I was with Tenke Mining for many years: political risk was always there and will be always there. This was the only reason I could buy this one at 0.9 CAD.
Interpretation of this risk is what matters for the stock price. My own personal take is that all these "news" are actually positive for Lundin Mining. Only if someone is investing after Mad man on BubbleTV sad Buy and without any DD this will be out of the blue.
Revision of all mining licenses in DRC are taking place from the very beginning of this year: you can find information on this blog: just search Tenke mining. Even Doug Casey once has put Tenke Mining on SELL because of it...at 5.o CAD. Should I remind you the price of TNK.to last April?
Actually now information from management is confirmed: Tenke Fungurume is not under question of termination. Renegotiation is another story and could certainly happen, but before you will sell in panic give it a thought:
1. Just check the value of the resources in Tenke Fungurume and discount by the market value of it in Lundin mining. Find conditions of the deal on this blog.
2. If conditions will be different - then previous uncertainty will be resolved and actual value, even still with Congo country risk, will be much higher. NPV of the project assumed long term copper prices of 1.0 USD. Value of Tenke Mining for Lundin Mining based on 8 cents for lb of Cu in the DRC ground. Extension of the resource base was never announced after latest drilling: I will guess that news will come out after "renegotiation".
3. "Renegotiation" are already well under way: Kabila - President of DRC, has visited Washington within last two weeks and met with G.W. Bush. Freeport-McMoran FCX is not a small company: they must have their own connection. There is some information (do not Trade on this one) that it is possible that people who looks like Kabila, his Minister of Defence and Minister of Mines have visited FCX properties in part of former Phelps Dodge which was recently acquired by FCX.
4. There are also some very important provisions in the Tenke Mining and former Phelps Dodge agreement on Tenke Fungurume: if capital required for putting Tenke Fungurume into production will exceed 25% PHD and now FCX will be responsible for all overcup.
As usual all this information does not contain any investment advise and only my thoughts on this particular situation.
If you will insist my advise will be only to read CS and that if you are on a margin or have put your house in ANY stock in the market SELL immediately. In all other cases obtain all information and then entertain yourself with your own thoughts and decisions.
The news could be found here:
Kabila did in fact visit FCX and a mine site in AZ prior to his visit in DC:
ReplyDeletehttp://www.eacourier.com/articles/2007/10/29/local_news/doc471e550b6e4cd370417858.txt