RE: Cline Mining $1.5 target
One more big redux I have forgotten
# 7 Just 10% future dilution =10% lower PROFITS /Sh
- not 10% lower coal price or revenues
At $ 2. next PP= 10% lower PPS = $ 1.8
Will translate to about $ 5 /t lower profits at 1 mt
and over $ 10/t at 2011 - 300 kt.
Brokers of course do not account for that possibility.
How could they ruin their fees /commission business?
If you will throw- in 8% royalties , land +port and Jansen yards leases
it easy will add up to $ 10/t lower profits at any production level.
If they will ask you for $ 200m for longwall = 47% dilution @$2
- RUN FOR THE HILLS AND NEVER RETURN.
If they will get that money , the mine will probably survive
But the diluted stock price won't survive level above $ 2 or $ 1.5
They of course don't care about that too much as long as they can get the money.
Mngment is actually interested in as low price drop as possiible - so they can reload another 10 m sh options on the cheap.
Same as dot com JDS - sold $ billions of shares during bubble
and could afford losing money for next 10 Y by tapping to the loot from share selling.
JDS - business did OK at losing money
, JDS share price didn't.
If $ 200m investment will reduce cost by $ 20/t , the burden of contractor's $ 10/t skalp is equivalent to
burden / cost of $ 100 m over few years Hmmm
They of course have to pay that , because they have no idea how to run a mine.
The whole REDUX LIST
6 BIG CLINE MINING REDUX -FACTORS
1. 20% lower price for coal quality
2 .20% lower AVER sale price/t due to thermal coal portion in overall prod.
3.As much as $ 20 /t higher logistic /handling /transporting cost( norail ,no port storage handling equip,distance to port )
4. As much as $10-15 /t lower price due to distance to Asia disadvantage vs AU cos.
5. As much as $ 10 /t contractor scalp
6. As much as $10-15 /t higher cost due to HIGH ROM- to clean coal ratio.
7 .Just 10% future dilution =10% lower PROFITS /Sh
- not 10% lower coal price or revenues
At $ 2. next PP= 10% lower PPS = $ 1.8
Will translate to about $ 5 /t lower profits at 1 mt
and over $ 10/t at 2011 - 300 kt.