In light of this situation:
Posters who are not holders and keep talking about VA and death should show respect for Ago, its shareholders, and its many employees in this difficult time.
Atlas has made the right decision to stop production to review its situation and until IO recovers.
I do believe IO will recover this year hence the cyclical 'strategy' squashing IO competition at the bottom to cash in from the next bull cycle. US and India cities are about to fire up (from this year).. Read the stories online. China also focusing on infrastructure to India. Eg long tunnel through Mt everest.
Australia is not doing enough to protect the local industry given the reliance Australia has on mining.
Holders are disappointed with the global IO predicament driven by corporate greed.
Considering Abbott says Australia is open for business he has a s_ithouse way to show it considering the current IO predicament and a struggling local 'Australian' mining industry.
I'm still confident a solution will come forward and Ago will rise again.
VS and production halt provides more options now, rather than later, especially if other juniors raise the white flag later.
At least Atlas is first in best dressed for negotiations and buys time till IO fires up.
Possible options for AGO?
Become profitable at all costs and renegotiate contracts where possible. Cut the fat for the next upturn.
Sell assets / port allocation to help pay off debt and keep money in the kitty to ride out storm. Debt not due yet.
Diversify.
Don't start production too early until profits are certain or shorters will jump on any negativity. Hedge a portion of IO just to be safe once futures turn with sediment...
Focus on Centauraus where its cheaper to produce.
Focus on emerging markets instead of dwelling on chinas growth. Global markets will grow post GFC eg. US (refer to stories below, as the US are showing good signs), India starting construction on 100 cities this year apparently (new China?), SEA and Egypts new capital in near future. Demand? Yes.
Merge with another junior eg mgx
Be bought out by a major or find a partner who sees longterm value in the assets.
CR.
What about?
What about the Government support local miners by getting dolers to work on the mines helping Aussies stay competitive.
What about the Government support a 'short' tax on top of capital gains for shorters who profit from shorting and driving down SPs. Double whammy tax. What do u think longs?
External forces to the upside:
New demand on the rise
US (stories by Myles Island 9 April 2015):
'US truck tonnage surging'
Google business insider story.
'US crane construction activity'
Google business insider story.
Beijing wants to dig high-speed railway through Mt Everest: Times of India
India's - building 100 smart cities from this year. (Deccan Herald story)
Australia needs to focus away from China and look at exciting emerging demand and new customers. Eg US, India etc. IO global demand outside of china IS on the rise which will help longterm rebalance.
Predatory Pricing and TPP
Great read Neoteric regarding 'Predatory Pricing'. Will the majors fall into this category soon?
US are not a fan of IO dumping (google stories on this eg Minnesota, Congressman Nolan) along with impacted competitors. With reference to Predatory Pricing and the TPP is there anything in the TPP trade agreement which would cover government / corporate impacts from supply dumping practices driving competitors out of the market in the name of 'free market'. Are there ramifications down the track with the entire globe being negatively affected. Companies and governments need to act responsibly for the industry and its peers. There needs to be accountability and global governance. Will shorters / hedge funds aggressively driving down SPs and sediment be scrutinized? ACCC need to stand up... and start governing in the name of fair trade for all not for the almighty 3 or few.
You never know, maybe the Government / ACCC may wake up with amnesia in the morning forgetting where they slept realizing they need to step in and support local Australian companies in the interest of Australia, its industry, its resources and its people who work and support local mining.
IO prices and supply
IO price is oversold. Nothing goes this hard down without a rebalance no matter how hard speculators are driving it. Especially downplaying the same old boring China story.
IO supply is slowly leaving the market even though China now are trying to prop up their domestic market. What about emerging demand? Eg India, SEA and US
Chinas housing.
IO china demand may steady and maintain a healthy level of growth from recent policy changes. My bet is chinese housing figures will improve from recent policy in the coming months as results don't happen overnight.
Rates and Aussie dollar
Aussie dollar due to fall further. Its inevitable. US are ramping up growth, rates will rise soon. Aussie dollar will fall.
Predictions this year - Going against shorting naysayers I predict several occurrences this year:
By end of year IO will bounce up to 60-70 per tonne with renewed demand supporting the IO price.
Aussie dollar will fall to the high 60s as the US raises rates.
India will start major construction later this year and its demand will at least double from already increasing growth. China will ramp up infrastructure to tap into opportunities with growing neighbors further assisting global demand.
Chinas housing will stabilize from recent stimulus measures.
US will continue growth in construction and infrastructure.
Shorters will be caught out banking on IO industry being 'doomed'.
Ago will survive and prosper along with investors who backed it long.
My points are of my opinion. DOYR.
