more positive news on tantalum

Sons of Gwalia
More positive news on tantalum
[3 pages; Company update]
As evidence accumulates of a building tantalum recovery, SGW's leverage should be appreciated. Global electronics are recovering and tantalum capacitors appear to be achieving some pricing power, in parallel with volume gain. The first stage of the recovery showed volume growth, but at declining prices. A recovery is clearly occurring, although it is too early to call the magnitude or sustainability of the cyclic upswing. The spot tantalum price remains well below the current contract price. Investment in SGW should encompass a view on the balance sheet, the tantalum and gold businesses, the management and the board. Post the placement the balance sheet is stronger. Tantalum is too early to call with confidence and now suffers from the higher FX. Key management and board positions are yet to be filled. We are warming to the stock, although we believe that further uncertainty removal is necessary before calling the price higher