Ask The Bros & The Bros Answer : Bracken International Mining
A Bro from South Africa asks:
Short Bro Summary: I heard about this chill mining company, 1BM (Bracken International) operating out of Australia. They are listed on the German Exchange. I want to get involved in a Manganese play and this looks like a good choice, but I am finding the company's fiscal reporting is lacking critical detail. Should I consider this as for my Bro-portfolio?
Full Question: 1BM, bracken international mining. just listed a fwe days ago on the german exchange. if what they're claiming is real, they've got a good business case and should be printing money shortly, but they say something on their website about not being required to report all info or something.. which makes me slightly sceptical that they're making some of it up. how do i invest in this- etrade says they do the german exchange, but can't find 1BM basically they mine manganese. manganese is used to make steel. 2-3% of steel. so there's a steady market. West Timor, the location, is relatively close to China making transport cheaper. the Mn BIM is mining is 50-68% china is the main user of the world's manganese but their reserves, which are mostly 15-20% low grade manganese, are decreasing. South Africa has 80% of the world's high grade manganese, 32-45% manganese, but only fulfills approx 15% of the global manganese market because the country's infrastructure is so outdated and mining licenses are so screwed up that new mines can't start and mines that exist can't get the mn out of the country. to make things worse, SA's ruling political party is discussing nationalising the mines, and in all other countries (mainly african) that have tried nationalisation it has failed miserably. so SA isn't likely to start filling any more of the global demand anytime soon. http://brackenmining.com.au/
A Bulls Bears Bros Contributor Responds:
It seems to me you are making this buy as strictly a manganese play. Approximately 90% of manganese demand is for use as a steel additive, therefore this buy is essentially a steel commodity play. Given the economic shitshow in Europe and slowing demand for steel in China ( http://blogs.wsj.com/dealjournalaustralia/2012/01/12/chinese-steel-demand-likely-peaked-in-2011-nomura/), I'm not so sure that this commodity is such a surefire shorterm play. I suppose once the US construction market has started revving its engine again it might be a different story, but the US economy is still far from firing on all cylinders. Steel stocks have been beaten down over the past year with little reason to believe the trend will end. Just this week, AK Steel was downgraded by BofA Merrill and Morgan Stanley slashed their price target down to current levels. On it's Q4 conference call, U.S. Steel announced it was shutting down one of its plants, citing it doesn't need the plants production to meet decreasing demand. I hate commodity trading, and these factors contribute to an especially bad taste in my mouth when it comes to steel.
It seems seems you are knowledgeable on the manganse trade, however, so I will put the steel commodity future aside and focus on 1BM. After visiting this company's website I must say I have never seen such a bad website from a public company. The flower shop around my corner has a better website, seriously. Also, they do not have any finical reports available for viewing and instead reference you to a message stating, "End of year financial reports are being completed and audited by KPMG and will be available in April 2012". I think that you should wait at least until these statements are available before you consider investing. In the mean time, you can check on American Manganese(AMY.V) traded on the Toronto Stock Exchange. This company has a been around for years and is much more accessible in terms of financial and corporate information.
Without being able to see any financial statements, there is no way you can access a company's value. This buy is worse than going on a blind date that your ugliest friend set up; at least you can try to get that chick to go dutch instead of just giving your cash away. Manganese might be a great investment, but that doesn't mean that this company is a good investment. I would avoid Bracken for now, and take a look a AMY.V if you really want to get in the manganese trade.
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