At this moment we're sitting on a solid nickel price of $11.42/lb (up 1% so far today). Roughly $6/lb profit at this price. Assuming 35,000 tonnes (77.2m lbs) of production and 60% ownership by MRE (46.3m lbs) that's $278m profit annualised. That is assuming $11.42/lb average price for the year though, assuming average price of $10/lb that's still $230m profit per year. So far this year we're on track for about $10/lb and today we're at $11.42/lb - both great figures.
Assuming $10/lb average price ($230m profit for FY2011), and today's market cap of 1.13B that's a PE ratio of 5. Good value in my opinion. Fair value in my opinion is $1.50 to $2.00, not saying it'll reach that point any time soon though.
You definitely have to be patient with MRE though, the slow moving cash cow. Generating stacks of cash day by day, but with months in between price sensitive announcements.
If only I was more patient...I need another hobby other than waiting for announcements!
MRE Price at posting:
97.0¢ Sentiment: Buy Disclosure: Held
