<excellent PR on the Metallica property>
Little doubt about it. I don't see MR as overvalued at all, but I took my four bagger in it (cost was 31). At least I'm not like everybody else who "invests" in the sector, taking every little 25% move they get no matter what. I'd like to get back under a buck if the opportunity presents itself.
In the meantime, I've gone for a tablepounder with IP, and took a position yesterday as part of a company orchestrated cross. The buyers were the company insiders and believers (including me for 200,000, plus 25,000 I bought last week)taking 1.1 million shares off the hands of a fund. I can see why, as IP's Magistral is 35% carried to feasibility by Antofagasta.
This one has been thrown out in the base metal collapse. They did a scoping study based on the first 27 holes last year, that suggests a 50-54 cents cash cost (the industry median). So at first blush, one would assume investors are just attaching another ultra cheap, out of the money call valuation, on another depressed commodity here. I think there's more to it than that, as costs should be coming down, and there is the potential for a low cost starter pit as well. I'm betting the deposit comes together nicely based on the last 48 holes (excellent sections of 1.3-1.4% copper/moly) drilled this season and totally ignored by the market. Jim Steel has been working it, and will have a new report out shortly.
So how is this valued? 29 million shares out @ 17 is about US$3 million. Come on, are you f----g kidding me? They have 35% (70MT)of what so far looks like about 200 MT. It will likely get bigger. Their partner Antofagasta (shrewd, and not afraid of buying at cyclical bottoms) is a key and is serious about this deposit. The IP stake might also be a target for a mid tier (Inmet?). I don't get the impression management is going to get cute about an exit strategy. So even if we assign a hyper-depressed value of 3 cents a pound to the IP stake, that's US$40 million. If the price environment for copper improved, look out. You can do the math. Thin trading, so don't just throw in market orders, buy carefully.
VERY comprehensive web site:http://www.incapacific.com/s/Home.asp |
