Post by
KerBer on Oct 19, 2008 11:46pm
A few things to bear in mind.
Junior production companies have been hit , devastated, by the recent downturn in the base metals market. First Nickel ( FNI ), down from a high of .96 cents to .055 on Fri. Frontrea Copper ( FCC ), down from a high of $7.86 to .34 cents. Strategic Resource ( SRZ ), down from a high of $5.17 to .02 cents. The list goes on and on. Ursa is by no means the only producing junior that has seen it's SP tank. The difference between Ursa and many other junior producers is that Ursa can shut it's operations down in a flash and restart them just as quickly. Just about all the workers at the Shakespeare mine were contract workers. When operations at the mine were suspended, there were no severance settlements, no long drawn out contract negotiate or expensive costs associated with shutting down the mine. At the moment, Ursa have just 2 employees at the mine on payroll. Should metal prices pick up, Ursa can restart the mine at very short notice. They have a stockpile of ore ready to be shipped to Xstrata ( 15,000 tonnes ). There are no penalties involved due to the suspension of ore shipments to Xstrata and Ursa can begin shipping at any time. Also, Ursa still have some monies owing from previous shipments. There are some companies that will not weather this storm but Ursa is not one of them.
Very few nickel/ copper companies are making money with today's low metal prices. Already production is dropping worldwide. DMCI Mining in the Philippines has suspended production of it's nickel mine in Zambales. PT International Nickel of Indonesia has said they will reduce production in Q4 due to low prices. Minera resources of Australia has deferred it's $300 million expansion of it's nickel mine. The Russian Copper Company has shelved it's plan to expand into nickel. Most if not all of the nickel pig iron producers have stopped producing once nickel dropped below $7.00, they account for approx. 8% of world production. Everywhere in the world, the supply of nickel is being reduced. It looks like nickel has hit a bottom although copper may have more downside. Hopefully the drying up of the supply of nickel will firm up nickel prices within the next 6 months or so. In any case, as soon as prices recover ( and they eventually will ) Ursa should be back in the business of making money. Ursa own over 12 million shares of Pat, if Richmont ever take out Pat, a strong possibility, Ursa should get a cash windfall from the sales of it's Pat shares. Meanwhile, they have a few good properties to continue exploring and drilling.
Comment by
KerBer on Oct 19, 2008 11:55pm
I forgot to mention that First Nickel has suspended operations at it's Lockerby mine in Sudbury.
Comment by
gldblv on Oct 21, 2008 11:18am
If you invest in a company without also evaluating the market it is in and what other similar companies do, It tells alot about your investment skills.As for investing in PAT, you can have your opinion and future will tell us if it was good or bad.What brought the SP to its actual level is nickel price and not the PAT investment.
Comment by
throughmud on Oct 29, 2008 4:58pm
goldenboy41. I disagree with you completely. [One could equally say that you have your head up your buddie (relative?) GK's butt. But I won't because I do not have that same itch to scratch.] The fact is (and in my experience) exigencies like the ones that RS has just experienced tend to sharpen the mind and modify the approach.We shall see. mud