I found this on HC, thought the discussion was worth reposting...

I found this on HC, thought the discussion was worth reposting here...

OPTIONSMAN:
Article in The West about Tethyans response to Skafells statement - I think David Moore has done well with his response.

The West also has a separate article about Equinox's copper mine in Zambia (Lumwana). I found the similarities between Lumwana and Reko Diq quite interesting: Lumwana has 13 billion pounds of copper with 0.6% - 0.8% grades. Reko Diq SO FAR has 15.8 billion pounds Cu with average grade of 0.57% and 0.29 g/t gold. PLUS TYC has massive areas of unexplored acreage - very likely to increase these numbers by a fair amount before we get to the development stage.

Note also that EQN has a market cap of $366 mill. In addition they just raised $170m in Canada, bringing their total market cap to over $500 mill.

TYC has a paltry market cap of $90 mill (note that the new JV means TYC has 50% of Reko Diq) - this to me suggests TYC should be trading at well over $1. I can't see it hanging around 70c for much longer. Maybe people are waiting for the BFS. I think if you wait that long you could miss out on a nice run to $1, then $2, then $5 ...

EQN states that the costs for Lumwana will be $US0.56 /lb ... I think something similar (or fractionally higher) could be used for TYC.

Even if you use only $0.50/lb as profit for TYC then you get a value of $4 BILLION !!!!! And thats not including anythign for the 11 million ounces of gold already discovered.

Note also that the Sar Chesmeh mine is in operation across the border in Iran - it has a similar size too. 1.2 billion tonnes at 0.8% Cu and 0.3 g/t Au.

Who operates the Saindak Cu mine next to Reko Diq? Is it the Chinese?

JOJO:
Hi Optionsman,

As I have said before I am not in TYC at the moment so have not followed the last updates on the Tanjeel resource and the latest copper grades.
But at the time I made my decision to let TYC go as I was focused first of all on the Tanjeel project as that would have been the first cash flow of the company. I made my decision to stick with the Phu Kam copper mine from PNA in Laos as they had next to the copper also gold credits which would be better economics both mines having low grades copper.
Funny enough both mines had to delay their BFS result as costs had increased and they needed more time /drilling results to work it all out.
Because of this delay the market has punished both companies and the share price does not want to move.

TYC has the luck to be in an ideal enviroment for heapleaching but they need water, which they have sourced from groundwater not too far from the mine.
Low grades will only be profitable when the volumes are high and with the right copper price.
The copper price is at the moment not a problem but where will it be in 2008???
So they can not use todays prices in their BFS but have to take a historical average which is probably around the $1 per pound

I had expected much more from tyc but it looks like real high grades are just a dream they are not present in the kind of resource TYC has.
So we can only hope for higher grades to make up for the less economical parts during mining.

Acording to the experts we will have high copper prices for some time to come and they believe that 2007 is going another good year for the red metal.
All this should keep the focus on copper mining companies and the share price.

Politically TYC will always be trading at a discount but with resources getting scarce mining in politcal risky enviroments will become more commonplace.

TYC will always be a gamble especially at this time with no cashflow or a mine in production but some of this risk has been taken away having a partner which is cashed up and the connections to get more funds when needed.

Lets hope for more good exploration results and ofcours an succesfull BFS and rapid mining construction to make the most of the current high copper prices.

jojo

OPTIONSMAN:
Thanks again for your thoughts Jojo.

Agree that the cost blow out and delay has hurt TYC quite a bit. But now with the clawback option removed from the equation I think it simplifies things for TYC and can therefore look at the whole area and choose the best way forward.

But I am not sure I understand what the issue is with the low grades. As I mentioned in my last post there are many mines operating successfully with similar grades - EQN's Zambia mine forecasts a cost of only 56c / lb ... this is much lower than I expected. However, I dont know what type of operation is being used there. Do you?

As you say you need large volumes - but that isnt an issue here either. We know we have one of the largest resources in the world at Reko Diq already.

Am I missing something else though?