Ago & ALco have something in common from memory, unsustainable debt when events outside of their control hit them. Ditto MFS, Centro. If you said you could have double your money on AGO then you must have bought post the collapse. You reckon any LT holder’s in PDN are seeing green shoots in their capital?
The point in this PLS sell off isn’t devious shorters but the risk of sustaining the debt through cash flow. Single mine operation with a design flaw which I assume refer to recovery issue + customer having conversion issue and the only option for the company is to optimize the situation by downing tools to fix by buying idle time is what I think the confidence is temporary shaken.
On the bigger picture I focus on sector consensus therefor it’s peers are seemingly in the same position wrt price trend suggest something else at play since those peers are multi mine operations so cash flow risks are spread around. So that layer of bearishness is the underlying commodity price. I’m sure the AGO LT investors were pretty certain at the time that IOP will not head to Zero but didn’t expect it could stay lower than their cost for longer. It is the latter that destroyed valuation!
Could it happen all over again? Sure it can. How likely? Depends how long Li prices stay low and if that length of low below cost price of production time is. This is a high beta stock leveraged to the margin. It can shoot both directions aggressively. I’m not inferring Pls is making a loss currently.
So I agree with beautifullife that PEr is a very useful measure sometimes to keep euphoria and doom in check.
PLS Price at posting:
48.5¢ Sentiment: None Disclosure: Not Held
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