why hasn't cuo been sold?

Poor us.

Legal eagle wrangling and suing the pants off people aside, I got to wondering why a mine which operates at US$1/lb production cost (or, has the potential to) is sitting idle and unsold, when copper is going for a run?

So I considered it from an Enterprise Value point of view considering that someone who is taking over the mess will have to pay out the debt to CFE and all liabilities, as well as pay something for the assets.

According to the annual report, CUO had around $200M of assets, and $170M of liabilities, so nett equity was #37M or thereabouts.

Then it went and had a massive FAIL with the QP's, which precipitated a bunch of problems, notably someone had to phone Macquarie Bank during a credit crisis and Maccas told them to go jump. Ergo, the fromage eating surrender monkeys in CUO's secret bunker decided to lay down arms and grab ankles, scuttling off to NiPlats and other sinecures to carry on suckling the shareholder teat and/or trying to forget about this at the bottom of a bottle of JD's. Like the rest of us.

Faced with this conundrum, we saw Maccas flog the debt to CFE; Tony Sage now has first option over CUO and its projects...but stuffed if I know what that means. Ask your lawyers.

Regardless, this isn't about Tony Sage's smarts, its about why someone else hasn't bought the CUO fail-boat and bailed it out.

In an EV buy scenario you pay for assets (which, considering $30M of this was copper in solution and on the heaps) which I estimated shrank to $70M or so when they turned the plant off and turned the bush green. You also have to stump up for market cap ($25M) and liabilities ($100M once you contra cash and receivables, pay out contractors, pay off debt from the hedge close-out, etc). You can then feel chuffed because you have $200M of assets for $70M. However, these assets represent a leverage in to the cash flow opportunity of the mine when running, which at 3mtpa (30ktpa Cu) has a mine life of 5 years, and would probably push $50 or $60M a year back into your pocket. Ie; you spend $200M to get $250M, minus your finance costs.

Normally, if you plug $200M in as the buy-in on an NPV calc, and have 5 years x $55M, it comes out about even, if not a tad rosy. So, ideally, if you don't pay too much for the plant, someone ought to have been able to walk in and make a deal which would see CUO either surrender a significant slice of equity in the project, or get bought out for nett $70M leaving it with the cash, no copper mine, and no debt. Buyer then goes on to do OK from Lady Annie and CUO dusts itself off and tries to make something of its remaining assets.

However, thanks to the related-party deal with Minsec, which was valued by oompa-loompas on meth apparently, CUO has a swag of assets in Platmin ($60M), NiPlats ($3.3M), Corvette ($3M), Buka Gold ($1.5M), Sappes ($??), Lady Loretta ($??), Tianshan Goldfields ($6M) and Australis Resources for phosphate (lets call it $3M). All up, something like $100M.

If the administrators and shareholders knew what they were doing, they'd demand the buyer pay market rates for these assets in various companies. You chuck another $100M on top of the cost of CUO's debt, assets and market cap, and suddenly you are looking at a hideous disaster with an NPV of negative $150M plus because some of these vehicles require top-ups and TLC. Ie you've paid close to $350M to get 5 years of mining, with possible upside.

But, you say, surely you can flog those assets for cash, thereby reducing the end-result price of the deal? Sure, but who's going to buy 47% of BKG? 2.6% of TGF? 17% of Platmin isn't a bad asset, but arguably you want to hang on to that, it could make you $15M p.a. in earnings once it gets mining. And the momnt you go to market with a slug of shares in these illiquid rat-arse junior mining stocks, the price goes down the toilet and you end up stalemated.

So, faced with a complex structure (thanks guys for merging in Minsec and all its stupid) and a huge buy-in price of up to $350M to account for all assets, liabilities, debts and a smidge for holders...you can't justify it.

The ugly truth is that Cape Lambert will probably end up with whatever assets its debt has liens upon.