Been reading analyst reports about Imp. They all say the book is about $30, although they use slightly different methods to get there. One said for instance that Red Chris is worth $780 million or $20.5 per share. That seems conservative when Imp's own resource estimates from the beginning of May said Red Chris might have 6 billion lbs of copper and about 9 million oz of gold, but then again I do not know much about valuing mines. Actually Imp only owns 88% of Red Chris--someone gets about 1.5% milling royalties and someone else gets about 10.4% in some kind of clawback arrangement. Also technically they have a permit that allows them to process 30,000lbs a day with allowable expansion to 45,000, but then they would need to get new permission for increased amounts. Just a detail I suppose, and years away. Speaking of that, someone estimated that a deep mine at RC would be online in 2018 which I thought was too long, also gave an estimate of $450 million for the mine cost. They all point out that RC is a work in progress and that each set of assay results have tended to improve the picture. I suppose the next definitive announcement will be the Q4 resource update, and in the meantime we can hope that the drilling results will continue to be good.
About raising money, I think that if Edco wants to finance the mine, they would probably do a share offering where shareholders can subscribe to new shares based on the number of shares they have. Or something similar.
Have been thinking about buying a few more shares. Kind of a speculation, or bet that results at RC will continue to be good and that the resource will even bigger. Also momentum chasing I guess. Imp has been my best stock since 09,
and I think it is still not well known. Even if it is worth only $30, and it takes 5 yrs to get there, that is still 12%pa for the new shares, which is fine by me. I think the new Mt Polley results are v good too, and that without RC the co is probably worth $10 to $12. A risk would be if they issue a lot of shares and water the stock. And Imp is already 10% of my port., so strictly speaking not necessary to buy more. I like the idea of owning part of a mine with a 25 yr life expectancy--like a real solid, inflation protected long bond. Thoughts? |
