RE: Latest resource update29 Jan 2021 10:58
Hi RL
No I hadn't seen the video and the article so thanks for posting. As with so many things to do with Amur and Russia they generally tend to raise more questions than answers. The one thing that jumped out at me from the Northern Miner article (which I need to read again at least twice to get a decent handle on) is this:-
"Asked if he would sell Malmyzh, Bowens says that “selling it now … would be stupid, because I wouldn’t make nearly as much money. I’m not young, but I plan on being around long enough to spend whatever I get out of this.”
The article was written end of 2016. Less than two years later a sale was concluded. He’s now involved with Amur Minerals yet this was his position over 4 years ago!
“…….I’m not young, but I plan on being around long enough to spend whatever I get out of this.”
You can take comments like these with a pinch of salt but Bowens, like Robin Young, is in his 60’s. He’s not onboard at Amur, IMO, to do anything other than help find a buyer.
When you look at the size of the resource at Malmyzh, its apparent further potential, the proximity of infrastructure, the fact that its shallow open pit, the decent/reasonable grades, the sale price seems awfully low at $200m. Was a sale forced through by Freeport who, by all accounts, were strapped for cash at the time and/or by EMX who stood to trouser a significant wedge from a sale?
"Close expects that a large Asian entity or Western multinational company might be interested in a takeover." An Asian entity or Western multinational buyer didn't happen and the project went to Russian Copper. Surely if any project was going to attract foreign interest and a bidding war it should have been Malmyzh?
In this game timing is everything. In 2016 copper prices were low, averaging for the year circa $2.25/lb., but rising. Prices then went on a run up to $3.25 peaking in 2nd.Q 2018 before falling again. Not exactly the best environment in which to raise billions to develop a mine or for selling a mine for that matter. The sale price, nonetheless, seems a give-away considering the size of the asset, its location and the apparent relative ease to mine.
Miners don’t make decisions on the present but on what they expect to happen in the future. Having said that I have an article where the president of Codelco stated in March 2016 that the copper price would stay around the $2/lb. level for at least the next two years. He ruled out copper prices rising above $3/lb. Within 9 months copper was over $3/lb.
Projects are overlooked or jettisoned by the majors only to be picked up by a junior and successfully developed or in some instances sold back to a major at a later date. For that reason I’m not sure you can take much away from the Malmyzh disposal given the information that’s out there. One would hope, however, that if Tom Bowens has been brought on board to help negotiate a deal for Kun Manie the outcome will be a good bit more than $200m.
TDT
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