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Ann: Quarterly Activities Report, page-35

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tanon

3,142 Posts.

103

02/08/18

07:29

Post #: 34680960
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Originally posted by savvyinvestor ↑

i see as few reasons for the dip over the last couple of days.
1. as per my post just hefore the quarterly, i was worried ore would be ‘cagey’ on guidance given their track record of missing. at the july 2 conference call RS said it would be higher than fy18 and that further detail would be provided in the quarterly. yet they gave the same vague ‘higher than fy18’ guidance in the quarterly again. the market generally does not respond well to a lack of specific guidance, especially in a company that has always previously provided guidance. they have also been confident of hitting nameplate soon, but the vague guidance suggests it could be only marginally higher than fy18 so 14,000-15,000 is realistic (rather than 16+).

2. the plant shutdown for a couple of weeks will put a minor dent in production (say 600t for 2 weeks based on their recent 300t/wk run rate). the effect of salt extraction from lower ponds on production sounds like it will be negligible due to using the new phase 2 ponds as alternative storage locations temporarily, but there is a risk this could have a minor effect on q1 production.
z
3. there is a subtle change in the published timeline for phase 2 expansion, with the FID being pushed back from mid to later 2019 and commissioning date pushed back from late 2019 to early 2020. we all know this will probably end up being mid 2020.

4. the final factor to compound the issue is that the chart looks ugly now. i talked the other day about the key support level between 4.80-5.00. ore fell straight through it and the is no key support level until around 4.00, although support may hold around 4.50. technical traders will not be buying and shorters will be trying to push it lower to scare off nervous investors and force fear selling/ stop losses.

good news is that the actual fundamentals of ore are great: they are strongly cashflow positive to the tune of up to 130-140mill based on 14-15000tpa and 9-10k gross margin, they are cashed up and fully funded with phase 2 and lioh generally on track. the ponds and plant are working well. lithium prices are buoyant and will remain so at least in the medium term. ore is at the bottom of fhe cost curve so any price weakness in the early 2020s will drive hard rock suppliers broke and will stop new investment in supply plus stop juniors from developing/ and big miners from expanding. ore will remain highly profitable and debt free in that situation which may give it opportunities for cheap acquisitions of high quality tenements.

so while i havnt bought any more to my overweight holdings yet, i will be looking to buy on the lows for a long term hold over the next month or two. if i can oick some more hp in the low 4s that would be ideal.

any medium to long term holders should be feeling comfortable not nervous and also looking to top hp if they have spare cash and a patient outlook. all imho only of course, dyor.

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More or less what I think and more or less what I did. ORE being an exception to my general bias to reduce in this phase of the market cycle. Still be aware of all the risks of ORE but ORE still a good option in this space.

ORE Price at posting: $4.55 Sentiment: Hold Disclosure: Held
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