I would think it is pointless to try and guess Xstrata intentions and especially timing of a possible investment in NKP.
Xstrata will have multiple goals some of which are strategic and others necessary to be able to deliver year on year improvement in results.
I see a potential investment with NKP as being part of the strategic portfolio that will not give immediate results but would support future profitability by securing a large scale resource of a commodity that is in short supply.
Although I am no expert and cannot assess whether there is a fit, I am aware that there are clear efficiencies on haveing close proximity Platinum and Chrome operations as lower cost chrome can be extracted from the PGM ores as a by product and this is now the focuse of the SA Ferrochrome industry to maintain their competative status in the face of rising electricity costs and a strong rand.
Xstrata has a huge Ferrochrome operation in the area around Johannesburg through its 50% JV with Merafe and a 50% NKP venture could in the long term be a very promising venture and give Xstrata above average returns that would cover any longer payback issues.
NKP is definitely one for the long term.If the resource is there then it is not only Xstrata that would be interested in exploiting it.
BR Max
NKP Price at posting:
52.5¢ Sentiment: LT Buy Disclosure: Held
