Anglo Pacific Share Discussion Threads

[piedro] 20/4/2015 07:09

Thank you for the lesson Jimbo55, I am grateful to be able to learn from the better informed.

As I understand it, the Iron Ore price is falling due a continuing increase in production against a diminishing demand from China.

Be pleased to inform me whether the case of coking coal, and in particular that produced by Kestrel for the Japanese market, is in the same situation.

Kind regards,
P.

[jimbo55] 18/4/2015 05:29

Piedro 17 Apr'15 - 14:59 - 7158 of 7160 2 2

OMG ...

"a forward iron ore spot price of $35 per ton"

... so what?
... where is APF receiving iron ore royalties?

DYOR.

As QuePassa has already mentioned, but I'll put more simply here:

Steel = Iron Ore + Coking Coal

See the connection?

[quepassa] 17/4/2015 19:43

but they use coking/ metallurgical coal to produce the heat/energy to smelt/process iron ore for iron and steel-making.

if the iron ore spot price is going down it means falling demand for iron ore which impacts negatively on the demand for coal.

it seems to me that the demand for coking/metallurgical coal is very much linked to the (diminishing) fortunes of iron ore with a dramatically lowered demand caused by decreased need for iron and steel. - China is no longer building frantically.

in terms of thermal coal used to power steam turbines to generate electricity for cities and general industry and other purposes, it too is being thwarted by the Green lobbies and new technologies for creating clean energy such as wind farms and hydro-electric etc.

it is not looking good for either coking coal or thermal coal.

ALL IMO. DYOR.
QP

[piedro] 17/4/2015 15:07

Oh, another thing ...

Thermal coal and coking coal supply completely different industries.
Thus the one can be considered as diversifying the other.

DYOR.

[piedro] 17/4/2015 14:59

OMG ...

"a forward iron ore spot price of $35 per ton"

... so what?
... where is APF receiving iron ore royalties?

DYOR.

[quepassa] 14/4/2015 08:46

Jimbo and RCT - good posts again. - Thank you. Well written and informative.

By following a share like this closely, one learns a great deal.



Danieldruff - precisely. Fully concur.

That is why further concentrating the APF portfolio onto coal with the recent major acquisition, was for me at least, a very eye-brow raising move.

The new technologies for generating power and the Green lobbies are very powerful factors against coal.


ALL IMO. DYOR.
QP

[danieldruff2] 14/4/2015 08:19

With the world set to add 1 billion humans every decade up to 2050, and increasing consumption in most populations, it is difficult to see any commodities downturn lasting too long. I suspect it will split between those resources which are plentiful and liable to over investment doing badly (coal, iron ore, nickel) and those resources where supplies are tighter continuing to do hold up better (copper, zinc etc)

[rcturner2] 14/4/2015 08:12

Santar, a fair point. I don't consider time spent on this thread as wasted though. Jimbo's post is a good example of why, this has traditionally been a useful and informative thread. Commodity stocks will drop very low imho and become a buy in the future. So I will keep informed for that reason.

[jimbo55] 13/4/2015 14:53

Santar,

The high yield is only any use if it is paid. How certain are you that the dividend is covered?

On the Australian front, I currently live there (here). The economy hasn't completely gone down the toilet, but mining has certainly been hit. In terms of State capitals, Perth has been affected the most. Sydney, Melbourne and Brisbane are not mining-centric so the local economies are not doing so badly - property speculation and associated sectors are the main drivers.

There is no good news on the mining front though, and even Joe Hockey - possibly one of the most clueless human beings to ever hold the title of Treasurer - is now budgeting for a forward iron ore spot price of $35 per ton. He's shown unusual prudence there given some of the utter tripe he's spouted over the last 12 months, but it's a tacit nod that even the government here are waking up to the fact that the commodity boom is over.

This is not the time for bottom-picking the sector in my opinion. BHP and Rio are going to be heavily ramping up production this year to try and maintain margins. They have the quality iron ore deposits to be able to do this and get away with it, but they're going to put a lot of juniors in the space out of business and I wouldn't want to be a Fortescue shareholder, that's for sure.

I see coal and iron ore demand as being very closely related to the industrial cycle, and I think there will be more pain to come in this space.

Just my tuppence worth.

Jimbo

[santar] 13/4/2015 09:08

If you guys sold out months ago and have no further interest in this company why waste so much time here? Pure altruism in warning us poor souls who might have taken a position at these levels or just to keep telling each other how clever you are?

I for one am comfortable holding APF as part of a diversified high yield portfolio. I note from the last Chairman's statement the "expectation that there will be a minimum annual total dividend of 8p per share per annum". That is a yield of some 9.3%. FWIW I also note that FinnCap and Peel Hunt rate APF as a buy with targets of 198p and 158p respectively.

With regards to anything else I am a great believer in strategic ignorance.

[quepassa] 13/4/2015 08:15

Good article.

Seems like the Aussie dollar and Aussie economy are in a terrible way too.

ALL IMO> DYOR.
QP

[quepassa] 10/4/2015 12:33

Well said. Good point.

That's what I did.

QP

[rcturner2] 10/4/2015 12:04

gavapentin, I sold mine at over £2, so I did put my money where my mouth is.

[jimbo55] 08/4/2015 23:27

Not currently living in a locale from which I can easily short this stock gavapentin.

Don't have a crystal ball, so can't say how low it will go or what price I'd exit. Depends how the chart develops. I would be happy shorting it from here though as I think there is more pain to come in coal (as there is in oil) and too many people seem too confident that they've caught the bottom in industrial commodities.

[gavapentin] 08/4/2015 21:36

Many valid points against this share.
Some for it.
At least Chris is staking his colours with his money.
If you are so convinced it wil crash - short it, and declare your entry/exit strategy up front.
It is easy to say anything in retrospect.
FWIW I sold half and am hoping for a change North....aka hedging ;)

[rcturner2] 08/4/2015 13:51

Having seen this guy for a while, anyone trying to engage with chris is completely wasting their time.

He is the perfect example of the private investor who has bought a share and therefore for that reason alone it will double in the next x months.

[jimbo55] 08/4/2015 13:37

christh,

Not short, but wish I was. Please forgive me if I'm wrong, but I think you're a prisoner of your past experience with this stock and with the commodities boom of the last decade, i.e. you seem to be assuming coal consumption and hence prices will relatively quickly return to what they were.

An Australian professor by the name of Ross Garnault weighed in with the following in January:

hxxp://www.businessspectator.com.au/news/2015/1/28/climate/garnaut-warns-china-coal-cuts

He's also weighed in with more of the same in the Australian Financial Review in the past week, but the article sits behind a paywall. It's here if anybody is interested:

hxxp://www.afr.com/business/mining/iron-ore/chinese-steel-consumption-will-be-lower-sooner-than-bhp-rio-predict-20150408-1mgr1h#

Steel is a downstream product of Iron Ore and Coking Coal, but I'd guess you already know this.

Before dismissing these articles out of hand, I would recommend reading Ross Garnaults bio:



He is a well-connected individual when it comes to China by virtue of being Australia's ambassador between the years of 1985 - 1988.

Cheers.

Jimbo

[quepassa] 08/4/2015 13:33

It is generally considered a negative sign when an important and long-standing shareholder like Ransomes doesn't take up their pro-rata share of any new issue.

That's just a statement of the obvious. The fact that you don't grasp that point really furthers the general perception that you just do not understand the basics.- Just like before when you claimed that there was no dilution or that the humungous losses for 2014 were purely down to London Mining.

Against all of these fundamental gaffs in your understanding, you proclaim that the share will go up. It's just crass and idiotic.

Kindly respond to my point:-

Have you been saying for three years that the share will go up and has it?

ALL IMO> DYOR.
QP

[christh] 08/4/2015 10:49

you have avoided my points.....

"Ransomes didn't take up the Open Offer but other institutions have bought the shares in the placing and the money was raised to buy the royalty.

Kestrel will be bringing a payment from the coal mining by Rio Tinto and will increase until 2017 and maybe longer.

Therefore more revenue will be coming to support the dividend but also to possibly
fund new royalties".

[quepassa] 08/4/2015 09:31

You have been saying the share would go up for the last three years.
Has it?

Look at the graph.

ALL IMO. DYOR.
QP

[christh] 08/4/2015 09:10

QuePassa,
Ransomes didn't take up the Open Offer but other institutions have bought the shares in the placing and the money was raised to buy the royalty.

So what's your point?

Kestrel will be bringing a payment from the coal mining by Rio Tinto and will increase until 2017 and maybe longer.

Therefore more revenue will be coming to support the dividend but also to possibly
fund new royalties.

I know you will never agree, its always sour grapes to you but these are the facts
and you can refresh your knowledge from the APF website.

[stevie blunder] 08/4/2015 08:16

I don't think I have ever voted a post down. If it is poorly thought out I ignore it. However if a post provides some insight I hadn't thought of, or provides a link to info I wasn't aware of then I vote it up as a "thank you". That happens from time to time, but not every day.

We aren't here to convince others, only to learn as much as possible and make as few mistakes as we can.

At least that is how I look at it, others may differ.

Please don't vote this post. ;-)

[rcturner2] 08/4/2015 08:08

Jimbo, only blue posters can vote posts down, so I think the down voter is NeilB.

[gengulphus] 08/4/2015 07:56

This isn't some kind of voting competition

Agreed entirely. But given that, why on earth are you paying any attention at all to the votes? I don't unless someone specifically draws my attention to them...

And when someone does specifically draw my attention to the votes, I usually discover that it's a total triviality. No matter how good and useful you or I think a post is, so what if one or two people dislike it enough to vote it down?

Gengulphus