RE: No Dilutive Financings Now PleaseWhy do you think the price dropped in the first place?
What I don't get is that they had ~$70MM in cash at end of Q3. Where did it all go? I thought the cash was the reason this play had such a huge market cap. Now they are looking for another $25MM to fund the mine?
ACU is significantly over valued based on the peer group. 7800 tonnes of Cu (17MM lbs annualized) barely justifies it's current market cap, let alone when it was trading 50-100% higher. 17MM lbs/yr x $2 lb cf = $34MM. Give em a 5x cf multiple and you are looking at a company with about $170MM mc when in full production in '09. Current mc is about $170MM, so already fully valued on a cf basis and they aren't even in production.
By contrast, you can buy Nord Resources that will produce 25MM lbs annualized for less than half the valuation as ACU. And they are starting production at year end, not Q2 '08. Nord is located in Arizona with an existing facility that is merely being upgraded. Nord also announced a 130% increase in resource which will soon let them announce expansion to ~40-50MM lbs annualized for very modest additional cost. Sprott owns 20% of the company. Trades on the pink sheets in the US - expect imminent listing in Canada - could be this month or early next year.
Another play that is dirt cheap in comparison is Zaruma Resources. Will be in production in late '08/early '09 with 15MM lbs yr. Trades with a piddling $18MM mc and is funded by Glencore. Trading at less than 1x first year's cash flow, equivalent to ACU trading at ~$0.24/sh...
Yes, ACU has the ability to expand, but at current prices, it's already fully priced in.