ABX 1.85% 5.5¢ abx group limited

This is a resources company selling a commodity, subject to...

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    This is a resources company selling a commodity, subject to commodity price cycles, not an industrial company processing raw material into finished products. If they cannot make their targeted margins at present it is sensible not to sell anything. This is prudent management. They are not selling a perishable good. The bauxite has been in the ground for a long time and won't deteriorate if they don't sell it till later when conditions are more favourable. It is not unusual for mining companies to shut in production for a while if markets are not favourable for their product and cost structure. This has even happened to gold mining companies from time to time. Take a look at the history of mining and exploration companies - you will find this is so even if you only look at modern history of the last 150 years or so.

    However it is clear that ABX is working on turning itself in part into more of an industrial materials company by focusing on more specialised bauxite markets such as for cement manufacture and the development of the ALCORE opportunity. Once the benefit of their products are recognised in these more specialised markets I expect sales and revenue will be more predictable with the ability to lock in long-term forward orders.

    As a resource industry speculator on and off over the last 50 years I am reasonably comfortable with ABX's progress although it has been a tad frustrating to watch, but there again so are so many other early stage ventures. I have been occasionally adding to my ABX holding when the price has shown weakness and sold some when it has got too exuberant but generally accumulating over the last few years.
    Last edited by Dozen: 28/10/18
 
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