
Over the last year, the momentum within the global move towards decarbonisation kept increasing, leading to BHP investing heavily into its Ni business at Mt Keith and Leinster, both located in WA. Its impending purchase of OZL complements the Ni investment.
BHP's Ni resource is huge but still less than double that of ARL's at KNP. However, KNP has yet to be drilled out. Blue sky potential there.
When ARL's DFS is finalised and announced, I won't be surprised if BHP peers at KNP's projected EBITDA and margin with a keen eye.
Afterall, Mt Keith and Leinster are not too far from KNP, especially with the Goldfields Highway connecting them.
Should the DFS numbers be significantly more compelling than BHP's Ni business, ARL will likely get a couple of knocks on the door. When that happens, at least ARL's Board has the benefit of learning from OZL's Board on how to negotiate with BHP.
Will I sell my shares on the news? For the right price, yes.
For reasons of conservative investment practice, I prefer to lock in the capital gain for channeling the funds into buying a good house with land in a good location as a rental business. That way, I'm in full control of my investment, with predictable rental income and high probability of future capital gain.
SHs are never in much control of the companies whose shares they hold. We may hold it, but we still don't own it. So we buy shares using a small capital outlay and hope for a large return to do our thing with it. That initial outlay made by the average investor is generally not enough to buy a good property.
In any case, having a good BOD and management team today and tomorrow is no guarantee of having the same quality a couple of years later. Good BODs and management teams have lives too, and they will move on when the time is right for them. I have seen cases of the not-so-good replacing the good. But we usually don't know until it is a little too late.
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