First blush it's too cheap. Second blush it appears to be placed with their institutional backers, not retail, that's good. Third blush, it appears that the development of Aqua Rica is being accelerated., that's very good. That's key because right now the market assigns no value to that great deposit. If so, we should hear more details, perhaps the feasibility study release, and a debt financing (could also explain the three buck price, quid pro quo?). Clues from this year old interview:
Recap Dec. 2003 Wall St. Interview:
"What will it cost to bring Agua Rica into production? Mr. Cohen: On the basis that we’re looking at it today, which is using some of the infrastructure at Alumbrera, it would cost us between $250-$300 million. That should be compared to the cost of a standalone project at Agua Rica of about $700 million. If you were to build a similar standalone project anywhere else in the world and not have the benefit of the Argentine infrastructure and costs, it would cost you between $1.2-$1.5 billion, so it’s less than 20% of other copper project of that magnitude and size around the world. TWST: David, do you have the balance sheet in place to accomplish all of your goals? Mr. Cohen: We do at the moment. Within about 18 months, we will be debt free (*), and the cash flow from Alumbrera will continue to allow us to put the equity together for the Agua Rica transaction. If you look at Agua Rica and you say it’s a $300 million project, we have already had indications from a number of banking institutions that they would finance between 60%-70% of it. So we’re probably looking for $100 million in equity."
(*) debt free year end because of higher copper prices |
