Friday, October 26, 2012

Nice chat with Copper Fox

Before eveyone gets too excited I should clear the air. Copper Fox can't discuss the BFS for all the obvious reasons. But, that doesn't mean we can't get information that lets us draw some inferences. So to start with I'll tell you that the company's forward plans are to complete an air tight BFS. Progress is clearly being made and for all we know it could be done and is being reviewed by Elmer and any others privy to it. They should be studying the implications and working out who to sell the company. As many already know, they have taken the initial steps towards the transition.

I asked if the pp was an indication that Copper Fox was indeed seperating the old from the new. What I wanted to get at was whether we had enough money to get us through January and into Arizona time. He says yes but qualified it. There does need to be a transition and assuming we will still own Arizona, then we will need money. Most if not all of the team is coming to the next round table too. If there were doubts about the cohesiveness of the team and their plans to work together those can be dispelled.

Getting back to the money. It's probably fair to say that this is a small step toward the liquidity event. In fact, each small item they clear off the docket is a small step towards it. I said we were looking for a signal that would give us an idea of when we might expect the next investment opportunity. As you may have guessed it is a little to early to tell. What with Teck's 120 window and all we could be looking at late winter for a deal. There is a bit of a track record for Teck to act within 30 days of an event like the BFS. They too need a final round of reviewing the data. This would mean that if the BFS came out tomorrow we'd be looking at the end of next month for an answer. On the topic of the USA election, would it impact us? Not really.

We talked about what other majors were doing. Despite what some may think, Elmer is in tune with this and has a lifetime of experience in the business. His reading of the proverbial tea leaves suggest that we can expect more majors to scout Canada. We also talked about the jobs stuff. As mentioned in another post, there is backlash to the idea that Chinese have to come in and mine here in BC because we are too stupid to learn it and there's not enough people willing to do it blah blah blah. We all know that's bunk. Sorry Christy but that'll get you kicked out of office in a hurry. We are some of the best miners in the world and we do have the technology. If you sold us out then there's probably going to be a price to pay. Returning to the subject at hand, I did tell Elmer that I do keep track of who's hiring what as an indicator of what projects are near term and mentioned that we do not see the work force being engaged. I wanted to find out what influence he might have over this by who he's talking too. He could not really answer this and said this would be Teck's problem.

So I asked about when we could expect a plan for Arizona. It sounds like they want to take advantage of the quite time. (The Long Dark Tea Time of the Soul? Author: Douglas Adams). They will begin planning next month sometime and look toward January to begin setting things up. A titan is obviously called for but I'll get into the details of Arizona around Xmass. The implication is that from now till the end of November is when we will see the BFS. Probably right away I think. But getting the window open is all that counts. I would speculate that they want the window open for November so that it doesn't interfere with the transaction and we also have a clue here because of the tax implications and tax timing to max the value. I won't go into detail here. You can talk to your accountants about why this would be the time frame most beneficial to all.

We talked at some length about how working with the local and branching out was a keystone to successful development. The implications here do impact the enviro files. This was a round about way to find out how permit progress was going. To my satisfaction, no glitches have appeared. We all know just how important this is.

So our window for the final transaction is 4 months. This leads me to believe that if Teck opted out there is in place another buyer. Perhaps more than one. If the company does not have plans for Schaft Creek beyond this maximum window (The Teck clock) then they are certain of the final outcome. So I'll go to my prediction of November 22. I think this is when we will know for sure what will be done. With that said I cannot rule out a snap offer by Teck. One thing a can think that can be ruled out is an "earn back in" by Teck. Back when they did the interview and mentioned that Teck could ship Highland Valley up there to reduce the capex, that was just an idea. So what prevents them from mothballing a project elsewhere where the political climate is bad and bring the equipment here? Nothing. So capex monguerers beware. There more than one way to do this with extreme profit.

If I have time this weekend I'll post some of my insights that I normally would not share. (Monday you can expect more RBC buying.)


  1. Good Friday afternoon,
    your comments above are very helpful to me. Looking forward to the weekend post. I'm sure most of the Agoracom members will be reading; especially your detractors. I never read SH, read all Ag posts and Vette's blog. This blog address has been posted by an Ag member so it will be widely read.
    Enjoy your weekend.

    1. Yes, I saw that. I didn't want to post my blog site on other forums because I wanted to grow readership organically. I appreciate that there are real investors on a lot of those forums and they have to put up with some pretty bad commentary from others. But hey, those are chat boards. So that's why I've gone this route and have to spammed other sites. I figure people who do serious dd will eventually find me. I suppose the guys at silicone investors and some of the other bb's should be told. It would be good to have some other informed perspectives.

  2. Cheers for the feedback WG, makes a nice change to read some future insights without about 3 pages a day to wade through and attempt to distill on the other forum these days. I`m also on SI but don`t go over there too much these days. I`ll have a quick browse now that you`ve reminded me of that site again.

    I hope the CUU deal with Teck is done before the next wave of opportunities pass me by with not enough dry powder to do them justice.

  3. Very well written blog. Finally real and informative research while showing dedication with real D.D. A blog where the investor can digest real knowledgeable posts from an investor with experience in geology and understands the investments he writes up about.
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