I think it is well worth understanding...
Some, of course, is the obvious in the market reality, right now, in most commodity focused businesses... here. Looking at the stocks as a group, you'd have to conclude that real economic activity, at least in that focus in the use of basic materials, is stuck at levels already well below the bottom that occurred following the crash in 2008... and, I think that's probably a true statement. Real growth in demand is occurring in India, and in China... a bit in the rest of the lesser developed world that isn't choking on debt... and pretty much no where else.
That market concern obviously explains a lot, for others... but, not everything that you'd care about here.
My opinion is that seeing that impact on CDY reflects an early (?) indicator of a shift in the market focus that is occurring, still being recognized only gradually, but beginning to have a bit more obvious market impact now...
If you look at CDY's prior enterprises, they made good money by finding large and readily developed deposits which they took up, did some basic exploration and development work on, and then turned into significant profit for CDY holders by selling them off as "improved" properties, lock stock and barrel, to their customers, only at a hefty mark up. It's a great model that solidly leverages their expertise in "finding"...
Now, they're looking to repeat that prior proven success, with new developments in iron (again) and metallurgical coal. They've also used prior successes to fund investments in equity stakes in a couple of gold focused exploration outfits... but its the iron and coal that are the operational focus...
Given the shifting nature of the time pressures in the commodity markets, now, with demand soft and supply adequate, or more, the customers have shifted focus, too. Given a bit of time, and a bit of help, there's no reason the customers can't go out and find similar/comparable opportunities themselves, and get "a better deal" by focusing more of their own $ and effort a bit earlier in the exploration cycle...
So, like anything else in the market, it's a pretty big deal in the valuation of mining projects to have the underpinning of price support... from an awareness that there are willing customers who are expected to be the buyers of what you're expecting to sell. If those former customers are already themselves fully engaged in funding earlier stage exploration projects that, with a bit of success, will be directly competing with your own... in meeting those customers future needs ???
The Chinese ARE shifting their focus that way, now. It's a shift that has been in the works and ongoing at a low level for a couple of years. They're getting a lot of help in the effort from Canadians, who'd rather have Chinese $ help in exploring and in funding the effort developing new potentials, rather than have it be limited to selling off proven values in the already existing "crown jewels" that are already in production now... having been funded to that stage by others. That's a positive trend for everyone, because it's not nearly as useful to foster growing competition for a finite and declining set of resources... as it is to make more resources available in order to meet future demand growth. Canada isn't resource limited. They've been investment limited... and, like everyone else... more limited as a result of the pernicious impact of the financial crisis... that has banks focused more and more on funding excess in government debt instead of productive economic activities. (rant, rant, etc.)
The Chinese have also already been burned a couple times recently, by "geopolitical risks" that they may not have properly considered or anticipated before sinking big $ into investments in some places that... scare the holy crap out of me as an investor. I think that they're rapidly learning to appreciate political stability paired with a culture and legal system that value and defend investment... at least in relation to their own investments in other countries.
So, I think CDY might be facing headwinds in "concern" by some investors that their prior successes in "flipping" properties... might not be as easily duplicated in the future... and, even if they are successful in marketing projects, they might not face an environment that enables similar dynamics in pricing, even if demand is hot... which right now it is not...
If that proves true... it becomes a bigger issue in terms of whose economic performance it is that your opportunities are tied to...
That's a risk they might address... either by altering the deal focus to complete some arrangements with customers somewhat earlier in the process... or by making the case that they intend to follow though on development efforts by funding projects through to production by themselves, becoming a production company... and not just a middle market development specialist that flips properties to others to put them into production.
The flip side of that set of risks for investors... is that there are parallel opportunities emerging, resulting from the shift in the market... that has large commodity consumers looking at shifting focus from being customers, to more direct participation in earlier stages of exploration and development...
Maybe not a bad idea to find out which juniors are well positioned to benefit from the trends that are occurring... and focus a bit of your $ on sharing those earlier stage risks with others... knowing that, with a bit of success, there's going to be a market waiting, that ensures that there will be follow on funding available to get successful exploration projects moved along from "proving up a find" to "making a production decision".
That's probably worth chatting about... but it would be off topic to do that, here...
Let me know where you'd like to go to have that discussion, if you'd like to have it ?
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