1. Lennard Shelf has always been the jewel for Western Metals. It has been a very profitable mine though I hear is now down to 3 or 4 years of minelife. I think you will find SMY are amongst a swag of potential buyers. The article was pure gossip mongering. The reality is the price that anyone pays to get the operations will determine whether it is good for the company or not. And SMY may not even end with the project.
2. SMY have hedged 2 years of production out of minelife of 7 years. Its pretty typical for banks to require new mining projects to have hedging just to get the finance so SMY probably did not have a choice to hedge or not. And hedging at current prices is not such a bad thing when you think that SMY did their Feasibility Study at US$3.25/lb and the current price is over US$4.25/lb.
3. The continous placement of SMY shares is a concern. Hopefully the need to find cash to develop their project is now completed. I think you will find that this latest announcement came from a placement of some weeks ago. However if SMY are trying to buy Lennard Shelf you have to ask where are they going to get the money from.......
Either way SMY's market cap is still way under the NPV for the project announced when they finalised their finance with Macquarie. Since then the nickel price has marched even higher.
I think SMY is an 80 cent stock and will be so in 12 months time when the first nickel hits China.
acturtle
SMY Price at posting:
0.0¢ Sentiment: None Disclosure: Held
