I don't actually hold a negative disposition towards MCR. It is just that after the pon collapse and GFC I realised I couldn't handle the extent of profit volatility you get with a miner as far up the cost curve as MCR are.
Actually I don't think their North Kambalda operations are too bad, but the southern ones can hardly have made a dollar in the past 2 years, after allowing for full lifecycle cost of the reserves mined. I am excluding any hedging benefits from that assessment.
It's a very volatile business model that far up the cost curve, but when things go right, as in 2007, then it's a monster cash cow. However as you've posted on another thread, there are good reasons to see the pon as very much capped this time round, plenty of iddled capacity etc. That is why I will stick strictly to high margin players. Of course with MCR the hope is that any USNOB they find, perhaps north of IGO's permits, will be of similiar grades to Long, or better to Moran. I suspect that if they do, the first market reaction would be to assess the value in terms of MCR's overall margins - possibly presenting the alert to opportunity - but at this stage with MCR we wait.
As for MAE, wouldn't have touched, but been sucked into plenty of other oilers over the past decade, mostly been lucky to get out with most or all of my original capital, but they are mostly for the quick, the smart and/or brave imho. Always offer big promises of a rosy future for shareholders, always operation bloated fees, salaries and expenses for those inside the club. I leave any bitterness for them, not for the honest hard working toilers at MCR.
EL
MCR Price at posting:
$1.84 Sentiment: None Disclosure: Not Held
