| | | I read the JV agreement and the most recent financials tonight...
The financials don't show where the money is going transparently, which is what I went to look for... so, I can't say what the driver of the burn rate is...
I question the legitimacy of carrying the asset at Schaft Creek as an $80 million asset at cost for the 100% interest prior to the JV deal... minus the $20 million in a return that leaves them now owning a 25% interest... but they're still carrying that 25% interest as a $60 million asset, at cost, versus an ~ $6.7 million asset value relative to the $20 million price tag on the 75%. But, that number they're using also just isn't the cost of the 25%... if the cost of the 100% interest was $80 million, the cost of the 25% would still be only $20 million, not the $60 million they're reporting. If that's in fact consistent with Canadian accounting standards... those are some screwed up accounting standards... that work to enable generating hugely inflated asset values. Not what I went there looking for... but, it pops out...
The clock is ticking... and at the current burn rate they'll be out of $ by the date in Feb when the management committee decides what sort of a work commitment to make at Schaft Creek in 2015.
On the tax return thing... if the BFS wasn't sufficient in the quality of effort to pass muster with a delivery notice re Teck... what was the issue with it that made it not worthy of delivery ? That's clearly relevant... as shouldn't you expect that there are probably standards that will apply to the quality of work done, when you're expecting to get tax subsidies to support that work ?
Otherwise, what I note in the terms in reading the JV deal... is that without $ in hand, and with a prodigious burn rate they seem intent on sustaining... CUU could easily end up needing to commit or transfer the remaining Schaft Creek interests that they have... either to Teck or Copper Fox "Affiliate" financiers. The JV places real limits on what CUU can do with Liard shares... but, from a CUU shareholders perspective, those limits aren't nearly limiting enough. They can dispose of them... without Teck's agreement being required... and without yours mattering...
What happens next, when they need money ? They're going to reverse, and try to sell shares, down here ? Or, they're going to have to either sell assets... or commit them as collateral in order to borrow...
I don't need to explain to the crowd here that for a company that's not making any money, borrowing money is the same thing as selling assets, do I ? Same thing... just with a delayed closing and a taxi meter running the whole time until completing the transfer.
I don't see that the focus on value here lets you drift along thinking nothing else happens here until mid-March, hoping to see good news then, when Teck finally allows Copper Fox to say something about what Teck thinks about spending money for exploring at Schaft Creek, next year.
There will necessarily be transformational events occurring here, before that happens...
Copper Fox clearly needs to kick the can down the road some more... but, right now, it looks like they're taking off their boots this time, in preparation... and its likely to hurt. |
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