RE:RE:Mining Companies Urge Top Congo Lawmakers to Block New LawYes, you and I discussed this company before, and I drew attention to its balance sheet and the fact of its being Glencore captive. Not only that, they have had a poor safety record, including a pit wall collapse a couple of years ago which killed nine miners. In addition, it has been the subject of two separate investigations in the past year by the OSC, one relating to political corruption, and the other related to accounting improprieties. And by the way, when a Canadian regulator actually goes after a company, it means either behaviour was very egregious, or the firm it is an easy target, or both.
Te key here is something you alluded to, which is that at current cobalt prices they are mining 8-9% copper equivalent, open cast (albeit at low recoveries due to metallurgy), and with about 10Mt Cu-equivalent reserves. Good work if you can get it. There is a growing body of analysts and commentators who regard the EV revolution as having the potential to drive Co to astronomical heights, north of $100/lb. Ignoring aggressive expectations of EV adoption rates, conservative demand growth projections are high, while high grade supply is very short, and it may take laterite nickel projects to fill the gap over time, likely no time soon. So imagine what this would do for profitability. And this is a producing mine, able to capitalise immediately on the opportunity.
At the exact bottom of the market I looked carefully at it and thought it was a very cheap levered play, But the enormous debt load and Glencore captivity, in addition to operating problems, did not seem to offer much security relative to other beaten down stocks, for example Ivanhoe at a negative enterprise value. More to your point, however, it is interesting to see how without much fundamental change, except in price, outlook and sentiment swing violently. I don't suppose that this forecast for the cobalt market would have been much more difficult to make two years ago. This is the opportunity in the commodity markets. They are so cyclical and inefficient. At a certain point, the lemmings turn around and run off the opposite cliff. Or, as Friedland analogises, a school of fish swims cohesively all in one direction, until, all of a sudden, they all turn on a dime and change course. As to what the true value of Katanga is I leave it to another discussion.
To your other point, the trading strategy you describe is illegal market manipulation, just like the stock pools of the 1920s, and contrary to securities laws in almost every jurisdiction. All big financial institutions manipulate every market throughout the world without getting caught, or paying fines which are less than their profits from the offence, i.e., no fine at all, not even disgorgement. The fines go to the government, not to the market participants who are the victims, and therefore it is a symbiotic relationship between the high street banks and the state to perpetuate this racket. And in Canada, the regulatory regime is a joke, a laughing stock of the world. Everybody knows the Canadian regulators never do anything to protect investors. Officers and directors can and do steal tens or hundreds of millions from their shareholders and they never get caught. And they know it, so they keep doing it brazenly, and white collar criminals come from around the world to start companies in the Great White North to steal from the stupid Canadians. Don't ask me how, there are dozens of ways. I consider myself an expert on all the fraudulent schemes of the VSE operators, and could write you a tome about it.