3SOF

Quote from: BigSully1 on May 20, 2007, 05:38:44 PM

Quote from: yukiii on May 20, 2007, 03:35:48 PM
Copper will decline 30 percent to an average of $5,650 a metric ton in the fourth quarter from more than $8,000 today, according to the median of 12 analysts' forecasts compiled by Bloomberg. Nickel and lead will drop about 50 percent from record prices reached on May 4 to $24,450 a ton for nickel and $1,000 for lead, the data show.

Company said:
Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year.

How will this affect next quarter earnings??? Why would the stock go up from here? I would not want to hold this going into next earnings report, but maybe buy after the drop................

OK. I can see you are definitely negatively biased by the way you just happened to leave the last 2 sentences off the quoted paragraph. I'll add them back for you.

"Looking forward to the second quarter of 2007, the Company also expects less than an average quarter of payable production during this period, due to the seasonal nature of the shipments from the mine (there are no nickel concentrate shipments between December 7 and January 21 of each year and again between April 7 and May 21). During these winter months, a smaller number of nickel concentrate shipments are delivered than would be expected, and, as noted above, there are no copper concentrate shipments at all during the period between December 7 and May 21. The result, assuming constant metal prices, will be to reduce expected royalty revenues in the second quarter of each year. However, in 2007 the lower than average production expected to be payable in the second quarter should be more than offset by higher metal prices, as nickel prices continue at or near record highs."

You do understand that don't you? I think you really do. More than offset by higher metal prices. We already know second Q will will result in lower average production (but not necessarily lower than Q1), but at  higher prices. Higher prices is already a fact. Suggest you also read the following paragraph again and you will find the just reported Q was also lower than a normal expected or average Q of production due to the strike at Voisey between late July and early Oct last year. Settlement from the mines does not occur until 90 to 180 days after shipment from the mines. Royalties for Q2 will likely be much higher than Q1 due to higher nickel prices and quite possibly even higher production than what was reflected in Q1.

"While concentrate sold during 2007 was up significantly at Voisey's Bay from the same period in 2006, it was less than a normal quarter of expected production from the mine. Production payable was negatively impacted by the strike at the Voisey's Bay operation from late July 2006 to early October 2006. Due to the nature of the sales agreements on the Voisey's Bay concentrates, in which settlement does not occur until 90 to 180 days subsequent to shipment from the mine, the impact from the strike was not reflected in the royalty payments until the first quarter of 2007. In addition, the first quarter payment reflected only limited revenue from the sale of copper concentrates because copper concentrate shipments are limited by CVRD Inco's agreements with the aboriginal people in Labrador. Under these agreements, copper concentrates can only be shipped between May 21 and December 7 of each year. Under normal conditions, the company believes that first quarter production payable from Voisey's Bay will be at or above the average for the year.

Yes, negitive, because of the facts, not blinded by the truth.
Overvalued now till they start ramping up some earnings........... don't see it next quarter do you?

Quote from: Houlahan on May 20, 2007, 04:54:00 PM
Hi Yukiii,

Just so you know, I really respect your opinion. 

Anyway, I simply thought, as demand increases for nickel, so would the price.

Kawasaki Industries will soon mass-produce a prototype nickel-hydrogen storage battery that can be used as a power source for rail transit. And it can be used to help maintain stable output from wind-power and solar-power generators. And alternative engery source during our high engery needs. As you know, TSL and other solar stocks did well recently. I see more needs in the coming future for nickel.

There are a lot of uses for nickel. I believe the demand will push prices higher but I not sure how much higher. I do not see another bull run like last year, because the higher prices are just getting too high and they are looking for alternatives. Like cutting the amount of nickel in stainless steel, in other words, lowering the grade. I think there is a growing use of low grade nickel ore, which could bring some relief.

I feel nickel is like the stock market. It will go higher. How much higher??? Will the stock market/nickel give a "mini-burps" before reaching new highers.

So, production is starting again May 21? And demand has not gone away. In fact, it is increasing. Finding alternatives will take time. Time needed for nickel to rise. 

Well, I don't know the nickel market but when 12 analysts say prices will go down 50% from here, I assume they know more the me. This was a great stock to own when it was $4 but now I don't see
alot going forn it unless they can get money from somewhere else maybe in 2010 or so....  negitive bias, but I could be wrong...  I believe everything you need is in all 10k's if you read them right and
I have learned the hard way before if you are to positive bais and miss the problems..

If you want a good mining investment  EGO should double next few years.

EGO looks great! Everything is turning around, increasing revenues, assests to liabilities are awesome, but their number of common shares is climbing and Diluted Weighted Average Shares is increasing too.

Not sure Yukiii, does this mean they are diluting?
Maybe small dilution is OK. And gold plus mining has a good future.

Nickel May Rise 20% on Smelter Shortage, Credit Suisse Says



By Madelene Pearson

May 21 (Bloomberg) -- The price for nickel, used to make stainless steel, may rise 20 percent as a shortage of smelters to process ore into metal constrains supply, Credit Suisse Group said in a report.

Nickel may reach $65,000 a metric ton in the ``near term,'' Credit Suisse London-based analysts led by Jeremy Gray and Eily Ong said in a report dated May 16. Smelting output may grow at 4.6 percent this year compared with demand growth as high as 5 percent should stainless steelmakers rebuild inventories and global economic growth increase, the report said.

Nickel for immediate delivery rose to a record $54,050 a metric ton in London on May 15 as China's economic growth fueled demand for the metal. Cost overruns and delays at BHP Billiton Ltd.'s Ravensthorpe and Cia. Vale do Rio Doce's Goro projects, the two largest nickel mines under construction, exacerbated supply shortfalls, helping drive price increases.

``Prices will remain strong over the next two years given the lack of supply growth until 2009 at the earliest,'' Gray and Ong wrote in the report. ``The current profile of new smelters is unlikely to be enough to feed ongoing strong demand from the stainless steel industry in the next two years.''

Nickel for immediate delivery rose $1,800, or 3.5 percent, to $54,025 a ton on May 18. Prices have jumped 155 percent in the past year as inventories plunged 78 percent to an amount equal to less than two days of global consumption.

Only three of 11 nickel mine and smelter projects under way, including Ravensthorpe and Goro, will start production before 2010, the analysts said.

Risk of Delay

``Any delay in the 2008 startup of Ravensthorpe and the 2009 startup of Goro will clearly make our global smelter growth forecasts of 4.6 percent in 2007 and 5.3 percent growth in 2008 look too aggressive and would help underpin the current strength in nickel prices,'' the report said.

The forecast by Credit Suisse compares to the $55,000 a ton estimate of Standard Bank analyst Michael Skinner made April 26.

Prices are expected to stay ``strong'' over the next two years given the lack of smelter supply growth until 2009, the report said. They may also gain should an anticipated increase in production of lower grade ferro nickel from China be overestimated, the analysts wrote.

``The strength in today's nickel price is a good lead indicator to suggest that the ramp up of Chinese production is clearly taking longer than expected to make an impact,'' they said. ``Our suspicion is that the ramp up of Chinese production will not make a significant dent in global supply until 2009 at the earliest.''

The bank is assuming demand growth of 3 percent this year, rising to 5 percent should stainless steelmakers build inventories in the third quarter. A ``pronounced'' cutback to stainless steel production may damp demand for nickel and threaten prices, Credit Suisse wrote.

To contact the reporter on this story: Madelene Pearson in Melbourne on [email protected]

Last Updated: May 20, 2007 20:50 EDT

Goldman Sachs raises nickel, zinc price forecasts for 2008
Monday, May 21, 2007 11:22:03 AM
http://www.afxpress.com


LONDON (Thomson Financial) - A likely tight supply of metal has forced Goldman Sachs to review price forecasts for some of the base metals complex

The investment bank has raised its nickel forecast to 35,000 usd for 2008 from a previous forecast of 30,000 usd (made in April), while zinc is seen at 3,250 usd from 3,000 usd respectively

"Prices will remain above historical levels as a continuing recovery in production growth keeps the emerging surplus relatively small for most of the base metals," said the bank's latest report

Nickel prices are currently hovering around 50,000 usd, about 3 pct lower than the all time high of around 52,000 usd struck last month. Prices are at a hefty premium as global inventories of the metal, used mostly for stainless steel production, would only satisfy a day's worth of global consumption

Commenting on nickel, Goldman's analysts said that while prices could climb on a dangerously tight market, stainless steel producers are introducing grades which don't use nickel, and which could depress prices

"Our baseline forecast is now that the market will return to balance by the end of the year, and as a result we believe the market is vulnerable to a sharp reversal of the demand rationing premium currently embedded in the price," said the report

On zinc, the researchers said "we do not believe that inventories will build sufficiently to bring zinc stocks back to historical norms, and as a result, we expect prices to trade in a wide band around 3,250 usd per tonne (in 2008)."

David, I think you should sell ROY, EXM, JAKK, MSI, CIMT, and find some new prospects.
TWIN, EGO, DRYS

Oh Yukiii,
for the past 10 years EGO has been diluting shares. Not just once, but every year. 
But let David see the company. The "excellent" might out weigh the share diluation.
Is a 1.1% share diluation every year acceptable??

You need to post your choices on the Analysis on Demand. One a day.


Current Assets     Current Liabilities     Long Term Debt     Shares Outstanding
12/06    527.02                131.12                     50.5                              341.1 Mil
12/05    320.74                 95.81                      50.83                          302.6 Mil
12/04    226.26                 19.3                        0.0                              276.3 Mil
12/03    171.96                 18.48                       0.0                              254.0 Mil
12/02    142.41                23.94                       6.8                                  206.2 Mil
12/01    112.88                  44.86                       17.59                          102.3 Mil
12/00    121.19                48.18                       26.31                           84.0 Mil
12/99    0.0                       0.0                             0.0                              0.0 Mil

QuoteDavid, I think you should sell ROY, EXM, JAKK, MSI, CIMT, and find some new prospects.
TWIN, EGO, DRYS

Thanks for your opinion yukiii. I like ROY a lot, EXM is better than DRYS, JAKK is undervalued, MSI I'll wait for FOH's financial details which I believe are attractive, CIMT is an awesome long term holding. TWIN and EGO? TWIN I don't know, but I dislike EGO, as Houlahan shows, what a "diluter" (almost $2 B market cap with $5 M net income a quarter, P/E is 100).

QuoteIs a 1.1% share dilution every year acceptable??

You mean 10% dilution a year ... it could be, if the rest were very attractive, but I don't see that at EGO.

Going back to ROY, my opinion is those Goldman Sachs analysts will keep raising their estimates for nickel and zinc. The trend is bullish, but they forecast the market to go down. I prefer to listen to market participants than to analysts, they're wrong too often.

Nickel rebounded strongly yesterday and is close to a new high:



I'll keep on holding ROY.

News today:

"Dancy assembled the Barron's Challenge portfolio using firms he currently holds in the LSGI Venture Fund L.P. portfolio, including Interoil Corporation (Amex: IOC), Arena Resources (NYSE: ARD), OMNI Energy Services (Nasdaq: OMNI), Matrix Services (Nasdaq: MTRX), Fuel Tech Inc. (Nasdaq: FTEK), U.S. Global Investors (Nasdaq: GROW), Diamond Hill Investments (Nasdaq: DHIL), Gigamedia (Nasdaq: GIGM), International Royalty Corporation (Amex: ROY), Comtech Group Inc. (Nasdaq: COGO) and Allegheny Technologies (NYSE: ATI).

"The applied financial theory that serves as the basis of our strategy has historically generated substantial excess returns on capital. Certain sectors of the market are not always efficient, and we illustrated that fact for a second year in a row. The companies in our portfolio are small, growing, and undervalued," said Mr. Dancy. "

Thanks for the post Houlahan, it's nice to know more people find ROY undervalued, as I do.

The company made investments in the past that will start producing revenues in the future. In Q2 2007 we'll have the following:

«During the second quarter, the Company expects to recognize initial royalty revenues from the recently acquired Legacy Sand and Limpopo royalties. In addition, Mercator Gold Plc has announced it will begin gold production at its Meekatharra operations in Western Australia in June 2007 at an initial rate of 120,000 ounces per year. The Company owns a 1.5% net smelter returns royalty on the Meekatharra operation through its acquisition of the Western Australia royalty in 2006.»

We'll study these investments over the next few updates. I see $70 M - $80 M revenues in 2007, considering current nickel and copper prices. For example EGO, a company yukiii likes, trades at 17.5 times revenues. If ROY were to trade at the same multiple, it would then be a $1.3 B company, or a $19.46 stock.

I'll keep holding ROY.

Nickel fell to a two-month low in London as an increase in stockpiles fueled speculation stainless-steel producers are reducing usage of the metal. Copper gained.

Inventories of nickel tracked by the London Metal Exchange rose for a fourth day, the exchange said in a daily report, taking the gain this week to 44 percent. Stainless-steel makers such as ThyssenKrupp AG, the world's biggest, and South Korea's Posco have said they plan to increase output of nickel-free products to cut costs.

``Until recently the market has been ignoring a number of bearish factors such as clear signs that demand in the stainless-steel market has slowed and increasing levels of substitution,'' Stephen Briggs, an analyst at Societe Generale in London, said today in a telephone interview. ``Rising stockpiles have been the trigger for a change in sentiment.''

Nickel for delivery in three months on the LME fell $400, or 0.9 percent, to $45,800 a metric ton as of 9:26 a.m. local time, paring this year's gain to 37 percent. Earlier, the contract fell as low at $45,100, the lowest since March 30.

Nickel production will outpace usage by 70,000 metric tons this year, the International Nickel Study Group said May 14. Stockpiles monitored by the LME rose by 5.4 percent to 7,200 metric tons today. They surged 27 percent yesterday, the most since Sept. 11, 2003.

Among other LME-traded metals, copper advanced $79, or 1.1 percent, to $7,280 a ton, aluminum added $1 to $2,822 and zinc increased $19 to $3,669. Lead slid $10 to $2,120 a ton and tin lost $25 to $13,800.

There was a form 6-K filed with the SEC yesterday that has a slight positive information, but I don't know to what extent:

«3. Amended and Restated Stock Option Plan

The resolution to approve the Amended and Restated Stock Option Plan was withdrawn by the Corporation and not submitted to shareholders for a vote.»

Usually when they amend a stock option plan is to give themselves more shares, so probably it is a positive factor that they have withdrawn this request. Unless they did it because they feel they didn't deserve more shares, that would be worrisome. It's impossible to know the motivation for this since it wasn't publicly disclosed, so we might as well forget about it.

The stock seems to be deciding which way to go, to make a bullish or bearish breakout. Support currently stands at $7.47 and $7.17 on close, and resistance stands at $8.04 and $8.33.

I find ROY fundamentally attractive so I expect it to breakout on the upside, I'll keep holding ROY.

Quote"Rising stockpiles have been the trigger for a change in sentiment''

Well, they should rebound a bit, look how low they got:

ROY stands at the ascending trendline support. My motivation is fundamental, but I would expect stocks to react to ascending support levels.

Nickel firmed on Thursday after losing more than 10 percent in the past three days, but analysts see scope for more selling as cutbacks at stainless steel mills and rising stocks weigh on prices.

Nickel for delivery in three months on the London Metal Exchange firmed to $46,800/47,000 a tonne in the official session, up $600 from Wednesday, when it shed 4.1 percent.

Nickel prices had gained 55 percent on the year when they peaked at $51,800 earlier in May. Despite the recent sharp fall, nickel is nearly 40 percent up since end-2006.

"Nickel's very volatile. We've gone down too much, too soon. We were above $50,000 just three days ago, so it is not surprising to see some short covering now," an LME trader said.

News of stainless steel mills cutting back production and rising inventories in LME has pulled nickel prices 11.5 percent down since Tuesday's peak.

But analysts see scope for more losses.

"There is a series of triggers which makes it extremely difficult for nickel to push higher," analyst Nick Moore at ABN Amro said.

"Cutbacks from stainless mills, rising stocks and you've got the move by various stainless producers shifting to nickel-free materials, these are triggers," he added.

Stocks of nickel in LME-registered warehouses rose by 366 tonnes to 7,200 tonnes, its highest since late December, with available stocks to the market stand at 6,594 tonnes, close to two days of global consumption.

Almost 60 percent of total demand for nickel, which makes steel durable and hard, is used by stainless steel producers.

Substitution and production cutbacks are being seen worldwide with POSCO, the world's third-largest steel maker, focusing on no-nickel stainless steel products as record nickel prices squeeze profit margins.

Also, Finnish stainless steel firm Outokumpu said earlier this year it would cut production by 10 percent in the second quarter due to lower orders.

The premium for cash nickel over three-month delivery, also known as backwardation and which indicates supply tightness, has come off to $3,045 from last week's $3,550.

Thanks for that article on Nickel yukiii. Nickel is still way above ROY's forecast for the average prices for the year, so even if it comes down some I expect the company to surpass its internal estimates of about $50 M in revenue.

But I think it is too short term oriented to think of the company as just Nickel dependent. For example, over the past three months or so ROY made 4 acquisitions:

• International Royalty completes acquisition of energy-related Sand Royalty
PR Newswire (Tue, Mar 13)

Here we're talking sand.

• International Royalty acquires over 10% of New Horizon Uranium Corporation
PR Newswire (Mon, Apr 16)

Here it is Uranium.

• International Royalty acquires additional Pascua gold royalty interests
PR Newswire (Wed, May 9)

Gold.

• International Royalty announces acquisition of Limpopo PGM Royalties
PR Newswire (Tue, May 15)

Platinum and Palladium.

So, this is like a diversified bet on metal prices over the long term. I don't know about you, but I see so many mining companies valued at stratospheric valuations (especially gold mining companies), that's it's hard for me not to see ROY at $485 M as cheap. My valuation model tells me I should only sell ROY at around 13.64, so I'll keep on holding ROY.