Antares (ANM.v): The fat lady has sung

This just out

VANCOUVER, BRITISH COLUMBIA--(Marketwire - 12/16/10) - First Quantum Minerals Ltd. ("First Quantum" or the "Company") (TSX:FM - News)(LSE:FQM - News), Antares Minerals Inc. ("Antares") (TSX-V:ANM - News) and Regulus Resources Inc. ("Regulus") (TSX-V:REG - News), today announced the closing of the previously-announced plan of arrangement (the "Arrangement"), pursuant to which a wholly-owned subsidiary of First Quantum has acquired all of the outstanding securities of Antares. Under the Arrangement, each common share of Antares was exchanged for, at the election of the holder thereof, (i) 0.07619 of a common share of First Quantum (the "Share Consideration") or (ii) a cash payment in the amount of C$6.35 (the "Cash Consideration"), or a combination of both the Share Consideration and the Cash Consideration.
The Arrangement was carried out pursuant to the provisions of the Business Corporations Act (Alberta) and was approved by the Court of Queen's Bench of Alberta and the affirmative vote of 100% of Antares' securityholders at a special meeting of shareholders held on December 10, 2010.
Pursuant to the Arrangement, First Quantum, through its wholly-owned subsidiary, acquired all 72,364,467 issued and outstanding common shares of Antares for aggregate Cash Consideration of approximately $2.6 million and aggregate Share Consideration of 5,481,963 common shares of First Quantum. As part of the transaction, Antares' 50% interest in the Rio Grande project located in Salta Province, northwestern Argentina, was spun out into Regulus, together with C$5 million in cash. Antares securityholders effectively received 0.4505 of a Regulus share for each of their Antares securities. Regulus is owned 90.1% by former Antares shareholders in aggregate and 9.9% by First Quantum.
The Antares common shares have been halted from trading on the TSX Venture Exchange and will remain halted until they are de-listed which is expected to be at the close of trading on December 20 CONTINUES HERE

FM.to vs ANM.v: There's that arbitrage again

First Quantum (FM.to) holders, just sell your FM shares and buy Antares (ANM.v). Easiest 4% arb you'll ever make.

Or as a mailpal said very recently; "Efficient markets my ass".

UPDATE: Tell 'em Owly....

Antares (ANM.v) Q&A

A reader writes (excerpted):

"....with ANM rising and now over $7, is this growing market expectation of a counterbid."

Answer: No. It's more about being attached to 'good paper'. Here's the chart showing First Quantum (FM.to) versus Antares (ANM.v) since the takeover was announced.

Not saying a counterbid is impossible, however. We'll have a little more on the ANM situation Sunday in IKN78, subbers. DYODD, dude.

Antares (ANM.v) holders: Do you know your 7619 times table?

If not, this might help out a bit:

FM pps	ANM arb
80	6.10
81	6.17
82	6.25
83	6.32
84	6.40
85	6.48
86	6.55
87	6.63
88	6.70
89	6.78
90	6.86
91	6.93
92	7.01
93	7.09
94	7.16
95	7.24
96	7.31
97	7.39
98	7.47
99	7.54
100	7.62

DYODD, dude.

A meeting with John Black, CEO of Antares Minerals (ANM.v)

Yesterday afternoon (Saturday October 23rd) this humble scribe met up with John Black, CEO of Antares Minerals (ANM.v) and the focal point of last week's big takeover story. We talked about the deal and what it means to all shareholders and stakeholders of the world class Haquira copper project in Peru. A report of that meeting will be included in today's edition of The IKN Weekly (IKN77), out later this afternoon (Sunday 24th). Separately, we'll also be looking at last week's share price action in ANM and trying to decipher whether the market thinks a counterbid to the First Quantum (FM.to) (FQM.L) offer is in the cards.

Soft promo for the subscriber service over. Please be having nice Sunday, thankings of you very muchly.

Antares Minerals (ANM.v): So what did CEO John Black say to you today regarding the current share price of his company, Otto?

"A long overdue adjustment", is what he said.

More of CEO Black's thoughts in The IKN Weekly, the publication that recommended Antares (ANM.v) as a buy at $1.42 in December 2009.

Two on Antares (ANM.v)

Numero uno: This link to the six minute appearance that Antares (ANM.v) head honcho John Black had on BNN TV yesterday. The lad done good.

Numero dos: This report out of Stifel Nicolas this morning. It's the general metals update that house publishes, but you just gotta see page 9 and check out how ANM.v has been performing versus copper peers.

 (note to subscibers: toldya, didn't I?)

Antares Minerals (ANM.v): TV exposure time

According to this, there might even be something worth watching on the box tomorrow:

BNN Commodities with Andrew Bell, September 16

John Black, president, Antares Minerals
Focus: Antares Minerals has a new scoping study out on its Haquira copper-moly-gold project in Peru. BNN talks to John Black, CEO, Antares Minerals about the project's production potential and the prospects for shareholder value.

Antares Minerals (ANM.v): We've tried our hardest to help you

After all, it was first reco'd by The IKN Weekly back on December 6th 2009, when at $1.42. We were banging on the table and telling people that all the ducks were in line on Feb 21st 2010, the stock at $1.70.

Then we even made a point of getting you to look at the beginning of this month, with this August 3rd post highlighting the strong newsflow announced. The stock was at $2.68 then.

Here we are, just two weeks later and 18.7% higher at $3.18. Not to mention the 123.3% gain since the pick was first revealed to subscribers. Don't say we haven't tried to make you money, dear reader....

So anyway, next Sunday's IKN Weekly is returning to ANM as we run a fundamentals report on the stock, see how things have developed recently and make adjustments to our price target.

Too-Too-Tooting over, please be having nice day.

Do you own Antares Minerals (ANM.v) yet?

The IKN Weekly subscribers do and they've been in the stock since $1.42. Here's a strong positive for the stock today, from Haquira neighbours Xstrata:

SYDNEY, Aug 03, 2010 (Dow Jones Commodities News via Comtex) --

Xstrata PLC (XTA.LN) has given the go-ahead for the development of the Las Bambas copper mine in Peru, with production expected from the second quarter of 2014.

The mine is tipped to produce 400,000 metric tons a year of copper in concentrate, alongside "significant" quantities of gold, silver and molybdenum, the company said in a statement.

Initial project spending would total US$4.2 billion, with construction expected to start in the third quarter of 2011 if regulatory approvals are granted, the company said.

Xstrata tips the mine's life at 18 years.

Charlie Sartain, Xstrata Copper chief executive, said the approval "reflects our confidence in Peru's longstanding fiscal and legal stability and is an important milestone in our strategy to progressively increase total annual copper production by 50% to almost 1.5 million tons by the end of 2014."

Everybody on the chorus!

NPVs, discounted cash flows, things like that

Wonk out! Here's an excerpt from IKN64 out yesterday that sampled the fun and laughter world of mine project economics. Posted up here on the blog by request from a subscriber (who'd like to show his non-subbing friend the piece). No probs 'GS', enjoy.

Talking discounted post-tax cash flows

In ‘Market Watching’ below, as well as in the two reports prepared by other analysts attached with today’s issue, we take a look at the new PEA published by Antares Minerals (ANM.v) last week (1). But before getting there I’d like to focus on one element of the PEA news release as it gives us some insight into the way junior miners often present their case as an investment vehicle in the rosiest manner possible; in fact it’s one that I believe to be irresponsible to the point of plain deception. We’re going to use ANM’s news release to highlight this because (and be very clear on this), ANM is one of the good guys, it’s doing the right thing by the market and investors and not trying to deceive anyone. This is probably due to a combination of the good, honest, straight-shooting people that run the company coupled with the fact that the Haquira deposit is so darned good it doesn’t need any extra dressing to prove itself to numbers people. It points back to the basic reasons why we recommend the stock as a ‘Top Pick’, too.

Here below are two tables pasted from the NR that show the Cash Flow models for Haquira. Before diving in we need to keep in mind that a PEA is not a definitive study and any of the current metrics being used by ANM might change by the time production day one comes around, but for the purposes of modelling we have to start somewhere so the things used by ANM (20 year mine life, 100k tpd flotation throughput, 30ktpd SX-EW throughput, 2:1 strip, 89c cash costs over first ten year etc etc etc on a hundred other variables) are taken as our fair baseline.

I’ve highlighted a couple of the numbers and titles in red to help with the explanation which you can refer to at your leisure (I won’t be discussing them all here). But the main one to bear in mind is the $1,069m cash flow number in the first table. This is the one presented by ANM in its news release headline that gives us the 16.4% Internal Rate of Return (IRR), the one that assumes a base case for the metal ($2.25/lb Cu) and also an 8% discount to the Net Project Value (NPV) of Haquira.

----------------------------------------------------------------------------
                               Copper Price US$/lb Cu               
                       -----------------------------------------------------
                                                               3 yr      
Post-Tax                                                 historical   
 Cash Flow                           Base                  trailing        
 (US$ millions)                      Case                       avg        
----------------------------------------------------------------------------
                    $1.75   $2.00   $2.25   $2.50   $2.75     $2.95   $3.00
----------------------------------------------------------------------------
NPV 0%             $1,424  $2,667  $3,911  $5,154  $6,398    $7,393  $7,641
---------------------------------------------------------------------------
NPV 5%               $337  $1,069  $1,800  $2,531  $3,263    $3,848  $3,994
----------------------------------------------------------------------------
NPV 8%               ($38)   $516  $1,069  $1,623  $2,177    $2,620  $2,730
----------------------------------------------------------------------------
NPV 10%             ($219)   $248    $714  $1,180  $1,647    $2,020  $2,113
----------------------------------------------------------------------------
NPV 12%             ($361)    $37    $434    $831  $1,228    $1,545  $1,625
----------------------------------------------------------------------------
IRR%                  7.6%   12.4%   16.4%   20.0%   23.2%     25.7%   26.3%
----------------------------------------------------------------------------
Payback (yrs)     7.4 yrs 5.7 yrs 4.8 yrs 4.2 yrs 3.8 yrs   3.6 yrs 3.5 yrs
----------------------------------------------------------------------------
                                                                            

----------------------------------------------------------------------------
                                Copper Price US$/lb Cu               
                       -----------------------------------------------------
                                                               3 yr        
Pre-Tax                                                  historical        
 Cash Flow                             Base                trailing        
 (US$ millions)                        Case                   avg(i)        
----------------------------------------------------------------------------
                        $1.75  $2.00  $2.25  $2.50  $2.75     $2.95   $3.00
----------------------------------------------------------------------------
NPV 0%                 $2,217 $4,148 $6,079 $8,010 $9,941   $11,486 $11,872
----------------------------------------------------------------------------
NPV 5%                   $846 $1,981 $3,117 $4,253 $5,389    $6,297  $6,524
----------------------------------------------------------------------------
NPV 8%                   $359 $1,218 $2,078 $2,938 $3,797    $4,485  $4,657
----------------------------------------------------------------------------
NPV 10%                  $119   $844 $1,568 $2,292 $3,016    $3,596  $3,741
----------------------------------------------------------------------------
NPV 12%                 (70.3)  $546 $1,163 $1,779 $2,396    $2,889  $3,012
----------------------------------------------------------------------------
IRR%                     11.2%  17.5%  22.7%  27.4%  31.6%     34.9%   35.6%
----------------------------------------------------------------------------
Base Case = Industry analysts long term consensus price of US$2.25/lb Cu                                                 

(i)  Three year historical trailing average for LME price of copper = US$2.95/lb Cu

Before continuing, let’s talk about why the “discount to NPV” (those lines like “NPV 8%, for example) exists. A way of presenting this is to imagine Person X investing a sum, let’s say one million dollars, in an investment that promises him or her $1.5m in a few year’s time (let’s say five years). Now that might look at first sight as if X will make a 50% profit, but if s/he hadn’t sunk $1m into the project it could have been used for something less risky but still lucrative. The typical counter-example is to imagine that $1m being put into government bonds or a time deposit that pays (again let’s say) a safe and steady 4% annual interest compounded. At the end of those five years, the $1m would become $1.217m once interest had been added and compounded. So the $500,000 nominal profit is really $283,000, which is a lot less.

The difference in those two results is a “risk premium”. If person X wants to put $1m into a relatively safe place, then $217,000 profit is the result. But choose a riskier invetsment and the return is higher ($500,000). It’s then up to the person to decide whether the extra reward is worth the extra risk (the same way as we equities investors make risk/reward decisions, often on a more intuitive level).

There is a second idea related to the NPV discount, which is related to the first but needs a note. The so-called “time value of money” theory notes that people prefer to have cash in hand than locked up over a period in time in any investment (be they safe ones like bonds or risker ones like mining). Therefore the potential investor needs to be compensated for their waiting by a monetary profit. There’s no need to go into the mathematics (it’s a bit technical but nothing on Einstein levels), just to understand that the theory takes into account that future profits aren’t just desirable, but actively demanded by the investor. It’s capitalism, folks.

So once those two concepts are taken into account, it makes much more sense for a company such as Antares to present its project economics using a discounted NPV. In mining circles, there’s a convention to use an 8% NPV which most players most of the time consider a fair benchmark (again, let’s speak very very roughly and say “5% for the time deposit interest, 3% as simple reward for waiting” to get a handle on things).

Now to the point I wanted to make about the ANM news release and project economics: ANM could have chosen a sexier copper price to present its economics. It could have chosen a lower discount rate. Also, it could have used a typical trick used by other miners and presented its economics on a pre-tax basis (just check the differences in those charts, especially when the NPV discount is higher). But it didn’t. It chose to pitch its headline using a low copper price, a industry-understood 8% discount and all on a post-tax, post-royalty, post-worker profit sharing participation (that’s 8% in Peru) basis. Also, on talking to CEO John Black yesterday I was told that the PEA added a 20% contingency price to every single line item, which is somewhat unusual in mining circles as a typical (and accepted) approach would be to add 20% contingency to some things but nail specific prices on other things that the company believes can be priced pretty accurately, even at this early stage.

All these conservative parameters and the IRR still comes out at 16.4%, the project shows robust economics and Haquira clearly “works” as a mine. So thanks to this modest, conservative approach used by ANM we can take this PEA as a solid and true baseline and assume that anything that affects project economics will affect it to the upside...it’s all blue sky from here, folks.

Now we have that out there, check how this news release (2) published by South American Silver (SAC.to) presented the PEA for its ‘Mallku Khota’ silver/indium project to the world in 2009. Here’s the first paragraph:

February 25, 2009

South American Silver Corp. (“SASC” or the “Company”) announces the results of a NI 43-101 compliant Preliminary Economic Assessment Study (“PEA”) on its 100% owned Malku Khota silver – indium - gold project located in central Bolivia. The study includes a Base Case with a pre-tax undiscounted NPV of US$1,233 Million (0% discount rate) and IRR 50.7%.

It also goes with using the “three year trailing prices” for silver and indium, its key project byproduct. Hopefully you can see the problem here but if not, reflect that if ANM.v had used to same cherrypicked criteria as SAC.to in its news release, it could have run with a project cash flow of $11.486Bn in its headline instead of the $1.069Bn it preferred. TEN TIMES HIGHER!

Yes SAC.to is one of my bugbear stocks on the blog, but it’s not chosen as an object of derision just because I don’t like the company logo. Aside from all the issues it has with its main country of operation (Bolivia) it tries to present project economics in a way that’s so misleading it should be outright banned by the financial authorities. SAC isn’t the only company out there that does this kind of financial manipulation...not by a long chalk. But it’s a good example and one that you can use as your counterpoint when checking out PEAs PFSs and FFS in the future. When it comes to mine economics, the devil is in the details.

The Casey Research pyramid scheme

Doug Casey must piss himself laughing at the stupid sheep who are naïve enough to pay him $749 a year for the 'International Speculator'. It's a pity they don't understand just how badly they're getting sheared by this elaborate pyramid scheme set up at Casey.

Wow, I bet all those A-listers were happy to see a sudden jump in volume to sell into.

click to enlarge

Message to Casey Subscribers: YOU ARE BEING RIPPED OFF BY A SELF-SERVING CHARLATAN.

Yours, Otto Rock (long ANM at $1.42 and staying long)

Antares Minerals (ANM.v): a few charts stolen from George

George Topping of Thomas Weisel ran this set of charts in his Base Metals review to clients this week. You'll probably need to click the chart to get it large enough to read well, but you'll be glad you did:

click to enlarge

George Topping is long Antares Minerals (ANM.v). George Topping is a smart dude.

More IFC money flows into mining

What the below means is that Antares Minerals (ANM.v) can get on and drill its 2010 campaign without having to go to market. The fully diluted shares number stays where it is, and $7.5m goes to the cash line. This is a real endorsement of the Haquira project from bigboy financiers that didn't need to exercise these warrants right now but decided to do so in order to add financial backbone to ANM. We very like this news.

Antares Announces Early Exercise of Warrants by IFC

WATERDOWN, ONTARIO, Mar 29, 2010 (Marketwire via COMTEX News Network) --

NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES.

Antares Minerals Inc. ("Antares" or the "Company") (TSX VENTURE:ANM) is pleased to announce that IFC, a member of the World Bank Group, has agreed to exercise all 3,750,000 warrants that it holds to acquire 3,750,000 common shares of the Company for a total subscription cost of $7,500,000. These warrants were acquired by IFC in July of 2009 in connection with a private placement. Each warrant entitles IFC to acquire a common share at an exercise price of $2.00 until July 22, 2014. If at any time following July 22, 2011, the Company's common shares trade at $2.75 or higher for 30 days on a volume weighted-average basis, the Company can give notice accelerating the expiry date of the warrants to 60 days following the date of such notice.

As consideration for IFC agreeing to this early exercise of its warrants, Antares has agreed to issue 1,875,000 new common share purchase warrants to IFC. Each new warrant will entitle IFC to acquire a common share at an exercise price of $3.00 until July 22, 2014. In addition, the Company will grant IFC a contractual right to participate in any future Antares financings to maintain its pro-rata equity interest in the Company.

Closing of this transaction is subject to approval of the TSX Venture Exchange and the negotiation and execution of definitive agreements. The new warrants to be issued pursuant to this financing will be subject to a four month hold period in accordance with Canadian securities law.

John Black, President and CEO of Antares Minerals Inc. commented as follows:

"We appreciate the support that IFC is providing as a significant shareholder in the Company. The funds received from this warrant exercise will enable the Company to aggressively proceed with pre-feasibility and exploration drill programs at Haquira while maintaining a solid balance sheet with minimal share dilution. We expect these programs to start with four rigs in April, pending receipt of updated environmental permits.

In addition to ongoing drill programs in 2010, we are also looking forward to the receipt of a preliminary economic analysis (PEA), or scoping study, of the Haquira project. This PEA will incorporate both the secondary SX-EW and primary sulphide zones that have been established to date at Haquira. We believe that this fully integrated study of the proposed SX-EW/mill-concentrator operation will reveal more fully the potential value of the Haquira project. We expect to receive this report in the next quarter."

CONTINUES HERE

Antares Minerals (ANM.v)

ANM.v, Feb 21st to date

People tell me I need to sell the subscriber service harder, so even though I'm not very comfy about shoving a big marketing spiel down people's throats here's a half-hearted attempt.



Antares Minerals (ANM.v) was first analyzed and called a 'buy' in The IKN Weekly on December 6th when the stock stood at $1.42 (we only ever have a max of 15 buy recos, by the way). But here's what was said on the stock as a small section of IKN42, dated Feb 21st. The stock stood at $1.70 at the time.

Antares Minerals (ANM.v): Ducks in line

I want to take a moment to emphasize my confidence in the current investment in Antares Minerals (ANM.v). Yes, I am long. Yes, it’s already a top pick selection. Yes, the whole investment was outlined in the NOBS report in IKN32 (if you’re new round here and want a copy, just say the word). But every now and again, and it doesn’t happen very often, my feelings on a stock go from strong buy to “man, I just have to pound on the table about this one as hard as I possibly can”. The last time it happened was in Dynasty Metals in December 2008 (DMM was at $1.40 or so at the time). There have been a few other occasions but I don’t want to fill up this report with “hey-look-at-me-aren’t-I-wonderful” types of commentary about past trades that have worked out well.

The point is that Antares has that “ducks in line” feeling about it, right here and right now. Therefore this short section is the sound of me banging on the table about the stock and waiting to see how the next few chapters of new resource number plus PDAC plus Xstrata at Las Bambas plus continued strength in copper plus beginnings of market awareness in ANM all combine.

ANM.v now trading at $2.41, which is 69.7% up from the original buy reco in December and 41.8% up from that table-banging of 12 days ago. What's more, subscribers know the target is plenty higher. The next Weekly, IKN44, is out Sunday.

Antares Minerals (ANM.v) updated research report

Peru copper plays seem all the rage this morning, what with Chariot selling to the Chinese and Antares (ANM.v) up over 11% right now on the (kinda delayed) reaction to its very smart resource update published Friday.

If you want to find out what George Topping of Thomas Weisel thinks of the ANM news, why not click this link and download your copy of his update, out last Friday. Makes for interesting reading.

Eleven point seven billion reasons to like Antares Minerals (ANM.v)

Err...that's a lot of copper, dudes. Higher grading than before, too. Here's the news release linked and here's the quote from CEO John Black:

"We are very pleased by the substantial increase in the size and grade of the Haquira resource. The total amount of in-situ copper at Haquira expanded by 38% from 8.5 billion lbs to 11.7 billion lbs and average grades increased for both primary and secondary mineralization. The total resource at Haquira has now surpassed a critical threshold of over 10 billion pounds of contained copper metal, making Haquira one of the largest undeveloped copper projects controlled by a junior exploration company. We are particularly pleased that the average grade of the measured and indicated primary mineralization now exceeds 0.6% Cu at a cut-off grade of 0.3% Cu. This higher grade will serve to distinguish Haquira from many other known large copper projects. The presence of near-surface secondary copper mineralization is another feature that distinguishes Haquira from other copper development opportunities. We are now in the process of evaluating the potential for a two-staged copper mining operation whereby the mine commences with a low-capital, low-cost SX-EW copper-leaching operation producing LME_grade copper cathode followed by a larger-scale, mill/concentrate operation producing copper and molybdenum concentrates with a significant gold byproduct. Our goal is to report the results of this preliminary economic assessment next quarter."

Antares Minerals (ANM.v) research report

George Topping (ex-Sprott and Blackmont and a solid track record) now works out of US sellside house Thomas Weisel. This week (Feb 16th to be exact) Topping published a report on Antares Minerals (ANM.v) and it's well worth reading, not least because he sticks his neck out and says that next week's resource update looks like putting the Haquira project over 10Bn lbs Cu.

Get your copy of his PDF report on Antares Minerals by clicking here.

The 0.74% copper poker head-to-head

Two junior exploration copper juniors sent out news releases within minutes of each other this morning. Bizarrely, both drill holes returned the exact same amount of copper at 0.74%. Plenty of other coincidences too, as both are working Peru and both found good mineralization. But one was simply "good" while the other....well, click through and have a look for yourself. So it made me think of this:

Apoquindo (AQM.v): "I bet 177m of 0.74% copper."

Antares (ANM.v): "I'll see that and raise you to 750.65m of 0.74% copper."

Apoquindo: "Fold."