Re: Twas the night before Xmas
in response to
by
posted on
Dec 20, 2019 11:45PM
CUU own 25% Schaft Creek: proven/probable min. reserves/940.8m tonnes = 0.27% copper, 0.19 g/t gold, 0.018% moly and 1.72 g/t silver containing: 5.6b lbs copper, 5.8m ounces gold, 363.5m lbs moly and 51.7m ounces silver; (Recoverable CuEq 0.46%)
1. Copper prices has gone through hell since the highs back in 2011.
Producers don't use spot prices to sanction. They use long term averages. Teck sanctioned QB2 at US$ 3.00/lb cu so whatever hell you're refering too doesn't bother a miner like Teck. Here's a long term price chart for perspective:
2. Project is strong economically. THere are no buyers when the money isn't there. The buyers are struggling themseleves. Hell look at gold, it's $1500 and we still haven't seen any crazy M&As yet.
The project economics are marginal at best. I'm not aware of a project that went ahead with a $ 3.2 billion capex and 8% post tax IRR. I do know of a project (Seabridge KSM) with 40 million oz gold and 10 billion lbs cu in reserves that can't find a partner. Their economics are 8 % post tax IRR and CAPEX of $ 5 billion. The capital risk is too high for those kind of returns. There has been a lot of gold acquisitions this year : https://seekingalpha.com/article/4310068-zijin-mining-acquires-continental-gold-how-acquisition-stacks-up-against-past-takeovers
3. No buyer is going to buy our carried interests until they know what Teck is going to do. You don't just buy into a minority interest especially in a bad copper market.
I completely agree with the first sentence and have been saying it for years. Teck is proceeding with a number of projects(QB2, QB3 and Nueva Union) regardless of the current state of the copper market. This is the best time for a buyer to acquire copper assets, not when it reaches $ 4.00 /lb.
Just look at QB2 and how their economics stack up before and after imporvements.
Are you referring to the deal that Teck did with Sumitomo on QB2? That was great deal for Teck which significantly improved their project economics. That's why I want CUU sitting on Teck's side of the bargaining table with any deals.