What I love about the CDU threads, besides James, is the vigour on both sides of an argument. Due in part to the unusual way this company is run (thats not a judgement) participants take a position, or not, as much based on belief (or lack thereof) as anything else.
Lets face it, none of us really know how much copper etc is down there. We know the official estimate. We know the speculation but we won't really know the fact for many years I suspect. None of us know exactly how profitable this mine will be over time or for exactly how long. Some are comfortable with this and some are not.
The SP has been on a wild ride and recently went from around the $3 mark to just about touching $5 which is a pretty decent run. Not one of us was willing to step up and drive it over the $5 mark and keen as M&G seem to have been to topup their position, they weren't willing to pay more either.
The company faces the posibility of a board spill which is presumably courtasy of at least one of its cornerstone investors. The board will no doubt be keen to avoid this prospect at the Nov 24 AGM.
Interestingly the company appears to be seeking new blood on its register rather and is due to announce details to market 9 days before the AGM. Could the possibility of facing a spill motion impact their negotiating position?
While its hard to rule anything out, its also hard to have any confidence either way on the price that they could demand for the stock right now. Demanding a premium when the price was closer to $3 was presumably easier given what they had to sell. No so sure that asking for $5+ would be a reasonable or comfortbale place to dig their heels in this time.
I'm not convinced that CDU is really in a position to say take it or leave it. Saying he won't "bend" might be presumptuous given we don't even know his starting position. WM won't be looking to announce delays due to lack of finance so there is presure on to achieve an outcome.
A quick look at the price chart in recent months helps to put the recent SP spikes towards $5 into perspective. The runup to $4.50 seemed to have decent support but above that it seemed to struggle.
If I was to take a guess at what CDU was shooting for, i'd say $4.50. My suspicion as to what buyers would be hoping to pay would be closer to $4, if not slightly below. Something inbetween is the likely outcome in my opinion. Anything above $4.50 would be a very good result. Even a placement at $4.50 would be very supportive of the recent SP I suspect as it would be a tiny discount to the recent high. Wouldn't be counting any chickens yet though. Too many variables and the board is under more presure this time I believe than in previous instances.
CDU Price at posting:
$4.67 Sentiment: Buy Disclosure: Held
