Taseko Mines Limited needs to go back to the drawing board

Nov 26th, 2010 – 2 Comments

If you like the TKO story then its a hold in hopes that they can make the changes needed to bring the Prosperity Mine back from the reject pile.


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Hello Lou,
TKO and FAN : Buy, Hold or Sell?
Thank you,
Stan

Hi Stan,

I last posted on Taseko Mines Ltd.( TKO TSX) On April 8, 2010 and my thoughts at the time was to protect profits. The stock was trading at $5.52 on the day I published the piece and by July it was trading in the $3.50 range. It did catch a bounce off of $3.50 and ran to $7.00 but has since fallen back to $4.67.

I guess the lesson from this case is that you have to watch your stocks every day and look for entry and exit point. Farallon Resources Ltd. (FAN TSX) is not a stock that I am familiar with so thanks for bird dogging it for me and other readers.Lets consult the charts to see if we can find some opportunities.

The three year chart for TKO illustrates the lovely uptrend that was broken as we got to the end of April 2010 and the bounce off of $3.50. The subsequent ascent to $7.00 was stopped cold when the Prosperity Mine in British Columbia  was denied approval to proceed on November 2, 2010. There is currently a call for an inquiry into an alleged leak of the decision on the spike in volume that occurred in mid October. In my house we always say – Guys in the Know – Know.

The six month chart depicts the asset shredding decision that took the Prosperity Mine out of play.What is evident is that there is now resistance at $4.75 and support at $4.50. That’s a very tight range. If you like the TKO story then its a hold in hopes that they can make the changes needed to bring the Prosperity Mine back from the reject pile.

The operative term in the statement when the  proposal was rejected was that it could not be approved as currently proposed. That’s code for get out your cheque book,get the engineers working overtime, and  redesign the elements of the proposal that are holding it back. I would probe to see if management intends to support their $800M project by investing in the creation of an alternative.

The three year chart for FAN immediately calls for a survey of the data stream given that the stock has been stalled at $0.79 since mid November. A quick review turned up this infiormation.  On November 15, 2010 an offer for all the shares of FAN priced at $0.80  from NYRSTAR was tendered with  the support of the board. At this point there are no indications that a competing bid is in play so I would say that FAN is going up the aisle at $0.80.

Happy Capitalism!

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