Interesting contrarian view on Ivanhoe Mines.
Good to see a little well reasoned skepticism after the enthusiasm expressed, in recent months, by those with overweight positions in the stock.
(Disclaimer: Do not now have, nor have I had in the past, any position long or short in the stock)
Isopatch
Message 19122921
<IVN has sold to the masses, but it needs to sell to the biggie investor who puts up 300 quatrillion to start a long term investament in a mine. China has biggie smelters and can slay anyone in metals, or for that matter, any other industrial chemical, so it can handle IVN's feed, but will IVN pass muster even with its new high grade started material. Grade is not the strongest. It is no Olympic Dam. The Pebble deposit, long denied by Cominco as economic, is as good.
If you take a look at the inventory of Copper-gold porphyries from Mexico to Japan, China to Russia, you will see why IVN is not causing major excitement. There are scads at 40 million to 1 billion tons. All kinds at .35% Cu and so so gold. BC is one big copper porphyry. The Windy Craggy was on of several metal deposits in the Wrangell group and it had 8 billion pounds of copper in it, at 1% grade.
The Kemess is an example of why you would not get excited about IVN. It is about the same or better dollar grade as IVN and operates at a huge 133,000 tons per day feed. That is not a small mine. It pays its cash costs but its surplus after that does not allow a real profit. If that is the case, then how is IVN supposed to pay its bills in a much higher cost country? higher construction costs, higher transport costs, weaker infrastructure, weaker labour pool, and higher power costs.
The only really good news out of IVN short of its sheer size is the recent news about the extremely high grade results that say started pit. If this is enough to pay down the mill, then IVN might have something. In fact the deposit itself might make a more sensible, affordable high grade mine. Of course if it could pay down a large operation it is ultimately more profitable to build the big mine.
What IVN's deposit might be good for, is where you owned a smelter and needed feed. If your name was Kennecott and you had a smelter in Japan, or India, it would make admirable sense. But elsewhere in not too far past times, major copper producers have been cutting back on their large scale production. Prices are back a tad so these days are behind us now.> |
