Seeking Alpha

Maxe Paul's  Instablog

Maxe Paul
Send Message
I adopt a highly cynical yet humorous view of financial markets. I am a firm believer that you can never ask too many tough questions in order to obtain the answers that really count.
My blog:
Maxe Paul
  • Bougainvilles Panguna Copper/Gold Mine to reopen? 12 comments
    Aug 16, 2010 2:55 AM
    Bougainville's Panguna Copper and Gold mine rates as one of the most complex and intriguing gold and copper mine stories dating back to its inception as a mine back in the early 1970's, building the mine was a sheer marvel of modern engineering at the time, literally taking the top off a mountain located in the middle of dense jungle terrain.
     
    When the Bougainville Copper Limited (BCL) mine was closed in 1989 due to sabotage from former Bougainville employees and BRA (Bougainville Revolutionary Army) members due to mine royalty disagreements (amongst other tensions) it was the largest open pit mine in the world.........it was big! 

    Proving just how large the mine project was in its heyday there is even a website that is devoted to the former workers of the mine and the long lasting friendships between "mates" that worked in such an inhospitable environment creating such a mammoth mine, riverbendnelligen.com.

    Those of you in your 30's or older such as myself may only remember intermittent news stories of constant bloodshed in Bougainville due to a civil war lasting approximately 15 years centred around a fight for independence in which the Panguna mine was one of many issues culminating in the loss of thousands of lives of Bougainvilleans and PNG defence force personnel. Those of you in your 20's may never have even heard of Bougainville, let alone the Panguna mine, those of you who are considerably older may remember Bougainville was a key location where American and Australian troops helped fight off the Japanese in WW2.

    To cut a long story short, the mine has been closed for 21 years and to this day BRA soldiers still guard the mine preventing anyone from entering the mine site other than BRA approved persons. Current estimates of the companies mining tenement reserves according to Bougainville Copper Limited (BCL) are approximately 1 billion tonnes containing approximately 0.3% copper and 0.4% gold, although not of the highest grade copper content the size of the resource more than compensates for the grade, and given current gold prices you could well argue that this would primarily be a gold mine with copper credits!

    Over the last several months the current "closed mine" policy has dramatically appeared to change, elections in Bougainville back in June resulted in a new president of Bougainville being elected to replace former BRA member and president of Bougainville, James Tanis. The new president, The Honourable John Momis (a former priest and PNG minister of Parliament), was democratically elected by the people of Bougainville in what was widely reported as a peacfull and fair election process.

    In only two short months of being in office Momis has shown himself to be a formidable proponent of re opening the Panguna mine as a means to substantiate Bougainvilles autonomy from PNG and ultimately the economic base to support Bougainville as a fully fledged independent nation by 2015, It would probably be fair to say that the rebuilding of the Panguna mine would coincide with the rebuilding of a nation formally economically crippled by civil war.

    Things have progressed so quickly that even the owner of the mining lease and former mine operator, Bougainville Copper Limited (BCL) has announced to the market (trading on the ASX as stock symbol BOC) that the government of Bougainville "has shown early signs that it is interested in reopening the mine provided local land owners are in agreement".

    The next stage is for the traditional landowners to form a collective in which the BCA (Bougainville Copper Agreement) will be discussed, plans are afoot to commence this before years end, plans are also underway for the Panguna mine affected landowners to visit operating mines in the country to see how the mining industry has developed from the experiences of the once world class mine.
    The mines planned to be visited include Lihir in the New Ireland Province, Porgera in the Enga Province and Ok Tedi in the Western Province

    Currently shares of BCL trade in the USA under stock code BOCOF, on the ASX in Australia under stock symbol BOC and in Frankfurt Germany under stock code BOU1. BCL was also trading in the USA under an ADR (deposit receipt) arrangement though this formally ceased earlier this year, currently shares trade at around 75 cents.

    There is a large number of European shareholders on the register and they even have their own website, bougainville-copper.eu, dedicated to the company which provides the latest news from Bougainville on a daily basis. According to their website "Bougainville Copper Limited (BCL) has 401.062.500 shares outstanding. More than 70 percent of these shares are owned by Rio Tinto or the Independent State of Papua New Guinea. Almost 30 percent of the shares are traded on international stock markets, mostly in Sydney and Frankfurt/Germany."

    One could write a book on the Panguna mine and Bougainvilles civil war, though SA would not be the place for such a thing, with this in mind i would refer any readers who are interested in knowing more about the Panguna mine to check out the exceptional analysis of professional investor Sven Lorenz at Undervalued-Shares.com, where you will find the most intricate in depth valuation model/s of a possible restarted Panguna mine.

    In closing i suggest that there would not be many instances today in which you would be able to invest in a 1 billion tonne copper/gold resource at pennies in the dollar and simultaneously underpin the future development of a nation such as Bougainville should the Panguna mine be reopened.




    Disclosure: Long Bougainville Copper Limited (BOC)
Back To Maxe Paul's Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (12)
Track new comments
  • nekro
    , contributor
    Comments (23) | Send Message
     
    Recent News

     

    15 Aug 2010
    Bougainville - Establishment of a Copper Mine
    A complete 390 page book about the establishment of the Bougainville Copper Mine. Published in 1973.

     

    dl.dropbox.com/u/39339...
    17 Aug 2010, 06:34 AM Reply Like
  • pandabärchen
    , contributor
    Comment (1) | Send Message
     
    many thanks for the tip . this could be a tenbagger
    17 Aug 2010, 06:43 AM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    Huge VOL In Frankfurt/Germany

     

    www.ariva.de/quote/sim...
    17 Aug 2010, 08:46 PM Reply Like
  • Maxe Paul
    , contributor
    Comments (932) | Send Message
     
    Author’s reply » Thanks for your comments.

     

    IMHO this is definitely a really interesting developing story, (the mine re opening), but due to the share price being under $1.00 the article doesn't pass Seeking Alphas "$1.00 stocks rule" for submission. I'm hoping they may reassess the story given it was once a $7.00 stock back in the 1980's, or of course the stock price may well go over $1.00 soon and i can re submit it.
    18 Aug 2010, 03:30 AM Reply Like
  • Jrookie
    , contributor
    Comments (29) | Send Message
     
    Whatever happen to this stock and what is the USA symbol?
    18 Jul 2013, 12:27 AM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    BOCOF.PK
    18 Jul 2013, 08:00 AM Reply Like
  • DUSzocker
    , contributor
    Comment (1) | Send Message
     
    Huuuuuuuuuuuge potential! I luv it!
    18 Aug 2010, 05:11 AM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    Very nice interview with BOC Ceo Peter Taylor today ;-))))))))

     

    www.theaustralian.com....

     

    www.theaustralian.com....
    27 Dec 2010, 10:41 AM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    Posted on: Wed, 12 Jan 2011 09:02:41 EST
    Symbols: BOCOF

     

    SINGAPORE, Jan 12, 2011 (The Straits Times - McClatchy-Tribune Information Services via COMTEX) --
    Will Rio Tinto, the major investor in one of the world's richest copper mines, get it right this time? Spiralling global copper prices are prompting investors to consider reopening a controversial copper mine on Papua New Guinea's (PNG) Bougainville Island that triggered almost a decade of civil war in the 1990s.

     

    The closure of the Panguna copper mine run by Rio Tinto subsidiary Bougainville Copper Ltd (BCL) in 1989 led to important changes in the way large mining companies deal with host communities all over the world. Current moves to reopen it are therefore likely to be closely watched.

     

    Located off the west coast of PNG, Bougainville Island is rich in copper and gold. It is also geographically and ethnically distinct from the rest of the country, a factor that has long encouraged secessionist sentiment.

     

    Disputes over the mine date from the late 1960s. At the time, Australian colonial officials actively encouraged Rio Tinto's endeavour, believing the mine would become an important source of revenue for the soon-to-be-independent nation. In this at least, it had some success. From 1972 to 1989, the mine contributed about 44 per cent of PNG's exports and about 17 per cent of the government's revenue. Bougainvilleans also enjoyed the highest living standard in the country.

     

    But the mine had been built in the face of strong landowner opposition. Tensions simmered throughout the 1970s as women -- through whom land in much of Bougainville is inherited -- lay down in front of bulldozers. Widespread violence erupted in 1988, forcing the mine to close the following year.

     

    By 1990, the situation had deteriorated into a full-scale civil war. Hostilities ended with a truce in 1997 and a peace agreement in 2001. Under current arrangements, the government in Bougainville is responsible for all activities except defence and foreign affairs. A referendum on independence is scheduled for some time between 2015 and 2020. The mine remains closed.

     

    But with the global copper price now four times higher than what it was in the late 1980s, the pressure to reopen the mine is growing. Along with BCL's shareholders, company chairman John Taylor agrees. But his cautious tone and reluctance to provide a timetable reflect the company's bitter experience.

     

    "We must ensure the landowners retain No. 1 importance," he said. "And the Bougainville government's support is also critical," he told the Australian media last month. Mr Taylor also acknowledges the fact that everything will need to be renegotiated, including issues such as ownership, the employment of local people and tailings disposal.

     

    Bougainville's new president, Mr John Momis, elected for five years in June, also wants the mine opened. But he may impose tough conditions on the company. Campaigning during the PNG elections in 1987, he demanded that BCL hand over 3 per cent of its gross income to the Bougainville provincial government. BCL's subsequent refusal contributed significantly to the tensions that triggered the civil war.

     

    Several disagreements among Bougainvilleans regarding the conditions under which they would accept the mine's reopening also need to be resolved.

     

    Some activists have been insisting that all demands made by the rebels during the fighting, including those involving environmental compensation, must be met before the mine is opened.

     

    On balance, however, the outlook seems hopeful. Apart from the current focus on the concerns of landowners, technological developments now allow tailings to be stored more safely. Previously, they were dumped in the Jaba River, a practice that triggered considerable controversy.

     

    The World Bank is also funding a programme to help the Bougainville government develop the necessary regulatory environment.

     

    Meanwhile, with the nation's attention focused elsewhere, there is less likelihood that politicians in the capital would attempt to interfere. Economic planners are currently preoccupied with a huge multi-billion-dollar ExxonMobil project to pipe natural gas from the Southern Highlands to Port Moresby for export to Asia.

     

    All that remains is to raise the estimated US$3 billion that reopening the mine is expected to cost. That should not be too difficult.

     

    Resource-hungry China is widely believed to be interested. And anyone seriously considering reopening the mine would surely be aware that the project already has access to a port via a 30km access road. There is also a reported 200 million tonnes of pre-stripped ore ready for extraction.

     

    Reopening the mine would also help cement investor confidence in the rest of the PNG economy, which is already on the cusp of a resources boom as a result of other mining-related projects. Last year the PNG economy grew by 6 per cent. It is expected to expand by another 8 per cent this year.

     

    For BCL, however, the Bougainville landowners remain key. Nothing will happen, Mr Taylor told Australian radio last month, "until they say to BCL, as a united group, 'We want the mine and we want you to run it'".

     

    It is hard to disagree with that.
    12 Jan 2011, 12:38 PM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    http://bit.ly/Kp61us

     

    Google translation

     

    Dear readers, since the low in mid-December when it is strong copper gone up.

     

    The fears of a massive decline in economic performance in China have not yet materialized. And just to strong demand in China is driving the price of copper over and over again. This new increase is seen also on the share price of some large copper values ??..

     

    Bougainville Copper

     

    This company could simply be the largest copper producer in the world. The mining company has over 7 Pangunamine next to the additional licenses which are located on the island of Bougainville in the Pacific off Australia and could be merged three of which the largest copper mine in the world. Bougainville is one of Papua New Guinea, but striving for independence in a referendum zwischen 2015 and 2020.

     

    Amazingly, the current BCL price is only € 0.60. Thus, the stock is well below the industry average of ratings by potential competitors. In addition to paying Bougainville Copper also has a dividend yield of 2.8 $ and attractive production has risen back to pre-civil war level ..

     

    More imagination is obtained for this stock and other values ??from the copper segment by higher prices - and they are quite possible. Consider this: At present the cost per tonne of copper nearly 8,000 Dollar.Noch beginning of August 2011 were almost $ 10,000. And from a low of just under $ 7,000, the price of copper has also recovered significantly again. In this respect copper stocks are now interesting again.

     

    Bougainville Copper pierces various reasons stand out: The company has no debt, and also sits on about $ 100 million in cash on the ASX landscaped. In addition, the high profit margins and production costs are among the lowest in the world .. Current the stock is listed near the 52-week lows.

     

    Of these it has in the course of the recent price rise in copper have been solved something - but the 52-week high, the stock still situated far. The current stock market valuation is a significant drop in prices for copper have been priced.

     

    Prospect of rising copper price, provides for potential

     

    But this year, a further price increase is again very possible. The also have the landowners and the government of PNG Pangunamine erkannt.Schon next month to begin negotiations, to be completed in the reopening of the Pangunamine sollen.Dieses lead time will benefit the entire population of the island from the profits it derives precisely and the upside potential and The surprise factor in Bougainville Copper from. Are highly profitable commodity values ??with reserves im2-3-digit billion dollar range, it is rarely compress in Angebot.Zudem the rumors on the island that PNG should have agreed to transfer its 19.6% share of the autonomous government of Bougainville Copper Bougainville.

     

    But after the turmoil in the stock markets last year, there are times such understatements.

     

    In the past it was frequently so that the stock has risen on the basis of such valuations in the next twelve months significantly. Why should not weider get the story this time.

     

    Successful Investments

     

    wishes you

     

    Jean-Jacques Tire-Bouchon

     

    Editorial "Private Commodity Research"
    20 May 2012, 02:14 AM Reply Like
  • nekro
    , contributor
    Comments (23) | Send Message
     
    http://bit.ly/18qVGAS
    18 Jul 2013, 06:06 PM Reply Like
  • Jrookie
    , contributor
    Comments (29) | Send Message
     
    nekro, I have no idea what to make of the reference chart. Based on my review of the stock price it has gone no where. What am I missing?
    19 Jul 2013, 02:46 PM Reply Like
Full index of posts »
Latest Followers

StockTalks

More »

Latest Comments


Most Commented
Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.