Agree 100% with your analysis here. Having big shareholder and MD kick in cash provides a high level of comfort.
Also, ATI has provided detailed info on the project model - go back to the project update 2 Feb 2011. Good to revisit since it's been almost exactly one year. It looks fantastic! Lowest cost producer in world, gross profit margin 50%+, long life, 25% contingency in CAPEX budget. How could it possibly go wrong.
There is even a good sensitivity analysis on about page 30 showing the potential effects of various events: 6 month commissioning delay, 25% decrease in vanadium price, and strong Australian dollar, among other things. All still looks good. None of these events would be a killer.
But what if all these negative events happen....at the same time? Well we are finding out right now.
Pretend you're a potential new big investor. What you see is a project that has $300M debt, is marginally economic at current vanadium price and f/x rate, and needs more capex thrown at it to get to full production. Why would you invest? And what sort of return would you expect?
I'm going to try and stay away from ATI forum for a good while. Nothing at stake for me. But I can't take my eyes off of it. Like looking at a disaster unfolding in front of your eyes in slow motion.
A few weeks from now, 90 cents a share will be a dream.
Resources stocks have been beat up recently. There are lots of great buys out there. ATI is not one of them.
Sam out
ATI Price at posting:
93.5¢ Sentiment: Hold Disclosure: Not Held
