Welcome To the Copper Fox Metals Inc. HUB On AGORACOM
CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)
Message: Musings on some factors affecting CUU
Some factors on my mind of late:
1 – Do we have the goods?
I think the latest RE screams "Yes!", including silver. It was a great RE.
2 – Can we produce the goods at an economical / attractive price?
The BFS will be definitive, but here are the pros/cons as I see them:
Pros
·The pre-FS indicated negative 32 cents a pound and that was before the NTL. This is an excellent indicator.
·Based on the 2011 drilling, we appear to have some good starting pit locations with relatively higher grades.
·I attribute the innumerable delays in producing a feasibility to continued reworking /optimization of feasibility numbers by experienced management who are looking to maximize IRR.
·Insider buying, this indicates a positive expectation around feasibility.
·Assignment of Tecks’ Jim Grey.
Cons
·Do delays indicate that, despite experienced management, there are troubles afoot making the economics work? I am not saying they do, this is the con I can think of however.
3 – Will an “economical / attractive” price be held hostage by slowing global demand?
Pros
·A glance at the 5 year LME tells me that we’re still at a relative ebb in stockpiles
·Even slower growth by China is still significant growth, over time.
·Copper is essential and in most cases not easily replaced.
·Further, like all resources, the easy stuff has been had and that makes CUU relatively more attractive all the time.
Cons
· A hard global slowdown (if it occurs) will reduce the demand for copper and molybdenum and reduce the cost at which these metals are worth producing. This risk must be taken into account when negotiating any buy-out offer since Teck still has to make its money mining the stuff in the medium term, not just the long term.
·Nations attempting to print their way out of slow growth bodes well for gold and silver at least.
4 – In sum / thoughts before the webcast
We have an enormous resource which is very likely to be economical to produce. If global demand can maintain its footing, the buy-out value of CUU will be “fair”. If global demand slips, I believe falling demand will be used as leverage against CUU’s buy out value. All the more reason to get this wrapped up fast.
I am interested to listen for a sense of urgency and “indicators of certainty” (however veiled) during tomorrow’s webcast - versus only reviewing the established facts.
A lot of buy out prices have been well argued between $3 and $8. I don't know enough to favour a paricular price. Anything over $3 will preserve my capital and keep me in the investing game and anything more is gravy.
5 – Thoughts about current share price
The market is telling us there are other places to make money faster. Until the feasability, and in the face of global slow down, I expect our stock will continue to languish below last year's highs until there is material event that squeezes out remaining risk and makes CUU a magnet for investor's to pile on to a "sure thing" before it is "too late". Then we'll see an increase...
Regarding a reasonable snap offer before BFS, that would be preferable to me. I bought mostly near the heights last May and have 222K of shares. Would love to see this position wind up sooner rather than later.
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