RE: Is Copper Mountain in play?A takeover is unlikely, Taseko tried it in June and failed! O'Rourke has set up this company in such a way to ward off any takeover as he wishes to bring it to production as CUM. Acquisitions are likely as O'Rourke would want to add to his holdings and get more copper for the mine. Think Supreme Resources, a prime takeover target and a company that may very well be in bed with O'Rourke. And then there is Beanstalk, O'Rourke's CPC which could fund the whole thing! Just food for thought. The $12 days of CUM are nearing... seize the opportunity and double your money NOW!
----------Original Message Posted 1/10/2011 10:31:02 PM----------
There is a new January 2011 presentation posted on the CUM website:
https://www.cumtn.com/sitemanager/_pdf_presentation/cumtn_PP.pdf
It removes all share price values based on P/CF, P/E, and NAV which were previously communicated by Copper Mountain. The removal of this information may suggest a takeover negotiation is underway.
In addition, the company has stated on slide 5 that "ongoing evaluations of acquisition and merger opportunities that can add shareholder value".
The new presentation deck also shows December construction and confirms a June start-up, giving confidence to a buyer of a cash flow production date.
All in all, I think that this new deck has been cleaned-up and posted in light of a merger/takeover negotiation, probably to comply with legal requirements/negotiations strategy.
In short, I'd say CUM is in play.
Copper Mountain will cash flow $2 to $2.50+/share starting in June ($3.50-$4.50 copper), so tack a 4X avg. peer multiple on it and you have an $8 to $10+ stock. It's much cheaper to bid on the company today, e.g. bid $8 vs. $6 rather than let it be re-evaluated as a producer by the street, have it shoot to $8 and then have to bid $10 or $12 later in the year. A near term bid saves a potential buyer hundreds of millions of dollars and a few months in the life span of a 15+ year asset is nothing.
As for the buyers, I'd bet on either Teck or Quadra.
The Australian flood situation means that Teck has hundreds of millions of dollars of unplanned cash flow this year. As it is unexpected, Teck could certainly "budget" that extra cash now to help it acquire Copper Mountain at what are still very inexpensive levels. Teck likes copper and if it is the buyer, I'd say the deal is for cash.
As for Quadra, it has some $550M in cash and no debt. That cash is not earning a return. It would provide good financial support for a takeover of Copper Mountain. Keep in mind, that Quadra has less cash flow per share than Copper Mountain will come June yet trades for nearly $15 a share. A bid by Quadra is likely cash and stock and given how accretive Copper Mountain would be for Quadra, I'd say Quadra likely bids more initially.
Either way, I would not sell on the first news of a takeover, a battle of some kind for this rare new copper producing asset is more probable than not, assuming we don't get a blow everyone out of the water $10 type of initial bid.
I will be buying more Copper Mountain at present levels and suggest shares in the $5-handle are VERY cheap. Thepresentation changes and the reality that a takeover delay means a moreexpensive takeover later suggest to me that CUM is already in play behind the scenes. If it's not,I still expect $8+ by summer's end on cash flow.
All round, Copper Mountain is currently a very good deal for new and existing investors.