Stock price when the opinion was issued
We think the market has effectively now written off the mine, so any good news at all would have an amplified positive effect on the stock. But we doubt an agreement is going to be reached. FM is likely going to breach some debt covenants, but it is not in creditors' interest to force anything on the company. It has other assets, and has lots of short term liquidity. We would not expect bankruptcy here, though financial risks have indeed increased, and creditors can be difficult at times. There is still a question of environmental costs in Panama, and whether FM can capture any damages from the government. Fair value is likely $8 to $12, assuming no other negative news. That being said, the mine accounted for about 5% of world copper production. Copper potential goes into a global supply deficit, from a surplus, with any economic strength. Thus, FM's other assets might see some benefit even from its disaster in Panama.
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He hasn't owned mining companies in a very long time. Shocking to see what's happened to FM with that mine, as it's a great asset. Shows how risky it is to invest in foreign countries outside NA.
ABX knows how to allocate capital very well. If he were interested in a mining company, this would be the one, as the CEO certainly knows what to do. Eventually, the FM mine has to be up and running. If ABX can run it properly, there's a lot of value that can be created.
Small companies can't exist anymore in this new age of mining, oil/gas. We're going to see a lot of M&A.
The concern is on its mine in Panama and what the government will do. There is an election coming up and there could be a compromise on the opening of the mine. With First Quantum and Franco Nevada both having a stake in this mine there is basically a free option based on the price of their shares. Both companies have upside at this price.
Looking at it with renewed interest. Political situation has changed, license may be reinstated. That's critical to this company going forward, but also critical for Panama. Multi-decade reserve life, produces 1.5% of world's copper. Cautiously optimistic. Potential outsized upside for a risk-hungry investor.
Good alternative to TECK.B. Balance sheet is a lot more acceptable.