I find that a reasonably rational presentation... but don't see anything in it that I'm missing.
I think CUU holders have vastly greater potential for a future benefit with Teck management, and not Copper Fox management, being responsible for performing the work at Schaft Creek (which the CUU mgmt spent $90 million on, while failing to produce, or deliver, an answer that mattered). Teck will do the work right... for less money... which doesn't mean any guarantee you'll like their answers better.
How long will it take for the market to bottom and come back up to that price point (and that direction in change) that production decisions will require exist before that property makes a lick of sense to develop ? The market reality is what it is... and ...time is still an issue. But, all Copper Fox management would have had to do, given all that, would be to meet the requirement in NOT being stupid, while figuring out how to survive without hemorrhaging cash, etc. long enough to have it matter. However, that's not what they ARE doing...
FWIW, others have also presented comparable companies with Schaft Creek scale comparable deposits... with fewer barriers to production, and with managements who aren't stupid... that are valued far less than Schaft Creek/Copper Fox is, today. I agree that CUU is over-valued relative to others... based only on the numbers in those comparisons. What % of the premium in the price of CUU is still a function of $ being spent on promotion ? Perhaps the remaining surplus in value here is only in "Teck being a partner" and not in CUU at all... other than as a factor in the risk they'll screw it up somehow ? It doesn't hurt that Teck and not CUU will manage the project... but, it doesn't help CUU holders that Copper Fox management, not Teck's, controls CUU's fate.
I don't see that there is any pressure on Teck to go out of their way to benefit CUU shareholders at the expense of Teck shareholders interest by hurrying along in spending $ at Schaft Creek... particularly in a market that clearly doesn't justify having any interest at all in hurrying Schaft Creek along... So, given the alignment between market reality and Teck's interest versus time... I'll be surprised if they do a lot more than "the minimum" right now... whether or not CUU needs to show proofs the project is "hurrying right along" in order to sustain market interest.
Given that view of the timing issues, and the alignment of interests versus the market calendar... I don't see any real reason to think that Schaft Creek, whatever its worth, should matter in my consideration of Copper Fox, today.... more than the management performance and risk matters. It is going to be a long time before Schaft Creek matters... and Copper Fox seems to me that it is increasingly unlikely to survive for that long a time... given the proofs in their management performance thus far.
Certainly from a purely mathematical perspective... if you avoid thinking there's value in working on risking the project potential... and focus only on risking the finances and the dilution risks... its hard to produce an analysis that suggests buying pre-consolidation or pre-dilution makes any sense...
The time line and the burn rate... aren't issues of opinion... and Copper Fox's "lifestyle" management isn't close to being worth what they're being paid... based on the results they've delivered.
I'll agree with you only that we won't have that long to wait to find out... They'll have partnership meetings in Q1 (early Feb ?)... and then Teck will make decisions about what they plan to do about exploring Schaft Creek with Teck $ in 2015. The results of those decisions about the efforts that will be made will be material... and they'll have to tell shareholders in meaningful detail what those plans are...
So, I agree that around March, sometime, the mystery about that, which is being used in sustaining hope, will cease being factor... right about the same time that CUU runs out of money, and turns out the lights... or, you know how it works... has to dilute, pump, rinse, repeat... to keep paying management for pissing away the value...
I don't expect to get to that point in March... seeing CUU with a lot of wind in its sails... but, it will be worth watching to see what happens in March... and how they deal with it, when they run out of money... |
