CLE - Cyclone Metals

[moneymajix]

This is one strange stock. You would think it was take off with the confirmation.

The sale is to be confirmed (if they get the numbers) at the AGM on 16 July.

Current price is 71.5c, up nearly 3%.


INDEPENDENT GEOLOGIST CONFIRMS INDICATED MINERAL RESOURCE OF 300
MILLION TONNES SATISFYING CONDITION FOR 70% SALE OF THE PROJECT

KEY POINTS
● Independent Geologist, RSG Global Consulting Pty Ltd (“RSG”), has now completed its estimate of the Mineral Resources within the Central Target Area at the Cape Lambert iron ore project (the “Project”);

● RSG has confirmed a minimum Indicated Mineral Resource of 300 million tonnes;

● The sale condition precedent requiring Cape Lambert to define a minimum Indicated Mineral Resource of 300 million tonnes has now been satisfied; and

● The final condition precedent to be satisfied by Cape Lambert for the sale of 70% of the Project is shareholder approval and a shareholders meeting is scheduled for Monday, 16 July 2007 to consider this matter.

 

[Mumbank]

I am in NSW and also can't go to the meeting on Monday. WOuld be great to get a first hand report from someone after the meeting. Anyone going?

 

[Ruprect]

Well, as much as id hoped for a surge on confirmation, the history of this one shows that there is a sell down after major announcement, followed by slow recovery. The difference this time is the sell down is very minor on pretty light trade.

Im holding, waiting for the big players to enter, as they did a couple of weeks back. Im not stressed, like many of us here, still sitting on about 70% profit.

An indepenent confirmation of the resource, more drilling results to come and iron ore price predicted to rise considerably over the next few years.

I see a lot of upside for CFE over the next few years.

 

[MR.]

Well isn't that strange. Are we all just sheep?
Didn't you guys see a trade at something like $0.725 for 10,000,000 a week or two ago? Now what is different? Between then and now?

mahmoodf, I didn't expect CFE to publish the actual results. They are actually better than I thought they would be. I expected and Tony Sage confirmed, that it was only going to be published as "CFE has more than 300mt confirmed."

We didn't really need to know 793 MT's because this is only a part of their resource. Tony Sage is expecting the resource to be 4 billion tonnes once the drilling is completed.

 

[mahmoodf]

MR. and Ruprect : I totally agree with your comments.

A 300Mt indicated resource has been confirmed and verified by an independent geologist as outlined in the Ding deal.

Shareholder ratification should take place Monday, 16th July.

Shortly afterwards, Mr. Ding should be paying Cape US$57 million (30% of US$192 million).

Three months later, another US$106 million will be paid to Cape (55% of US$192 million).

The fundamentals of this project are constantly improving. If people want to sell, that is their perogative. I hold as I believe there is much more upside to come.

 

[mahmoodf]

http://www.brr.com.au/event/CFE/1827/25135

Sounds pretty good to me.

It sounds like they will not have to wait for BFS now.

 

[MR.]

mahmoodf, thanks for the link. I haven't looked there for a while.

The 1st payment will be one month after the official contract release next week after meeting.

I put my money where my mouth is today and i purchased some more oppies.

Delong Holdings has the money and CFE has the FE. And theres a contract.

Can anyone go to the meeting on Monday?

 

[mahmoodf]

I put my money where my mouth is today and i purchased some more oppies.

Good on ya MR.

Here are my thoughts on the deal. Any comments appreciated.

Ding has agreed to pay US$192 million. I am quite sure that this was done at a fixed FX rate of 0.76. Why? Because in the broadcast, Tony says that AUD$75 million is due in 4 weeks time. This equates to US$57 million. Which is 30% of US$192 million.

So in total, Cape will get AUD$250 million cash.

Now the project itself. Lets say the project will have a CAPEX of AUD$500 million. This means that Cape will have to come up with AUD$150 million (30% of CAPEX) and Ding will have to come up with AUD$350 million (70% of CAPEX).

Obviously the same applies with revenue split. If Cape can get a 15Mtpa operation going, with net revenue of US$30/tonne, that equates to US$450 million EBITDA. Applying FX of 0.85, tax of 30%, this leaves AUD$350 million profit. Cape's share will be 30% of this or AUD$105 million. On a PE of 10, that equates to a MCAP of over $1 billion. If Cape has around 500 million shares after options exercise, we are looking at a share price of around $2+.

And don't forget the $100 million that Cape has leftover to play with along with potentially AUD$30 million+ if all OCT08 options are exercised!

Can anyone go to the meeting on Monday?

I am based in Perth and will try and get down there but can give no guarantees.

 

[lazyfish]

Hi guys,

Sorry for asking a dumb question, I don't own shares as of yet, can I still go if I am interested?

TIA

 

[MR.]

Hi guys,

Sorry for asking a dumb question, I don't own shares as of yet, can I still go if I am interested?

TIA

I can not see any reason why you would be rejected from the meeting. It would be in CFE's interests that potential Share holders attend. Now option holders would be attending and they can't vote so visitors I would think will be encouraged to attend. I think you will need to check with CFE.

Mahmoodf, the meeting would be most interesting. I'd love to hear the questions asked and their answers. There would be so many questions which we have not even thought of. As you seem to be a fair poster on this thread (not just a ramper) I'd be interested in your comments if you attended.

The Geologist RSG with a deal of 250 million on the line had to be very conservative. They had to be 100% confident that there is in excess of the 300mt's. I'd hate to think of the litigation towards RSG if they made a mistake. If I was RSG I'd either not have taken the task on or I would have been very conservative.

CLIO in London up a bit at 30.25 (+3.4%) overnight.

 

[MR.]

Tony Sage (TS) last week said to me “he can see the share price going ten times. Look at Fortescue”
Since the S/P has sat at $0.60+ for more that a month, I would assume that this is the S/P he is referring to. I questioned the fact and withdrew my argument when I remembered whom I was speaking to.

I calculated a share price at $3-
Mahmoodf has calculated $2-+
TS believes in $6-

It will be interesting after the meeting and later in the week if Ian Burston exercises some of his options as TS did. TS’s option exercise was a vote of confidence I believe .

 

[mahmoodf]

MR, based on public knowledge, I have more confidence in your figure and my own figure for the SP going forward. If Cape does get to $6, great. But I'm not sure how TS has come up with $6. Obviously he is much closer to the action than we are.

Regardless, IMO Cape provides good value going forward 18-24 months.

It will be interesting to hear how today's GM pans out. I did not go due to work committments.

 

[lazyfish]

Hi guys,

I went for the meeting this morning. Here are some from the Q&A. I got some more on paper but left them at home so if there's anything more I will edit this post.

1) the Ding deal status
3 out of 4 things cleared.
a) Resource report (ok)
b) Board approval (ok)
c) Shareholders approval (ok)
d) FIRB approval for Ding (takes max 35 days, Ding's doing it, and if they don't hear back from FIRB they can assume it's being approved. Just for formality, almost never rejected)

2) Someone asked why the share price hasn't gone up, still in 67-70 cents range

Most brokers don't think Ding can make it because he's not famous. Once the first payment is through there should be a surge in share price. Ding has lots of assets (over a billion AUD and over a billion SGD? didn't hear this part clearly), already has 3 employees working on this JV and secured a property in Perth to carry this on. Board is very confident this will go through.

3) Estimated production

15mt/yr. Although initial production is likely to be 5mt-7.5mt/year. This is to cut down the risk of having no production at all if the 15 mt plant have issues.

4) Production commencement date

2010 is the earliest, as it is possible to have no access to other companies' jetties. If they order to build it now it can only start in 2 years time.

The board also mentioned the possibility of other projects.

That's it for now, I will update after I check my notes.

Cheers

 

[MR.]

Thanks lazyfish,

http://www.firb.gov.au/content/who.asp?NavID=48

FIRB Board examines proposals by foreign interests to undertake direct investment in Australia and makes recommendations to the Government on whether those proposals are suitable for approval under the Government's policy.

 

[jammin]

That's it for now, I will update after I check my notes.
Cheers

Thanks for that Lazy and looking forward to any further detail from your notes.
I am going to have to modify my trading plan to include some weighting for the location of GMs. My experience is that only boring GMs/AGMs are held in Sydney.(Well the ones I have attended have been). This meeting sounded much more interesting. How was the tea and bikkies?

 

[mahmoodf]

Thanks for the great update lazyfish.

Once the first payment is through there should be a surge in share price.

I agree with this comment. Cape has done everything required of it. It is now upto Ding to do his bit and come up with the first payment.

 

[lazyfish]

Didn't know I can't edit my own post anymore, but anyhow, this is what I have left on my notes...

1) How does CFE guarantee the price of ore sold with only 30% interest?
Market condition will be set in the J/V agreement. Chairman do not think this is a problem.

notes

$750,000 of the deposits which Ding has already paid are non-refundable even if conditions are not satisfied.

Chairman hinted at dividends after Ding pays up.

Board talked about 80 CFE shares -> 1 Global Iron shares for share holders, which will happen in few weeks.

Board talked about exploration of other projects, saying they have been too focus on Cape Lambert in the past. Something about 110(?) tenement and exploration rights. Sorry I have no idea what they were talking about and I ran out of paper. :hide:

The Celtic Club, where the AGM is hold, is quite a run down place. I like the board being prudent about any spendings though.

I am a total noob at this so apologies if I got anything wrong. I am pretty convinced that Ding will pay up given all he has done (deposit, staff, office), so I picked up some CFE myself today .

Cheers

 

[Ruprect]

From AAP and also running in The Australian online. Might generate some more interest over the next few days.

Cape Lambert sale approved
LAMBERT Iron Ore shareholders have approved the $287 million sale of a majority stake in its Cape Lambert magnetite project to China's Best Decade.

Shareholders overwhelmingly supported the sale of a 70 per cent stake in the West Australian project for $US250 million ($287.67 million).

Cape Lambert previously announced that the project had potential to produce 15 million tonnes a year, starting production in 2009 and costing about $600 million to develop.

Magnetite is low-grade iron ore and requires intensive processing to produce a saleable material, unlike the high-grade hematite ore that can be shipped directly to customers.

 

[MR.]

Lazyfish,
thanks for your comments and I hope our share holdings prove to be worth while. I have half in fully paid shares and half in options. My average price with options exercised is $0.50 each. Not as good as Ruprects 70-80% increase but he is a hardened trader and I not and I can’t help assessing the risk from time to time and adjusting my holding accordingly. Unfortunately i suspect that we may see the share price slide in the next couple of days. Many have been jumping on for a quick buck with little to no research. By the way the true meaning of noob would have to be some of the posters on the (“hot copper” forum. But at least they sometimes come clean.)

Perhaps I can answer some of your questions:

I would not be surprised if dividends were paid. I have suspected this for a long time. With Tony Sage’s recent exercise of his options could only add to the probability of dividends.

CFE has access to something like 110 tenements a few hundred km’s north of Albany in W.A. CFE has access to these gold mining tenements to look for iron ore. Providing that CFE does not interfere with the gold mining. I assume that ALL these tenements are being spun off into Global Iron. As CFE has not started exploring on these tenements they feel (along with the majority of share holders) that a separate company is best. I agree in concentrating on one project, but I disagree if it proves that we have lost alot of our share holding rights to management. Time will tell.

Of all the research I have done the simplest of calculations assures my holding. The mine is worth 350 million (based on 250 million for 70%) divided by 500,000 shares = $0.70

Also if you didn’t already know 200 million US was being raised by Delong Holdings. The buyer for Cfe can be either Ding or Delong by contract. Delongs proof of capital raising can be found in late May at :
http://info.sgx.com/webcorannc.nsf/...w&RestrictToCategory=DDELONG HOLDINGS LIMITED

My work is done here. I am not selling.
Good luck guys with what ever your intentions are. Cheers MR.

 

[moneymajix]

Well,

This stocks never seems to go up when you expect it to, that is on good news.

0.640c

Down 0.035c
(-5.185%)


Guess, holders will have to be patient a bit longer.