Liberty Posted June 4, 2012 Author Share Posted June 4, 2012 One thing that should be mentioned is that a weaker Canadian dollar should be good for FTP because afaik DP is priced in USD. Link to comment Share on other sites More sharing options...
keerthiprasad Posted June 6, 2012 Share Posted June 6, 2012 Bought some more last week. This is definitely an uncertainty vs. risk situation (getting thurso and lanquardt for free). Additionally, most people just don't want to wait (kind of a perfect storm of delays that hit thurso and lanquardt at the same time). Is anyone attending the annual meeting? Link to comment Share on other sites More sharing options...
Liberty Posted June 6, 2012 Author Share Posted June 6, 2012 Is anyone attending the annual meeting? I wish I could, but it's a bit far. Hopefully others who can attend will share their notes. Link to comment Share on other sites More sharing options...
sculpin Posted June 6, 2012 Share Posted June 6, 2012 This type of news doesn't help the investor sentiment on the DP biz... Plunging cotton prices cast pall on commodities outlook Wednesday, June 6, 2012 DAVID BERMAN dberman@globeandmail.com Read David Berman's Market Blog at tgam.ca/marketblog Polyester shirts are not only uncomfortable - they're also behind-the-times as reflections of the commodities market. When cotton prices were sky-high last year, polyester was used as a cheaper replacement. Now, cotton prices have hit hard times, and the decline provides a troubling indicator for the global economy. "When cotton gets sick, the rest of the commodities show up at the hospital eventually," said Ron Lawson at commodities broker LOGIC Advisors in Sonoma, Calif. "It's the longest-leading economic indicator because it passes through the greatest number of hands." To be sure, cotton isn't alone among commodities singing the blues right now. The Reuters/Jefferies CRB index of 19 commodities is close to a 21-month low after tumbling 27 per cent from its recent high in 2011. But cotton has had it particularly rough. Prices have fallen to about 67 cents (U.S.) a pound in New York, down from a record high of nearly $2.20 a pound in March, 2011. That's nearly a 70 per cent slide, and makes crude oil's recent troubles look comparatively tame. The decline has been so sharp that the price of cotton is now at its lowest level since late 2009, when the global economy was still in the early stages of emerging from the frightening financial crisis the year before. Cheaper cotton is good news for companies that make and sell clothing because the cheaper input costs can translate into fatter profit margins. J. Crew Group Inc.'s chief financial officer seemed to be breathing a sigh of relief when he said on a conference call in late May that "the commodity pressures that we're seeing in cotton are beginning to ease." True enough, cotton is declining from very high levels in 2011, when prices surged to record highs because of devastating crop damage in Pakistan and Texas, low inventories and high consumer demand. But as a signal for the global economy - already weighed down by slowing growth in China, the ongoing sovereign-debt crisis in Europe and a faltering U.S. recovery - the current price is nonetheless giving some investors another reason to fret. "Yes, the market got too extended in 2011," Mr. Lawson said. "Now we're back down to what we would typically think are historically normal levels" - but other commodities, including corn, remain well above historically normal levels. "It'll sort itself out. But for now, the cotton market is hurtin' for certain." Link to comment Share on other sites More sharing options...
Liberty Posted June 6, 2012 Author Share Posted June 6, 2012 This type of news doesn't help the investor sentiment on the DP biz... Plunging cotton prices cast pall on commodities outlook Certainly, but it's also good because there are many competing DP plants that probably won't be built, and when the cycle goes back up (the current downturn isn't unexpected after the record high prices that pushed farmers to plant a lot more cotton than usual), FTP should be ready to benefit massively. Link to comment Share on other sites More sharing options...
BRK7 Posted June 6, 2012 Share Posted June 6, 2012 This type of news doesn't help the investor sentiment on the DP biz... Plunging cotton prices cast pall on commodities outlook Certainly, but it's also good because there are many competing DP plants that probably won't be built, and when the cycle goes back up (the current downturn isn't unexpected after the record high prices that pushed farmers to plant a lot more cotton than usual), FTP should be ready to benefit massively. Along those lines, Sateri is possibly not very excited about the prospects for its Fengdu project (principally a DP project, I believe) in China. They are selling the Fengdu project to RGE for US$2.7 million (the amount of expenditure Sateri had incurred by on the project), while retaining an option (with right of first refusal) to buy it back at any time during the next 5 years. The stated reason for selling Fengdu seems to be to focus Sateri’s resources on its VSF project (requiring capex of RMB3.5 billion or roughly US$0.5billion). Note that RGE (controlled by billionaire Sukanto Tanoto) owns about 84% of Sateri. So, it is a “related party” transaction. Not sure what to make of that, but it will be interesting to see if RGE develops Fengdu or just holds the assets, hoping to sell the assets for a capital gain in the event that DP pricing goes through the roof again. It would also be interesting to know the expected production cost of DP from the Fengdu project. http://www.sateri.com/download/news/e20120525-Connected_Transactions_48.pdf Link to comment Share on other sites More sharing options...
bathtime Posted June 7, 2012 Share Posted June 7, 2012 Barring further travel snafus, I'll be at the meeting. Unless there's something of great import I won't have time to give my impressions until the weekend. If anyone else from the board will be there, please let me know. Or just say hi to the blonde guy in jeans around Chad's age. Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 This type of news doesn't help the investor sentiment on the DP biz... Plunging cotton prices cast pall on commodities outlook Wednesday, June 6, 2012 DAVID BERMAN dberman@globeandmail.com Read David Berman's Market Blog at tgam.ca/marketblog Polyester shirts are not only uncomfortable - they're also behind-the-times as reflections of the commodities market. When cotton prices were sky-high last year, polyester was used as a cheaper replacement. Now, cotton prices have hit hard times, and the decline provides a troubling indicator for the global economy. "When cotton gets sick, the rest of the commodities show up at the hospital eventually," said Ron Lawson at commodities broker LOGIC Advisors in Sonoma, Calif. "It's the longest-leading economic indicator because it passes through the greatest number of hands." To be sure, cotton isn't alone among commodities singing the blues right now. The Reuters/Jefferies CRB index of 19 commodities is close to a 21-month low after tumbling 27 per cent from its recent high in 2011. But cotton has had it particularly rough. Prices have fallen to about 67 cents (U.S.) a pound in New York, down from a record high of nearly $2.20 a pound in March, 2011. That's nearly a 70 per cent slide, and makes crude oil's recent troubles look comparatively tame. The decline has been so sharp that the price of cotton is now at its lowest level since late 2009, when the global economy was still in the early stages of emerging from the frightening financial crisis the year before. Cheaper cotton is good news for companies that make and sell clothing because the cheaper input costs can translate into fatter profit margins. J. Crew Group Inc.'s chief financial officer seemed to be breathing a sigh of relief when he said on a conference call in late May that "the commodity pressures that we're seeing in cotton are beginning to ease." True enough, cotton is declining from very high levels in 2011, when prices surged to record highs because of devastating crop damage in Pakistan and Texas, low inventories and high consumer demand. But as a signal for the global economy - already weighed down by slowing growth in China, the ongoing sovereign-debt crisis in Europe and a faltering U.S. recovery - the current price is nonetheless giving some investors another reason to fret. "Yes, the market got too extended in 2011," Mr. Lawson said. "Now we're back down to what we would typically think are historically normal levels" - but other commodities, including corn, remain well above historically normal levels. "It'll sort itself out. But for now, the cotton market is hurtin' for certain." BAL:US rebounded the last few days ... <IV http://blogs.barrons.com/focusonfunds/2012/05/11/cotton-prices-likely-to-get-support-from-here/ Cotton Prices: Likely To Get Support From Here.EmailPrint smaller Larger By Brendan Conway It was a tough week for cotton, but there are reasons to suspect the commodity is near a bottom now that it’s fallen to a 22-month low this morning. First the week’s bad news for prices. The U.S. Department of Agriculturecapped a bearish run in cotton Thursday by forecasting a 9% production increase this season in the U.S., the world’s top cotton exporter. The agency also said global supplies are set to hit another record. Demand in China has been pretty weak of late, which is one reason the bears have been on top. Cotton for July delivery is falling another 2.5% to just under 80 cents a pound as of midsession after sliding yesterday. AFP/Getty ImagesNow the price-bullish news: Export demand could pick up at prices below 80 cents, in the judgment of Morgan Stanley’s commodities researchers, who put on a bearish cotton trade back in March. In addition, don’t count on weather in the South being as cooperative as market prices currently suggest. The analysts led by Hussein Allidina recommended this morning that traders close out the short position: One leg of our argument for lower prices has been that global consumers (particularly in Asia) were likely to cancel prior purchases of US cotton as the end of the Chinese reserve purchase program pressured domestic prices. Lower US prices reduce the likelihood that these cancellations will be realized, posing upside risk of up to 700K bales to our current export forecast of 11.25 mln bales. If achieved, this would leave US 11/12 S/U below 20%, and likely support near-dated cotton prices. Supply-side may also pose bullish risks. Cotton prices have been pressured in recent weeks by better precipitation in the Southern US, which has raised yield estimates and lowered abandonment forecasts in drought-stricken Texas. While the trend appears to be in favor of more precipitation, much of the Texas dryland cotton area remains under drought conditions, and we note that a decline in precipitation could reverse the market’s optimism on US production prospects. There are, in fact, a handful of ways to invest in cotton in the ETF market, although none are particularly well-traversed. The iPath Dow Jones UBS Cotton Subindex Total Return ETN (BAL), down about 23% in 2012, has just $33 million in assets. The ETN’s prospectus and more are found here. Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 Thought this was well written aside from trying to predict the future trading values. But the framework is a good summary. http://seekingalpha.com/article/627801-attention-commodity-shoppers-cotton-s-blue-light-special I've been spending some time on reading up about the enviromental impact that Cotton farming is having throughout the world but praticularily in China. After reading numerous articles and whitepapers its pretty clear that current Chinese practices are not sustainable. I recall Chad putting an asterik beside the Chinese's contribution to world cotton production for this very reason. The Aral sea disaster is a sad example of what has been going on in the World Cotton markets. I've attached a great summary from idhsustainabletrade.com. The article footnotes refrences numerous sources to continue your reading...Cotton_in_China_-_Country_sector_analysis1.pdf Link to comment Share on other sites More sharing options...
Liberty Posted June 7, 2012 Author Share Posted June 7, 2012 Thanks <IV, interesting stuff. I don't pretend to be an expert on the minutiae of the cotton market, but I think the big trends are very favorable: -There's a floor below which cotton farmers switch to other crops (not a static floor because it depends on other ag-commodity prices), putting upward pressure on prices. We seem to be way below that floor right now, yet DP prices are at levels that would still make FTP profitable because the high-cost producers are idling (on top of that, they have their long-term contracts, and their higher quality DP is sold at a premium to the spot that we often see quoted). That's reassuring. -If I look out 5-10 years, I see very little chances that China won't require massively more cotton and cotton substitutes like rayon than it does now. Even if they grow at just 4-5% a year on average, that's hundreds of millions of people who can buy an extra pair of jeans and a few extra t-shirts. And there seems to be a consensus that China needs to rebalance its economy and encourage consumption, so even low total growth could hide high growth in consumption. -A couple more billion people in places like Africa, South-America, India.. will be able to upgrade their wardrobe, one of the most accessible luxuries as people start having a bit of money above subsistence levels -China's cotton production should be pressured downward for environmental reasons. Their high yields don't appear sustainable, and as has happened pretty much everywhere else, as people get richer, they start to care more about not being exposed to toxic chemicals, having clean air, safe water, etc. It has already begun in China. -At some point the US and European economies will show a lot more vigor and consume more cotton and cotton-substitutes (as well as specialty DP products). -Many of the things that can negatively impact FTP are things that will impact other companies too (ie. if China crashes or there's a global financial crisis, FTP will have a hard time, but so will most other things I could invest in too), but there are many unforeseeable but probable events that could give a lot of upside to FTP but not to others (ie. a big drought in a cotton-producing area, or the price of corn or soybeans going through the roof, making farmers switch to those). -I won't get into all the reasons why I think supply of DP won't go up nearly as fast as some people think, but let's just say that a lot of projects that were announced when prices were at record highs were cancelled or postponed, that very few plants are good conversion candidates (iirc, Chad said he found 6 around the world, and he's already bought 2 of them and hired many of the people who knew how to do a conversion), China isn't a good place to produce DP because of the wood supply situation, FTP is the only new entrant to that industry in the past 30-40 years, and building a DP plant from scratch is a big gamble (expensive and long to build, and if you aren't a low-cost producer and prices for DP aren't where you thought they would be, you have a batch process plant rather than a continuous process plant, which is sub-optimal if you want to convert it to other types of pulp). Barriers to entry in the industry seem fairly high. And since at current prices you are pretty much just paying for Dresden, you get to ride these big secular trends for free. My 2 cents. Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 I think that's about it. BAL up 5.2% today. Short covering. http://in.reuters.com/article/2012/06/06/markets-cotton-idINL1E8H6HS520120606 Link to comment Share on other sites More sharing options...
tombgrt Posted June 7, 2012 Share Posted June 7, 2012 Up 12% from the low but considering how far it fell... No need to follow this on a month-to-month basis, let alone weekly. I want $1600/ton prices in 2015/2016! Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 Cotton Council International very bullish on Chinese Demand. http://www.cotton247.com/article/28003/cci-is-very-optimistic-about-china-s-cotton-demand At the moment, a large snake (cotton market) is swallowing a large goat (increased production). Once the goat is digested the snake will be ready to eat again. By the end of July 2012, China will hold a full 25% (roughly 18M bales) of the worlds cotton stock due to massive buying the National Reserve. During his presentation in Chengdu on the 2012 global cotton market outlook, Anthony Tancredi (president, Allenberg Cotton Co.) said no single factor will have a greater impact on cotton prices in the near future than the actions of the Chinese and Indian governments. It was a bit of a shock to hear that government intervention is as influential, if not more so, than the most basic tenet of economics – the law of supply and demand. But it stands to reason that the supply of cotton in global stocks is a much different thing than the available supply of cotton in global stocks. Link to comment Share on other sites More sharing options...
sculpin Posted June 7, 2012 Share Posted June 7, 2012 Great discussion on the cotton industry guys. AGM 4pm today in Vancouver. Would have liked to have been there. Link to comment Share on other sites More sharing options...
Liberty Posted June 7, 2012 Author Share Posted June 7, 2012 Great discussion on the cotton industry guys. AGM 4pm today in Vancouver. Would have liked to have been there. I wish they would record these and post the video on youtube. In fact, I think I'll email them with that suggestion. It's such a low cost way to provide more transparency for your shareholders, they should def. do it next year. Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 One down!! Fortress Paper customer reinstates banknote order 2012-06-07 17:55 ET - News Release Mr. Chadwick Wasilenkoff reports FORTRESS PAPER PROVIDES LANDQART OPERATIONAL UPDATE Fortress Paper Ltd.'s wholly owned subsidiary, Landqart AG, a leading manufacturer of banknote and security papers, has had a material banknote order reinstated. This order was unexpectedly suspended in the fourth quarter of 2011, which negatively impacted the financial results of Landqart's operations in the first half of 2012. Chadwick Wasilenkoff, chairman, chief executive officer and president of Fortress Paper, commented: "The recommencement of this previously delayed order will provide Landqart with momentum to realize additional orders and maximize operating efficiencies. This important order allows Landqart to better optimize the overall mill and should provide a meaningful contribution to its margins compared to recent quarters." We seek Safe Harbor. Link to comment Share on other sites More sharing options...
triedtestedand Posted June 7, 2012 Share Posted June 7, 2012 Order, order ... http://www.digitaljournal.com/pr/745246 Link to comment Share on other sites More sharing options...
lessthaniv Posted June 7, 2012 Share Posted June 7, 2012 no way to verify by the press release but it would be nice if this was the India contract estimated to be 50% of Landquarts capacity. maybe we'll see something out of the indian papers tomorrow. Link to comment Share on other sites More sharing options...
Liberty Posted June 7, 2012 Author Share Posted June 7, 2012 Excellent. I didn't expect this until H2 2012, but I'll take it now. Even if it only brings Landquart to zero cash burn, that's truly all that is needed, but if it's a big order, we could actually see green ink. Link to comment Share on other sites More sharing options...
triedtestedand Posted June 8, 2012 Share Posted June 8, 2012 Gents: Managed to get to the AGM. Was mostly interested in the Q&A, which was fairly thorough (lasted ~50min), and was refreshingly candid. I got what I was looking for, which was primarily reassurance. Not that FTP is without any challenges ... but they certainly seem capable of both confronting and addressing them ... and there's obviously significant upside in doing so! Didn't have pen/paper, so notes below are from short term memory bank ... hopefully I haven't mixed up too many of the numbers, but it should provide reasonable gist of things: Dresden - No material issues from operational standpoint (As example ... they "spend 5 minutes on" during regular internal update sessions.) o Generates (significant) predictable cash o Margins are now trending towards 25%. (I think I got that # right?) - Capacity growth potential o Originally rated at 20K tonnes/yr, keeps increasing (last year another +15%) , now heading towards 60K? “Every year they keep finding new ways to improve/add/tinker to the existing system”, even though it seemingly is at max rating o Without further incremental would need step function capability (i.e. another machine) that would then add further step function capacity (eg 50K+ tonnes), so not seriously considering such a jump until sufficient demand/supply imbalance is favourable to FTP. o Have had enquires for joint ventures to expedite capacity expansion, but that's not of much appeal right now, as it might cede pricing power, reduce barriers to entry, etc. - Shareholder maximization o Have been asked (repeatedly?) about selling … Tactical buyer in nearer term would likely be private equity or similar, but such would want to buy for 3.5-4x EBITDA to get super attractive returns for them. This isn’t attractive enough for FTP, so haven’t entertained seriously, especially as continue to grow and haven't reached plateau. Such buyer would also need to secure financing, which (in Europe especially) isn't easiest/most favourable at this time. Landqart - Got news on 5K tonne deal (which apparently has 25% extra allotment potential) a few hours before the AGM, so very timely! - Because deal was put in abeyance 6mo ago, raw material supplies are already procured, so expect to be able to ramp up fairly quickly. - It's getting late for Q2, but order will fill the machines for 2012H2 (and contribute corresponding margins). It will also facilitate optimizing all that new capacity that they brought online with other orders. - Looking at macro events ... death of the Euro might be good for printing money paper, but not for Swiss based Landqart, as most costs denominated in safe-haven Swiss francs, which would be highly inflated and uncompetitive in such situation. LSQ - Despite complexity, w lots of moving parts, confident about closing (very, very soon?) o Interesting point ... Quebec govt has motivation to approve (imminently? before summer?), as otherwise risk missing a construction season (owing to northern location, winter weather issues, etc.), and associated stall in promised new jobs. o Deal would close in two stages. First stage would be in escrow, at which point would then have lease access to building for union employees, who in turn would need to vote on contract (FTP seeking 15% wage reduction.) National union has been supportive, which is a good sign, but still need local union ratification for deal to totally close. o $25M convertible debenture subscription associated with the deal would flow specifically to this project (i.e. doesn’t seem that it can be used for general purposes) Thurso - Lots of small issues (made crack about worrying about "death by a thousand cuts"), but have overcome all key ones to date … a few examples include: o Computer system glitches (back in December) that kept raising red flags needlessly o Valve that was not set properly, inefficiently wasting chemicals, sending some directly into sewage treatment o Target rating of 37% efficiency w wood supply (i.e. 1 tonne of wood yields .37 tonnes of DP) was originally down around 33% … but now approaching target by blending appropriate chemical mix ... or whatever it is they do ;-) - The above noted, team is closing in on sustained (important word!) rated capacity o Rated capacity is 575 tonnes/day … they have now had several multi day stretches now where have achieved >600 tonnes/day, so confident in rating. o Further, in last month+ have averaged out at ~83% (even w startups/downs), with last couple of weeks or so the average nearing 90%. o Presuming continued progress along this front, may likely issue update to general market soon. - Cost Structure o As fixed costs amortized over ~80% of production, have only just recently (per point above) started to reach cost target objectives o Confident of hitting ~$725/tonne cost basis once co-gen is up … for modelling purposes, before that add ~$100+/tonne o One example ... energy usage (steam) optimized with higher (and consistent) production rates - Pricing o Current contracted amounts provide minimum blended base of around $1150 ... which is right around spot price (see below) o NB: Contracts provide minimum commitments by customer, but not by supplier (i.e. FTP haven’t had to buy spot DP to cover while they ramp) o That said, contracted customers appear keen to take amounts above minimum commitments ... just need to supply the goods. ;-) o If continue with DP quality enhancements, may be able to get another $50 premium for general DP market o Spot price in last 6mo for DP has decoupled from (the tanked, now bouncing?) cotton market. DP spot has hovered around $1100 +/-$50 … o Chinese swing producers seem to need $1200/tonne to be viable … NB: they seem to effectively collar the pricing, as if spot increases significantly, they can (currently) bring on a fair bit of incremental supply … BUT if it goes too low, they need to shut down. This makes it attractive for a consistent low-cost producer like FTP, as it keep out competitors - Shareholder maximization o (Applies to Thurso and LSQ?) … as quality increases, can move towards the acetate market, which gets a consistent $1600/$1700 value … but will need further CAPEX upgrades to do, so that’s a future. o Low cost producer status makes it attractive for a consistent low-cost producer like FTP to keep out competitors ... and makes them also potentially attractive acquisition by a customer with big enough supply requirements (I think Chad mentioned Ful ida's acquisition of Port Alice specialty pulp mill) Cash Flow o Equity markets are last resort … not keen on dilution w current share price. Low hanging fruit appears to be Dresden operations, which currently have 25M EURO credit line … operations could support 2x to 3x that amount There were some other Q&A about acquisitions (sounded like not looking at pulling any triggers until get further of above further ramped up and self organizing; also not keen on while share price is in the tank, as do not want to be dilutive in issuing equity), lawsuit (similarly sounds like it's on a backburner, and happy to keep it there for now), staffing (happy w team have been able to ramp up), long-term (will sell assets when/where/if attractive valuation presents itself, and redeploy or return cash as makes best sense for shareholders) That's about it ... Glad I jotted this down ... I'll likely forget it all in a few days. ;-) Link to comment Share on other sites More sharing options...
Liberty Posted June 8, 2012 Author Share Posted June 8, 2012 Thank you very much Triedtestedand. I truly appreciate it, and wish I could have attended myself. Link to comment Share on other sites More sharing options...
tombgrt Posted June 8, 2012 Share Posted June 8, 2012 Thanks a lot triedtestedand! Will be late for work after reading all this but whatever! :D Link to comment Share on other sites More sharing options...
BRK7 Posted June 8, 2012 Share Posted June 8, 2012 There was a large trade today of ~150K shares at ~ $17.70 ... which got me to thinking who owns/buying the stock (and believes the story), and conversely who's selling (and has soured, or capitulated). From Morningstar.ca (which shows top 10 holdings) and SEDAR (which shows >10% holdings) the following #'s are provided, based on reportings from past 6mo: Chad Wasilinikoff 2390K -> Holds >10% Mawer 691K (as of Apr 30/12) -> reduced from >1M? IA Michael (ABC Funds) 800K (as of Apr 30/12) Invesco 1478K (as of Apr 30/12) -> Holds >10% FaithLife 352K (as of Mar 31/12) Scotia Private 188K (as of Mar 31/12) Fiera 321K (as of Mar 31/12) Standard Life 352K (as of Mar 31/12) Industrial Alliance 234K (as of Mar 31/12) Dimensional 111K (as of Feb 29/12) Manulife 226K (as of Feb 29/12) BMO Guardian 222K (as of Jan 31/12) Trimark 273K (as of Dec 31/11) GBC 208K (as of Mar 31/12)* *GBC is part of Pembroke, which did own 1360K shares as of Oct31/11. It looks like GBC sold half their position before Mar31/12, so presume that Pembroke's overall position reduced proportionately (or more) since October. Not factoring possible incremental Pembroke holdings, the total is ~7.8M shares (of 14.3M), or about 55% spread across 14 players. It'll be interesting to see if/how the mix changes, as over the past 7+ days there has now been about 1472K shares traded ... which is about 10% of the total outstanding. Of that amount there has been about 10 trades where >30K shares have traded, totaling ~500K+ shares. (If I had the tools, it would probably show the classic 80/20 distribution.) Anyway ... just some friday musings. I looked at both funds and institutions, and removed duplicates where funds are a subset of an institution's holdings. Invesco updated its filing today indicating that it bought another 536,300 shares in May Link to comment Share on other sites More sharing options...
triedtestedand Posted June 8, 2012 Share Posted June 8, 2012 Playing around with some #'s tonite ... here's a rough cost/EBITDA variability analysis for Thurso: Presumptions: - 200K tonnes rated capacity - $850/tonne pre cogen cost target (with cogen savings of $100/tonne) - 80% of costs are fixed (20% are variable) - Sales Price/tonne of $1150 -> This conservatively could imply that $136M (=200K tonnes x .8 x $850/tonne) is fixed ... however much or little is produced. Corresponding EBITDA sensitivity analysis: % Capacity Usage EBITDA contribution (per annum ... pre cogen) EBITDA contribution (per annum ... post cogen) 70% $1.7M $15.7M 80% $20.8M $36.8M 90% $40.4M^ $58M 100% $60M $80M ^ As example, for 90% ... the number is determined as follows: All-In Cost = Fixed + Variable = $136M + (200K * .9 x $850/tonne * .2) = $136M + $30.6M = $166.6M All-In Cost/tonne = Cost / Production = $166.6M / (200K x .9) = $925.56/tonne EBITDA contribution = (Sale Price/tonne - All-In Cost/tonne) x Production = ($1150 - $925.56) x (200K x .9) = $40.4M Is there a flaw in the logic there? If not, and if they do hit ~90% in/by early Q3 and simply maintain, then H2 is actually looking pretty good overall, with all 3 operations running close to or at capacity. And after that start looking for bennies (cogen bump, pricing above $1150, other cost optimizations, LSQ) after that. Link to comment Share on other sites More sharing options...
triedtestedand Posted June 8, 2012 Share Posted June 8, 2012 BRK7 - Can you point me to the source of your updated Invesco filing for May? I saw one for April on SEDAR, dated May 8th. Link to comment Share on other sites More sharing options...
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