RE: RE: On the one hand, on the other . . .last post was bad and didnt come thru tight, ignore that, here is the correct one:
some good points ration,
some other considerations though:
TKO has not made good on many low op cost promises like you said. the announced cost cuts are largely due to deferred stripping, which if you know mining, is really just borrowing "cost" from your self only to pay it back later at a higher cost.
For this reason, valuing Gibraltar production only, you cant use standard PE of 7-8 on these numbers, use 4-5 or maybe 3 if you are bear on copper.
I estimate 1.35 to 1.50 for "real" op costs this quarter, but more like 1.50 to 1.60 longer term.
however, that being said I beleive TKO has good upside, especially if cu can hold 2.25-2.50. I actually believe Copper will just mirror the USD/CDn exchange hovering about 2 CDN.
Here are the reason why:
TKO is like the OLD TECK. same lean thinking, lean management and cheapness. labour costs are about 2/3 on a per man basis of what teck is paying down at HVC. workers and unions seem happy with this with current forrestry strife. Think of teck back in the early 80s, leveraged Afton, a low cost cu gold producer into a foray into coal, then that leading to cominco takeover.
Further to this, and most importantly, I beleive TKO is about to make a move on CUM. They more or less got prosperity shot down by govt EIA, or at the least have a huge delay there, and CUM has a much more attractive project, that will get them their 100M lbs per year, for half the cost and half the time, and not too mention less red tape, and enviro and native BS to deal with. As an old operating mine, CUM at princeton will pretty much just have to build the mill and then turn on the key., realistic to get up and running with in 2 yrs from now, where as prosperity is probably 5-6 or more years out.
I think TKOs strategy has changed for these reasons, and also CUM fits "like a glove" same scales for production, equipment sizes, output of cu. there are countless marketing, overheads, and even labour synergies. Big Plus also that Haulbauer is very familiar with the area, and tight with brass of CUM as well.
The other element of this strategy, is to give prosperity more momentum when and if they go at that again. I think if they pull out of there for now, and "teach a lesson" to govts and residents of BC, that capital, jobs, and other great economic benefits will flow away from prosperity and the forrestry devastated area, when permitting and native issues become to much BS to deal with. That project is one of the bright spots in a fairly barren economic landscape up there, and maybe people will form a more powerful citizens group, and govt will help the challenged project forward next time around.
Anyway aside from that just purely from the numbers, it would be reasonable to expect abour 200-220 M shares out, with the new combined outfit, producing about 200M lbs cu at about 1.50. that an amazing 1 to 1 Lbs copper per share, or one lb per 2 dollars. compare this with the current half lb per share or 4 dollars per lb with TKO now, and 0.75 lb cu per share at teck, or 30 bucks per lb cu produced at Teck. HELLO VALUE???!!
I think TKO is giong to "massage" the earnings a bit this Q to jack the stock and build momentum for this possible move. and possible equity issue to help finance fast tracking the mine at princeton. shoudl be pretty easy to get creative and show say 1.25 per lb costs. failing this HDI has incredible deep pockets, and could bankroll the deal.
the value potential is absolutely huge if you are a copper bull beleiver. TIme to load up on CUM and TKO????