So far and until proven otherwise, they have been rather smart.
Need less to say who have been the stupids so far!
Shorts have been told they are in a tough spot for over a year!
They seem to be handling the stress quite well.
The problem with your strategy is that you must have the fortitude to hold all the way to $6 or $12, which is difficult and nerve racking for most investors. Many investors sell their winners far too soon after a modest gain and keep their losers far too long.
PAL has made many peaks since 2000 and crashed by 50% or more as many times, the odds of getting in anywhere near a bottom and selling anywhere near a peak is extremely low for the average investor.
Back in 2008 buying in at $4 might have looked like a great bargain, but as the present price indicates you would now be down over 80% and if you did not sell at the end of 2010 around $6-7, expecting it to go back to $12 you were out of luck. Again in 2012 when the stock was around $2-3 it might have looked like an even better bargain!
Another danger is the temptations of averaging down on a falling knife, where you can lose a significant % of your capital.
If you have been long for the past couples of years you must know exactly how it feels to be deep in doooo doooo
Mining stocks are risky and speculative. To make money you must get both your entry and exit points mostly right.
It is difficult to make money in mining stocks, you chose one of the most difficult sector to start your investment career.
I would recomend you stay away from all cyclical stocks and buy ETFs unless you are willing to invest thousands of hours and many years improving your investment strategies.
Duriing the CC, there was a lot of questions and discussion on production levels and my take away is that they are going to 23,000 mt by the end of 2014 no matter what. There was no talk by MCP about demand and market economics as was the discussions in the previous quarters. They seem to be confident that they can sell all except Ce to either costumers or for internal use.
Looks like they are betting the farm that they are the low cost producer and are able to displace the competitors and perhaps drive them into BK.
There losses for 2014 should indeed be at least the interest cost of about $100 M. if they meet their target.
My take, is they are given us another load of optimism. They were a very elusive on some specific questions that I would have liked to have clearer details, saying they are seeing improvements, steps in the right direction, etc. The problem is a minuscule steps in the right direction is not enough (even a slowing in the down trend of prices for example can be interpreted as a step in the right direction, so the statement in reality as very little meaning and it is dangerous to make optimistic projection based on this statement IMO), they need large steps in the right directions, they provided very little guidance.
Some specific targets are:
1- 23000 mt production at Mt Pass by year end.
2- Some savings have started to take effect, but will be felt gradually (water transport and chemicals purchase)
3- CEO confident they will be cash flow positive less interest in 2014, but mentions that he is more optimistic than the finance guy. If the CEO is another over optimist like the two previous, MCP will likely miss their targets once again.
4- Cash flow positive in 2015.
5- Confident they can sell all products except Ce, even if they increase output to the max.
6- Demand and prices are firming up, but we have heard this before, but are seeing little evidence IMO.
The have annouced that production levels in Q1 at Mt PAss would be comparable to Q4, so we probably have to wait at least for Q2 for confirmation of truly positive news.
I look forward to getting VotingM's analysis, he seemed fairly disappointed yesterday, I wonder if he will be ajusting his expectactions after this latest let down.
Heard the same after Q2, then Q3 and now after Q4.
I expect to hear the same after Q1 2014, it is like chasing the golden pot at the end of the rainbow which is forever elusive.
Define ''a good year'' as all seems to be relative, many seem to be happy with the Q4 and full year report which I find worst than my worst expectation.
But hey, he who has low expectations, has a better probability of being satisfied!
They have pushed back their ''breakeven'' or ''positive cash flow from operation before interest expenses'' a few times already.
Whether they reach positive cash flow from operation before interest expenses in 2014 will demand on RE prices which is totally out of their control.
IMO the likely hood of being cash flow positive for 2014 is no more than 30%.
To decrease their production costs, they need to ramp up production, if they ramp up production, this puts downward pressure on prices.
A catch 22 position.
It means the production levels of Q1 2014 are likely to be similar to the levels of Q4, ie 1000 mt.
When a company can generate profit by ramping up production, they usually are able to quickly do so IMO.
When they are in no hurry to ramp up production, it is because there is little economic benefit in doing so.