They were getting average nickel prices of $7.45 per LB in Q2, based on prior month adjustments.
The current price is $6.34 per LB, so based on the lag factor, you are only going to see the full effect of the current lower nickel prices appear from Q3 onwards.
They have to repay the $50m equipment loan in the next year, so cash comes down from $108m to $68m after that.
The key question therefore is can they service the bondholders interest of $35-40m p.a., plus capex and other central costs, if the nickel price remains at current levels ?
This could be tighter than it first looks.
High reward, but high risk too.
MBN Price at posting:
8.4¢ Sentiment: None Disclosure: Not Held
