Lithium Watch – MJ Doubts PLS DFS

John Robertson

UK-based industry publication Mining Journal has questioned the price assumptions underpinning the recently released Pilgangoora lithium project definitive feasibility study from Pilbara Minerals. The Journal has observed that “there is very little sound analysis present” to justify the prices assumed for the 36 years of the project. While the Mining... Show More

Lithium Watch – Orocobre Criticises Lithium Scepticism

John Robertson

According to The Australian newspaper, Orocobre chief executive Richard Seville has described scepticism around lithium as “overblown”. http://www.theaustralian.com.au/business/mining-energy/orocobres-seville-expects-ongoing-demand-for-lithium/news-story/1344f63141c921a2b60e5f0a334bdd77 The newspaper report refers to Orocobre’s lower share price being “due to growing concerns that new and expanded sources of lithium supply could swamp the global market”. The share price has declined... Show More

Mining Industry Profits Stabilise

John Robertson

Mining industry profits may have started to stabilise during the first half of 2016 with two consecutive quarterly rises, albeit only modest, in seasonally adjusted pre-tax profits in the March and June quarters of 2016, according to the Australian Bureau of Statistics, after a dramatic cyclical decline over the prior... Show More

Whitehaven Coal Rating Update

John Robertson

Whitehaven Coal (WHC:AU), an expanding New South Wales coal producer, has been rated ‘3+’ on the PortfolioDirect five point rating scale. Strong share price gains have left the market price within 5% of the PortfolioDirect assessed value. There is now less scope for company initiated activities to precipitate a further... Show More

Fortescue Improves While BHP Struggles

John Robertson

Fortescue Metals Group stands out as an Australian mining industry success story after having overcome extreme scepticism about its prospects. The PortfolioDirect modelling methodology assesses the Fortescue steady-state bond equivalent return, based on its 2015/16 operating outcome, at 4.7%. This is not especially exciting but significantly better than the negative... Show More

I usually favour the longest possible historical series so sympathise with your 20th century perspective. The chart which shows an average ratio of 54 is 'confined' to 35 years primarily because, earlier than that, governments had prevented the gold price from fluctuating while the silver price was freer to move.

On More to Go on Silver Adjustment -

Theoretically, a handful of superannuation funds will eventually own all the stock in the ASX 200 at current rates of growth. The Australian superannuation arrangements are structurally unsound. The upshot is ASX 200 stocks ending up in an asset bubble or Australia's household savings being forced offshore. Neither is without its policy problems.

On Jo Townsend, the CIO of REST Super, a $28billion superannuation fund, says they have sent the majority of new funds allocations offshore -

Company management pitched itself as having a superior skill base and in doing so created expectations of near perfection. The Vietnam drill results were not bad. They were not perfect. A more strongly capitalised company could brush it off and keep going. Neon needed a perfect outcome to succeed. Moral: the chance of a company outperforming if it has already produced returns among the top 3-5% in the sector is low.

On Neon Energy has abandoned a carefully crafted and hitherto well supported strategy in favour of a big bet on deep water drilling -

The official statistics do not get revised like the HSBC ones. In this instance, I am prepared to accept that the official numbers are better quality than the bank numbers because the latter are designed for speed (and profile for the bank). Chinese new year, weather, smog are all influnces in the short term but take a step back and the numbers have been consistently showing very little postive momentum. You get the same message from whichever angle the data are viewed.

On The slide in Chinese manufacturing momentum continues -

I have not read these studies but the conclusion referred to would be consistent with comments by the Fed chairman that consideration would be given to the unusually and persistently low participation rate in framing any future unemployment target. See my comment and chart at http://www.eimcapital.com.au/portfoliodirect/daily_views0913.htm for 9 September on the employment-population ratio.

On According to Goldman's top economist, Joe Hatzius, two key economists at the Fed have published research indicating the FOMC will lower the level at which it... -