Last Update - 25/10/2004 MRE delivered another strong result in 1Q05. Nickel production from the 60% owned Murrin Murrin operation was a record 8,156t, eclipsing the earlier record of 8,042t set in June 2002. Nickel production was up 37.1% on the previous quarter and 5.1% on the pcp. Packaged nickel was not quite as strong, up 8.0% on the previous quarter to 7,420t. Repairs to the nickel briquette cooler limited the output.
Cobalt output was strong at 576t, up 48.8% on the previous quarter. The quarter was the second best on record for cobalt production.
In September, the ATO issued a favourable class ruling for the proposed 20c capital return. Shareholders will vote on the capital return at the AGM in November.
Business Impact: It was pleasing to see MRE report record nickel and strong cobalt production. A moderate increase in output will be required for the company to reach its FY05 Murrin Murrin production target of 35,000t of nickel. The favourable taxation ruling for the capital return is a positive for the stock and shareholder approval now appears a formality. The record date for the capital return will be approximately one week after the AGM, with payment at the end of November. We expect the nickel market to remain strong for at least a year and the short term outlook for cobalt is positive. As with nickel, supply tightness dictates the prevailing strong cobalt prices, however, the metal is produced in relatively small quantities and is subject to volatility. Nickel has also been the most volatile LME traded metal over the last 20 years. At the end of September, MRE held $183m in cash and was debt free at June 30, 2004.
Forecast Impact: --
Recommendation Impact: Upgrade due to improved production performance and outlook. Nickel and cobalt prices should remain supportive, but the commodity price volatility must be borne in mind. (Last updated: 25/10/2004
Event Analysis
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^100% of Murrin Murrin Production. MRE is entitled to 60% *1Q05/4Q04
Go you good thing..........................some people got no idea
MRE Price at posting:
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