It is well worth printing out and taking the time to read it.
It paints a very different picture to all the other price forecasts. Who is correct? Who knows. (But Simon Hunt is well regarded.) But as shareholders in OZL we should be aware of what may happen and have a strategy that we can execute if we need to.
The forecast of $5,500/t of copper by Qtr 4 is a price of $2.50/lb. OZL is quite profitable there, as are most other copper miners.
The forecast of $1,500/t by 2016 is scary. That is 68c/lb. That puts ABY, EQN, KZL and HGO out of the game. It also makes OZL marginal (at current C1 cash costs) and PNA would probably have neg cash flow.
I harp on C1 cash costs. I do this for a reason. More than anything else, it is what makes or breaks a company. Base metal commodities are volatile and only those companies with C1 cash costs at the bottom end of the scale will be there for the long haul.
I suspect that TB understands this. He has been around in both the high and low copper prices and his prudence in making sure that any acquisition is good for the long haul means that he does not appear to be doing a Wolfden or Allegiance.
HT1
OZL Price at posting:
$16.95 Sentiment: LT Buy Disclosure: Held
