RE:RE:Tesla and copperThanks... I suppose it is possible. Mitsubishi is 30% owner of Copper Mountain if I remember correctly. That said they could also hedge with a basket of copper producer stocks and avoid taking on specific company operation risk. Interesting to see what happens though
Good Luck,
Notgnu,
(NCU, NWHM, KRR)
CdnScorpion wrote: umm, how much do you think it would cost to buy futures to cover 85 million pounds of copper a year, for the next twenty years, at a price of less than $1.20/lb? Probably one heck of a lot more than the NPV of Florence at $3.50/lb. Definitely a lot more than the market value of Taseko itself. Buying into the mine now would be pennies on the dollar for all the copper that will be produced. We're investing in Taseko because we think it has a pretty good future, A company like Tesla buying the mine is not as an investment, it is insurance that the price of the materials they need to produce their products are stable. Tesla buys the mine, copper could go to $300/pound and it would not affect the costs of their production because they have locked in 85 million lbs/year for 20 years. Even if tomorrow they paid $1 billion for all of Florence, they will have locked in 1.7 billion lbs of copper over the next 20 years. So it will have cost them about 50 cents a pound to lock in a price of less than $1.50/lb. I doubt that that is even possible using futures and options.