In a reminder of just how fast things can fall apart in the business world CuDeCo (ASX:CDU), a Queensland based mining company saw half its market value drop in one day.
The sell off wiped away $320 million from the company's market capitilisation. The drastic selling of shares was a result of an announcement made by company Chairman Wayne McCrae which caused investors to dump the shares.
The bad news was related to the copper project called Rocklands which the junior miner is currently focused on. Initially it was believed that the project resources were worth 100 million tonnes with 2% copper. Yesterday CuDeCo said that it was just 30 million tonnes with 1.24% copper.
The Gold Coast based CuDeCo plans to start mining at Rocklands near Cloncurry in 2012. The initial grades are enough to sustain a 10 year mining operation producing 3 million tonnes a year. However transactions of large number of shares yesterday has weakened the company and it could now become a takeover target.
The share dumping is being seen thanks to a website called HotCopper which allegedly misled investors. The company is filing legal action against them.
CuDeCo, according to documents filed with the Australian Stock Exchange, bought back 1 million of its own shares in the June quarter at $4.17.
Shares closed Thursday at $2.32 down from $4.79 on the 13th August 2010.