Coronavirus, Copper Price and TKOCoronavirus is very serious problem in China now. But I think that it will be under control and the peak will be passed around April this year. Do not underestimate the power of Chinese system for control this virus. This will be only short term effect.
Copper was supposed to be deficit this year. But now it may be shifted into surplus this year because of the effect of coronavirus and sharp decrease in electricity network investment in China. Copper market should be in surplus with 800K tonnes more copper from new mines in 2021. Further increase in copper production from new mines in 2022 and 2023 may keep the copper market in surplus in 2022 and 2023. So this year and next 3 years, there will not be sharp jump in copper price. My guess the copper price is around $2.6-2.8 per pound range this year and next three years.
Last year TKO mined copper mainly from Granite (South part of the pit if you have visited the mine in BC) plus some low grade stock pile. This year TKO mined copper about half from Granite containing 0.27% Cu (0.29% Cu Eq.) and half from Pollyanna (North East part of the pit) containing 0.24% Cu (0.25% Cu Eq.). Next year, TKO will mine copper mainly from Pollyanna. So the grade is decreased. Earning report is not going to be good. GAAP earning should be negative. TKO is about breakeven GAAP around copper price of $3.2 per pound mianly due to high depreciation rate of $30 millions per Q. But cashflow breakeven is around $2.55 per pound of copper.
TKO will survive, but not prosper in the next 3 years. If you are long, hold your shares. If you want to buy, you will have three years. If you want to short, $0.8 may be good price.
Good luck to everyone!