Dr.Copper is speaking and Callinan investors are listening
Copper prices are increasing, signalling a possible end of the beginning of a recovery, particularly in the commodities market, as central banks throughout the World pour money into ‘shovel ready’ infrastructure projects. The proposed shift from hydrocarbon to green energy, with more expansion of electrical generation capacity and consumption by electric automobiles, will continue to increase the demand for copper. Of course, the BRIC countries remain potentially huge consumers of copper as they work to extend their growing prosperity to vast domestic populations who have yet to benefit from recent economic activity.
Callinan shareholders and potential shareholders are fully aware of the importance of copper prices in view of the company’s special relationship with Hudbay and the Hudbay operated 777 Mine, in which Callinan owns a 6 2/3% NPI royalty and receives $0.25 for every ton mined. The 777 Mine is the profit centre for Hudbay’s total operations. Some analysts have said that one of Hudbay’s limitations as an investment is the life span of the 777, in spite of the fact that Hudbay has stated that it has a 15-20 year mine life. Diamond drilling on Callinan’s contiguous, 100% owner War Baby claims has revealed the distinct possibility that the Callinan property contains the down-dip extension of the lucrative 777 ore body and consequently, the extended life of the mine.
The previous Hudbay administration has aimed their acquisition sights at far away, low labour cost but high political risk targets: Their recent expensive Guatemalan acquisition is in mothballs due to the decline in nickel prices, and the proposed acquisition of Lundin Mining was rejected by the shareholders, resulting in the ousting of management and the Board of Directors. The new management / director team, led by Peter Jones, has said that they will focus on acquisition where there is clear value to the shareholders.
Callinan should come up on his radar screen for three obvious reasons:
- The War Baby could increase the life of the highly profitable 777 Mine
- The outflow of the royalty payments would stop
- Hudbay could eliminate the high risk of unintended consequences posed by Callinan lawsuit, which Hudbay has finally clearly acknowledged as real and not frivolous
In addition, Callinan owns several mineral properties of merit in Manitoba, a province in which Mr. Jones has considerable expertise. Dr. Copper is sending out a message and it is being listened to by not only Callinan investors but also by base metal producers such as Hudbay as well as larger companies looking for undervalues situations.
