nustar mining

This morning I finished acuumulating a stake in NMC. I bought a swag in late May, and have topped up now. This is not an 'exciting' stock, given there is not likely to be any exploration news for some time (and its not going into uranium that I know of).

However, if the market in gold companies stays reasonable, it should be a steady performer. It has started gold production, and early announcements indicate that everything is positive, particularly grade reconcillation, which was perhaps the main risk (ie mining dilution due to ore geometry). The advertised first year production is at around 80,000 oz @AUD325 an ounce. However, I suspect there is some spare capacity at the plant and I wouldn't be suprised to see NMC try to increase throughput up from 250,000 tpa to say 275-300,000 tpa.

NMC have a strong hedging program, with about 60% of the first three years' advertised production hedged at around AUD625. They also have substantial (about AUD45 million) tax losses - this all leads to very strong cashflow.

The issue of the share register presents both opportunities and risks. SED, SBM and STT all have large holdings, although the last two have sold down considerably. There could be the perception of a share overhang in the short-term. Alternatively these holdings would provide a way in for a potential predator.

Just my thoughts.

angus