RE:This on the other hand was from Paul Gait last summerThat is true, Inco paid 30% of in-situ value. It was 140 million tons at 2% Ni equivalent including copper and cobalt, worth about 12b in-situ, sold for 4.3b. However, about half of that was at surface, even higher-grade, and the deposit was on the sea, and in Canada. And even then, Inco overpaid for it. It was a hot market for nickel, Inco and Falconbridge were arch rivals, and both just had to have it. Inco's bid was a pyrrhic victory, since after they bought it, the nickel market collapsed, from $4 to $2, and they spent years paying for it.
The CITIC placement at 3.63 does indicate the stock is cheap. Not much has changed, as the tax code was already in the works, and the copper price was about the same, maybe a bit lower now. You might say the election was a little unorthodox. But then again, what do you expect in Africa? Does another billion pounds of copper make this more valuable? The effect is probably marginal. It takes a long time to ramp these base metals projects up, and there are major infrastructure investments required. The 7% copper they have will have a fast payback, and supply plenty of throughput with enough declines. Tapping a new reef at 3% copper may be somethng to do 30 years down the road, when this is a huge mining complex, but until then, scarce resources will not be diverted from Kakula. The stock market, and the lack of better terms from BHP, Rio, Glencore, etc., are telling you it will be gobbled by Chinese parastatals for less than you hope. Will the politics or industry perception change? Maybe. But for now, it is a no-go zone. The FT quotes Rio Tinto president Jean-Sebastien Jacques:
“A significant industry issue is resource nationalism,” Mr Jacques said. “From the DRC and South Africa to Mongolia and Australia, it is gaining momentum."
It is everywhere. But more difficult in Africa, where there is no hope of an impartial court holding up your rightful legal claims. The judges are paid by the politicians who stuff illicit payments into their bank Swiss accounts. And the Western governments and courts and media go after the mining companies for making the payments. It's a lose-lose proposition. Much easier to work in Australia, where the rules are fixed, the process is transparent, you have the infrastructure and the work force, and at worst there is the occasional charge for back taxes, like WA hitting up BHP for 300 million in back taxes. In Tanzania, it's 190 billion! BHP has that new discovery near Olympic dam which looks promising. Still, they're looking closely at Ecuador as well. Central Africa is pretty far down the list.