ARG So Cheap, But There Is A ButARG looks so compelling. Just came-off strong quarter of US$0.11 on coper price of around US$3.35/lb.
Copper, after peaking-up to US$3.60/lb., likely to average US$3.35/lb. in Q3, which means Q3 EPS likely to be similar to Q2. This quarter will see EPS of US$0.10 and pay a dividend of C$0.065, so it will retain another US$0.04/share in cash.
At current copper prices ARG annualizing EPS of US$0.40 (and likely better in a year out once electricity prices revert to more normal levels). Trading at 6X EPS with no debt and cash of US$0.30/share.
And Colihues will happen, just taking longer. Expect approval by year-end, initial ramp-up at 10,000 tpd and increasing to 45,000 tpy by end of 2008. At full ramp-up EPS goes to an insane US$0.80 based on US$3.35/lb. copper.
But I admit to be dumbfounded why ARG isn't buying back any shares down here? It truly doesn't make any sense for me. I certainly do not believe it is because of anything bad happening operationally. I think management wants to accumulate cash in order to make "future growth opportunities". This is not a good thing, but its not balanced given ARG's strong cash flow, cash position and low share price. I guess they feel the high dividend is enough in terms of returning funds to shareholders.
It would so accretive to all of us if company were to buy-back a few shares.