AWC have a 40% stake in AWAC. Their business model is they receive cash distributions from AWAC and pass these onto their shareholders.These distributions are determined by the margins on what they sell their Alumina to what it costs to produce. half yearly reported a $73US a tonne giving us approximately US 2.8C per share with a slight year on year increase in production. The margin hence cash distribution is determined by the alumina average price.
Moving forward, we know that the current LME alumina price is $295 a tonne, ATM. Best estimate at this point is the Alumina realised Price will be in the order of $295 or higher for the second half of 2020 assuming the Alumina cash cost will stay the same or become lower due the centralizing of all business units being controlled by Pittsburgh, US.
We now have a statement by Jerome Powell averaging inflation at 2% instead of having a ceiling of 2%. (Strong language). Me thinks the US are going inflate their way out of this debt and try and put the inflation genie back in the bottle later to save Donald's behind.
We also have the following articles from a Eureka report
(protected link),"
Following a speech by New York banker Adam Rozencwajg in Zurich which highlighted that commodities are poised for a boom, Tim Treadgold explains the view that a look back at 100 years of financial market history indicates that commodities are currently undervalued and a change in monetary regimes is upon us."He then goes on to state "
The recent years of benign commodity prices is ending and going forward we will have to contend with rising prices. Inflation is coming back, something few investors are prepared for.”
To my way of thinking, I am accumulating basic commodity stocks that pay dividends at the lowest point in their price cycle as I am fearing a commodity boom. With Iron ore and Copper already well priced, I see this stock a potential to ride the upcoming inflationary boom that no one really wants.
The biggest downside I can see is the lowering of the US dollar,however, the Aust government will have to follow or make us totally un-ccompetitive in all our exports.
All opinions welcome!
