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Forum - Mining and Commodities Eh! (Morgan Stanley China - CAF)    All things commodities, with a Canadian Junior Miner focus.

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From: Jimjones1972 (Rep: 3) reply to Jimjones1972Date: 02/14/2018 22:53
Forum: Mining and Commodities Eh! - Msg #6124 - List CAF msgs Thread #673914972 (Rec: 0)
South African Rand Hits 3 Year High After Zuma Resigns

Remember, the stronger the Rand, the more CAF profits convert into USD. Plus the new leadership is pro business and will make the economy stronger.

Reply to Jimjones1972 - Msg #6123 - 02/13/2018 10:59

Here are three important factors that will significantly increase the value of CAF:

1) Sales. As reported in their last MD&A, sales are lower than usual apparently, but prices are much higher. However, the next quarters coming up will show increased sales. From the MD&A:

For the 9-month period ended July 31, 2017, the Corporation reported a net income of $595,716 (C$741,080) compared to a net loss of $315,919 for same period the previous year. The increase in net income was directly related to an increase in sales during the period, as well as improved profit margins generated from efficiencies generated from Quantum s new calcining facility, which only started fully operating in August 2016. Revenue increased to $8,443,667, in comparison to $2,907,198, for the same period last year. The significant increase in sales is due to a combination of unusually low sales during the last fiscal period combined with increased prices per sales unit. The Corporation expects to report a slight increase in Sales during Q4 and expects fiscal year end 2018 to reflect increased demand as the Corporation hopes to bring on a new customer.

2) Price of Anthracite(coking coal) for steel manufacturing. This is important as increased sales and higher commodity prices go hand and hand. From the chart below, coking coal is near multi year high's. Problem with the chart is it's general coking coal pricing and not showing the premium CAF gets for it's Anthracite coal, which is rarer and more valuable.

3) Rand/USD/CAD Exchange rate. There are many public companies that have good sales, but the exchange rate can either make of break them. In our case, the Rand is getting stronger as a new pro business leader is sworn in and Jacob Zuma leaves. But not only that, the CAD is getting weaker at the same time. This means that once Canaf converts their Rand into USD, then it must be converted into CAD to reflect it's proper value on the TSX Venture, thus giving us an additional premium. The rand is still near a 2 year high versus the USD.
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