Movie (you should watch it all for interest)
https://www.youtube.com/watch?v=y85_h86OKEc
(Start watching from the 38 minute mark to the 45 minute mark)
Visual Presentation (very interesting facts)
http://www.teck.com/res/tc/documents/_ces_portal_meta/downloads/investors/ir%20presentations/investor%20day%20nov%202013/01%20-%20drl%20intro%20final.pdf
My general comments from Don Lindsay's thoughts
I still believe we will be bought by another major but watching this video for the first time I observed some relevant factors that impact Copper Fox in a positive way.
Don Lindsay had some interesting comments on IRR and NPV calculations. He talks about how the NPV works and discusses the implications of this method. To me he does not focus too much on the NPV calculations and prefers to use other ways to understand value when allocating capital expenditure. Don does not focus his analysis and research primarily on NPV when determining the value of a mine/deposit. He thinks NPV is not really a main measure to determine long-term investment allocation. It is funny how we are all stressing about this method to determine value when Teck does not even consider it as a priority method to understanding the intrinsic value.
Don lindsay and Teck invest in mines that have long mine life such as 50 to 100 years like Highland. This to me bodes well for Schaft Creek since Teck prefers long life assets. Teck looks at long-term investment strategies, so in relation to the IRR according to Don 12% IRR is very good (we sit at over 15% at ROV case) as this is how you build shareholder value.
The NPV method is always changing as the numbers presented on the production decision will always be at its lowest value. In the startup phase companies need to put capital out, so each year you get closer to production the NPV improves as the capital expenditure invested is behind you which is put into the project. Don Lindsay said from a investment perspective looks at the "minelife to payback ratio". Don said he is happy at 4, very happy at 3, and even 6 is okay if you have a long asset life (such as Schaft Creek as it could produce for 100 years like Highland).
Don commented on mines near the end of their minelife and they become less profitable with declining grades of the ore but the positive for Schaft Creek deposit is it increases in grade as you go deeper.
Don Lindsay explains Teck has a constructive view on the Coper market and the price in the medium and long term which bodes well for Schaft Creek when it becomes a producing mine in 2020.
Don is looking a potential opportunities in the M&A space but has not been successful yet.
The Copper business unit is a main priority for Teck going forward as they see a Copper shortfall in 2020 with significant gaps in the million tonnes.
Lastly, in Don Lindsay's Q&A session he highlighted a few important points:
1) Resource nationalism
2) Community acceptance
Don wants to invest in long minelife assets and find these unique low-cost assets (Schaft Creek fits the bill imo) in low risk jurisdictions such as Canada. Teck wants to reduce risk and uncertainty by investing in the right projects that have strong local support. Also he noted global growth to be in the 2-3% range which bodes well for Copper demand going forward.
