Thursday, November 1, 2012

Teck is rising on CUU rumor


After the late rally Teck took its dive and now shows a bullish run on the rumor that Schaft Creek will drop their costs and set the company up for decades of profit. The chart indicates a $10 run. While not the old high, the expected increases from copper and the decrease in operating costs make this a conservative target. Regognia has identified this classic pattern. See chart below.

 

5 comments:

  1. Hi Web,
    I highly doubt the recent "run up" is related to Shaft Creek. There has been some strength in the broader markets and most resource companies have been up over the last week or so. I think if anything, you may see Teck decline with any sort of announcement of SC as the price they pay may appear too high. As well, if Teck does indeed buyout CUU, I could see them including shares as part of the deal. Depending on the dilution, this could be seen as a negative. I suppose it all depends on how Teck would spin the news to their shareholders.

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    1. It is a negative cost. Yes, there is a general positive outlook including Dr Copper. Yes, am all shares deal is best for both. CUU won't make a huge dent in their share structure and should be viewed as a positive.

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    2. Huge dent? Probably not but depending on the required CAPEX, it could be seen as a negative (at first). Teck also has a number of copper projects that are still at their infancy stage and will require large up front capital expenditures. They could obviously mothball or sell these if SC’s economics blow them out of the water however. I just don't buy that the Teck run up is related to CUU at all.

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  2. Teck gets its shares up before the aquisition.

    "With a stock-for-stock merger, an acquiring company exchanges its own stock for the stock of the target company.During a stock-for-stock merger, a merger arbitrageur buys the stock of the target company while shorting the stock of the acquiring company. So, when the merger is complete, and the target company’s stock is converted into the acquiring company’s stock, the merger arbitrageur simply uses the converted stock to cover his or her short position."

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    1. I would believe this scenario more if essentially every other diversified miner was not up significantly today and week over week.

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