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Serious CUM talk

Copper Mountain ( just gave us another set of sticky, messy numbers with a net loss so bad you feel like grabbing a tissue and wiping your hands clean after handling the financials.

But its problem isn't the nasty bottom line losses, the problem is its pathetic operating margins.

What CUM has is a crapload of financial debt that it took out with a bunch of Japanese banks and that happens to be in US Dollars. What with the Loonie going South bigtime against the Greenback recently, the amounts owed on that US Dollar debt suddenly balloons in Canadian Dollar terms and (which for its own stupid reasons has decided to keep on reporting in Loonies) has to adjust that on the P+L. Hence it registers a small operating profit and a big net loss.

But the worry is that this perenially underperforming company isn't showing better operating margins. Costs keep eating into too much of that revenues number and we should be seeing better margins from a company that pays in Loonies but sells its wares in USD.

The debt on the CUM books is heavy, but most of it doesn't come due until the next decade and the next two years are very light in repayments. The company has financial time and isn't going to feel a cash crunch, but it's been a poor operator for way too long and its management team has to come under deserved scrutiny one of these days, you can't get a pass like this forever.

If I were Mitsu, I'd look for the moment to buy these jokers out and then put in a team that can actually run this company. One thing's for sure, if copper rebounds the Loonie will go with it and you'll suddenly see eyepopping net profits coming from this one. If they ever get those shitty costs under control, anyway.