Hi Iggyman.. Thanks for posting the spot prices..
I hate to see the spot price drop like this, but it may also be a silver lining.. At about $120 I believe you will see the big miners start shutting down partially. Close selected mines temporarily, that can't make a profit at that price. Their costs per ton are a lot higher than CWRN's and they know all they have to do is shut off the spigot for a month or so and the bid will run back to $140+ in a heartbeat. Also a lot of mines that were planned startups, will be cancelled. Who would want to start a new mine with the volitility in prices we have now? And where could you get a loan for a new mine when the profit margin looks like it is only 10% at a large dig. Even at $120/ton I have to think CWRN could still squeeze out 30%.
I also noticed that crude prices have busted through the sound barrier over the last week. When those prices are passed on to shipping, and fuel costs to run mining equipment, the noose on iron exports from the big 3 could close in a hurry.. Keep in mind the miners in Australia and Brazil already pay twice as much for fuel as we do at the CWRN mine.
I think if it were me right now, I wouldn't sell any ore to China at all, until the price goes back up, unless operating cash is needed, or Bao agrees to a locked in 5 year minimum price of $135 and one load a month, and a cap at $170. That would give both companies a hedge against the volitility in ore prices that could be ahead.
If we just keep chipping away at the overburden, and we can pay the bills with heavy gravel to Cemex we will be good to go. When prices get back up to a decent level we could have a dozen shipments ready to roll. The prices aren't going to stay this low for long imo. Just another high stakes game of chicken going on.. If BHP put out a press release tomorrow that they were going to shut down all their mines for maintainance for a month, the spot price would jump up $10 in the next two days imo.
Also sending out my best wishes and crossed fingers for Bob today.. May his lawyer be the best and smartest, and the SEC be as full of porn as they were in the past! LOL!
