…a lot higher last week and what’s more, Copper Mountain (CUM.to) has managed to consolidate those gains this week too:
In round numbers, a 30% pop and that’s not shabby at all. All on the back of the move in the copper price, of course, aided and abetted by the improving Loonie.
Which shouldn’t have been any surprise to those of you watching carefully. CUM.to has been the butt of jokes here at IKN for a while (Puerile? Moi?) but in the last installment “Serious CUM talk”
we made an effort to go behind the crappy results it keeps spurting out at us and talk about what’s really wrong and right with the company. Here’s an excerpt from that post:
“…this perenially underperforming company isn’t showing better operating margins. Costs keep eating into too much of that revenues number and we should be seeing better margins from a company that pays in Loonies but sells its wares in USD.
The debt on the CUM books is heavy, but most of it doesn’t come due until the next decade and the next two years are very light in repayments. The company has financial time and isn’t going to feel a cash crunch, but it’s been a poor operator for way too long and its management team has to come under deserved scrutiny one of these days, you can’t get a pass like this forever.
If I were Mitsu, I’d look for the moment to buy these jokers out and then put in a team that can actually run this company. One thing’s for sure, if copper rebounds the Loonie will go with it and you’ll suddenly see eyepopping net profits coming from this one.”
In short the opportunity here is the better copper prices that should widen operating margins, plus the way in which the loonie’s rebound will take pressure off that Dollar denominated debt and allow CUM.to to post strong bottom line profits in Loonie terms. The risk is that the jokers running the show fail to put in the type of production the mine is capable of AGAIN and snatch defeat from the jaws of victory.
Bottom line, for those with a penchant for risk and a liking for copper from here, it may be time to swallow CUM (into your portfolio, of course). Of maybe you’re like me, don’t trust this management team to put together more than one quarter of decent operating performance, and keeping spitting it out. Fnarr fnarr.