Marcos, Yes, Campbell is an old-time miner.
It’s was funny that “Campbell took your gold virginity”. LOL. The long standing history of Campbell, within Quebec, was one powerful reason I always believed that Campbell would make it out of this situation. Then I looked at the Institutional Investment (before Sprott and Nuinsco deals were announced).
For the second half of 2005, Campbell has Institutional Holdings of about 30 million shares. The average share price since 2002 was 60 – 80 cents. So these institutional had invested at least $20 million in Campbell. Campbell had spent over $60 million on the Copper Rand mine so far. I said “there’s no way they’re going to let this company go under”.
Another sign came after the fourth quarter 2005. I could see that (what appears to be) a Canadian Pension Fund bought 2.5 million CCH shares in the 4th quarter of 2005. CDP GLOBAL ASSET MANAGEMENT, INC. (CAISSE DE DEPOT) reported 12/31/05.
As for the size of the outstanding shares (after the current dilution), the situation is much better than meets the eye. Campbell will have shares outstanding (fully diluted) of about 400 million.
About 100 million will be warrants, so they won’t hurt the EPS unless they are exercised. If they are exercised, that’s another $15 million cash for Campbell.
Almost half of the outstanding shares will be held by Sprott and Nuinsco.
We know that “strong hands” hold another 70 million shares, because we can only account for about 30 million shares that have traded in the entire year since Campbell went into restructuring. There has been lots a trading, but most positions with various Brokerages haven't changed by much (revealed in the StockWatch Institutional Holding screen).
Campbell will have 5 operating, producing copper/gold mines by the 2nd half of 2007.
My models show an EPS (earnings per share) of between $30 and $80 million, at an annual rate, by the middle of 2007. That gives CCH a forward PE ratio of between 1 and 3 (full dilution, using today’s share price).
440 million shares are NOT that uncommon for a mid-cap Producer. Breakwater (BWR.TO) has about 300 million shares, and they got up to $1.60 on the last peak. Bema Gold (BGO) has about 400 million shares, and they still don’t have an operating profit. BGO trades above $5.00.
Take a look at these comparison tables, developed by Bill Matlack. You will see many Producers with around 400 million shares. Look at the PE ratios. The gold companies trade at higher multiples than the copper companies. Campbell produces both.
Base Metals & Mining Stocks: Analysts' Ratings & Estimates
kitcometals.com
Precious Metals Stocks: Analysts' Ratings & Estimates
kitco.com
Here’s one more thing to consider. Sprott is buying 125 million shares. You can be absolutely sure they plan on selling these shares, probably in a few years. They just have to be expecting the market for CCH to be up in the single dollar range, with millions of shares traded per day. If not, how could Sprott ever exit a position of 125 million shares? Today’s market depth is just a fraction of what they need to sell 125 million shares at a good price. |
