I've seen several articles this year commenting on the M&A activity taking place in copper including Copper M&A activity heating up (Feb), China is in the hunt for copper (May), Copper activity poised to rise (June) and How to cash in on copper M&A (June). In regards to the China article, they state China is using this soft market for miners, like always, to do some buying. They bought Las Bambas. Often this is an indicator of a bottom. China has also eased rules making acquisitions easier to do.
As of July, in Canada alone, there had been 41 deals for a total of $7B+ from Osisko Mining ($3.7B) to Sulliden Gold ($300m). Another interesting tidbit is Canada has more mining head offices than any other country. Apparently this is an unused tax asset since there is no revenue to offset them. So, acquiring a Canadian mine provides the needed revenue.
Private equity has been dead in the mining sector of late. But, they do have a lot of $$$ and can act as source of financing. K Thomson, partner at Davies Ward Phillips & Vineberg, does many mining deals and says his desk is full of transactions of all shapes and sizes.
Private, you've talked about share purchases by them ever since TC started its slide. We've heard you and its become an old refrain. On MB after MB, I hear the same thing. When the share price is down, someone always expects the CEO to step up and buy. Seldom have I seen any of these purchases. Maybe Perron took out a big mortgage when he moved to Colo., has little free cash and is too levered right now. Maybe he's putting money aside for his kids to go to college. Maybe he prefers to be diversified. Don't mean to come on strong but think its time for you to get on a different horse.
These guys are taking tax loss selling right through Dec 31st. This is not the pattern from last year where TC hit its low and immediately began to reverse. Need some decent production #s.
Did another large sale go through at the end of the day yesterday? I thought volume jumped a couple of hundred thousand.
I'm wondering whether there is some under the radar things that might impact Q4 and 2015 that haven't really been discussed on the MB. Some of the things we have talked about include 1) the cost savings due to the weakness in the CND. Not sure how much this adds to up for Q4. 2) Some minor cost savings due to the drop in oil prices. 3) Hoping for better recovery rates.
Previously, Perron mentioned the additional work they have to do on the tailings dam will cost less than expected. This won't impact Q4 but will impact 2015 (is this an expense or capex?).
You mentioned a long time ago some positives coming from putting TCM on C&M at end of 2013 in terms of GAAP acctg. factors i.e. TC can discount the impairment DCF model to omit CF from PH8. Get rid of as much NBV as possible. Won't this help lower some of TC's depreciation expenses in '15? Other positives coming out of this.
Are there any other factors that can have a positive impact on TC financials moving forward? Thx.
Just a reminder for some ... Once TC pays off the 1st $350mm loan & refinances the rest, their annual savings will equal about 17 cents a share.
Back of the envelop calculation - an additional $280mm (cu $3 to $4=$80mm; au $1200 to $1600=$50mm and 15mm lbs of moly at $14 vs 6mm lbs at $10=$150mm).
Always surprises me how this many shares can move through without the price changing, unless it's the market maker moving through a lot of shares that they had accumulated for someone.
Who do you think has shorted copper. I thought Goldman had as one of their strategies for 2014 to short copper. Did other investment banking houses jump on board? How does this jive with Red Kite buying up LME inventories. Do GS and others decide to cover the short once they see enough compelling evidence that China will continue to buy large quantities of copper (and that maybe cu supplies won't be in surplus?
With getting close to 100% design plus adding a 2nd crusher, how close to 100k do you think MM can get - 90k?
Plus, the buyer also gets a moly operation!
Thx for the correction. Their Q3 production # seems quite high - equaling the first 6 months of the year. If correct, they've turned things around in the last qtr.
Have looked at additional info on the Lumwana mine. In 2013, it produced 260k tonnes. But, in 2014, production through the first 9 mos was 138 mm lbs or @ 63k tons. This is way below last year's pace. Part of the problem in '14 was they had a partial collapse. Also, they stated their fully allocated costs at $2.98 for the first 9 mos of '14. (But, I also read that in Q3 they produced 34k tons at a cost of $1.84). If this is so, then they've gotten production back up to & even higher than their 2013 rate and have gotten their costs down. The dispute with the govt is over a royalty tax that is going up from 6% to 20% on Jan 1st. I guess now Barrick waits to see if the govt blinks first.
Let us know if ICSG continues to reduce their 2015 net surplus position. It should also give a good read on how demand is holding up.
Have read about more copper mine suspensions, namely in Zambia.
Konkala suspends operations at its Nchanga copper mine in Zambia due to reduced power supply (9/14)
Glenmore suspends operations at 2 of its copper mines in Zambia due to tax row.
1st Quantum made a similar move in Zambia.
Barrick Gold to stop production at its Lumwane copper mine (Zambia) due to tax increase from 6% to 20%.
Barrick also has stopped construction of its Pascua-Lama gold mine in Chile
Chile has ordered El Morro to stop its development due to sorting out regulatory issues
Maybe we won't be hearing as often from dime, muffin, do, superlite, iraq, dadufuss, armchair, etc.
Well said and well written. On Dec 31st, I'll raise a glass to 2105 and try to forget the past 4 mos.
Skimmed the Technical Report - as if that's possible!
Given the overall/LOM ratio of 1.8 to1.0, I've decided to use a 1.2:to 1 ratio for 2015 (to be conservative like Perron). Assuming TC produces 260K oz og gold in '15, they should produce 300+oz of silver for @ $5m in revenue. This still may be a little light.
For LMC, I'm moving my revenue estimate up to $20mm.
So, $25m for LMC and silver together. Hope it's more.
I assume these technical reports are very meticulous and hold up over time. The MM report is from 2009
Not sure where you are coming from re: silver. First, you write silver at MM? Then, you write their silver is probably worth $6-7m. Is that LOM? Your thoughts on my projecting $1m for silver in 2015. More?
There's a lot we don't know about Langeloth since they'll be embarking into new territory. We can't really estimate total volume processed, where it'll be sourced, the % that'll be ferro, oxide and other, success in sourcing moly concentrate, etc. etc. So, I just put Langeloth down for @ $18m in rev in 2015. Just a guess.