Mines de cuivre au Chili...La grosse communiste Michelle arrive, faut partir

Many Chileans will cheer if Michelle Bachellet romps home as expected in a run-off presidential vote this month, but copper mining companies – the mainstay of the economy – are breaking out in a nervous sweat at the prospect.

The industry, which accounts for a third of global copper production and reserves, and a fifth of Chilean economic output, has seen production costs double over the past five years because of higher wage costs and energy bills and lower ore qualities.

And the new government is likely to add higher taxes to these woes.

Ms Bachelet, a left politician who has made free education one of her main campaign platforms, plans to raise corporate income tax from 20 per cent to 25 per cent.

In addition, Chile may bin a law that protects foreign investments in the sector from higher royalty fees, which may deter some projects.

In addition to a 30 per cent slide in copper prices since they peaked two years ago – analysts at Goldman Sachs predict prices will fall a further 12 per cent in 2014 – and a global copper surplus, Chile’s loss of competitiveness has helped reduce a pipeline of about $100bn of potential mining investments down to just $30bn, according to Joaquin Villarino, president of Chile’s mining council.

PLUG, un bon long shot ?

Plug Power is a speculative small cap fuel cell company that has exploded recently. This stock price is up almost 160% in the last three weeks and the stock price is up over 1700% from its 52 week low of 0.12 when the company was on the verge of bankruptcy. Plug Power has made some strides that merit some of the increase in stock price but this company has a history of over-promising and under-delivering and investors should take heed of the past.

Plug Power makes fuel cell modules that replace batteries for fork lifts. The fuel cell modules have several advantages over batteries but cost a lot more money. Several big companies have bought Plug Power's fuel cell fork lifts for their distribution centers/warehouses such as Walmart , Sysco, Coca Cola, and Whole Foods Market as well as other notable companies.

However, adoption has been slow and Plug Power has a history of heavy losses. In fact Plug Power was getting seriously close to having to declare bankruptcy this past year. The company managed to raise money at very unfavorable terms to existing shareholders and at heavy dilution. The share count ballooned from around 38 million diluted shares a year ago to around 125 million today which is serious dilution. In May Plug Power picked up a strategic investment from its partner Air Liquide. This was the catalyst that started Plug Power on its upward trend.

The biggest pop for Plug Power's share price has come in the past few days. The company gave a business update and announced they expect to be profitable in 2014. Their version of profitability is "EBITDAS" (net income before interest, taxes, depreciation, amortization, and non-cash stock compensation expense) which is some late 90's tech boom version of profitability as opposed to GAAP (Generally Accepted Accounting Principles). However, the stock price has jumped from around $0.80 to $2.06 after the announcement.

Plug Power has made similar big predictions in the past that didn't pan out. In 2012 the company forecast revenue of 40 million and predicted gross margins of +10% in an investors presentation. The company actually booked 26 million in revenue, had gross margins of -57%, and a net loss of 32 million.

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