i think its unwise to ignore a large short position as its building hence i reduced previously at higher levels of ore, but i think the shorters know they are nearing the bottom havingpushed it down to around high 2s.
if the outlook is below expectations then they will hold for the initialpanic selling then slowly exit their short positions over the next 6mo in the mid 2s.
i am slightly underweight ore but with an average around 3.00 and knowing the volatility, im happy to hold even if guidance disappoints, then ill add once it bottoms out in mid 2s in preparation for it to turn the corner back to mid 3s.
my prediction is that the guidance will be for annual production to increase significantly in q4 cy17 and q1 cy18 so they should get close to 15,000t for the 17-18fy and get close to annualised nameplate of around 4,000-4,500 tonnes in a quarter over the peak evaporation period of next summer q1 cy2018.
that gives the greenlight for phase 2 and signals exit stage left for any shorters left hanging around too long.
i dont see the need for an offtake agreement for current production but if they could secure an offtake agreement combined with upfront funding for phase 2 now then they dont have to wait for nameplate and dont have to worry about paying high interest rates on debt or raising equity etc.
perhaps something is brewing and that is why it popped yesterday, or perhaps it is a reaction to big 4 buying up / doing jv's with other small aussie players
ORE Price at posting:
$3.31 Sentiment: Hold Disclosure: Held
