Forum Archive Index - July 2003

["SJ.Greaves" <SJ.Greaves@xtra.co.nz>]

AUO Technically looks like a dog. In a down trend for a while and has just broken through support at $0.45.

 The price of coking coal dropped US$2/ton this year and the AUD/USD exchange rate is also going against them.

 

So what have they got going for them? Austral is in the process of upgrading plant etc. They will, if the schedule is kept double there production early next year. They are currently in the third month of a three month shut down to upgrade plant. I feel the current shut down is the reason for the weakness in the share price. If the mine is operational again on schedule the share price should firm up a bit.

 

 If the rest of the upgrade is completed on schedule and the mine production is doubled, I feel the share price is at todays price a steal.

 

 Austral have hedged against the currency fluctuation for at less another 12 months and the next round of price negotiations start after the mine production should have doubled. So there should be the opportunity to get out at a profit later this year or early next year if you are worried about the next round of price negotiations or exchange rates.

 

So the main problem as I see it is can management deliver on getting the mine up and running on time, from the current shut down and keep the rest of the upgrade on schedule? They have been taking there time to date at organising the upgrade but have kept it on schedule.

 

I noticed CBA brought another 1.3 million shares last week. There quarterly report is due out Tuesday. I own a heap I brought between $0.52 and $0.435. I'm confident it's worth keeping a very close eye on. Time will tell.