A little late at night when I picked this up but here goes:
2007 earnings estimates have been steadily rising and are now at a $1.049 average with the last 5 averaging $1.13 and the stock now trading at a PE below 7.
Profit for the half will surprise to the upside of brokers estimates given $45 K average nickel price.
Dividend for the half should (and I say should be given the pile of cash generated) be somewhere between 40-50 cents.
No major problems with plant announced but we are still awaiting a number of upgrades to plant during the shut and therefore I would suggest that production will surprise to the downside off the back of some no doubt minor problems (as there always seems to be).
There are clearly two schools of thought in the market at the moment on nickel market prospects and the market is currently reacting largely on sentiment to the downside case. Share price targets reflect this and vary enormously from $10.50 down to $5.00.
The wild card we hold up our sleeve is a potential takeover by xtrata and it is not unreasonable to see a potential escalation in value similar to the Lionore takeover. Last months share price strength correctly reflected this and it is very likely that we would see a rapid retracing to the upside at any hint of corporate activity.
Heap leach is on track and we should get all our expansion news in the second half.
It may have been an idea to take some profits above $8.50 but now the issue is when to buy given the dividend and heap leach prospects and potential take out in the next 6-9 months.
Hanging out for sleepy time!!
Regards Eos
MRE Price at posting:
0.0¢ Sentiment: Buy Disclosure: Not Held
