I'm positive on the company's prospects based on what they have in the ground and the exploration upside. The work in terms of the development is frustrating for me, but I've seen a lot bigger projects be delayed in even worse fashion by miners who think they can project manage the development phase of a project.
I worked on the Lihir MOPU project and ran into so many conflicts because they are tighter than ducks bums when it comes to spending money (I wanted them to spend money up front on a crushing plant to produce decent concrete aggregate and roadbase), and are reactionary managers rather proactive managers (ie. they prefer to fight fires rather than preventing them in the first place)
So I think CCU have gone in with the cheapest or simplest solution, rather than goldplating the process plant. I can understand that, it gets the finance over the line but if it doesn't work it's just embarrassing; and now they are having to bring forward (planned) capex and also are looking at the issues with the process plant.
From my point of view this company is being pushed down on thin volume to prime it for a takeover. Investors are not really running for the exits, but if an enthusiatic buyer steps in, they might be keen to offload. Where the bottom is, I don't know. Whoever wants CCU will buy it up, pay out the finance and shell out the money to fix the plant pronto. I'd say the total figure they would be looking at is $150 million.
So, 100 million for the company (once the takeover is announced, watch the price run up), pay out the finance for 25 and chuck another 25 at the process plant. That's not bad for 700 million to 1.5 billion dollars worth of silver
CCU Price at posting:
27.7¢ Sentiment: Buy Disclosure: Held
