Performance matters

Jan 6th, 2010 – Comment

If you go through the corporate information on the website for CS you will find that they ran into some operating problems in the third quarter that have needed attention.


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capstone

 

This company has two operating mines, Minto and Cozamin –very good cash flow, a strong balance sheet and a further project it has completed feasibility on —it is primary copper with gold by-product—yet it has not moved with the recent prices of these metals—it also has a toe-hold in Nevada Copper that appears to have outstanding potential

What am I missing here?

Joe

 

HI Joe,

Thanks for the assignment. I love a head scratcher myself!

Capstone Mining Corp. ( CS TSX)  has as you mentioned two operating copper mines. The Cozamin Mine in Mexico and the Minto Mine in the Yukon. They are also developing a Kutcho deposit in British Columbia and they have an investment in Nevada Copper which is developing the deposit at Pumpkin Hollow. So whats the rub?

If you go through the corporate information on the website for CS you will find that they ran into some operating problems in the third quarter that have needed attention. In addition the forecast for 2010 cash cost per pound of copper has risen to between $1.10 to $1.20.

Finally you would have to expect that some investors decided to take some money off the table given the rise in the stock in 2009.  These are the factors that have taken some of the excitement out of the stock over the last four months.

 

cs

The three year chart provides a good view of the sideways pattern on CS since Q3 but also the significant advance from $0.75

 

 

 

 

 

 

cs2

The six month chart provides a clear view of the range bound pattern since August with resistance at $3.15 and support at $2.70. There appears to be some resistance along the 50 day moving average since December.

 

 

Capstone has been very generous to investors who got on the ride in early 2009. If management can deliver on its strategy of organic growth through resource and reserve expansion via the drill bit at Minto and Cozamin and find some attractive takeover targets 2010 might be a good year. But as my friends in the mining game always remind me its easier to take a stock from $0.75 to $3.00 than from $3.00 to $12.00.

 

Happy capitalism!

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