Wti Oil Etc Discussion Threads

[billthebank] 23/2/2017 10:09

SP not reacted well today to that RNS and still the company are saying that the current price of copper is not high enough!!!! How high do they need it to be? I am saying no more but not in a hurry to increase my holding GLAHs

[leedskier] 23/2/2017 10:00

It is easy to be wise after the event with copper price hedging. Who knows JP Morgan's prediction for a sub $5K MT copper price this year, could still be proved correct.

[sh1984] 23/2/2017 09:15

With you on the good management Leeds,

So far they haven't filled me with any confidence ...
1. Hedged Copper when they should have left well alone and actually hedged the currency.
2. Not recovered the overdue VAT
3. Keep deferring loan repayments and agreeing offtake agreements such that Orion make more cash than WTI.

Good management and this company would have made in the region of an extra $1.3k/ton for the past 4 months..... no more mistakes!!!

[charlieeee] 23/2/2017 08:23

Orion are mine financiers not mine operators, so of course it is in their best interests to support the company in trading out of the current situation.

The RNS shows that despite increased working capital (and a problematic first 3 months) that the cash balance moved positively.

The surprise is that no further hedging was announced, as a condition of the loan being rolled over.

[leedskier] 23/2/2017 07:39

Of course it is in the best interests of Orion to support WTI as a producing mining company.

The survival and recovery of this company depends on three factors.

1. The price of copper.

2. Good management.

3. Orion recognising -- which seemingly they do -- that their interests are best served by supporting the current management.

[frazboy] 23/2/2017 00:33

I hadn't looked at this share for years but found some time last week to do some investigating. My conclusion (happy to provide the spreadsheet) is that this is option money on the price of copper being about $6500+/tonne. The reason is, Orion have got them by the balls. They're currently paying around 10% on those loans, and as we know, they're about to default. Not only are they paying them 10% they (Orion) also have the option to buy a significant amount of this years production at well below market price (and let's not even mention the hedging...) I'll assume that Orion take that option (why wouldn't they) and, as they need to do some renegotiation of the loans (with weatherly being in default) they'll charge them another fee and/or even harsher payment terms (why wouldn't they).

As I see it management have two options 1) declare bankruptcy if they can't come to agreement with Orion on reasonable terms (weatherly is after all run for the benefit of the shareholders not Orion) which will, with a fair wind, give shareholders a reasonable chance of making some return, or 2) find another lender/supplier of capital who will clear the Orion loans and charge weatherly a more reasonable rate of interest, with a more sensible pay down period.

So if you Orion, what would you do? I would keep the company on life support, by extorting the company for every penny without pushing it over the edge.

For anyone thinking that Orion are shareholders too (and thus need to be charitable)you only need to look at the market cap ($8.5m) vs. The company's debt ($105m, from the investor presentation in November)to realise that Orion have less than $2m worth of shares but are owed the full debt.

Best of luck to all holders

[gozo] 22/2/2017 21:05

I agree leedskier, I think Craig's doing a pretty good job all things considered.We can all criticise with the benefit of hindsight.

[leedskier] 22/2/2017 16:25

I rather thought it was being very well managed. But you and I disagree over the hedging issue.

add

which may explain why you sold down and I held.

[teverish] 21/2/2017 23:09

Only a matter of time before WTI picks up again. The copper spike has sent KAZ flying, and smaller copper producers like under-the-radar Rambler (RMM) are experiencing a big uptick and re-rating too.

[leedskier] 21/2/2017 16:31

Copper is off to the races again too.

Currently $276.65 a pound which works out at $6097 a MT.

[leedskier] 17/2/2017 07:08

* COPPER: Copper prices climbed on Friday following overnight losses,
supported above the key $6,000-mark by major supply restrictions at the world's
two biggest mines in Chile and Indonesia. Three-month copper on the London Metal
Exchange was up around 0.8 percent at $6,005 at 0245 GMT, after earlier
climbing as far $6,038. It fell over 1 percent the session before.

[rougepierre] 15/2/2017 16:42

My recent post from the ATYM BB...

The C1 costs are an illusion...

The forecast is for the whole of 2016/17 but...

From the June quarter:

"C1 costs for Tschudi for the quarter were US$4,689 per tonne, increasing due to the reduced production and actions taken to manage the groundwater inflow."

And from the September quarter:

"As a result of reduced production, additional costs to deal with the groundwater inflow and adverse exchange rate movements, C1 costs for the quarter increased to US$5,073 per tonne."

But from the December quarter (the groundwater and reduced production problems having been resolved...

"Tschudi production for the quarter was 4,496 tonnes of copper cathode, 5.8% above nameplate, and a record for quarterly production tonnage achieved at Tschudi to date

· With improved production, C1 costs for the quarter have reduced 17% quarter on quarter to US$4,222 per tonne"

And....

"the hedging position we had progressively established to ensure financial stability while getting on top of the groundwater issues mean that the Company is still dependent on support from Orion in the near term..."

So it's eyes wide open and I consider the biggest risk to be Orion converting part of the debt and/or interest payments into equity...

Which is why I have "dipped my toes" and "will buy more if they fall"...

Indeed Finncap has a target of 1.1p based on their forecast from June 2016 when they predicted a 0.32p per share loss for 2016/17...the price of copper is at least 60 cents higher than it was then which, on the unhedged portion, all goes to the bottom line...Finncap's 2017/18 forecast was 0.64p/share which aint bad for a share priced at 0.85p, and...

An average unhedged price of $2.75/lb for a year would produce pre-tax EPS of 2.36p, i.e. a P/E of 0.33...

Untaxing...

[sh1984] 15/2/2017 14:44

Also Financial Position as of 30th June 16:

$5.7m in cash
$6.1m in VAT due (estimate)
$1.5m (estimate) loss in Q1 FY (RNS of 20 Oct 16)
$3.5m (estimate) profit in Q2 FY (RNS of 26 Jan 17)
$2.5m (estimate) profit in Jan and Feb 17 (based on Q2 FY numbers extrapolated into a 2 month period)

So come 28 Feb 17 there could be a sum of approximately $16.3M

They also had $10m in inventory on the balance sheet on the 30th June, which I have not included.

They can re pay Tranches C & D.

[leedskier] 15/2/2017 13:36

The Company certainly invested a lot of money (advanced by Orion -- a mining investment fund) in this project. That of course was before the current CEO was appointed. He has the job now of meeting the repayment schedule.

What made it difficult last year was that copper prices were depressed by a combination of Chinese manipulation and Rio Tinto's decision to boost production to levels which created a glut during a period of weaker demand.

But the prospect of massive US capital expenditure on infrastructure by Trump and the strike at BHP's (and the world's) largest copper mine in Chile is moving prices back up to a level where even small producers can make money.

Hopefully Orion will see the sense in giving WTI some 'slack' to get it up to 20K MT a year which would see the Company (and Orion) both get a full return on their investment, if Copper continues to trade at current levels.

[jp2011] 15/2/2017 12:34

Re Loan Payments:

B 6,153,846
C 4,280,000
D 4,280,000

(These exclude interest)

I estimate WTI will have free cash of $7-8.5m by the end of Feb but they'll want to keep $2-3m for day to day purposes. No point running out of cash.

They can just afford to pay Tranche A or easily C but there's no way all 3 will be repaid.

There's another scenario where they just service the interest charges which would otherwise get stacked onto the loan.

Another issue is funding the 2,500t expansion which will need $3-4m. In terms of risk profiling, it would be in Orion's interest to issue a new loan or defer C or D to allow the expansion. That said at $6000/t, WTI could self fund by Aug17.

We need to be realistic about the repayments but things are looking up beyond June17.

[charlieeee] 15/2/2017 11:06

Hi RP

Here too, but not in size: high risk, high reward and no doubt I will really kick myself if Orion are reasonable re the debt deadlines.

I am expecting them to insist on part hedging (again) at these prices to get a deal, but that would substantially reduce the on-going risk.

[rougepierre] 15/2/2017 10:46

Just made my first ever purchase of WTI...no-brainer...to go alongside my ATYM...

[leedskier] 14/2/2017 17:09

Quite.

Must be one of three

The MM have millions of shares they are happy to unload at current prices

or

The MM do not want to bid it up fearing a sell off

or

The MM want to keep this under the radar.

[sh1984] 14/2/2017 14:44

Hope they pay off the loans in 2 weeks time with all this copper cash coming their way

[leedskier] 14/2/2017 08:40

LME COPPER 3MO ($) LMCADS03:COM $6,106.00USD/MT 16.00 0.26%


$6100 a MT.

[leedskier] 13/2/2017 15:51

The company cannot release price sensitive information in emails to investors.