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Strategies & Market Trends : Winter in the Great White North

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To: marcos who wrote (504)	3/31/2001 4:17:18 PM
From: tyc:>	Read Replies (2) of 8273

>>i suspect that you arrive at the choice of Inmet as a copper vehicle through a more scientific selection process than ralfph with tek.b.to and i with my aur.to, I doubt it Marcos... it's just common sense, not rocket science. I sure wouldn't knock Aur. However, was reading about it the other day and noticed that QuebradaBlanca has a cash cost of .51c and the orebody has a projected life of 12-13 years. In contrast, Antamina will have a cash cost of .35c and a mine life of ~23 years. Both mines have to repay their capital costs before anyone really gets any true benefit, of course. But even a 3.3% share of the remaining life-of-mine cash flow sounds like a helluva lot of cash flow to enjoy. The intriguing thing is that the market seems to be ascribing no value to IMN's interest. Hell ! even IMN's books don't ascribe any value to it ! Izok is carried on the books at only C$24M, and Cayeli, one of the worlds lowest cost underground mines at $26M. (Years ago they wrote down the value of their capital assets). Despite these ridiculously low book values, the market price is less than 50% of book ! Lots of uncertainty about OKtedi still . However, IMN has made it clear (finally) that there is no legal obligation for IMN to provide cash even in the unlikely circumstance that OKTL should require more cash; IMN would suffer only dilution of its interest. (Best you read the annual report about this yourself). Challenge this statement please ! Right from the start of production, Inmet will enjoy leverage to an increase in copper prices for 3.3% of the production from Antamina.... With higher prices the owners may receive their money back faster, but not more money ! Similarly, IMN retains the benefit of leverage to metal prices for its 18% interest in OKTL too ! There's more... but that's enough. The usual disclaimers apply.. I could be wrong. Do your own due diligence !

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