Q: Someone asked a question about Taesko TKO mining the other day especially they asked about valuation. Your comment was that it trades at a very high PE and that Lundin Mining was perhaps a better pick. I agree with both of your comment but I think it is important to note that TKO is on the verge of transitioning from a 1 operating mine miner to a miner with two operating mines. The Florencia mine in Arizona is in the start up phase. Florencia is one of the world's first solution mines for copper (kind of like SAGD from the heavy oil industry). Solution is pumped underground, it dissolves (perhaps that is not the correct technical term) the host rock and another well collects the dissolved solution and brings it to the surface where the copper is stripped out of the solution (I believe the solution is then reused). The end product copper needs very little processing (no electrowinning at least). IFFF this new mining system works as well as the pilot plantw orked then the copper production costs are supposed to be very low. That is one of the reasons, along with high copper prices, that TKO has been on a solid uptrend lately. So there are valid reasons why TKO might deserve a seemingly high valuation. But I agree with you that Lundin is the better/safer copper miner so I have a good position in Lundin and a much smaller, more speculative position in TKO> Just a little extra color on TKO story.
5i Research Answer:
Thank you. Yes as a company diversifies it often gets re-rated. Expensive does not always mean bad.