I think copper consumption is slowing. In fact I wonder if Asian economic activity might be in full retreat as we speak? On 1-28 combined Shanghai, Comex, and LME stocks were at an extremely low 106,569 MT, and this AM it's 134,470. Hardly a glut, but a sign the market is changing.
Meanwhile, we now have copper trading at new highs today, on the latest USD weakness.
Copper(CMX) May 151.60 +1.95 3/8/2005 5:15
This will pressure China even more and is the manifestation of my Train Wreck theory (*). Speculator positions in copper are already very high, so we are entering into rarified air. Could it go high risk parabolic as the technical traders add? Absolutely, especially with all the hot EZ money around, from the Alan Greenspan casino Pig Man/Bully economy. CNBC and Kudlow/Kramer/Goebbels are running exposure to the key resource analysts non-stop now, bad sign, tells you the Pig Men are working this to their ends (sell to latecomers). They've finally even had maverick unconventional energy analyst Matt Simmons two days running. So this is now not exactly meeting my smell test. It fact it has the heavy smell of the Train Wreck underway. One has to weigh strong parabolic action (and economy destroying) with risk more and more. My inclination now is try and develop some kind of good Asia and China short. Any ideas? CHN can't be shorted.
Happy times are here for resource stocks and commodities, but this will be difficult to time and trade. On NTO, we also have chart patterns and events at work. This one has clearly been discovered by the IBD momo types, as the chart is parabolic.
stockcharts.com[l,a]daclniay[pd20,2!b50][vc60][iUc20!Lf]&pref=G
WHT reported yesterday, so we already have Alumbrera results (NTO's would be one-third that of WHT) for the 4th qt, quite good. So the company report Wed. will be largely about Aqua Fria if we are going to get anything else.
Alumbrera milled record tonnes in 2004, primarily as a result of on-going productivity improvements and the successful commissioning of the flotation plant expansion early in the year. This also contributed to increased recoveries, particularly of gold.
Average grades mined were down approximately 16% compared with 2003, more in line with long-term average grades.
Average realized gold and copper prices were 14% and 58% higher, respectively, compared to 2003. High copper prices resulted in total cash costs of minus $371 per ounce of gold, compared with minus $191 per ounce in 2003.
Alumbrera had an excellent fourth quarter, with high average grades and excellent recoveries. As a result, production of both gold and copper was significantly above average. However, as a result of the timing of sales shipments, approximately 25% of the quarter's production was not recognised in sales until 2005. Had these shipments been recognised in 2004, as opposed to 2005, Wheat0n's 2004 sales and net earnings would have been increased by approximately $26 million and $11 million, respectively.
The Company received $126.5 million in cash distributions from Alumbrera during 2004, bringing total distributions since Wheaton acquired the mine in March 2003 to $161.5 million. In May 2004, Alumbrera repaid $58 million (Wheaton's share) of project debt and is now debt-free.
In June 2004, Alumbrera announced a 20% increase in the ore reserves which has added 2.5 years to the present mine life and ensured production until mid-2015. This substantial increase in reserves has added 1.2 million ounces of gold and 770 million pounds of contained copper, of which Wheaton's share is 37.5%. Further intensive in-pit resource definition work will continue with the objective of adding additional ore reserves in the coming year.
Alumbrera's effective tax rate for 2004 was 26%, compared to the statutory tax rate of 30%, due to a recovery of future taxes in the fourth quarter of approximately $6 million relating to foreign exchange deductions and other permanent differences. During 2004, Alumbrera commenced accruing cash taxes payable, which will be due in May, 2005. Wheaton's share at December 31, 2004 amounted to $45.4 million.
(*) My theory that the global and especially Asia's profitless output and America's jobless consumer/finance economy will be wrecked by high commodity and input prices.
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