RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: RE: REMudguy & Prospekt & Retire56,
I've enjoyed reading your discussion today, and I'll just add some brief thoughts:
How do we value the exploration potential? ... Lots of multiple SC claims, but I have looked critically for the data to support this and have come up with modest prospects.
I think that CUU has excellent potential to find further minerals in the Paramount, Mike, ES & GK zones, but I've come to realize that it will take a lot of time to come up with measurable resources, especially if the company has to deal with a slow & conservative engineering firm such as AMEC. Lots of other companies also have significant exploration potential, and I've become sceptical as to whether a potential buyer will pay a huge premium on this account.
The key to this is Ernesto. He controls what happens, and if he wants to move on, he'll take his price. His recent buying is very reassuring, but is numerically insignificant and can't possibly be attributed to meaningful accumulation, when he can buy shares in lots of 1.5M+ via private placements. So I think he is strategically sending a signal to the market, or pragmatically, he is sending a signal to potential buyers that shows his commitment. What is his price? I suspect our assumption that he bought $2+ means he expects more might have been correct at the time, but the market has deteriorated considerably since then. His expectations may have as well and we should be mindful of that.
I agree, and I'm influenced by these considerations:
- Ernesto bought his 50% interest in CUU in 2009, because he was able to get a huge block of shares very cheaply.
- We know that Ernesto is interested in other business ventures besides CUU (ANI, RHR, RPM), and now that the market has crashed so badly in the last 6 months, I wouldn't be surprised if he'd like to free up some or all of his CUU investments and put the proceeds into other undervalued companies. I agree that Ernesto might be willing to accept a price that suits his agenda just fine, but is not so great for the rest of us.
What I can't get my head around is why are there Juniors with less proven resources and only in a specific metal i.e. gold, silver that have a SP that is significantly higher i.e. ATAC. It was as high as $9.00 a while back and is currently viewed as being undervalued at around $4.00. CUU isn't only a world class deposit in copper but the other metals as well if it reaches its potential as most are predicting. So why couldn't CUU reach the same threshold as ATAC when they show comparable #s in just gold?
I don't think that ATAC is a very good benchmark to use for trying to value CUU. If we consider only ATAC's proven resources in its Tiger zone, then that company is vastly overvalued. But for various reasons (whether rightly or wrongly remains to be seen) many investors became persuaded earlier this year that ATAC was on the virge of finding a resource of 20MM ounces of gold or more. Now, many ATAC investors are having second thoughts and the price has fallen a lot.
The more general observation however, is that (wisely or not) investors tend to value gold projects more than base metal projects, and it may be that many investors still see Copper Fox as being primarily a base metals project, and are overlooking our 6MM ounces of gold.
So I am closing out the CopperFox bottom-fish buy recommendation at .065 for a 78% loss from the bottom-fish buy limit, while keeping the company on watch to see if it can emerge with ownership terms that give it permanent control over the direction of Shaft Creek, a development which would justify treating Copper Fox as a world class call on future copper prices.
Remember that John Kaiser's conclusions, quoted above, were written when the share price of CUU was at 6.5 cents. At that price, Kaiser declared that it would be a "world class call on future copper prices". I am a Kaiser subscriber and I can confirm that Kaiser no longer has any Buy recommendation on CUU (it's not that he dislikes the stock -- he's simply silent about CUU).
Hmmm, but are we really interested in making it look good for Teck? What is our end-goal with Teck anyway? Surely, it is not to have them earn-back any amount and failing that, the least possible.
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Why are we trying to make it look so good right now? We don't have to accept a poor offer from Teck. We could just say that we'll sit around and take our chances closer to mine opening day. Couldn't we? I just don't see the downside in that, except time of course.
Yes, except time of course, which is a big "except". I've heard it said that Elmer feels that many investors don't sufficiently value CUU's relationship with Teck -- they see Teck's 75% back-in rights as a liability whereas he (Elmer) feels that it is an asset. Well, at any rate, I think it would be -- over a short time horizon -- a disaster to CUU's share price if Teck were to decide not to back in. Yes, there would be other big mining companies who might be interested to buy us out or to do a JV, but right now those big mining companies have a lot of attractively priced junior companies that are eager to do deals with them. We could languish for a long time.
Good discussion, friends.