The key to this is grades. As grades improve, recovery rates will rise, but costs will stay largely the same. The AR said ave grades for this year of 0.88% and for rest of life 0.99%. These figures are on the low side given what the Eagle Research report of Oct 2008 said. I have asked David Round for clarification - I am hoping they are just being conservative given the problems they had last year maintaining grades. I understand they have a stope currently which is at 2% plus. An ave grade of 1.25% with recovery rate of 75% gives annual Ni production of 8437 tonnes, whereas 0.88% at 60% recovery gives 4752. That is a difference in profit of $68m (working on $12/Lb and 30% smelting charge)
It is not clear whether the company received any money for by-products last year, so there maybe some back payments to come.
What I think would really help is for the figures to be presented in a clear and unambiguous way that mere mortals like us can understand. Then they need to get the message out to the wider market eg has anyone seen the company mentioned in any mining or an investment publication?
I believe very few people are aware that the company still exists, which is why when they release good news about saving $4m on the new mining contract, volume remains pitiful and the SP goes no where.
Nur0 and I have been promised that things will happen soon to correct this, however the previous company sec promised a marketing campaign before relist that never happened. We were also promised the LOM (which should clarify a lot of the figures and include an upgrade on the resources) a few weeks after the quarterlies, that was 2 months ago.
However I think it is worth being patient, even though it is exceptionally frustrating, and if you have spare cash taking advantage of the current low SP to top up. The full LOM is still to come, they have had some brokers out to the mine with more to come later in the month, so sooner or later we will know what the mine is really worth and hopefully the SP will rise to reflect it once the wider market wakes up to their existence
ALB Price at posting:
12.0¢ Sentiment: Buy Disclosure: Held
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