Interesting comments. The answer is a bit more nuanced...but it is unequivocal.
"the cure for low prices
is low prices". (and the inverse) I am not sure if people can comprehend this, but let me say this in clearest terms. If prices stay low...every mine will close including (eventually) Khasaks mines. It's the way it is.
Simple really. At these (unsustainable) levels, producers
must and
will leave the industry. The market takes care of that for them. PDN is case in point. I don't want to go over old ground, but you know my thoughts. PDN will not make it, and I'm sorry if that offends any holders, as PDN was once quite good to me, so I carry a soft spot. I just simply don't see a path forward. Obviously I was wrong not seeing a path forward for D.Trump, but hey, you lose some
Back to the ditty: ("cure for low....")
- extra mines will not get built at $24lb. Don't be so foolish as to think they will. Projecting out on current prices into 2022 is nonsensical. So don't add it to your assumptions as you're wrong from the starting point.
- extra production will get curbed at $24. Don't be so foolish as to think it won't. It's just Darwin's theory. If you don't get Darwin's theory, then you're probably prey.
And stockpiles. Ha. I heard a Siberian Husky once telling me that 1.4m stockpiles means purchasing won't occur, well, um, err...forever by the sounds of it. Hopefully I don't need to explain the definition of stockpiles, but what is the logic of leaving the front porch of your ranch in Vermont without firewood throughout winter. And even at that end, I don't expect to see any hillbilly's that would risk it down to the last piece of chopped firewood the day before the snow thawed. Stockpiles are stockpiles.
This has been discussed, so repeating myself isn't too helpful, but in summary:
- Jap Stockpiles. Sitting largely in fuel bundles. At $24, the labour costs alone doesn't make sense to unbundle and sell on spot. It is acknowledged that Jap Reactors will take longer to come back (and not to full fleet) That's another discussion, but not to be conflated with stockpiles.
- Chinese stockpiles. Did you know: As of last week, China now has largest stockpiles of Iron Ore on their shores since 2004! And the price is what? $80 - $90, up from $30 - $40. You can answer "why" in 20 different ways, but the bottom line is that a stockpile of 'zero' is not just nonsensical. All 1.4b is...is just a big number. It's the perception of immediate need versus medium/long term need that is important.
Q: How much money does your business have in your bank?
Q: How would your business run and how would
you act running said business with only $5 in the bank instead of say $140k?
It's as foolish as a poster here (Fluffynymph, I think??) saying that Uranium is one of earth's most prolific minerals giving insinuation of abundance, which while true...a genuine poster (or a more knowledgeable one) would have finished the sentence and posed the obvious question: "how much can it be dug out of the ground (or taken out of the sea ocean) for?" And if the answer is much more than the current price is, then the simple and logical answer is that it won't be. Simply because the market isn't incentivised to do so. This is basic stuff man.
- I've even heard one claim that decommissioning is going to outstrip commissioning of reactors in next 2 decades. it's.just.not.true. OR they forgot to finish the sentence again. (west vs emerging economies) Saying that Russia changed the US election doesn't make it so. These people making these claims should be given shorter thrift than their wallets. A trip to Nepal on their winnings. Pfft. Chicken feed. If they were flying their private jet from their investment winnings
over Nepal - different story. But let's not pretend who we're talking about here. PEN a good buy at 15.5c anyone?
It doesn't matter how many kitchen sinks you throw at the argument...that IS and WILL always be
your form. The very stock one questions when value is actually there to be had, no mention of petitioners gone (about when you stopped making sense), mine built, cash in bank and...wait for it cash flow positive soon. (not to be confused with profits of course, but don't be so naive as to not apply accounting practices)
Not to mention some of the other fizzers (AKP anyone? A wing and a prayer, binary bet stock if I ever saw one) Sorry bout that. Add to that a poster who couldn't tell the different between dilution and share price. I may as well just cut verbatim so one can't bend truth to make it even sound like an argument. Those who know what and who I'm talking about follow this closely in case you missed it.
"...those who bought large holdings at the fabled 2 cent mark (80 cents) now have their break even point above 91 cents, and those who paid $1.20 for their shares will now need to see $1.37 before breaking even on those."
They literally said that. Literally. No change of text. No paraphrasing. Only to be picked up, of course for the obvious error and explained to that, dilution aside, if a buyer buy for 80c and sells for 80c - they
are breakeven.
Again...it's simple man.
Having an alter ego with another computer calling yourself a different name to back you up doesn't make you any smarter.
Sometimes my friends...the longest explanations are long
because they are covering up some much bu&*s*&t. - other times it's because I'm a verbose bastard!
Now where was I?
Word on street is that Cameco are looking at curbing more production. (funny how it took them to lose $1.3b of contracts to make this call) They will need to fill this hole and they aren't going to do it at $130lb contracts in a hurry,
and they are one of few who can stockpile. Good for them.
One can shout from Siberia all they like about all the miners lining up to deliver U into post 2020. But make no mistake, there will be no new mines built at $24 lb, and they either don't know that (and would be lacking intellect) or know that and just want their narrative to keep running (schadenfreude). I am not sure which is worse but it says more about them than most here. To think that a tiddler with a couple of $mill in the bank is any more than a tiddler with a couple of mill in the bank is erroneous. Glass houses and all that jazz. We've all got problems. I like mine over others.
We've got:
- Oodles of cash in bank. do you own maths, but don't give me 'skit'.
- Holding inventory if I am doing mathematics right, perhaps even enough to fill contracts (think about this my friends...and stew on this point. Don't let it leave your head quickly. It's for the smarter ones...not those 'breakeven' boffins)
- Working mine, albeit in a 'batten down the hatches mode'
- Optionality on the elephant (Karoo)
- things
Furthermore - making repeated claims about how wrong analysts are isn't the point...at all. If that (analysts reports) is your benchmark for entry, that is your problem. Sure, it helps to see a consensus form around this opinion which gives a bias - but the bias shouldn't be overwhelmed from your own ability to i) afford this investment and ii) withstand the time horizons. I am more interested in what arguments the analysts present for their thesis. If the thesis is still in tact, it just means you're a little (or a lot) early. But being early by 8 years when it was 15.5c. What a doozie? What did that get you...a postcard from Nepal
So then (again) it comes down to timing. And something none of us can pick...and if we did it would be a fluke.
Finally, obvious question is - how do I feel about the change? How could I answer that until I see and ask? I can't. I've made my previous thoughts known so how could I back away from those. I've spoken to Gus and given my regards and wish him the sincerest best but I would say outwardly those who have indicated that he was sacked should perhaps make a quick self edit of their post to avoid defamation. Definitions are important and I don't agree. I've spoken to David Coyne member and I've got an introduction to Mr Heili next week. It's never my job or inclination to pass on these discussions except to say that never have I felt left in the dark about any decisions or confused by any announcements. If others have, perhaps it's because you a) didn't pick up the phone or b) aren't able to understand it. Both of those things are your problem.
Otherwise, wishing you all a cheery end of week. Good day.
And enjoy
Cheers
