I am rather disappointed that I was in Perisher on Friday at the interschools when the production annoucement was made and the panickers drove the price into a very nice buying range. (We did win but I came back with the flu!)
Three of my predictions on my 7 July posting have come to fruition (Ni price at 28,000, the share price at $2.30 and an indifferent production in Q2)
After adjusting for the shut in April, the production was slightly more than Q1. Of significance, cash grew by $40 M (or around 9 cents per share). I am not sure whether all of this related to production, but it is still better to have the additional cash than not.
With $110 M of cash, a 10 cent dividend at $46 M could be easily funded. One broker (Citigroup) has predicted 12 cents.
As stated in the quarterly, Minara are projecting 17-19,000 tonnes of production for the second half. Based on today's Ni price of US$28 K and the current $US/$A exchange rate, the 19,000 production figure would translate into a pre-tax profit of A$300 M for the half. Because of tax loss utilisation, there would be no tax paid on this figure.
This is the best possible result, but I do believe that the Ni price will come back a little, the A$ may creep up and the production target may not be achieved.
All these factors will reduce profit, but there will still be a very large profit in the second half any way you look at it. (Remember, most brokers are using a Ni price of US$ 15-16 K in their models).
Regards Eos
MRE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
