When a company has a low share price, shareholders have justifiable reasons to be grumpy. But from my perspective there are reasons for optimism:
- costs per pound of nickel have, and are coming down. This translates into higher profit. The company can't do much about the high A$ or the nickel price, but it can control its costs. Which they are doing.
- The Directors are putting their money where their mouths are. No one buys stock in reasonable amounts just for the fun of it. Rightly or wrongly, Directors see value at current prices.
- Closing in on higher grade horizon at Mittel. (June). This will translate to higher tonnage of nickel mined and further reduced cash costs. More nickel from the same amount of dirt moved = extra profit.
- And a strong cash backing that supports ongoing exploration, new resources and resource to reserve replacement. MCR has been able to pay consistent dividends, and not once has had to go back to the market for extra cash, because they keep finding more nickel and keep mining it profitably.
- The buyback may not support the price, but it beats the hell out of those companies who do more mining of the pockets of small shareholders than actual mining. The value it creates per share may not be visible, but little by little each share gets more valuable intrinsically.
Companies like MCR don't make huge profits when commodity prices are down. But that is precisely when their shares are the best buying. Tiny EV, heaps of cash, and with cash costs coming down. 70 cents, in the fullness of time, will like a real bargain.
IMO, MCR remains an excellent risk/reward investment for those who are contrarian investors and can buy against the general sentiment.
Yaq
MCR Price at posting:
70.5¢ Sentiment: Buy Disclosure: Held
