Friday, April 10, 2015

Time to Take a Position in Turquoise Hill?

Financial news outlets were blaring out headlines and lead stories about an alleged agreement between the government of Mongolia and Rio Tinto (RIO) and Turquoise Hill (TRQ) concerning Oyu Tolgoi, the rich mineral resource in the country.


While it would be welcome news to investors if this is in fact the case, I will wait until I hear very clearly from Rio CEO Sam Walsh on his take in the deal.


Just recently Walsh stated very clearly that the final offer was on the table, and it's a check to me that he has been very quiet after the supposed blockbuster announcement from Mongolia’s Prime Minister Saikhanbileg, that past hindrances to the project have been resolved and the project is cleared to move ahead.


If that was really the case, it's very puzzling that there are no confirmations of this outside of a small story and line from Sky News in Australia, which asserted Walsh confirmed the story.
To me, this is too big of a story and impetus for it to be ignored by Rio and Turquoise Hill, if indeed a deal has been made.

This is especially true after Walsh said just a little over a week ago thatnegotiations had reached the critical stage, with the major issues left to be faced. It's puzzling to believe it took that long to fix a number of smaller issues, and in a short week the major issues have quickly been resolved. It's possible, but highly unlikely.


More on Oyu Tolgoi, Turquoise Hill and Rio Tinto

Saturday, June 1, 2013

Chesapeake a Better Long with New CEO

After years of acquiring enormous assets which made Chesapeake Energy Corporation (CHK) second only to Exxon Mobil (XOM) in natural gas production, CEO and Chairman Aubrey McClendon, who founded the company, was forced to leave April 1, and has now been replaced by Anadarko Petroleum (APC) executive Robert Douglas Lawler.

Who you may ask? We'll get into why the question itself, and the answer to the underlying premise of the question is important to this new CEO choice for Chesapeake.

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Get Ready for Platinum to Soar

Conditions surrounding platinum have been changing quickly, as extreme pressure is on the sector because the current price literally can't support the industry. Either the price of platinum will have to rise or production and supply will be cut back on. It's as simple a story as that, although with numerous details which support the narrative.

As for platinum supply, South Africa, Zimbabwe and Russia account for 90 percent of all platinum produced in the world, with South Africa accounting for about 75 percent to 80 percent of it.

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Rio Tinto Gets Lean as Oyo Tolgoi Shipments Approach

As anticipation of the first shipments from Oyu Tolgoi, the giant copper and gold project in Mongolia, builds, Rio Tinto's (RIO) CEO Sam Walsh offered his input on the strategy of the company overall, and where things stand with Oyu Tolgoi specifically, at the Bank of America Merrill Lynch conference in Barcelona recently.

Walsh said all the right things, and it's worthwhile taking a look at them as the strategy of the company is one that should be considered a bellwether for the mining industry in general. If you're looking at miners, the actions and ideas presented by Walsh should be taken into account in the analysis of other mining companies. If they aren't taking similar actions, they could be in real trouble in the current economic environment.

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Time to Flee Solar?

In what will without question be a crushing blow to the solar industry, the European Union is ready to punish Chinese solar imports with a huge tariff imposed on them of an average of 47 percent, for the majority of photovoltaic panels. Most people are scratching their heads over this, as it'll harm the largest solar farms in the EU, and only benefit a small group of solar manufacturers. Many feel if the June 6 deadline is adhered to, it will crush the solar industry, and not only in China.

This is the result of the Chinese dominating a market once controlled by European companies. Fast growth by Chinese manufacturers has resulted in a glut, which has shrunk margins, pushing a number of companies into bankruptcy.

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Battle Between Two Solar Strategies ... And the Winner is...

The dismal condition of the solar industry, and the response of the U.S. and Europe to Chinese solar imports, brings to the fore what the strategy being fought over is all about. On the part of the Chinese, they're attempting to build market share while temporarily forsaking profits. Revenue is what they're generating, not earnings.

This has disturbed the U.S. and Europe, which aren't able to effectively compete against the Chinese strategy at this time. While this is attempted to be spun as unfair competition, it's in fact a common business practice that is employed all the time.

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LyondellBasell's Margins Driven by Ethane

LyondellBasell (LYB) has had an awesome year, and it looks like that performance will continue on, with one of the major drivers being its extraordinarily profitable ethane.

Ethane is a "wet" byproduct of shale gas, aka natural gas liquids (NGLS), along with butane and propane. All three are profitable, but ethane probably has the best potential going forward.

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Potash May Be Ready to Rumble

To say that Potash Corp. (POT) has underperformed the broader market over the last couple of years would be an understatement. If you bought the company in early January 2010, the share price would be about the same today as it was at that time. It hasn't changed much since then either. A January 2012 entry point would has brought the same results as a January 2010 entry point did.

Since the demand for food and desire for better results per acre remain in place, it may be time to take a closer look at Potash as the lack of performance in the midst of the high-flying market may signal the stock is poised to jump.

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Denison Mines Ready for the Uranium Rebound

Of all the publicly traded companies with exposure to uranium, my favorite is Denison Mines (DNN). It has put itself in solid position to generate some serious growth when the price of uranium resumes its upward trajectory.

Before we get into it, Denison isn't my favorite just because it's trading below $2.00 a share and is assumed to have great upward potential for that reason only. After all, there are many companies trading at these levels because that's all they're worth.

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