Sierra Rutile Share Discussion Threads

[eddie catflap] 30/1/2013 20:39

Article re John Sisay and UK award nomination...

[eddie catflap] 30/1/2013 07:22

from Kenmare update...

..."Global titanium feedstock inventories are depleting and demand outlook improving..."

and...

Market
2012 was a year of contrasting halves for the titanium feedstock industry. During the first half, demand for titanium feedstocks was very strong and prices grew steadily. However, as the painting season in the second quarter was weaker than expected, pigment producers felt the impact of holding excess finished goods inventories. This was addressed with a curtailment of production by most pigment producers that commenced mid-year, which led to reduced demand for feedstocks from the pigment producers and some downward pricing pressure. High grade feedstocks in the second half of 2012 were impacted more acutely as pigment producers re-configured their feedstock blends to utilise a higher percentage of lower cost feedstocks such as slag and ilmenite. Despite overall weaker feedstock demand from pigment producers, demand for ilmenite was more resilient than feedstocks in general, and Kenmare was able to sell more than it produced in 2012 at significantly higher prices than in 2011. Year-end inventories were drawn down to low levels as a result.

The titanium feedstock inventory destocking process is still underway as pigment producers continue to deplete inventories to more normal levels. However, underlying demand, which is closely correlated to world GDP growth, is expected to improve as global economic conditions strengthen during 2013. Given improvements in the real estate market and automotive manufacturing in the United States and the stabilisation of economic activity in China, Kenmare expects stronger market conditions to emerge with an improving pricing outlook for feedstocks during the course of this year.

Global zircon market conditions were challenging during 2012. Consumption was weak due to significantly reduced demand primarily from the ceramics sector. This was driven by the slowdown in construction activity in China and weak economic conditions in Europe. Additionally, zircon consumers started 2012 with high inventory levels on the expectation of continued supply shortages. However, faced with slower demand for their products, zircon consumers took a cautious approach to buying as 2012 progressed. Prices held up well initially but reduced sharply during the fourth quarter. Whilst this trend has continued into 2013, there are some tentative indications that prices may be close to stabilising.

Kenmare, with its relatively small production volume, was able to sell all of its zircon during 2012 at the prevailing market price. With a stronger economic outlook expected in China during 2013 and completion of the de-stocking cycle in Europe, zircon demand growth is expected to resume in 2013. The readjustment of market prices that has taken place should help to reverse the downward trend in consumption seen over the past 12 to 15 months.

[russman] 29/1/2013 23:57

I guess that these sales agreements are with the same seller. They have pre-sold 813,750 shares at a discount of 10% to the prevailing market price.

[nurdin] 29/1/2013 10:50

How come these Directors are able to buy shares at well below the market price?

[eddie catflap] 28/1/2013 21:15

And another...

[eddie catflap] 28/1/2013 21:12

Decent newspaper article on SRX's Lanti dry mining... and mentions palm oil plantation...

[eddie catflap] 24/1/2013 21:49

Scrutable,

thanks for your comments.

My own figures are based on a 'worst' case basis. With shifting so much stock, I am just projecting a poor sales prices so I can guess at the minimum the shares are worth (75p).

I sincerely hope you are more accurate than I and will be I happy to accept any surprise on the upside.

Regards

[eddie catflap] 24/1/2013 21:12

Hargreaves Lansdown re SRX comment but nothing we didn't already know...

[eddie catflap] 24/1/2013 21:02

Comment on Iluka's outlook statement...

[scrutable] 24/1/2013 12:40

eddie

your 'very healthy' sales tonnage of 34,202, with which everyone should agree, at Iluka's published rutile average sales price for Q4 ($2094/T) lead via a little arithmetic to EBITDA £83m for FY2012 and eps of nearly 15p. DYOR but that would mean a PE for the FY of around 6. The share is thus severely undervalued despite the recovery in share price from the low of 45p to yesterday's brief 70p peak and today's
68.5p at lunchtime

[eddie catflap] 17/1/2013 20:37

Page 4 shows Iluka's 4th qtr ave Rutile revenue per ton US$2094. We already know SRX sales volume for the qtr. Would be nice to be anywhere near that sales price.

[eddie catflap] 17/1/2013 20:22

Iluka quarterly production report to end of Dec 12.

[sailing john] 14/1/2013 11:52

The RNS says 53p although hard to see how they could buy at that price so it could be a typo I guess. Have you seen 63p?

SJ

[deadly] 14/1/2013 11:33

Director buys of over £300k at 63p look good.

[eddie catflap] 09/1/2013 20:35

Some observations and some very quick conservative guesses:-

3rd qtr stock was 31,600t
4th qtr prod was 25,502t

as end 4 qtr stock was 22,900t SRX sold a very healthy 34,202t in 4 qtr which was far better than it was looking like after the 12,781t sold in Q3.

Due to the excellent sales volume in Q4, I'm allowing for a big price drop to to $1500, to shift stock.

Without any idea of actual costs, or exceptional costs, or bonuses paid, I have a conservative year total of 11.5eps and on a peer group p/e of 6.5 get a 75p per share fair value.

I stress, this is a guess. I would hope this is the minimum and any surprise will be on the upside.

With increased 2013 production expected and prices holding steady, there should be decent upside. With any price increases, there remains tremendous potential.

GLA

[weildy2] 09/1/2013 14:39

Well I think the RNS is no more than a 'holding' statement. I am still convinced that this share will suddenly fly with no prior warning. Mr Castro and the other directors who last bought in (again) back in November are well clear of any closed period now. So whether it be good news from one of their projects, or possibly even another take over bid, I am glad I am in, rather than sitting on the edge of my seat waiting to jump in.

Just my opinion, please don't jump in on my say so, I'm no expert.

[eddie catflap] 18/12/2012 08:10

Slightly aged Davy comment on Iluka / Kenmare...

[eddie catflap] 18/12/2012 08:03

Just demonstrates the power of the press re Barrons & Tronox...

[eddie catflap] 16/12/2012 20:57

Tronox and titanium market comment...

[eddie catflap] 13/12/2012 19:52

Industrial Minerals reckon rutile pricing has fallen below $1500 but with an improving 2013 outlook...

[eddie catflap] 13/12/2012 08:09

Worrying press comment re Iluka. (confirms that pricing is ok but sales remain a concern)



... the most alarming aspect of Thursday's announcement was that it expects just 15,000 tonnes of second half rutile sales compared to 85,000 tonnes in the first half.

Previous guidance was for 140,000 tonnes.

RBC Capital Markets analyst Geoff Breen said that in a weak market, the makers of titanium dioxide want to produce it cheaply and prefer to buy low priced "chloride slag" than higher priced rutile to make higher titanium.

"They (customers) are under pressure, they're building inventories and running 70 per cent capacity etc ... ," he told AAP.

"They're trying to reduce their production all the way down the chain really, the demand is not there."

[eddie catflap] 13/12/2012 07:57

Important update from Iluka includes...

Rutile pricing $2505 until end June. $2370 July to Sept. $1990 Oct to Nov.

And...
In the case of high grade titanium ore feedstocks, the current low level of pigment plant utilisation and preference for lower grade titanium dioxide feedstocks and/or those available under legacy contractual arrangements, has maintained downward pressure on high grade titanium ore prices.

[eddie catflap] 04/12/2012 20:29

Rio and Zircon market.

[eddie catflap] 28/11/2012 08:52

Negative near term outlook from Kenmare...



Market

A reduction in the market prices of zircon and titanium feedstocks has been
widely reported. Kenmare continues to sell all zircon production at market price
but its principal revenue-generating product is ilmenite, which represents 70%
of forecast revenue for 2012.

While ilmenite has seen some price weakness, this has not been nearly as great as in zircon, rutile or synthetic rutile. Although the market for ilmenite is experiencing some temporary softness due primarily to inventory destocking in the pigment supply chain resulting in modest price reductions, the Company believes the destocking process will complete in Q2 2013, followed by a recovery in demand and a return to stronger pricing levels.

---
Bullish medium term comment by Rio Tinto via Gunson...



Strong market outlook

The Coburn Project is tipped to deliver annual revenue of around $124 million, with a strong market outlook for zircon and titanium dioxide products.

Rio Tinto (ASX: RIO) forecasts the titanium dioxide market to grow 46% to 9.5 million tonnes per annum in 2020, with titanium dioxide consumption linked to GDP growth in emerging economies.