As I understand Glencore owns roughly 83 % of the Perkoa project. Means mine and the deposit. In my understanding the surrounding areas are still 100% owned by BTR. I havent found supporting hints in the different publications of the company - but this would be my assumption. It seems that the area around Perkoa could be quite prospective with regards to zinc and possibly other base metals. I also know that in the last years the company has made some efforts to explore - at least superficaly - the surrounding area. In my view so far these explorations efforts have been performed on a "low flame". Obviously the focus was to bring Perkoa to production.
With regard to management I would say that the last 2 joiners have a pretty nice track record. The former CEO Scott Lowe overall has made a good but probably not "outstanding" job. However...without the actions taken by Scott I guess that BTR today would not exist anymore. Perkoa was on care and maintenance and the project was almost dead when Scott took over. The real issue here was the fact that Kitumba in the last quarter 2012 seemed to be a really se.xy project. Obviously at that time and even later it was/is not completely clear if Scott has "exagerated" in his positive view (by the way shared by at least 6 or 7 brokers/banks/analysts) or if the data was just not accurate enough to make the right assumptions. However in the beginning of 2013 the market has been taken by surprise by a massive reduction in overall ressources (44% minus) and by the fact that Kitumba can only by run as a underground mining operation. Furthermore we have seen delays at Perkoa and over run of costs. Both resulting in a dilution of the BTR share at Perkoa form 40 to 27 %. Actually an additional need of roughly 10m A$ working capital is discussed. With other words: The new CEO has probably to tackle this issue first and then focus on the optimization of the Kitumba PFS (due in April).
I guess that the market will measure the performance of the new CEO on the outcome of that 2 points.
From my experience I would say that the new CEO needs at least a few weeks to come to grips. I expect therefore a kind of "status quo statement" in February or so. I assume that Mark Mitchell needs some time to sort out everything and if he should already be in negotiations with Glencore this obviously needs some time.
My suspicion is that one of his first tasks will be to check everything was his predecessor has made, said, written - whatever.
So the 2 main questions here are:
a) Can BTR hold Perkoa (or is BTR forced to dilute further or even to sell) and can Perkoa be a profitable operation and if, how profitable?
b) Can Kitumba be a profitable operation?
I personally think that one goes with the other. Should the optimized Kitumba PFS deliver a very good outcome then I could even imagine that BTR try to sell Perkoa to finance Kitumba project. I do not know if this might then be a good idea or not....but however...we will see.
Meanwhile the SP slumps around...and I do not expect dramatic changes in the next few weeks.
BTR Price at posting:
23.0¢ Sentiment: LT Buy Disclosure: Held
