Re: Erlend5 Jan 2009 15:28
lnxs, I have been considering selling of 10% of my holding to minimize my exposure if Albidon did fail. That being said I am holding them for now for the following reasons:
Albidon needs Nickel to stay above $5.00/lb to keep profitable in the March 2009 quarter, and $4.00/lb thereafter. Nickel has though risen up to near $6/lb, and is showing some resistance to move below $5.50/lb- very good new for Albidon and its shareholders. Even if Nickel settles at a low of $5/lb (or even 4.5/lb), from the middle part of next year Albidon should be producing nickel at an attractive 4/lb. This is at a time when most Nickel mines operating costs will be above 6/lb.
Nickel is also one of the base metals best positioned to benefit from any market uplift and infrastructure projects. In that Albidon is, as far as I can see, also quite well positioned, with its main market being China-which has one of the largest packages of infrastructure projects yet announced- and a life of mine agreement with a major Chinese steel producer. If nickel prices rise, or stabilize, then Albidon offers a great opportunity to profit at the current knock-down share price. The risk are if: (1) Nickel falls in the short-near term below 5/lb, or in the longer term to below 4/lb, or, (2) Albidon can't meet its cost cutting program.
My judgment, and I leave it to others to make their own call, is to hold Albidon for now- perhaps buying if Albidon succeeds in its cost cutting and if Nickel prices remain favorable.