Atlas Cons. Mining and Dev't Corp.( AT)

I would like to share my earnings analysis for Atlas Consolidated Mining and Development Corporation that I did last July to all the readers of this blog.

First Half Performance

For the first half of 2010, AT had a total of 9 Shipments of Copper Concentrates with an average of 5,384.61 WMT containing 28.51% copper. These shipments also have an average of 3.1 grams of Gold/ dmt and 26.138g/dmt of silver.

Copper Sales for the first semester amounted to a total of $89.16 Million or PHP 4.1 Billion. Take note that the total copper sales for the first half of 2009 is only P4.3 Billion. It seems that AT is on track to meets its target of having 20 shipments for the year that amounts to around P9.5 Billion in copper sales.


Copper Price

We need to looke closely at the price of copper because copper prices provide us a glimpse on how global economy is doing. The metal is used widely in construction, automotive, electronics and a myriad of industries. Year-to-date it is 32% higher than the average price of copper in 2009. Average price of copper in 2009 is $5396, while 2010 YTD is $7128.

We also need to look at how the economy of China and India is doing in order to see the outlook of copper prices in the future. An excerpt from Money Morning Magazine reads:

China and the rest of Asia remain very strong. China's numbers reveal that it is still in risk of overheating its economy, despite the measures it has taken to avoid this. Very strong trade surpluses, despite the recent financial turmoil and European distress, strongly point to the fact that China needs to do a lot more to "flexibilize" its currency and let it appreciate. A more-flexible approach would be beneficial, since it would achieve a more balanced growth, relying less on exports and increasingly in the purchasing power of its own consumers. As an example, the trade deficit excluding oil for the U.S. economy narrowed with every country except for China.

Now, should China gradually make the currency changes that I expect - as Brazil and Mexico have done for a long time - the Asian giant would benefit from an immediate easing of its internal inflationary pressures, while at the same time increasing the purchasing power of China's consumers.

This, in turn, would help support the global economy, balancing China's growth, and stoking its demand. The global commodity and exporting sectors would benefit from that heightened demand.

India's economy is set to accelerate into the second half of the year and beyond, and is stimulating lending. And Brazil's economy has been - and will continue to be - able to post accelerated rates of growth this year. It will grow at a 7.5% pace this year, with the rate moderating to 5% next year.

This environment is the ideal scenario for commodities.

Projection Figures (Please click on the image above)

In my projection figures (copper sales only), if AT were to reach its target of 20 shipments for the year, Copper sales would amount to a whopping $208.5Million or around PHP9.5 Billion. Using the first quarter net profit margin of 7.44%, net profit would equal to around $15.5 Million or PHP710 Million. An improvement from the PHP2.7 Billion net loss last year.

This will translate to around 0.677 EPS for FY2010.

Conclusion

Atlas Consolidated Mining and Development Corporation is about to have a turn-around performance this year. It has already completed 9 shipments of copper concentrates in the first half of 2010 and is on its way to meet its 20 shipment-target for the year.