Peter Hodson
Pine Valley Mining Corp.
PVM-T
WEAK BUY
Nov 03, 2005
Had recommended this one in January and it's been an awful preformer. Sold last summer. Disappointing on production, costs and on the sector. Sector rolled over and they got hit with massive costs. The sector is consolidating now. At these levels, it's probably better.
Metalurgical coal is very cyclical in nature. A cautionary note on the junior coal companies in Canada:These are mines that are not cost competitive in a commodized industry. If coal prices roll back to $60, these companies won't make any money and will get mothballed again. Extremely high risk.
A coal producer. Buyer of their inventory had some delays. They will produce 2 million tons next year. If the price of coal stays where it is they will make a lot of money. Very cheap.
Recently did a financing. Right now, the buyers and sellers of coal are in negotiations and we should soon hear what kind of pricing will be in place. The expectation is that it will come down. If it doesn't come down too much, this is an extremely cheap stock.
Results just announced were not very good so the price dropped back. The problem is cost of production versus revenue per tonne. It looks like the coal price may come down. Thinks the stock price is reflecting a good price of coal. Risky situation.
Have had production/transportation problems. Did a big financing which is going to sop up a lot of demand for the company. Failed to execute and the market is changing on them dramatically.
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