Seeking Alpha

Vale fears it could lose all of Guinea mine investment

  • Vale (VALE +1.4%) warns for the first time it may lose its entire investment in the struggling Simandou iron ore mine in Guinea pending a review by the country's government.
  • The venture has been hampered by logistical obstacles and later accusations that partner BSG Resources used bribes to acquire the mining rights it now shares with Vale; the Brazilian miner does not say whether its losses could exceed the $500M paid upfront to BSG in 2010.
  • Vale recently posted its biggest quarterly loss since it went public in 1997.
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Comments (6)
  • Jerome Verony
    , contributor
    Comments (40) | Send Message
     
    certainly not the greatest news, but the chance of a write-off happening seems to have been priced in for a while already. Vale is cheap no matter how you look at it.
    31 Mar 2014, 02:33 PM Reply Like
  • Brian Sanders
    , contributor
    Comments (1040) | Send Message
     
    true. however if/when this becomes reality, it does have lt implications on ops. so we may see a 2-4% dip on that news
    31 Mar 2014, 10:59 PM Reply Like
  • Qniform
    , contributor
    Comments (3496) | Send Message
     
    I'd be surprised if the likely number isn't fully priced in. A reported loss less than what the market expects or a favorable decision from the government would actually move the stock up. The mining and utility sectors are really the best place for finding value right now. Vale and ED are my picks - I'm long both, and wrote OTM puts in both as well.
    1 Apr 2014, 11:27 AM Reply Like
  • Brian Sanders
    , contributor
    Comments (1040) | Send Message
     
    well I like VALE as a value investment, but the market never fully prices in news until it actually happens
    1 Apr 2014, 12:38 PM Reply Like
  • Qniform
    , contributor
    Comments (3496) | Send Message
     
    Never say never :))

     

    For instance, there are tons of stock price jumps on poor earnings reports, when the miss isn't as bad as expected.
    1 Apr 2014, 12:42 PM Reply Like
  • Berliner
    , contributor
    Comments (49) | Send Message
     
    Old news...yes, VALE still remains cheap, and the Government is encouraging investment...6%+ Dividend, tax credit etc. My money is where my mouth is...the lowest PT I've seen is 15.00...and there are plenty of reasonable 'Others' much higher. The last week has seen very large buys at the close. I'm sleeping well.
    31 Mar 2014, 09:16 PM Reply Like
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