Cyanide!
Cyanide wrote the company and they replied the delay is because the PFS has added a seam. I will post for all you folks (like myself) who are watching a shake down.
-Adding a seam means adding to the size of the PFS which if it was just the harbour seam would mean only 20% of the resource is being considered.
-Adding a seam means more coal can be mined and faster.
-Adding a seam means the PFS got more complicated
- Xstrata's website says 5 million tpa which is way more than what the ERD website says, so likely this is a function of adding a seam- this is speculation
I have been in this baby for a long time and we have some very professional traders on this thing. I notice the level 2 board jumps back and forth rapidly, sell offs happen in the morning, then we recover. As the price goes down the volume goes up big time, as the volume dries up the price goes up again. It has been happening since 30 cents.
As for where the price should be is anybodies guess. I think it is still really cheap despite what Rudee says. Look at the price since September and you see a pretty clear up trend now being broken by impatient speculators who don't understand that ERD is 25% of the DCA and therefore can't force Xstrata to hurry up and get the PFS done, especially when the project scope just doubled.
If you value the deposit at 2% of total cash flow it will generate assuming long term met coal price of $200 for semi soft coking coal you get 120 million tonnes is ERDs share of Donkin. Take 70% of that (low estimate from PEA) and you get 84 million tonnes of true SSCC(semi soft coking coal). Take away the cost at $26 from the PEA and add 10 bucks to wash it you get net value of $164/ tonne and you get 13.7 billion net cash flow undiscounted. 2% of that is 275 million or 3 dollars a share. If you value that at 10 times net revenue you get 5 million times 25% or 1.25 million tonnes a year at $164 you get 205 million net revenue per year. At a 70% yield and no credits for thermal coal or anything else they can do it for 70 years. 10 times 205 million is 2.05 billion or 23 dollars a share.
On a macro level Met coal is scarce and met coal close to water is almost unheard of. Fear of course is easy to find and is everywhere. It is cheap and costs folks a lot of money.
Anybody watching the trading notices how the order gets slaughtered with sells cascading out stops. It is easy to say that market movers are manipulating the stock and it may or may not be true. I for one am suspicious that a very intelligent trader is taking advantage of the impatience and fear of investors. What else is new?