Even years ago it was widely known that copper was very common and there were a lot of places that it could be mined cheaply - including some just a few hundred miles away from Stillwater, Montana. Check out NCQ and a host of others. They even are opening old copper mines in Northern Michigan that have existing infrastructure. Why, o why would anyone in their right mind look to mine copper in the middle of nowhere in South America and in a country, Argentina, with such a hostile socialist government?
And the future for copper is very dim as China cuts back and massive new cheap suppliers come on line. Frank should get the chop for Argentina ALONE!
From the wires 03/25/13:
"Hedge funds are making the biggest bet against copper on record as global inventories expand to a nine-year high, while concern that Europe’s debt crisis will spread spurred the biggest gain in gold bets since 2008.
Speculators raised net-short positions in U.S. copper futures and options by 53 percent to 25,719 contracts in the week ended March 19, according to Commodity Futures Trading Commission data that begins in 2006. A jump in bullish bets on corn, gold and natural gas boosted overall holdings across 18 raw materials for a second"
What's even worse than Frank McAllister "not being in his riight mind" (as implied by your question ending your first paragraph), is that SWC's board of directors rubber-stamped Frank's idiotic plan. The board of directors is SUPPOSED to be working for SWC shareholders, not for Frank himself. Yet the directors not only give Frank whatever he wants (including ridiculous pay of over $5 million/year), they totally shirked their responsibility to shareholders. Given that SWC shareholders owned shares for the North American PGM pure play, at the very least the directors should have put Frank's bonehead plan to turn SWC into a South American copper play to a shareholder vote. Instead they just groveled to senile old Frank, and thumbed their noses at the shareholder base. Incredible that these people now want shareholders to keep them aboard, after betraying them and ignoring their wishes. I hope Frank and the board not only get replaced by Clinton Group, but they get sued big-time for shirking their fiduciary responsibility to shareholders.
What also irritates me about Frank's stupid copper bet is how he nonchalantly paid nearly 4x the market price for Peregrine, and at a time when copper was at the top of the market. He defended this in the July 11, 2011 CC as saying that they didn't overpay, because the price of 3.8 cents/pound was at the bottom of the market for recent copper deposit purchases. As if that's all that mattered, the price you are paying for copper in the ground. Never mind that it will take another $2+ billion to develop, is in a remote part of the world, and subject to socialist Argentine politics, including possible nationalization and/or confiscatory taxation. Nope, to Frank as long as he paid a "fair price" for copper in the ground, he's a good boy. Why wasn't it a clue to Frank that he paid 3.79 times the market price? Because Frank is clueless, senile, and not in his right mind.
However, this doesn't explain why the board of directors rubber-stamped his hare-brained idea. For $200,000/year per director, you'd think that the board would actually take their jobs somewhat seriously. Clearly they did not. On the same CC (July 11, 2011 - transcript archived on the SWC website) someone asked if the transaction would be put up to a SWC shareholder vote. Frank said no, that he wanted to make the transaction as simple as possible for Peregrine shareholders. Aww, wasn't that nice of Frank to show such concern for Peregrine shareholders? Too bad Frank and the board of directors didn't show any concern for the SWC shareholders who actually paid their salaries. How ridiculous now that these people want the SWC shareholders to show concern for them, rather than throwing them out as they deserve.
Frank bought the South American copper-dirt-pile called Altar (Peregrine corporation) because he's a senile old fool who's living in the past. Frank was a copper company executive (Asarco) so he wants to be a copper prince, rather than a PGM producer. And Frank once had some distant association with the Alumbrera copper-gold deposit in Argentina. I know a little about Alumbrera, that was a great deposit. I bought shares of Wheaton River (WHT) after they took a large stake (I believe it was 37%) in Alumbrera, making it their core holding (and only holding of significant value). Wheaton River, formerly named after a British Columbia (Canada) deposit which had since been exhausted, reinvested their cash in the Alumbrera stake, thus making WHT shares essentially a pure play on Alumbrera.
Alumbrera was (and still is) a great mine - I believe it was already complete or nearly complete when Wheaton River took their stake - and WHT shares soared when it began producing. In fairly short order, Goldcorp bought WHT, they made Ian Telfer of WHT their CEO (moving legendary Goldcorp CEO Rob McEwen to chairman), and eventually used the old Wheaton name for the Silver Wheaton corporation. At any rate, perhaps Frank McAllister thinks that Altar can be another Alumbrera. I don't see it. Regardless of whether this can actually be pulled off, it's not what SWC shareholders wanted in 2011, and I'm guessing it's not what they want now. Frank has had his chance, he betrayed the SWC shareholders, it's time for him to go.
I agree Alex that the former Governer of Montana will be shareholder friendly. Even though I am not from Montana, we are all American's! Frank and his crew have destroyed SWC. We need the former governer of Montana to save SWC.