Exco improves as Lion spins puntersEmailPrintNormal fontLarge...

Exco improves as Lion spins punters
Email
Print
Normal font
Large font
By Barry Fitzgerald
April 10, 2006
Page 1 of 2 | Single page
GARIMPEIRO

AdvertisementAdvertisement
EXCO Resources' share price has finally got a wriggle on after being in danger of being one of the only copper/gold stocks not to respond to the big gains posted by both metals.

Helping the stock along — it closed on Friday at 27.5¢ — was the cross-promotion of the company by its 14.7 per cent shareholder, Lion Selection.

Lion has been telling punters on its own roadshow that it is sure that Exco's Cloncurry copper resources are going to end up being owned by Xstrata.

Exco's resources are within spitting distance of Xstrata's Ernest Henry copper/gold mine, which needs to tie up additional reserves if it is to continue beyond 2011.

And if Xstrata really wants to cash in on current boom prices for copper, gaining access to the higher-grade material that Exco has on its books becomes compelling.

There is nothing new in all that. What is new is that with the copper price taking off, the value to Xstrata/Ernest Henry of the Exco-owned copper resources has soared to as much as $400 million by one estimate.

For Exco, that represents a big multiple of its current market capitalisation. But without a deal being struck, the market is holding back on giving Exco full value for its Cloncurry copper.

The October appointment to the Exco board of Barry Sullivan has raised hopes that a deal is not far off. Sullivan worked at MIM, now part of Xstrata, between 1974 and 1995.

He had a six-year stint as executive general manager of MIM's Mt Isa operations. During that time the current head of Xstrata's copper unit, Charlie Sartain, was a rising star in the Sullivan team. So the two know each other well and there is mutual respect.

While the behind-the-scenes work on a deal continues, the market has also started to take another look at Exco's gold exposure through its White Dam gold project in South Australia.

Once a native title agreement is reached, a go-ahead decision is a virtual certainty for a low-cost development that would generate super returns at current gold prices. To many in the market, those potential returns alone justify Exco's current market value. Cloncurry copper, then, is money for jam.

http://www.theage.com.au/news/business/exco-improves-as-lion-spins-punters/2006/04/09/1144521209767.html