PYX Resources: Achieving volume and diversification milestones. Watch the video here.
http://www.miningweekly.com/article/merafe-ferrochrome-sales-fall-13-2012-03-06 Highlights: The ferrochrome sales of JSE-listed Merafe Resources fell 13% and profit plunged 58% in the year to December 31. Strong global ferrochrome-using stainless steel production growth, driven mostly by a 15% increase in stainless steel production in China, resulted in record production of stainless steel in 2011 of 33.9-million tons compared with 32.4-million tons in 2010. Global demand for ferrochrome reached a record 9.3-million tons in 2011, exceeding the previous high of 9.1 million tons in 2010. Strong end-user demand and restocking by stainless steel distribution centres in the first half of 2011 supported the growth in global demand for both stainless steel and ferrochrome. Despite producing around 2.5-million tons of ferrochrome in 2011, China remains a net ferrochrome importer with 1.8-million tons imported in 2011. This represents 42% of total Chinese demand of which South Africa supplied 1.1 million tons, an increase of 18% on the previous year. The Chinese chromite ore market continues to grow strongly with 9.4 million tons imported in 2011, an increase of 9% on the previous year. South Africa supplied 51% more raw chrome ore to China than in 2010, a point of contention as this is taking away from local beneficiation potential.
nothing new there, I've mentioned on here numerous times over the past few years that chrome ore export tariffs were needed but IFL now mine more ore than they can process and this is set to rise so without additional furnaces it is uncertain if tariffs + higher ferrochrome prices would be enough to compensate for loss of ore exports (or reduction of export prices). It is sad the SA have allowed this to develop into such a problem and it is clearly a difficult time for the ferrochrome industry in SA but they do still have a massive % of current production so they should be able to find a way to make it profitable enough to support continued investment
I actually think the shutdowns are unavoidable due to power supply issues and they have put this cashback spin on it to make it look like a good deal (may even be contractual if supplies are reduced by enough). With ore exports soaring and China seemingly able to process it all its hard to see a few months reduced output will make a significant restriction in supplies. It's very hard to get the overall picture as I can't find much information on exactly what ferrochrome processing capacity China has. SA is still the main source of ferrochrome so you would think they should be able to influence supplies/costs more than they seem to be able to at present.
Shutdowns really look like a necessity with a nice spin put on it. New power plants are behind schedule and I suspect miners have been told they can't get the power supplies they need so here's a sweetener instead and tell your shareholders its a good deal. The ore figure does not surprise me at all and its disappointing it has been allowed but its part of a deep rooted problem in SA… they continually fail to make the most of their natural resources with poor legislation and planning. Though you can start to see a picture here that while power supplies remain such a significant factor, allowing cheap ore exports might be a necessary evil to allow ferrochrome producers to keep mining rates up without stacking up massive piles of ore.
don't do a pro's a con's… nothing good will come of it! I am interested to see if the already moved timescale for return to cash generative will move yet again. I think I already know thew answer so there's a starter for your cons column. This is now more than ever along term share and only a takeover will see any significant movement in SP this year IMO. 25p year high is my guess
yea following those with proven success seems as good a way to pick stocks as any although the KEA sp has had a rocky time (ex-RIFT guys) but still looks like it should be a success and if you bought in at lows would be a nice earner.
I read somewhere there were problems with new power stations resulting in delay of increased supplies. It's SA - nothing ever gets done on time. Hefty hit today on pretty small volume… typical of IFL.
I'm sure there is a good reason why they won't or they would have done so already… surely?
don't know about state secret!! but as Eskom have done a similar deal with other producers I would guess they will keep the figures confidential.
Also I think JISCO will be the ones driving any expansion so doubt anything will happen until they want it to as it would no doubt require some additional funding at least in part from them in return for a percentage of the output and a bunch of shares as well.
That's from 5 years ago. Even before financial crisis they were talking about maybe just 2 new furnaces. You assume the plans remain as Skychrome should provide the ore to double capacity but will be a few years before they even think about renewing the plans. Can't even get full use of the ones they have!
I assume while there might be enough demand to keep furnaces running the prices clearly don't so you wonder if JISCO are reducing their order or if other customers will not be supplied, and what effect that has on customer relations. I'm sure they have said they have been getting decent prices in America so maybe they will continue with sales there and reduce other orders. All guesswork here and I can understand the level of detail we are talking about is not something we can expect but it would help us understand what impact the shutdown will have. I am unsure of what level of ore they will be selling as they will clearly be producing a large excess if mining continues at current levels. I've been saying for years SA need to put some tariffs on ore export but I guess IFL are as well taking advantage of any demand there is for ore even it is only at break even as it allows mining plans to progress on schedule.
This always had the look of a recovery year where all the cost reductions should start to come together and the furnaces and co-gen plant run near capacity. The furnace shutdown should not change that and real profit is only going to come when ferrochrome prices improve so short term I am not too worried about what they are doing but I was disappointed to see the cash generative dates shift as they should have been cautious with any targets following the furnace issues. We have to give the new guy a chance, the sp reflects the poor situation IFL find themselves in right now so what can we do but wait and see what progress they make this year.
was thinking that exact same thing… stock was low so you assume customers were already set to take less or are happy to take less… when industry stocks are said to be low? I can only assume they are going to be selling a lot of ore as well as mining already produces more ore than they can produce as far as I can tell.
yea me too… had more than enough of this. Won't be back. The family have made things far too complicated.
You overestimate my knowledge I think!! The sums you provide look fine but I don't look at IFL in these terms as all the cost factors are variable. Power, exchange rate, mining costs etc. Small increases in ferrochrome prices do make quite a difference though and you have illustrated how profitable they can be when all the factors work in their favour. Minimising operational problems is key for IFL this year and the rest will take care of itself.
Yea been in before and following progress. Decided I would stay out until BNC got sorted but it still looks decent value on the gold assets alone.
I tend to agree. Can only see a benefit to IFL if it for a very short period, maybe a month or 2 at the most. There was little inventory left and client orders to fill no doubt, so I find it hard to see how they can shut 1 furnace for too long. I guess we have to trust they will do what is best for the company. Sure I read recently how industry stock levels were down and the spot price was expected to head upwards as restocking took place so a little unsure of the actual picture right now.
Cheers, had a quick look of their website there. Plenty information which is always good. Looks like they might need to raise more funds later this year and they aren't producing so the entry point is very important here but looks an interesting long term hold. If it has bottomed out now then this could be an ideal time to get in. Probably keep an eye until the year end results are out.
plus the merger would rule out any move anytime soon. That just leaves Samancor who have sniffed about before but ruled out a move (don't remember a specific reason).