CLE - Cyclone Metals

[chris1983]

All I care about is the deal going through. Once thats done I know 100% in my mind I'm on a winner. Ore grades etc etc may be low grade..but I wouldn't of even looked twice at this company if the deal with Best Decade didn't arise.

250 million dollar deal for 70% of their deposit. Options coming into conversion will bring 38 million.

Once options are exercised they will have 100 million at bank to aquire new projects and the 30% interest they hold in the project would be allready fully funded. An additional 15 million from Mr Ding when he converts his options (Huge sign of confidence from Mr Ding).

The hurdle to overcome.

Get an indicated resource of 300 million tonnes from an inferred resource of 2.5 billion. They expect to have this in 4-6 weeks. This was an easy one for me to put money into. Lets hope the deal doesn't crash and burn..anything can go wrong but once it is completed I'll be smiling.

 

[chris1983]

Ferret's Stock to Watch: CAPE LAMBERT IRON ORE LTD

Find a highly prospective iron ore explorer, cum producer down the track and link it with a Chinese buyer and you have stock that is hard to go past. The word buyer is on two counts, one in buying into the company and the other being the source of buying its production. This is a company that will take time to come to fruition, but shareholders have the prospect to prosper if everything goes according to plan.

On Friday Cape Lambert Iron Ore Ltd (ASX:CFE) reported to the ASX that a Chinese investor, Mr Ding Liguo, had entered into a contract to acquire 40 million Cape Lambert options from a third party. The purchase of these options by Mr Ding follows the news earlier this month that Best Decade Holdings had entered a binding conditional agreement with Cape Lambert to acquire 70 per cent of its namesake iron more project in Western Australia for $250 million.

The options to be acquired are due to expire on October 31, 2010, with an exercise price of 37.7c, but Mr Ding has formally indicated that he intends to convert the options to ordinary shares in the near future, which would generate $15.08 million for Cape Lambert. On the conversion of the options Mr Ding would hold 13.7 per cent of the issued capital in Cape Lambert and become one of the company's top five shareholders.

In addition to the acquisition of the options, the company has accepted a request from Best Decade that the purchaser of the 70 per cent interest in the Cape Lambert project will be Mr Ding, the sole beneficiary and a director of Best Decade Holdings. Cape Lambert director Tony Sage said: "We believe that Mr Ding's acquisition of these options and confirmation to us that he intends to convert them into a significant equity position in the company proves how highly he regards our management and technical teams, and most importantly our plans moving forward." However, the half-year result didn't augur that well after Cape reported a consolidated entity tax loss of $3.2 million, although it was much better than the comparable 2005 period which saw $15.5 million wiped off the books.

The last large loss for the six months was largely due to the impairment of exploration assets in relation to the Romanian SACU Project resulting in an additional expense of $2.1 million. Meanwhile work on the Cape Lambert Iron Ore project continued during the half year toward the preparation of a bankable feasibility study and commenced in respect to environmental permits for the Cape Lambert Iron Ore project. Resource definition drilling at the project began last July within the central target area and continued up to December 15 when drilling ceased for the Christmas/New Year period.
The company had completed 69 reverse circulation (RC) drill holes for a total advance of 18,052 metres. The company is scheduling the recommencement of RC drilling in early April, once the RC rig is available and all outstanding DTR results have been received and interpreted. Priority drill targets will be immediately to the north of the central target area and along strike and down-dip of drill holes MA209 and MA210, which returned thick DTR intercepts of 164 and 202 metres respectively with high Fe concentrate grades and low deleterious elements.

The mineralisation in this area is open along strike and down-dip. Work also commenced during the quarter on consolidating Robe's drilling data along with new drill data into a single digital database in anticipation of preparing a resource concentrate model for preliminary open pit mining studies. This necessitated the installation of a new server and appropriate database software.

 

[chris1983]

I topped up this morning and am hoping for the deal to be realised in the next 4-6 weeks.

 

[chris1983]

Well below is my valuation on Cape Lambert. Feel free to question what I have written.

CFE - Total Class Issue: 247,576,062

Market Cap (Undiluted): $116,360,749

CFEO - Total Class Issue: 136,511,800

Market Cap (Undiluted): $30,032,596

Chinese investor, Mr Ding Liguo, to purchase 40 million unlisted CFE Options
(“Options”)

Total shares on issue – 424, 087 862

Current price is 47 cents

Fully diluted market cap is $199, 321 295

Now if you work out the monetary value the company will receive it will be worth.

$250 million (deal with Best Decade)

$38 million once options are converted.

Additional $15 million

In total this is $303 million in cash value to the company.

But out of this 303 million only 115 million will be left for the company to aquire further projects because the rest of it will be used to fund their 30% interest in the project that Best Decade aquired 70% of.

As stated in the West Australian..

“It would also leave Cape Lambert with around $100 million to invest in other projects, once outstanding options are exercised next year”

This is how I know 115 million in cash will be left for the company because you have to add the additional 15 million from Mr Dings options once converted on top of the $100 million left over from the deal with Best Decade. This would leave the company with 115 million cash in total and the 30% interest in the project is fully funded.

When you put a valuation on the company I believe the value should be the total value of the company divided by the shares

$303 million divided by the fully diluted share holding of 424, 087 862

= .714

So once the deal is confirmed I am expect atleast around a 70 cents valuation on the company.

 

[Freeballinginawetsuit]

Chris,

Ive tried to make sense of CFE price action in recent days and considered the fundamental scenario also .

So like you I have taken a punt, nothing big .........35000 oppies at 22c today! I'm with you on this one, seems a gimme, lets hope the seems turns out to is!

 

[chris1983]

Chris,

Ive tried to make sense of CFE price action in recent days and considered the fundamental scenario also .

So like you I have taken a punt, nothing big .........35000 oppies at 22c today! I'm with you on this one, seems a gimme

I hold just a bit more than you Freeballing. I also hold the oppies. Im expecting 70 cents to be reached in the short to medium term for the head share. Thats 23 cents above the current price. I dont think we will have any troubles with this. I just feel very safe with this stock..due to the deal being carried out with Best Decade. If that fell through then I will be out..and out fast. The deal needs to go through and it looks like it will. 23 cents up would bring you and I a nice little profit because the oppies will follow the head share. Good luck mate Now we have to hang in there for the next 2 months.

 

[monaliza]

I hold just a bit more than you Freeballing. I also hold the oppies. Im expecting 70 cents to be reached in the short to medium term for the head share. Thats 23 cents above the current price. I dont think we will have any troubles with this. I just feel very safe with this stock..due to the deal being carried out with Best Decade. If that fell through then I will be out..and out fast. The deal needs to go through and it looks like it will. 23 cents up would bring you and I a nice little profit because the oppies will follow the head share. Good luck mate Now we have to hang in there for the next 2 months.

It is about the deal,without deal everyone will be out fast.
What about long term investor,if there is no deal

 

[chris1983]

It is about the deal,without deal everyone will be out fast.
What about long term investor,if there is no deal

Its about the deal to me. Long term you are still fine..there will still be a company..they will still have a deposit. But I have worked my figures out based off the cash they will receive and the backing of the chinese. Thats the main reason I hold. You can hold longterm if you want..there is nothing to say these guys won't have success if the deal with best decade fell through.

 

[nomore4s]

I really don't understand the sell down on this stock. They've negotiated a great deal, I'm not sure what the market wanted/expected?
I can understand the sp not taking off till the deal is confirmed in a few months but for the sp to be sold back to the level it has really surprises me.
It broke down past what little support there was at 45c, the next level of support looks to be at 42c, but more likely at 40c.

 

[james888]

Change of director's interest notice---director sells on market on 2/4.

 

[mmmmining]

Director selling into strong price action is not a strong indicator, if selling into falling price, the company is in trouble. In this case, it is OK to me.

 

[Mousie]

Director selling into strong price action is not a strong indicator, if selling into falling price, the company is in trouble. In this case, it is OK to me.

It's not even a question of strong/weak price action. The price never reached the supposed valuation in the 1st place, so unless everyone here is wrong about the "correct" valuation of CFE supposing the deal's success, why'd he sell?

I don't think a director being a director doesn't know CFE's valuation. Something doesn't smell too good here IMO

 

[chris1983]

It's not even a question of strong/weak price action. The price never reached the supposed valuation in the 1st place, so unless everyone here is wrong about the "correct" valuation of CFE supposing the deal's success, why'd he sell?

I don't think a director being a director doesn't know CFE's valuation. Something doesn't smell too good here IMO

Doesnt mean anything to me. If Mr Ding starts selling then I'll worry. He acquired 40 million unlisted oppies

"Chinese investor, Mr Ding Liguo, to purchase 40 million unlisted CFE Options"

He has put faith in the company..if a Director sells a minute amount of shares and options to the equivelant of 300 grands worth whats the big deal. Maybe he needed some cash. I would sell your shares if your worried because nothing is concrete just yet. Thats a risk I'm willing to take though.

 

[Mousie]

Thats a risk I'm willing to take though.

To each their own. Hope it gets better for ya then

 

[chris1983]

To each their own. Hope it gets better for ya then

Havn't lost anything. It can only get better.

If not I need capital losses anyway. Wont hurt

Ive weighed everything up. The deal is all I need to go through. If it falls through thats something i'll have to live with.

 

[Glenhaven]

He sold a large part of his shares at 54c just after the announcement. I think this is a bit of a worry.

I hold. The worst thing is I might of been one of the buyers as I bought on the day he sold.

 

[nomore4s]

He sold a large part of his shares at 54c just after the announcement. I think this is a bit of a worry.

I hold. The worst thing is I might of been one of the buyers as I bought on the day he sold.

Does anyone know what he paid for the shares? Maybe he sold them to freehold the rest?
There could be a number of reasons for him selling.
As far as the deal is concerned imo it still looks good for a number of reasons.
a) Mr Ding buying the options, is a sign of confidence in the company, project and the deal.
b) The fact Best Decade has put a deposit down with a non refundable amount suggests to me that they can't see there being too much of a problem with the target being met for the deal to go ahead.

There could of course be things happening behind the scenes that we don't know about, but imo it is still looking ok pending the results to come.

 

[chris1983]

He sold a large part of his shares at 54c just after the announcement. I think this is a bit of a worry.

I hold. The worst thing is I might of been one of the buyers as I bought on the day he sold.

Too many times investors lose focus. He doesn't even hold a large portion of the company. Like I said I'll be more worried if a message was released saying Mr Ding sold his shares. I only bought into this company based off the deal so if it doesn't go through thats the way it goes.

 

[Ruprect]

Chris, im with you - ive been watching this forum for a while - but ive just joined. I should play my part.

Glenhaven, get a grip. Look at the deal that CFE have done - if they can prove the resource, (which from all accounts is probable, but not without risk), then the sp will shoot back up. And it is then that the ONE director who sold down SOME of his shares will be the loser, because they will head higher (probably much higher) than the 54cents he appears to have sold at.

Dont forget, there are other directors with significant holdings.

I hold, and am happy to take the risk with this one.

 

[Joe Blow]

Off topic posts removed. Back on topic please gentlemen, sans the personal attacks.

Thank you!