More Thoughts on BMC (Part II): "A Piece of Pie Fit for a Midget" | RNO Message Board Posts

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Msg  11919 of 65647  at  6/20/2007 12:08:40 AM  by

aztec02


 In response to msg 11917 by  
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More Thoughts on BMC (Part II): "A Piece of Pie Fit for a Midget"

When I look back at my original research and notes on BMC I was basing my valuation on BMC producing 22 million pounds of nickel in 2008.  Essentially I failed to recognize that they only take 25% of payable nickel produced.  (BMC's press releases stated 100%.  I took that to be 100% attributed to BMC.  I think it is deceptive how they give production estimates based on Lafranchi mine based on TOTAL mine production especially given the fact that they only have a 25% stake in the mine.)  Another HUGE problem with BMC is the fact that before you even split the produced payable....
 
1.  Only about 88-92% of the nickel in the  nickel concentrate is recovered.  
2.  After that BHP (if I remember correctly) gets 35% of payable nickel.
3.  So now after these steps BMC gets their 25% cut.   
 
Another very important consideration with BMC is the fact that in terms of (payable) nickel production per  dollar invested is something on the order of 0.025 pounds.  This is just about where LIM is right now at $27.50 a share in terms of nickel production per dollar invested.  LIM has had a good run and is closer to fair value then when it was in the teens.  This means that BMC is no screaming bargain.  Additionally, one could INSTANTLY double nickel production per dollar invested by simply rotating the money from BMC to FNI.  FNI has a figure like 0.056 pounds per dollar invested based on $1.28 U.S. per share.  So the question remains:  Why hold shares of BMC?????
 
In summary, I'm NOT impressed with BMC valuation.  In other words I don't see it as grossly undervalued by the market.  Second, I despise their deceptive and  confusing press releases that fail to give guidance based on only BMC's share of the Lafranchi mine.  They should provide an attributed figure just like LIM did.  I feel better not owning a single share of BMC.  I'm happy I sold while the BMC shares were green early Monday morning.  A few share were sold after it went red.  In any case I'm not going to haggle to get out. 
 
One huge deceptive thing with BMC is the fact that they give their guidance in terms of 2008/2009 (June to June.)  Another thing I don't like is that in their press release they refer to the quarter ending March 31, 2007 as Q1.  However in their SEDER  document they refer to the same period as Q2.  Their fiscal year is screwed up.  I probably had another thing in my notes that I didn't like in regards to what I view as deceptive practices. 
 
In any case the guidance in their press release of 29.2 million pounds only comes out to something less than 4 million pounds in 2008.  If you factor in their goofy projection time frame from June 2008 to June 2009 then they come out to something just over 4.3 million pounds of payable nickel produced.
 
I think another thing was the high nickel core samples.  People think that just because they have high concentrations of nickel that this makes the company valuable.  Under the right conditions a company that owns high concentrations of nickel ore is great.  But when they lose about 10% of nickel concentrate  in the refining process followed by a MASSIVE 35% raping by BHP by the time you figure the total payable nickel left the "payable nickel pie" has shrunk drastically.   Take 25% of that drastically reduced "payable nickel pie" and that is what is left for BMC...a piece of pie fit for a midget.
 
Aztec.


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Msg # Subject Author Recs Date Posted
11934 Re: More Thoughts on BMC (Part II): "A Piece of Pie Fit for a Midget"? Aztec - Hardly. Crucible401 22 6/20/2007 4:38:59 AM






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