Bill Cara: Inco-Falco sell-out upsets media, Mon., June 26, 2006, 4:53 PM

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June 26, 2006

Inco-Falco sell-out upsets media, Mon., June 26, 2006, 4:53 PM

For those who are interested in the three-way merger announced today by Phelps Dodge, Inco and Falconbridge, ROBTV.com had full coverage.

First on ROBTV at about 3:30pm ET there was an interview of the three CEO's, followed by a complaint session by two highly-respected Canadian reporters, followed by remarks from a Toronto financial analyst as well as a third (less negative) Canadian reporter.

I recommend you watch the Reguly-Willis commentary via Replay on ROBTV.com.

As for me, I see the share prices of Inco and Falco staying up for a couple weeks until Xstrata and Teck-Cominco return to the fold. Somehow, I don't this is a done deal today.

Earlier today, ROBTV's McConnell interviewed Peter Grandich on (mostly) junior metals, which I would like you to watch if you have interest. Peter offers sound advice at any time. Today he discussed how Eldorado, Bema and (his favorite) Northern Dynasty are all take-over candidates.

Grandich also stated that Aurelian " in spite of its astounding discovery of a gold property in Ecuador, is fairly priced (which echoes my remarks last Wednesday morning).

Yes, I do expect to meet with Aurelian management this week and obtain some details worth writing up. But I'm not going to rush this; I think the stock price will settle back in the short term. In fact, I think gold and the goldminer's summer rally is not likely to come until August.

What affected my thinking today was (i) the discussion by Elliott Wave chartists that there is another wave down into the low -- which I can see possible -- and (ii) Newmont's Pierre Lassonde today discussing (at a major investment conference) the likelihood of massive central bank gold bullion sell-offs between June and September.

Watching the share price of Aurelian come off today and Friday, I'm now thinking about something CEO Patrick Anderson said at the AGM last Wednesday after 4pm. He said that all the major miners would be signing CA's (Condidentiality Agreements) and visiting the property soon. Together with the share sell-off since he made that comment, that indicates to me that maybe the management has decided to go for financing sooner than later.

He also said that the $21 million in the Aurelian bank was adequate to cover at least 18 months heavy drilling on the property. But I know that Barrick and Newmont both need to replace assets in order to increase production. So they will be competing to buy into this deposit, I should think. At least they appear to be the most likely candidates.

As more drilling is needed for management to entertain meaningful negotiations, I also have to think that things will be pretty cool for Aurelian for the next month, which gives me the time needed to do research, and for the share price to fall back to a more reasonable buy in level.

You know my motto -- why pay retail?

Posted by Posted by Bill Cara on June 26, 2006 04:53:59 PM | Category: Canada

Discourse

Bill, just curious why it wouldnt be more prudent to advise people here to wait for the Fed to issue their announcement before talking up the precious metals, - granted they were sold down sharply, but to jump all in before Bernanke delivers seems to be a bit risky for many people out there. If he does go 50bp, you can imagine what would happen with the related stocks. If he doesnt, and holds 25bp, then people might miss a few percetages on the run up vis a vis tens of percents on a spike down, cheers

Posted by: Jason22 at June 26, 2006 5:06 PM [link]

I point to a great article by Mish here: http://globaleconomicanalysis.blogspot.com/2006/06/is-us-dollar-toast.html

Its rather interesting to me that everyone is calling 580 the breakout point, time to get back in axis. I guess I just dont like to be with the crowd.
Would rather wait until later.

Cheers, J

Posted by: Jason22 at June 26, 2006 5:23 PM [link]

Talking up? I read this posting and see nothing but "This shaping up nicely, but let's wait a bit." Looks like preparation to take advantage of a quality opportunity and prices that may still drop a bit. A 50bp increase by the fed (unlikely) is just going to push prices of miners lower. If a quality stock is located before that happens, all the better to take advantage of the selloff later. Anyone who reads that post as "Go out and buy some Aurelian (or any other miner) NOW" has, in my opionion, not gotten the point. "Jump all in?" Nah. Bill is saying "let's just keep a close eye on this and get ready to make a solid move later." Unless I misread something.

Posted by: MikeNYC at June 26, 2006 5:31 PM [link]

Bill-

It very well COULD be ABCDE on the gold and miner correction. But MAYBE NOT. For the miners, it depends on if the general equity market can stage a rally here. It appears very weak to me. For bullion, $USD looks toppy and there's upward pressure on oil.

Your original buy recommendation gave people a very good entry point and the charts have shaped up nicely. If people have moved up their trailing stops they now have a "safe" position against anything but a HUGE gap down in the bullion. That is because the miners are performing very well against "pedestrian" $8-10 oz drops. JMHO.

Signed, The Reluctant Gold Bull

Posted by: MarkM at June 26, 2006 6:35 PM [link]

Bill -

This is the 3rd time I've listened to an item you recommended on ROBTV. I must say, it seems aimed at an audience that wants to THINK by commentators who actually KNOW what they are TALKING about. We're just not USED to that here in the US! ROBTV is TERRIFIC. Thanks for making me aware of it!

Posted by: Jock at June 26, 2006 10:59 PM [link]

Jock,

It bothers me that U.S. TV is not as good or better, but it does speak to my point that there are so many conflicts, so many isolated vested interests being served, that the whole system fails the majority of the people.

GE knows that if they gave CNBC's Dylan Ratigan $10 million to produce a better TV production than CNBC, he would do it. But they don't want that. So the people get what GE wants delivered.

And if the U.S. cable/telco companies are allowed to take over the Internet, this problem will just get worse.

Thanks for commenting.

/Bill

Posted by: Bill Cara at June 26, 2006 11:45 PM [link]