If the cost is not "significantly reduced" (there is no hope this could happen unless diesel, labour, plant, equipment, taxes, interest on a mountain of debt costs nothing) and Ni prices stays at the prevailing rate then MBN will not be priced for another round of massive capital raising but rather for "bankruptcy" (around 10 cents).
Don't dismiss this. Nobody could believe Bluescope steel to fall from $13 to 0.39 cents. MBN shares are so diluted they make BSL ones look like lard.
The low grade and high cost is a double whammy. Western Areas has an average of 5 per cent nickel in every tonne of ore it mines, compared with Mirabela, which has 0.55 per cent. Western Areas' cost of production is about $US3 a pound according to:
MIRABELA, Mirabela on the wall, who is the fairest of them all?
The answer isn't Mirabela Nickel (ASX: MBN), whose shares have fallen 37 per cent in the past month and almost 70 per cent in the past year.
It is battling a nickel price that has dropped about 40 per cent over the past year to $US7.90 ($A7.63) a pound, and increasing costs at its Santa Rita mine in Brazil.
Its cash costs are $US7 a pound, so it's barely profitable.
MBN Price at posting:
44.9¢ Sentiment: Sell Disclosure: Not Held
