Ann: Financial and Operating Update, page-2

For once, I got this right. I recently predicted more pain for the mining services sector and sold all my TTN and SXE (about a week ago). SXE promptly went up the day after (which is on par for me), but now this result has come out and down they come.

I will repeat my warning again. The pain in the smaller end of town for mining services has not ended. There is less work out there, being more competitively priced. Companies that built up overhead structures that are now not sustainable are going to suffer. If they are offering not much more than glorified labour hire on do and charge basis, what do they have to offer to clients , and what value are they in a take-over sense?

And to those who think a move to infrastructure projects will save them, be warned, the margins on infrastructure projects were always less than mining, and will be further squeezed by more people competitively bidding on the same work.

Talk of reaching the bottom for mining services is optimism in the extreme. For some of these companies, there is no bottom other than going broke.

I have paid a heavy price having lost 50% of my investment in SXE, and do not get any satisfaction in the share price dropping, other than I no longer own them. Good luck to anyone who is buying them. You are more courageous than me.