Don't know if anyone else has made comment on the issues, but a fund manager on the resources side the other day suggested that they (the management) took some short cuts on the plant-in the concentration circuit-to keep cost and time overruns in check.
Not surprisingly these short cuts have bitten them on the 'bottom'.
To keep the tonnes up they have sacrificed grade in the short term as the incomplete circuit is not yet adept at treating the higher grade ore with different copper levels included.
This is supposedly being rectified but will not show through until much later in the year when some of the higher grade stockpiles can be treated.
They fell for the old trick of trying to keep the market happy by controlling costs, but then annoyed the market shortly thereafter when they blew their production targets-going to get shot either way. (Better to bite the 'bullet' on the first shot?)
Then the situation only compounds on itself when the market retreats across the board-which it has.
Is the price approaching a 'bottom'-probably unless something else pops up . (And the gold price is still around A$550-the same range +/- A$20 for the past three years!!!).
Not an easy one for traders for the time being, but a potentially interesting one for investors in coming weeks if you assume a recovery in operating performance later in the year.
(The next leg of the resources boom has been diarised to start on 28th June-it is a Tuesday so there will be a lead from Monday's Wall Street news, tax loss washing will be complete, the metals market would have factored in summer destocking in the northern hemisphere,and I SAID SO !LOL)
Cheers,TAS
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