There is a wealth of misinformation available. One article in wikipedia says the mine was closed becasue the reserves had been completely mined out. Another Wikipedia Article linked to the first says there ae 195 million tons of reserves and it represents one of the largest assets in asia. In another section, it says that there is an 84 million dollar bond, held from RioTinto to remediate the project, since it as been closed. However there are a lot of mine assets associated with the closed mine, that are being used at other nearby activities. Too little hard information.to put much money into this, though it looks like fun.
1. LINCGY is buying some large future environmental expenses?
2. Coar is dirty and is going out of favor, and this mine may not make any money?
3. Operating such a facility may be beyond LNCGY's financial capacity?
4. Uncertainty increases risks and drops the value of the stock?
5. With such a large "value" of oil in the ground, why are they complicating the picture?
A review of the refinery details suggests very strongly that this is a refinery with each major asset duplicated. With reasonable care in placement of the assets, it appears that the refinery is designed to operate even if one of each of it's major elements were compromised. What we have is essentially TWO refineries at the same site.
As a former Navy Engineer, with experience as a Chief Engineer on a Deep Draft Vessel (This class includes aircraft carriere), I understand "Redundancy". Having fully redundant components sitting near each other gives you a higher standard of availability than having two entirely separate refineries a mile apart. While this is a "big deal" fire in terms of costs and capacity, it is not going to sink this ship. In addition, the company has insurance for most of the losses. Buffet is a good guide in this case.
Sentiment: Strong Buy
Every few years we have a Recession. Interest rates go up. Markets drop, unemployment goes up Businesses go bankrupt, Cause: Government policy and the Federal Reserve action.
Is that what happened this time? Nope. Unemployment went up, Federal Reserve starts dropping rates. Housing crashes, even though interest rates are going down. Economy shrivels. We have deflation is some sectors. Housing prices, Average hourly income, the value of old-fashioned telephone companies, the value of Bank branches, the value of printing companies. Recession? Nope - Depression. During a Depression we have massive destruction of capital, Hundreds of Billions of dollars disappear forever. What has happened to the value of the analogue telephone central offices, the copper telephone lines, printing companies, travel agencies, television stations, branch banking, welding jobs on automobile assembly lines, The list goes on.
Because we are in a Depression, do not expect things to perk up quickly, Inflation will stay low, interest rates will stay low, and most importantly,companies like AGNC will be around for a long time (If their management handles things with an understanding of the truth). Question to think about: Why was Bernanke chosen? what was his expertise? Clue:: it began in 1929.
Paraphrase from Warren Buffet:
In the short run, the stock market is a voting machine. but in the long run it is a weighing machine. Put another way: IF you are deciding to buy or sell stocks based on what other people are doing that day, you are guessing if people will like it or not, and if they are being swayed by emotions or not. If, however, you can accurately "weigh" a stock, to determine it's real value, then you determine if the stock is being accurately valued, in the long term. While it is easy to vote, it is hard to weigh. Refiners are especially hard to weigh. The bulk of their profit comes from the "crack spread" The difference between the cost of the oil, and the value of their products. At present the crack is wide. The transportation of crude to the gulf or the East Coast is clogged by too much Baaken and Canadian, not enough pipelines, and trains are expensive. IF the Keystone is built, in two or three years, NTI will make a lot less money. NTI is very sensitive to fears about the pipeline, increasing interest rates, and rumors that the U S Government will change tax rules. all of which are swirling around at present..
I just bought 3,000 at about 17.30. That is above the low of the day at about 17.00, but about 1.00 below trend. Considering that the new purchase is accretive to cash flow, and the CEO says that their intent is to increase dividends at 5% per year, the -$1.40/share reaction to no news is a buying opportunity.
Sentiment: Strong Buy