Why shorts about to get smashed in MINs, just after quarterly

Largely a repeat of last night's note:
My analysis suggests the MINs July quarterly will be decisive with say about 50% of the shorts, looking to cover just after its released.

Here is why.

Shorts at July 16 is 13.96%.
At March 3 it was 10.4% and the share price was $24, so therefore at least 25% of the shorts are down by 27% or more + the borrow costs. So it's been a crap trade for them. Most of the shorts are US based hedge funds or US $ denominated international shorts. They are looking for US $ returns. The Aus $ has moved from .63 to .66 since March 3. So the loss for the US shorts is on average 33%. That's big.

My guess is it is probably closer to 50% of the shorts that are down this amount or more. The 25% is the absolute minimum it can be. In my experience most shorts don't hold their positions more than 3 months: they are looking for a specific event to play out with a timing catalyst in the near term.

There may be a loyal band of about 20% to 30% who may have held the shorts for say 5 months or longer who may be up, some well up, on the trade; that's say 3% to 5% of the 14% short. But make no mistake, 50% or more of the shorts are likely in world of pain with this crappy trade.

What are the shorts betting on
If we think about what the shorts are betting on:
1: Iron ore going to $70: Response: clearly not any more;

2: Onslow not working: Response: its working now, but there is some possibility the road may fail again, eg next cyclone season with floods. But you wouldn't hang around now for that, because you take a lot of share price risk up until end of December. You've already lost 30% in 3 months! You'd initiate the short start of January next year. So again doesn't make much sense.

3: Capital raising: Response, very unlikely now;

4: Lithium going to zero, unlikely now.

5: ASIC, AFR stuff; there isn't really anything there. Is ASIC really going to seriously investigate a company returning 39% pa since listing about bad treatment of shareholders (i think not), especially when set against the woke superfunds perennially underperforming the index by about 2% to 3% a year. Last financial year the monkey randomly picking stocks beat the superfunds on average by 3%, and the monkey was actually the best performing fund of the lot with a 13.4% pa return, versus 10% on average for the woke superfunds!

6: $5.4 of debt??? All bonds trading above parity so unlikely any issues there.

7: Further capital cost blowouts; always possible, the Quarterly should provide some guidance there.

8: Valuation: A lot of the Investment Banks have MINs valued at $22 or less (Mac Bank, Jarden, JP Morgan). The models are stale and wrong eg using $90 or less for iron ore, and a lot of other things:
- not having a zero effective tax rate for Fy 26;
- not have an extra $180 m = for repayment of carry loan less iron ore prepayment.
- not have contingent payments from Gina and Morgan Stanley = say may be $400 m for Fy 26.

(That's an $800 m mistake plus just for Fy 26 alone)

But may be the shorts believe these valuation models????? They are pretty dumb if they do!

I don't see the shorts argument?
So looking at all of the above points, i don't really see much of an argument for being short.

If the quarterly does the following things i think about 50% of the shorts would need cover at a fairly big loss (eg 30% plus loss):
1: Current net debt in $5.4 bn to $5.6 bn range, with statement that was the peak, and coming down now by X per month.
2: Onslow production guidance of at least 30 m t pa for this qtr and the year;
3: Onslow FOB cost guidance ideally < $60 per tonne
4: No material new cap ex;
5: Haul rd repair on track for completion by end of August, start of sept, with say 100 km completed by now.
6: No further truck rollover incidents in the interim.

I have been deliberately conservative with these 6 things. My view is MINs will probably announce an expected production of 35 m t pa for Onslow for Fy 26, and possibly provide indicative FOB cost guidance of say around $54 from the October qtr onwards.

If we get those 6 things above, i think we'll get the shorts covering after the quarterly and the share price will re-rate then.
The projections for the Fy 26 free cash flow should be reasonably easy to do from the quaterly, and the analysts with the low, out of date and stale valuation models, will upgrade.

The problem for the shorts trying to exit after the July quarterly
Now, there is a problem if say 7% of the MINs register tries to cover all at once. They run for the door, but the exit isn't big enough to let them all out at once. You need to induce selling from 7% of the long register! Good luck with that.

The key question is, how much does MIN's share price have to rise to induce 7% of the longs to part with their MINs. I have no idea, but my guess is a starting point may be a $35 to $45 price range.

If some of the shorts were clever enough they would figure this out now and cover now. But most are not, so i don't expect big covering before the quarterly.

We shall see!

I'm happy to hear the counter or different views?

I hope the SHORTS in MINs especially enjoy the day.