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8horse

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8997

09/08/19

09:40

Post #: 39937065
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Originally posted by setfire2thehive ↑

Mothballing any project means you're not in the lowest quartile for opex costs.
FMG for was running for a number of months at 0 profit when the iron price tanked.

In fact - information fed to me at the time was they were running at a loss.
Had they mothballed operations due to low pricing, BHP, RIO, Vale would have swallowed that market share as they refined and reduced their opex costs.

Because FMG pushed through, brought down opex, when the iron price recovered they made bank.

IMO PLS is in a good position to be spat out the otherside and scoop a lot of the supply that hasn't come online/or is at the current level not marginal. The key as previously said, is to reduce their opex. It's a must. If they can bring that down then the expansions make sense. Flood the market and push the marginal producers out. For now, they are a marginal producer but i think there's a lot of potential if they get it right.

GXY is the other one i see coming out the otherside quite well - cash backing plays a large part in weathering the storms. They have no requirement to re-finance or take death spiraling debt, CR's etc. That said, i think they squandered their opportunity a little bit not using that cash earlier to be better positioned when the market turns.

just my thoughts.

SF2TH

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FMG, was doomed due to its high production cost and discount realized price, but managed well to reduce strip ratio then cost, it went up 460% from $1.60/share to $9/share for such a large cap stock where RIO was only up 160% from $39 to $105.

PLS will be alright, but there are some obvious issues to overcome, I hope the management has learnt from AGO.

GXY, if they were using their cash and script to acquire quality juniors, they could be the leader of sector, but unfortunately bought a bad one, and cash spent faster than expected, apart from tax and investment, still around USD$37m gone just for last quarter, watch for next quarterly cash flow report.

Cheers.

AVZ Price at posting: 4.8¢ Sentiment: Buy Disclosure: Held
12 Upvote

1 Great analysis

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