How one listed company lost almost half its value in just 24 hours

It can take years to build value in a company, but as Queensland mining company CuDeco found out yesterday, it can take just one piece of bad news and a few hours to destroy it.

CuDeco is a junior miner focused on developing a copper project in Queensland known as Rocklands. It’s colourful and outspoken chairman, Wayne McCrae, has been upbeat about the project’s prospects, but yesterday shocked investors with an “upgrade” report on the project’s potential.

After previously saying the project resources were more than 100 million tonnes with 2% copper, CuDeco yesterday told the market that the resource is only 30 million tonnes, with 1.24% copper.

Rattled investors reacted savagely, selling the stock down from $3.50 to an intra-day low of $2.25. The shares recovered slightly to finish yesterday at $2.45 (down 49% for the day) but have continued to fall this morning, down to $2.42 at 11:15 AEST.

The announcement caps a dramatic week for CuDeco and McCrae, who announced on Monday that he was taking legal action against internet investment forum Hot Copper and two of its participants, claiming defamation.

Hot Copper has since suspended all posts on CuDeco, but that hasn’t stopped the stock from being hammered.

The only consolation for McCrae is that he has been through this all before. In 2006, Cudeco shares went from about 30c to as high as $10 as investors flooded into the stock on news of a big copper discovery.

The shares would later fall to below $2 in 2008 before climbing back to around $6 in late 2009.

McCrae provided an optimistic view of yesterday’s announcement, saying “the new resource update lifts CuDeco to a whole new category, with a major project introduced to the Australian mining industry”.