excited

I am very excited about the coming month for this stock. After having some second thoughts about the price of tin after last weeks fall, I have come to the conclusion that the fundamentals remain so strong that the tinheads are in for a very sweet ride. It seems China has no interest in exporting tin. And when you think about it, why would they? They are trying to buy up every metal out there, taking stakes in Australian mining companies, both current producers as well as companies with large deposits. This is the case for EVERY metal out there.

I ask myself, so why would they suddenly want to start selling tin? I concluded that they wont. Analysts have been saying for the last few months that now tin prices are so high, China will move back to a net exporter. Well I disagree. The last two months of data, while tin has been at record prices, show that they have not moved back to a net exporter. China clearly has a very, very long term outlook for its industrialisation and is securing long term supply of every major commodity, therefore I believe they will do the same with tin.

I also believe that Indonesia have discovered their pricing power. After shutting down all their illegal tin miners, the majors there are holding off their supply to keep prices rising. Their mine lifes are not all that great so they want to prolong their supply, while generating higher prices in the short term. I dont see them suddenly dumping a whole lot of tin onto world markets anytime soon. The largest miner there is owne by the government, therefore they can control the entire Indonesian tin mining industry and all evidence suggests they are going to keep supply constrained.

At this point, the world is consuming more tin than it is producing, with a shortfall of 9,000 tonnes in '07 and a forecast deficit of 13,000 tonnes in '08 (Bloomberg). Also according to Bloomberg, production outside of Indo and China, the two largest producers, production needs to double by 2012. There is a great deal of talk about old mines being re-opened etc, but from all my reading (which is a lot), MLX is in the best position and the closest to re-commencing mining with a scheduled date of sometime this month. Given my belief that we are in for a sustained period of high prices for tin, ie. the next 2 years at least, the timing could not be better.

There are some other tasty catalysts for this stock to surge in the short term. The feasibility study on Wingellina is also due out some time in the next 6 weeks and I have a very strong feeling that we are going to see a resource upgrade somewhere in that time as well. The company has been hinting at this for some time.

Also, anyone see WGR today? Up 52%. MLX is the major shareholder here owning 29%.