Eric Sprott Likes Inca Pacific

I like Eric Sprott. A straight shooter, a darned good stockpicker, a successful investor. You know where you are with the Eric dude. So the fact he owns a tad under 50% of Inca Pacific (IPRFF.PK) can only be a good thing, right? He originally took a 50+% position there, but at no point asked for a seat on the board or tried to put one of his dudes there to dictate matters. He basically said, "I like the deal, I'm buying in, now go make me money." And since then he's doubled down on IPR by buying large chunks of the subsequent placements. No doubt he still likes the company.

Thus, knowing that Eric sees Inca Pacific and its large copper/moly project at Magistral, Peru, the same way as me keeps me warm at night, but there is a downside. Sprott isn't the kind of dude who will sell his stock back to an eventual buyer for a 10% gain or similar; in my opinion he won't part with his large chunk of IPR for under $3, and even then I'm probably lowballing the deal. So with the stock fiddling around the $1.50 to $2 range, a potential buyer will not be interested in paying such a high premium to current market value, methinks.

It's a bit of a catch-22, no? The low volumes and low profile of IPR mean it doesn't get the hype machine revved up behind it. But on the other hand, the largest (by far) of the shareholders knows IPR is worth a lot more than the current PPS and has the zen-like patience to wait until the rest of the world works it out.

But fortunately, the story of this junior won't be one that drags on for years, as there are a couple of natural deadlines coming. The next one will be when the environmental study is (presumably) approved and the project goes for funding (it's had some positive comments from guys in suits), and the final limit is the 2011 date the government of Peru has put on the project; basically use it by then or lose it....and nobody's going to lose that much copper and molybdenum to a piece of legal paper.

But by then, IPR is bound to have sold out, and that is bound to be at a price that Eric Sprott likes. Even now, there are several miners that have made it pretty clear to the local jungle drums that they're interested in IPR. I don't know how far down the line any takeover offer is right now, but I know I can wait until it (or even they) come along.

So as mentioned before, keep IPR on your radar. And while I have your interest in the stock, go have a look at its website, linked right here.

Disclosure: Long IPRFF.PK.