It would be naive to believe that today's sell off is due to government's proposed new resources tax. The sell off in BRM began the moment BRM came off the trading halt a week ago. Today, the sell depth built up to about 900,000 but gradually worked down to the 550,000 level that it's been since early last week. There's a big holder who has been selling off, and today just exacerbated the price drop. I don't expect the price to move north until the big seller has sold off their holding. Who knows what the SP will be by then, but I'm expecting it will drop back to the $2.80 mark - to about the point where it was when WNH decided to up its stake. In respect to the effect of the tax on the NPV, I'm expecting the buyer will have to wear the additional cost. After all, even with this additional impost the Asian buyers may still find buying iron ore from Australia is not more expensive than that from Brazil once shipping costs are factored in. Anyway, the tax may not end up being passed by the Senate or there may be a change of government before the tax's introduction in 2012.
BRM Price at posting:
$3.25 Sentiment: None Disclosure: Held
