Sunday, November 11, 2012

Copper Fox -CUU.V Update

It's time to ask the hard questions.

To be honest, there is a lot of backlash over the lack of transparency. There's been no shortage of complaints. There's a lingering question  of "is this company going to keep going in this style?". I posed the idea several times that the company is bound by the contract with Teck. They won't admit it so we question whether this is going to continue. Tomorrow I hope to get an answer. This needs to have the air cleared.

In past talks with Elmer he indicated that he wanted to pull a Hunter Dickinson I don't see that company having ever operated in a cone of silence. I can respect the intention for the future development of the company. But, if this is not by contract then I predict his business model will fail. Whoever is coordinating this strategy is not that good in business. Answer me this: Why does BXX have a public rehash of material information with the company's opinion and CUU doesn't? Since this is a glaring contradiction of style I conclude that Elmer does not have that sway either by design of contract inherited or someone else is implementing the business strategy.

Hopefully we have an answer tomorrow.

Well, it's tomorrow today and what have I learned? It seems that a large portion of the discontent and the past foul ups are the main reason the company has stopped trying to estimate the finish date. I can completely understand this.

For starters, you can't ride the engineers case and expect a good result. So when he comes and tells you that someone key in another department resigned and took a job elsewhere you may want to have a tantrum but all you can really do is protect him. If you don't and you get involved in any way how can the result be one of independence? So you just have to let it ride. At the same time your investors start breathing down your back and a blogger hits you over the noggin while your trying to keep 25 plates spinning.

It's days like this when you want to throw the towel in. Remember that offer you got a while back that you passed up? Yup, sure makes you question your own judgement at times. But then comes a piece of news that gives you a glimmer of hope that the muddling is coming to an end. The guy you were forced to hire to oversee the feasibility study say "it's looking good, we're nearing the end". And you breath a sigh of relief. You been through this before, 5 times to be exact, but never this rough.

Looking towards the future you realize that with the explosion of mining that it may be hard to keep timelines especially in the face of a changing work force dynamic. Remember the 80's? To be sure, we can expect close to 2 decades of it. Wanna be a geologist on the front line? Really... I think the next cuu will be a lot more like BXX is today. I think the Elmers of the world are just beginning to embrace the face time that's required with today's retail. We are not our fathers. We are spoiled brats who expect to be kept up to the minute. Else wise, we will move our money into blue chips and sit on dividend stocks.

When a snafu happens and preferably before, a company should come out and say "we are experiencing technical difficulties". The hit will be minor if the co has a following and a reputation. In fact, there just might be seasoned players who sat on cash for the little spur that the sp needs and will provide it at the right time. This new era of communication is something the old boys have to adapt to. The guys who do it will be rewarded. Today's investing in Jr's is a conversation not a speech. Like an organism, we are the bio feedback. You need us in order that you should survive.

So where are we today? Have we been told that the mine plan is done? Can we accept that? Are the reviews done? Since the last department who was/is working on this blew off every deadline they gave, can their work be trusted? I say yes. There's not a lot they can do now about manpower. That was something to have been considered last year. Blame their management. On a related relevant note. It's almost funny to see a company come out a brag about their Q's success and in the same breath tell us their backlog went up by 10%. If I ran that company heads would roll for being so stupid. Why crap on your customers simply because you couldn't plan for success? Idiots I say. I'm pretty sure this is going to come back and bite them. They are cutting the legs off the chair they plan to sit on and don't even realize it.

Here's an excerpt from an Agoracom poster who emailed the company (Posted today): Unless you have some very long summers in Canada I'm kind of disappointed at the missed MID to LATE SUMMER BFS release date. (The work required to complete the Feasibility Study has been completed by a number of independent engineering companies, over which Copper Fox has limited control. These engineering companies provide estimated dates when they would completed their work and that is what is provided to and used by the main contractor Tetra Tech to estimate when they would be completed. In addition to delays encountered by these companies, the work completed by the various contractors have to be reviewed by competent persons internal to those engineering companies and then passed on to Tetra Tech. If on review Tetra Tech has questions or issues that have to be resolved before that information would be used to move to the next stage/phase of the feasibility study. The cumulative effect of this process has led to delays (which were unexpected). Please keep in mind that five independent contractors were involved in providing information to the feasibility study. Also a number of Tetra Tech’s people were hired  away by other companies during this process.)

So the question everyone wants an answer to: Is it done yet, is it done yet? I think they found quite a few areas of improvement and incorporated them. Remember the port we bought? Elmer said that was worth 300 million in savings? I think the number was something like $60/ton.  While this is an indirect cost savings it still effects the final numbers. And yes folks, it is being incorporated in the valuation. Remember how much time Elmer spent talking to the buyers of concentrate? Well, the point of that was to come up with an accurate shipping cost. Again, factors in. So are we done yet? Not quite. Is it close? Yes

So they are in the third round of checking the numbers. Could they release it Monday? Yup. Will they? They might. I figured Tuesday was a prime day. So we wait up to 2 days. Can't blame them if some people want a long weekend can we. This has been a hard long haul. The last word I received was that this project will wrap up before the year is over. If they want to beat Xmass then Tuesday is the day. Monday they should get an update. If there are no more questions then the drafting of the NR will begin.

If there are still questions then people will take that wrong despite the attempts by CUU to get the message out. See agoracom Post:  The company is finally responding to the need to communicate with us. Late? Oh yes, very late. But this is the right thing to do should they need more time. Telling us why is critical to keep the retail in the game. I'm helping get that message out too. The small investor needs to know there's no reason to panic. There may be traders who try to exploit the fear. You'll hear the old "ballooning CAPEX crap" and all the standard BS arguments to try get you to sell.

There are a number of people who think we have till the end of January to buy. They are looking at Teck's finances and all the other information and think Teck will be in no rush. Teck wants a bullet proof BFS and expects CUU to deliver it on their time dime. They think TT is under powered still and won't make the deadline this year. They cite in specific:

CUU has not made a clear statement correlating the workings of Merit, their own internal reviewer's progress and TT's current status. There has been no informal update on the company hired to provide oversight (The Moose). All of these are interdependent. They see the statements made in the emails as incomplete or lacking. They do not like the idea that a full disclosure has not been made. They would like a formal update on what issues and improvements have been identified and a clear statement of what's left to do.

I can understand these questions. No, I do not think the company should use the blackout as an excuse not to update us. If on Monday they discover that there needs to be another month of refinements they need to tell us in a NR. No timelines required, we can figure out roughly (laughing at TT) how long the remainder will take. I almost take their refusal to offer guidance as a sign that they really believe it is almost done.

It's possible we may find out some more info next week even if there's no NR. It looks like the company will continue to take questions and is opening up more and more. I consider this a really positive step.

If I have time I'll post about AZ next week. (Providing it's relevant lol) This is part of the compensation we are getting for being so patient. It is just a rough guess right now because I don't know the final share structure but it should come in as a $5 share at maturity. (40 million shares to start with?)



  1. Thanks for the update, Webgogs

  2. I like the sound of management wanting to compensate the investors for our patience. The question I have is, how long will this maturity take for the share price to reach $5.00 in cuu2? 1 year? 2 years? 5 years?
    thanks Webgogs

    1. 1 year if they go nuts on it and it gets sold before the resource is done. 1.5 years if they go the full distance to a resource. 2 years if they model it for a client but this adds to the compensation. Yes, I have asked what they are thinking for after AZ. That's a story that is just coming onto the horizon. I think 1.2 billion pounds is reasonable and at 6 cents. I think they can get a lot more with just a bit more work. I like the sound of a 200 million payday for around 18 months. (Just a hunch that we will hit a very large deposit with some very nice grades. Sometimes Elmer just gets in my head lol.)

  3. Webgogs, when you say "the last word I received was that this project will wrap up before the year is over", do you mean the BFS will be out before year end or the SC will be sold before year end? Please clarify. TIA.

    1. I really hope you are right and that would make this Christmas the best ever. If the selling price would even be close to your $5 prediction for CUU2 I would cry with joy (I know you valued $7.87 for CUU, but that would be unbelieveable). BTW, do you still expect a selling price of around $7.87?

    2. They should be trying for it yes. Teck isn't just buying a deposit. It's a turn key mine complete with shipping facilities. People seem to miss that this is no ordinary BFS. It's one that is the linchpin for the whole area. How often has this occurred in Canada and in particular, BC?

  4. Webgogs, if we get anywhere near $5 this year for cuu I will gladly donate $10k to your favorite horse refuge in Quesnel.


  5. Hogwash! This is all about nothing... pity

    1. You know what to expect tomorrow am... ;)

  6. I know this. "When information is deemed material you have to put it out in a timely fashion."