Ivernia Inc IVWFF

The future

[dismalscience]

Much has been made about the impact on lead prices of Ivernia’s suspension, but I wonder if it’s overstated? It has contributed some perhaps, but comprising only 3% of world output when in production, it can’t be that much. Plus this is a point-in-time view that doesn’t factor in growth in demand, coming mainly from China – a key market for Ivernia given its proximity. While Ivernia got all its ducks in a row getting the required approvals for permitting their mine and getting it up and running, they goofed shipping “on the cheap” through Esperance. But I hold the port authority there just as responsible. Esperance has come under fire before – it only recently completed modifications required for the safe shipping of nickel. Then there’s the WA government. They’re not even sure if any laws have been breached which suggests their legislation is in serious need of an update. I suspect their legal beagles are busy at work as I write this. If existing legislation is found to be deficient, it should result in the government paying for any cleanup costs at Esperance and Ivernia should only absorb the additional costs of safe shipping of the exising stockpile there. Based on the lead contamination studies to date, I don’t think cleanup costs will be huge by the way, although they might have become so had shipping via past methods continued. Australia is known to be “mining friendly”. Serious consideration will be given to the tax revenue from the Magellan mine, not only in corporate taxes from the company itself, but also the income taxes of its employees along with those coming from economic activity in shipping and export. Of course that’s not to say environmental concerns will be dismissed (and I for one wouldn’t want them to be), only that I believe government is just as committed as Ivernia to resolving them and getting Magellan up and running again. One thing for sure is that Ivernia will have to ship its lead more safely from now on and the technology exists to do it (how is lead shipped safely elsewhere in the world?). While that will cost more, with a cost of production of 0.30/lb last year (to be reduced to 0.25-0.27/lb when operations resume), they can easily absorb it and still turn a very good and growing profit, even if lead prices fall significantly from current levels. If they come to use Fremantle (and there may be other options), there’s an added benefit in that it’s closer to China by sea. Since Ivernia doesn’t hedge, I see no “lost income” from not being able to sell contracts forward at current lead prices, but rather only from not being able to deliver any lead right now. The customers will return as soon as Ivernia’s back in the game as it appears they can supply lead cheaper than their competitors. The recent bought deal (@$1.65/share) gives me confidence that I’m not alone in my opinion that Ivernia has a bright future, once it gets past the current snags. I’ve been accumulating at these levels. Just some thoughts – discussion / rebuttal invited. Diz