At long last we are starting to hear some positive information for Boart. This latest contract win in Chile sounds like a big one and it is BHP and RIO who are employing our company. They would not want the largest driller in the world to disappear.
We are hearing of many of Boart’s competitors getting out of the way. Emeco has just announced that it is moving out totally from Indonesia and Boart is involved there. Major Drilling has withdrawn from Australia. Private driller, Tom Brown Drilling Services, has gone into administration. Incidentally Stoeger drew attention to the last two in the Ausdrill link and declared a buy sentiment, but didn’t bother to mention them here. Perhaps they were too positive for him to draw attention to on the Boart link. If Stoeger is considering buying Ausdrill, then his view towards drilling companies has changed and is not what we see here. The reason I have posted so much on Boart is because I saw Stoeger, a short seller, talking it down all the time. I am not a fan of short sellers particularly those who try to drive a troubled company broke.
I do think that Boart saw the size of this mining disaster earlier than its competitors. It wrote assets down, did an enormous reduction in staff and reorganised its debt quickly. It certainly hurt our share price more than the others, but when the recovery comes, if we are still alive, I do think we will move upwards faster and further than our competitors.
Seven percent of Boart’s work is in nickel mining and the nickel price has gone up more than 50% in the last six months. I think we can expect that 7% to double over the next year because nickel drilling will recover much more quickly than the other metals.
Chartists are likely to start coming back to look at Boart in the short term. Aussie Bulls charting has been talking about bullish resurgence in Boart over the last three days and I would be willing to bet that it will declare Boart as a buy tonight. Aussie bulls can be seen here Aussie Bulls
The 2014 first quarter has been a very tough period, to some extent because of the North American bad winter weather where 40% of Boart’s work exists. The bad weather has gone. Hopefully the gains this quarter will be double what they would have been if that weather had not held back the first quarter.
Europe is recovering strongly from its economic malaise. The German Dax and the British FTSE are both at all time highs. I saw a comment recently that London has more billionaires than any other city in the world which rather surprised me. With this recovery in Europe, we are going to see expansion and more demand for metals over there. The Dow is also at an all time high and America continues to grow. Even China doesn’t appear to be slowing as much as was feared and recent government announcements have been positive. The world is now looking the strongest it has been since the Global Financial Crisis. Surely mining will not continue to fall in these circumstances.
The short sellers attacked us last week after the quarterly report announcement. I did not think the report was that bad considering the tough quarter it was. The short selling figures are announced by ASIC four days after they occur so we have just received last Thursday’s figure which was the day the quarterly report was announced. Short sellers have now sold 46.6m or 10.12% of Boart shares . Tomorrow’s figure is likely to be higher again because the short sellers hit us last Friday as well. These guys have to buy those shares back at some point and the things mentioned above will surely start to put pressure on them.
The annual general meeting is on Monday and by issuing its quarterly report beforehand, Boart has already given us the bad news. Today we saw the first of the good news and let’s hope they have some more good news for us from now on.
GPASAS
BLY Price at posting:
23.2¢ Sentiment: Hold Disclosure: Held
