RE:RE:RE:$35,150 $15.95Just trying to see the other side of his option trades. I'm trying to fathom why he would just make a huge purely speculative bet on such a thin commodity. Could be he's just a bad trader. There are many oil producers that hedge using wti even though they produce much different grades and delivery points.
Ernieandbert wrote: No, I think Tsingshan largely produces nickel pig iron, so not even a deliverable on the LME. He has been talking up how pig iron might work for batteries for quite some time. I think he is the sole reason the price of nickel has been suppressed for as long as it has, at least untill now.
Remember, S does not sell their Class I Ni on the LME. They sell to commercial buyers at negotiated prices and historically achieve a relazied price close to the LME price, according to their disclosure. They also have true-up price clauses in their sales contracts so adjustments can be made after sales.
However you look at Ni, the LME and S, the bottom line is on 17k MT's of Ni per year and U$4.25 NDCC (assume it still is because Co and Fertilizer will offset higher sulphur etc), you can model out Ebtida in the C$500mm range if Ni sits in this area of U$15-17/lb. That puts the EV/Ebitda at 1.7x when the historical average is closer to 6x. What stock price = 6x? Try $4.50-5.00 range. At the current price of $0.80, it is trading at about 1.5x. With all the tailwinds (Ni pricing, Norilsk, global electrification that most will want to happen sooner as opposed to later now, and the cleanest b/s I have seen on s in 20yrs), this is risk/reward best investment out there.