Thursday, November 1, 2012

The final pieces of the CUU puzzle

Putting the last pieces together. I normally don't take anyone's word for anything if they are an outsider. Today is a good day for an exception because I know the source.

Vette says "Merit's review of the entire several thousand page draft report was done in a week (per Elmer Thursday but didn't say when it was completed) which I would have to assume means Matt is done his review since he has more specific knowledge of the project and more time to focus."

So October 27 they are just beginning to do the economics portion of the BFS. That takes a day. Sept 25 they said the review was in progress. We hear that it took a week and is done. Merit said a month for a complex document. So let's call that Oct 25 (yes, it has 5 weeks). Now it's Nov 1. The market isn't buying this and its not buying at all. See today's trading. 87k and flat as a pancake. I do see a couple of houses loading up even more and as I mentioned elsewhere this could be a catalyst for a beat down Monday if there's no news. You can't blame traders for doing everything they can to shake some shares loose. So if the trading is any indication we are looking at another delay. Day by day? Are we inching towards some imaginary finish line in our minds? 

Several people have suggested January as the release date. Is this far fetched? well, no not really. But I gave it an extra month which really should have ended up Oct 22 and adding the month for Teck to examine the BFS, Nov 22. But here we are with no BFS. So revising the timeline, we might be looking at the second week of Dec for a Teck decision. But the holidays will be upon us so why not wait till Jan for the formal NR? Or so the arguments go...

The thing is, Teck has had full access to all the information as per the contract. CUU updated they weekly and in August Teck downloaded the entire database. There's very little they need to see. Why they would wait is they would run their own numbers and then compare what CUU produces. They need this for pricing and negotiations if required. 

None of this justifies the extreme overtime for the BFS. I'm lost for an explanation. The review came up clean and only took a week. So what has the company been doing with it all this time? I would say they have been studying it because they have to represent it. I don't think they will release it until they are confident they can represent it fully. 

There's also the nagging question of an impartial value audit. I don't mean the offer audit I mean the one a company does to see if it has its head in the clouds. In our case the deal and the properties are very complex. You have a mine on top of a mine. The BFS will not represent the true value of the project. There's enough there for two mills. This is why the mill scale has just kept on increasing. 180k a day has been proposed. 

Then come the question of will CUU delay things until Teck is ready. Now just to dispel any false belief about timeliness rules. You're supposed to release material changes in a timely fashion. Sure, ok, but who decides when it's done? It's not material until it's done. In the case of a BFS they can keep changing the numbers as long as they want. Nothing compels them to release it.  There are some extreme examples out there.  I brought this up with Elmer at the co and he said that Teck's readiness would have nothing to do with their timing. I'm beginning to think otherwise. I think we will get a normal BFS, one that could have been produced on time a year ago. I think people will question why it was so late. I don't have a problem being delayed so as to benefit Teck as long as we get full price.

In light of new information I'm revising my timeline. We either get it next week or the first week of Feb 2013 looks good for a Teck decision. 


  1. Crikey !! Here's hoping for next week...otherwise I guess I will get to take advantage of a much lower share price in the ensuing months. Maybe my average cost will be half of what it was originally; already 30% lower with the delays. Either way I'm looking forward to the final day of reckoning. (Today was eerily quiet.)