Take physic, pomp

Morning Mailbag: Apoquindo, Chariot and Doug Casey

“Well, call me crazy, but it is my philosophy that in
order to be successful one must project
an image of success at all times.”
Buddy King, American Beauty (1999)
I haven’t done one of these posts in a while, so as three worthy candidates have come my way in the last few hours here we go.
Apoquindo (AQM.v): After this post on Tuesday IKN received the following comment from the management at AQM.v yesterday via the comments section, so by way of ‘right to reply’ here it is in an open post so that more people see it. For the record I agree totally about Villarzú’s integrity and his good standing in the copper industry. All I’m saying is that his price predictions on spot copper suck, the puff-piece interview with that copper-ignorant and backpocket-biased Andrew Mickey dude is way too suspect to be taken seriously and the IR company in the middle of the whole thing needs to take a long, hard look at how it’s doing its job if it wants to build a worthy following instead of just court the fickle, popular vote. I mean, check the share price action:
So here’s the reply from AQM.v. Fair dos to Ms. Ashton, she defends the company corner well.

I want to defend Juan Villarzu as a person with great integrity. You may disagree with his views, but they are genuinely held. I am a director of Apoquindo Minerals, Stephanie Ashton, and the title King of Copper was not made by Mr. Villarzu, he would not call himself that. Basically, to further explain his view, Mr. Villarzu believes that the current crisis is fundamentally a crisis in confidence, and that regaining confidence could change the economic situation very rapidly. He also says that the current crisis differs from other crisis in history, since never before has there been such a massive, concerted and rapid response by governments and central banks worldwide, and this will cause the recovery to be quicker. He believes in copper growth in China, and that alone will mean enough demand for copper, along with production cutbacks, that will result in a higher copper price. Yes Kin Communications is the IR company for Apoquindo, and I do not see what is the problem with the IR company doing its job. Most people disagree with Juan Villarzu´s opinion, as evidenced by the Cru conference presentations currently occurring in Santiago, but he is not alone in view, and it is genuinely held. He is a believer in the metal, as we all are here at Apoquindo.


Chariot Resources (CHD.to): CHD.to has been a pain in the side of Tom Meyer, analyst at Raymond James, as he rode his pick down through 2008. However Meyer deserves credit for sticking to his guns (though lowering his prices target by an order of magnitude) because 1) Meyer is very good at working the numbers and seeing underlying value and 2) copper has been coming back some and there is light at the end of this tunnel. So with that context, here’s Meyer’s latest update on the company, out this morning.

Chariot Resources Ltd. CHD-TSX
8th Delay in the Feasibility Study – The End Must Be Near
Tom Meyer, CFA, P.Eng

Target Price (6-12 mths) (C$) 0.50
Closing Price (C$) 0.24
Total Return to Target 108%

Chariot announced, before market open on Mar-31-09, yet another delay in the release of the feasibility study on its 70%-owned Mina Justa Cu project in Peru. The study is now planned to be released on or before Apr-23-09 (prev. 1Q09).

We reiterate our STRONG BUY rating and are increasing our target to C$0.50 (prev. C$0.40). In anticipation of the “almost done” feasibility study and our view of possible M&A activity as the miner’s balance sheets improve with the rebound in commodity prices, we have increased our target P/NAV multiple to 0.30x (prev. 0.20x). This increase more than offsets our model adjustments to account for the added delay and capex and opex uncertainty (we biased our numbers slightly higher). All told, we have reduced our NAV estimate to C$1.65 (prev. C$1.81).

– Capex/Opex uncertainty. Similar to the explanation given for the previous delay, management indicated that it is currently in the process of estimating the most up-to-date capital and operating costs. We estimate an initial capital cost of US$490 mln and a life of mine average operating cost of US$0.77/lb [opex includes sulphide flotation mill (additional capex of US$135 mln) starting in year 3 of project life].

– Mine planning parameters. According to management, the feasibility study envisions processing 12 million tonnes per year with an average grade of 0.58% Cu through the vat leach plant to produce up to ~60,000 tonnes per year of cathode and processing 5 million tonnes per year with an average grade of 1.25% Cu through a concentrator to produce up to 56,000 tonnes per year of copper in concentrate. We estimate first production in 2H12.

– Liquidity. According to the press release, Chariot has ~C$19 million in cash and is responsible for funding 70% of the project’s US$8 million budget in 2009.

CHD shares trade at a P/NAV of 0.15x versus its peer group weighted average at 0.62x. Our target price is based on a 0.30x P/NAV multiple and is in-line with risk and liquidity-adjusted historic multiples for advanced projects


Doug Casey: Following yesterday’s TradingPost, here’s a mail from a regular reader, initial “R”. Good to see that the smarter among you consider him, at best, a stage along the way.

I’ve developed a real dislike for that guy (Casey). I hate to admit I was a subscriber for a while. His entire operation is one big marketing drive. You sign up for one service, they tout another. And another. And another. Too many layers, and way too much appeal to elitism. Way too little in the way of performance too. He buries you in more picks than you could ever afford, then selectively touts the winners while tap dancing the burning match routine when his losers blow up.

And what’s with the Salta crap? Like I’m gonna sip wine and play polo all day with Mr. Risty while the rest of the world burns? **** that. I hope he gets overrun by Marxist guerillas.

The final straw was when he hired some so-called ex-CIA spooks to snoop for poop. As if. Show us your badges hosers. Don’t got any? Thought so. Oh, and the hijacking of ERIS, as if he had clue one what Anton Wilson was about. That really irritates me. He and Tony Robbins should get together.

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