While I won’t quarrel the price ranges you’ve pointed out in the timeframes you’ve chosen, I might point out that the timeframes themselves are irrelevant. See, it would also be accurate to say that after the Dec’ report the price was at a 12 month high in just less than a month, where it remained for a four week period. And while after the March report the price indeed retraced to .80 cents this was surely not due to the report alone. To make that assumption would be to believe that quarterly reports are the only factor influencing price, so we would have to attribute the meteoric rise from then to now to this weeks report, which would be foolish.
I agree that the net cash-flow should be somewhere in the -$60-65m range. If the company is correct though- and there are no ‘other’ surprises (like last quarters GPC payment which we see this week), then the Exxaro cash should come through for the next quarter, which will produce a $15m surplus, not a $5m deficit. But that’s too far away to calculate.
It’s worth noting that the oil hedges have reset for the financial year this quarter. Linc is committed to sell 326,724 barrels this year for $86.96. That’s the first 900 barrels a day, every day, all year. It’s down 100,000 barrels on last year and up a few cents. Still, we won’t see the full benefit of an increased oil price.
LNC Price at posting:
$1.70 Sentiment: None Disclosure: Held
