Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Ethereum EIP 1559 and Raven Coin - 21st Apr 21
Gold, USDX: The Board is Set, the Pieces are Moving - 21st Apr 21
World Economies Need to Find a Lot More COPPER! - 21st Apr 21
DogeCoin CRASH! Time to Start Mining BOODGIE Coin! Crypto Mania 2021 - 21st Apr 21
Pausing Stocks and Gold Fireworks - 21st Apr 21
Precious Metals and Miners Start of New Longer-Term Bullish Trend - P2 - 21st Apr 21
Looking For A Mortgage Broker? Here Is How To Hire One - 21st Apr 21
Amazon AMZN Stock PRIMEDAY SALE! Trend Analysis - 20th Apr 21
Stock Market Sentiment Speaks: You May Not Believe My 2021 Targets - 20th Apr 21
Stock Market Phase Two Projection - 20th Apr 21
Are Precious Metals & Miners Starting A New Longer-Term Bullish Trend? - 20th Apr 21
Inflation: First the Gain, Then the Pain… - 20th Apr 21
8 Stock Market Indicators in 1: Here's the Message of the Panic/Euphoria Model - 19th Apr 21
Gold - You Can Win a Battle, but Still Lose the War - 19th Apr 21
Will Interest Rates Rally Further Push Gold Price Down? - 19th Apr 21
Gold Fireworks Doubt the Official Inflation Story - 19th Apr 21
YuanPay Team Discuss The Process Of Crypto Diversification - 19th Apr 21
Central Banks May Ramp Up Gold Buying - 18th Apr 21
How to Get Rid of Driveway Weeds With Just WATER! 6 Months later NO Weeds, Ultimate Killer! - 18th Apr 21
State of the European Markets - DAX, FTSE, CAC, AEX, SMI, IBEX 35, S&P/MIB, Euro Stoxx 50, RTS - 18th Apr 21
Einvestment Fund: What You Need To Know About Investments - 18th Apr 21
Google Alphabet (GOOG) AI Deep Mind Stock Trend Analysis - 17th Apr 21
Stocks and Bonds Inflationary Slingshot - 17th Apr 21
Best Smartphone Selfie Stick Tripod Review by ATUMTEK Works with Samsung Galaxy and Iphone - 17th Apr 21
How to Give Budgie's First Bath | Easy Budgie Bathing and Water Training with Lettuce - 17th Apr 21
Record-breaking Decrease in New Passenger Vehicle Sale in Europe - 17th Apr 21
US Stocks Climb A “Wall Of Worry” To New Highs - 16th Apr 21
Gold’s Singular Role - 16th Apr 21
See what Anatomy of a Bursting Market Bubble looks like - 16th Apr 21
Many Stock Market Sectors Are Primed For Another Breakout Rally – Are You? - 16th Apr 21
What Skyrocketing US Home Prices Say About Inflation - 16th Apr 21
Still a Bullish Fever in Stocks? - 16th Apr 21
Trying to Buy Coinbase Stock on IPO Day - Institutional Investors Freeze out Retail Investors - 15th Apr 21
Stocks or Gold – Which Is in the Catbird Seat? - 15th Apr 21
Time For A Stock Market Melt-Up - 15th Apr 21
Stocks Bull Market Progression Now Shows Base Metal Strength - 15th Apr 21
AI Tech Stocks Buy Ratings, Levels and Valuations - 14th Apr 21
Easy 10% to 15% Overclock for 5600x, 5900x, 5950x Using AMD Ryzen Master Precision Boost Overdrive - 14th Apr 21
The Current Cannabis Sector Rally Is Pointing To Another Breakout - 14th Apr 21
U.S. Dollar Junk Bond Market The Easiest Money in History - 14th Apr 21
The SPY Is Nearing Resistance @ $410… What Is Next? - 14th Apr 21
The Curious Stock Market Staircase Rally - 14th Apr 21
Stocks are Heating Up - 14th Apr 21
Two Methods in Calculating For R&D Tax Credits - 14th Apr 21
Stock Market Minor Correction Due - 13th Apr 21
How to Feed Budgies Cucumbers - Best Vegetables Feeding for the First Time, Parakeet Care UK - 13th Apr 21
Biggest Inflation Threat in 40 Years Looms over Markets - 13th Apr 21
How to Get Rich with the Pareto Distribution - Tesco Example - 13th Apr 21
Litecoin and Bitcoin-Which Is Better? - 13th Apr 21
The Major Advantages Of Getting Your PhD Online - 12th Apr 21
Covid-19 Pandemic Current State for UK, US, Europe, Brazil Vaccinations vs Lockdown's Third Wave - 12th Apr 21
Why These Stock Market Indicators Should Grab Your Full Attention - 12th Apr 21
Rising Debt Means a Weaker US Dollar - 12th Apr 21
Another Gold Stocks Upleg - 12th Apr 21
AMD The ZEN Tech Stock - 12th Apr 21
Overclockers UK Build Quality - Why Glue Fan to CPU Heat sink Instead of Using Supplied Clips? - 12th Apr 21 -
What are the Key Capabilities You Should Look for in Fleet Management Software? - 12th Apr 21
What Is Bitcoin Gold? - 12th Apr 21
UK Covd-19 FREE Lateral Flow Self Testing Kits How Use for the First Time at Home - 10th Apr 21
NVIDIA Stock ARMED and Dangeorus! - 10th Apr 21

Market Oracle FREE Newsletter

FIRST ACCESS to Nadeem Walayat’s Analysis and Trend Forecasts

Petropavlovsk’s Iron Ore Prospects

Companies / Metals & Mining Mar 10, 2010 - 05:30 AM GMT

By: Miles_Banner

Companies

Best Financial Markets Analysis ArticleWe last wrote about Petropavlovsk back in December 09. Back then we noted the unusual selling of shares from Peter Hambro and Pavel Maslovsky, the two directors. Last week one of our readers drew our attention to the fact we’ve not spoken about them for a while. Fear not, they have been on our radar and as of last week fresh news caught our interest.


Firstly Chief Executive Pavel Maslovsky told Reuters last week that the company is considering a Hong Kong IPO and long term bank loans for it’s iron ore projects. And secondly the Chief Financial Officer has sold just under half his shares in the company (53, 846 shares at just over £10 per share).

Aricom – and the iron ore prospect

Aricom was the demerged sister of Peter Hambro Mining (the former trading name of Petropavlovsk). A producer of iron ore, Aricom was attracting the attention of investors because of the geological position of it’s operations – close to the Russian border with China.

Currently China is the biggest purchaser of iron ore in the world. The World Steel Association (WSA) predicts China’s steel product demand will increase by 19 percent to 526 million tons this year. In 2009 they accounted for production of 47 percent of the world total crude steel (according to the WSA).

What’s more the demand for iron ore looks set to rise – Deng Qilin, the chairman of the China Iron and Steel Association, warned of a large rise in bulk prices for iron ore this year… Similarly last week, Zhang Xiaogang, chairman of China’s Angang Steel, (the largest steel group listed in Hong Kong), told journalists at China’s yearly parliamentary meeting in Beijing he believed prices would rise further than expected –

"Iron ore negotiations are under way. I personally am very pessimistic about the results… China’s steel mills originally expected a 20pc price increase, but they will not get that."

A price hike looks imminent. [read about iron ore prices further here]

Most of China’s iron ore is bought from BHP Billiton, Rio Tinto and Vale. The problem with this is the associated shipping costs. By setting up operations much nearer to the steel mills of Northern China Aricom attempted to resolve the problem. This made them an attractive proposition for investors, especially when you took into account they had $257m in cash reserves.

Then in 2009 the renamed Petropavlosk acquired Aricom for £294.5m ($442.9m). Since then news of POGs iron ore arm has been relatively muted, until now.

Liquidity – in current economic times

Peter Hambro summed up the continuing pains of a company operating in today’s climate. In this video he describes the perils of illiquidity and the need for cash.

The company needs liquidity to invest in it’s iron ore venture and it needs liquidity because of the turbulent market conditions. The recent statement by Chief Executive Pavel Maslovsky reiterates Peter Hambro’s interview. In the news feature Mr Maslovsky told Reuters the company would need $500 million in the next year or two to finance its iron ore projects. They went on to note that a decision on funding would be reached in the first half of 2010.

Together with the rising cost of iron ore this is now a timely moment to be raising funds for/from its iron ore part of the business.

With the cost of iron ore heading higher the attraction of Petropavlovsk’s iron ore business is getting bigger. Certainly if they do decide to sell there will be plenty of willing buyers. And the sale would provide the company with that much needed liquidity. Underwriters, Investec analysts, valued POGs iron ore assets at $550m – 173p per Petropavlovsk share.

POG Chief Financial Officer sells shares before full years figures released

On a very different note Petropavlovsk will publish their full year results on the 25 th March. In this the group is suppose to be reporting, for the first time, an estimate of its gold reserves. Follow Gold Price Today for that week’s issue.

Taking into consideration the nearing full year results it is significant to see, last week, the Chief Financial Officer, Brian Egan, selling just under half his shares in Petropavlovsk. Brian Egan sold 53, 846 shares at just over £10 per share, through the SG Hambros Trust Company Ltd. With just under 3 weeks before the full year results it is a notable decision that begs the question why. This follows the recent decisions to sell shares from the two directors, which we noted in December. Together they are cautious signs for investors. Unfortunately we don’t know what to make of these actions, there’s no further indication of motives. So we’ll closely read the results when they are out and see if this gives us any hints.

In summary the shift in attention to the iron ore part of the business is certainly being played out as the international demand for iron ore rises. It’s geological position next to China makes this part of the business an attractive proposition for investors if POG do decide to sell or raise cash. As Peter Hambro mentioned in the video they’ve learnt that in the current climate you cannot afford to be without liquidity. With the added conundrum of the CFO’s share sale this promises to be an intriguing few weeks/months ahead for Petropavlovsk.

Keep reading Gold Price Today and stay tuned for next week.

Regards,

Digger Gold Price Today

P.S Digger writes a weekly email analysing the gold price and the gold industry. Visit Digger at Gold Price Today (http://goldpricetoday.co.uk).

© 2010 Copyright Gold Price Today - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules