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Johnmagee, I'm not sure I follow. Temporary low prices for...

  1. 117 Posts.
    Johnmagee,

    I'm not sure I follow. Temporary low prices for concentrate are actually bad because it will provide larger profits that will increase the value of the CCAI business which will mean that CCA have to pay more to buy out TCCC?

    So low concentrate prices are bad, but high concentrate prices are also bad.

    Increasing the value of CCAI is bad as well because it means CCA will have to pay more to buy out TCCC. Yet CCA already hold 70% of CCAI meaning the value of their holding has also climbed. As I said I'm not sure I follow. I would also like to give CCA some more credit instead of assuming that they will overpay on buying back the asset from TCCC sometime in the future because they didn't consider that concentrate prices may rise once TCCC sell.

    In regards to your earlier comment regarding paying for this expansion from current earnings. If you believe that CCA will achieve a higher return by doing this than you are able to get by receiving the dividend and investing elsewhere, then you must feel strongly about the future prospects of the company and want to buy and hold the stock. On the other hand if you believe that the business has serious headwinds, then any earnings that you can take out of the business now and redeploy into another investment with better prospects is a bonus which means you should commend Alison Watkins for doing the deal that gives CCA the chance to expand whilst also maintaining their ability to pay out dividends.
 
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