Dar, it has been a long time since I have posted on this board, possibly even under another name, and I appreciated your answers in the past. I have a very small position left from my original puchases in PCU (I have been in and out in my other accounts several times) and just trying to decide whether to hold any longer. When you mention the stealth buyout, and I know this is a very open questions, but at current valuations, how greatly do feel this will effect the final long term price (outside of copper variations).
Thanks and great to see you still posting.
I don't want to get bought out. I want to be holding this stock when the big production increases turn into bigger dividends.....much bigger dividends, even at current copper prices.
If and when the endgame comes (the forced buyout), it will be at a 15% to 18% premium over then current market. Somebody will sue Grupo for breach of duty by paying too low a price (a la Minera Mexico). Grupo already controls so they don't have to pay a control premium. They just have to pay enough to win the inevitable lawsuit.
Copper still has a diversification place in my portfolio, scco is still a very low cost producer and capex will decrease when production increases unless they keep going big time on increasing production, like developing El Arco.
I intend to hold.
This posted this morning by Zacks, that brilliant, insightful stock research company:
" By Zacks Equity Research
1 hour ago
Investors are always looking for stocks that are poised to beat at earnings season and Southern Copper Corp. (SCCO) may be one such company. The firm has earnings coming up pretty soon, and events are shaping up quite nicely for their report."
I'm sure the geniuses at Zacks are keeping their eyes wide open for the earnings report which was released on April 24. DUH!!!
Too many moving parts on Tia Maria.
First SCCO said they expected a permit in March 2015 ….... now who knows?
Then Julio said the deal was dead and most thought he spoke without managements OK ….. he did not!
Protests go on and we are led to believe Farmers are laying their LIVES on the line to stop this project. DON'T TAKE THIS AT FACE VALUE!
Humala has 15 months left in office and his administration has been beset with scandals ….. he's gone through 7 Prime Ministers in 4 years! Many are waiting to vote him out of office and as we all know, the most important thing for a politician is to STAY IN OFFICE ….. especially in a third-world country …. there's just to much money to be made.
So ….. how does Humala save face and stay in office?
This leads us to SCCO being accused of “wrongdoing” and being asked to meet with government officials to discuss their “wrongdoing.” Just what was that alleged “wrongdoing”? Supposedly a former (?) SCCO employee was taped listening to a PROTEST ORGANIZER'S bribe solicitation to stop the protests ….. and save lives!
IMHO don't expect a permit any time soon and if it comes it won't be until after elections (if at all) unless a bundle of dirty money is involved. Ask yourself, how could a protest organizer stop a supposedly grass roots protest? Could it be that many of the protesters are actually on somebody's payroll and that the farmers are just pawns in the game?
Lots of questions but the bottom line is …... what will SCCO do with $1.4 billion if this project is canceled or delayed for 1 ½ years ….. think about that.
SCCO already has $4.2bn of identified capex for 2016/2017 not board approved (not in the budget). They have another $1.8bn with no date specified, and some projects with no $ specified.
There is never a shortage of things to spend capex on. You might be interested in going back and looking at past capex and production forecasts, with the understanding that it is par for the course for large mining projects to get delayed.
It has been written that anti-Tia Maria protesters are composed primarily of:
Local Political Groups
I can understand the fear (justified or not) of the Farmers, with regard to University Students they know nothing and will back any cause that SOMEONE convinces them is just, Local Political groups are easy to understand as politicians will back anyone who will get them re-elected, what isn't clear to me is why Unions back these protests? Don't the Unions see where killing all additional mining in Peru will lead? Or, could it be that the Unions feel that flexing their muscles now will lead to more power (and higher compensation) for their mining related (or other) members later?
What is the Government's position ….. they have sent 3000 police and 1000 military in to quell the protests …... does that mean the Government ultimately wants proposed mining expansion to go forth? Or, is there another angle that the Government is looking to ultimately exploit?
An interesting side light is that about 20 Peruvian mining companies have hired about 500 Peruvian Police Officers to provide private security in their off-hours thereby putting extra $$$ into the pockets of Peruvian Police Officers …. not an illegal practice in Peru but certainly a questionable one.
Lots of questions and few answers. The only thing that is clear to me is that it will be a long time (if ever) that Tia Maria expansion gets approved and IMHO there is only two things that can possibly expedite approval and they are additional SCCO concessions or outright $$$$ …. then the question becomes …... is it worth it?
Look up the Tia Maria satellite view …. it's interesting.
The USW STRONGLY appealed to thousands of their members to attend a rally against ASARCO/Grupo Mexico at company headquarters on 6/1/15 to protest company positions and demand a "fair" contract after almost two years of negotiations. They also penned a letter to the U.S. Congress using very harsh language to describe the company in an effort to enlist member support of the rally and gain the sympathy of politicians.
Approximately 200 people participated in the rally according to local media. How many were transported to the rally by the USW or potentially reimbursed for their attendance was not covered.
Have you noticed USW is not talking strike? They watched Grupo over Cananea. Asarco is their least profitable mine. I think the USW knows Groupo would just wait it out....for years, if necessary to break the union, just like Cananea.
On 6/5 the USW gave notice to ASARCO t;hat they wished to end the extended contract which both have been working under for the last two years! Each party had the option to cancel the extended contract with 15 days notice.
So ...... as of 6/20 there will be NO contract in force ..... the question is why would the USW do this? If I'm not mistaken ..... and I could be ..... my past experience tells me that the next step would be for the USW at ASARCO to take a strike vote and if that option passes the strike option is available to the USW. I cannot see the USW taking this step unless they were confident that a strike vote would pass.
But ..... will they strike ..... or is this move just designed to put more pressure on the company?
Grupo is immune to union pressure. They dumped asarco into bankruptcy during the last strike and bought it back only because asarco had a 9 billion judgement against them for breach of duty when they caused asarco to sell its interest in minera mexico (mexican mines) to then PCU, now scco, for too little money. Cost them 2.2 billion to buy asarco out of bankruptcy so they could extinguish the judgement. As part of that deal the then union contract was extended a year or two with no changes. I believe this is the first post-bankruptcy negotiation.
Risky move for the union. That leaves grupo open to selling the mine without a "take-the-union-contract" provision.
OK I'm going waaaay overboard on you now.
First ..... the word you're looking for is ..... successorship.
Second ..... either party could have ended the extended contract with 15 days notice ..... but IMO it was best for the USW to do so because IF the USW elects to strike ..... Grupo could say "poor me, we didn't cause this" and would have good reason to sell ASARCO ..... do they have a buyer lined up already and are just waiting for things to play-out ..... could be?
Third ..... the USW has been in close contact with the Mexican unions, they're working hand-in-hand against Grupo/SCCO stoking the Mexican unions and have said some very bad things about Grupo. So DAR, since I'm too lazy, why don't you find out when the Mexican contracts are up. Then think about what Grupo selling ASARCO with NO SUCCESSORSHIP AGREEMENT would say to the Mexican unions.
Fourth ..... who might be interested in ASARCO and who may be interested in forming a link with Grupo/SCCO? Ask ..... who's got the money and who needs the copper ...... that's right ..... China.
Fifth ...... IF China buys ASARCO it's an opportunity to take a little political pressure off themselves and put pressure on one of their biggest critics ..... John McCain.
There ...... have I figured it all out???
Accordingly, the Company reversed $289.4
million of net cumulative stripping cost as of December 31, 2005 and
recorded a net charge of $166.6 million to retained earnings after recognition
of workers’ participation and tax benefits of $122.8 million. Amortization of mine stripping for the year
2005, amounted to $467.5 million and is included in “Depreciation, amortization
and depletion” in the Company’s statement of earnings.
Jerk brings up a 2005 change in accounting for stripping costs. Hey dope, it was a charge to retained earnings.......a write-off of previously deferred costs.... they switched to direct write-off, a more conservative accounting method.
I understand that you shorts will post anything negative about a stock that you can think of, but this thread is as lame as it gets. First you bring up something they did 10 years ago....as if it cast a negative shadow on their accounting and then you get the balance sheet effect wrong.
Morbid stupidity is defined as a level of brain activity so low it just about keeps the vital organs functioning. There is no energy left for even the most rudimentary intellectual activity. This thread is a classic example.