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CLE - Cyclone Metals

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Well it was interesting to watch as an observer how that whole Chinese deal/Russian buying thing played out, very strange if you ask me

Anyhoo just ran some number for fun and here's what I got

380M shares + 120M (ish) opies avg conversion price 33c

So total capital = 500M

Cash current = $270m
Sale proceeds to be recieved = $160m
Option exercise = $33m
Total = $463M

NTA Share = $463m/500m = 92.5c

There are 2 further factors worth considering,

1. The company has kept the Cape Lambert South Project which is IMMEDIATELY South and touching the main Cape Lambert Deposit and magnetic surveys have found a 3km long anomoly which looks similar to the much larger anomoly the discovered at the main Cape Lambert deposit which after much work was found to host 1.5Bt's and eventually sold for $400m

I would imagine any ore discovered here would also be naturally sold to the Chinese, so in a way CFE already have a buyer lined up IF thats IF they can drill out another deposit



2. The company is propsing to give back $100m in 2 parts, in specie distribution and dividend, using the 380M shares currently on issue = 26c a share


Key points
NTA should be 90c vs SP 50c
Company has the Cape Lambert South Porject which does look promissing

DYOR
 
Hate to sound like a broken record but....does anyone know what has happend to the GFE (Global iron) shares that we were supposed to be given?

I dont see them in my Commsec account and haven't done so for a long time!
 
I'm not sure but I my Holding Statement says they were 4 month escrow shares from listing and they were initially noted with my CHESS ID, but I note that later taken off my CHESS statement and issued with a SIN as Issuer Sponsored with a different HIN, so that may explain why they don't show on your account.
 
CFE is an odd stock. MCC have paid, or are paying, more for part of the companies assets than the present market cap. They could take over the company, get their cash back and still own all the assets. With a wiley Russian partner they must be aware of this.They could buy the company with the companies own cash. Why isn't there more action in the market place for the CFE shares? With cash on hand and another potential iron ore deposit these shares must be underpriced. Am I missing something here?
 
YOUNG_TRADER said:
Well it was interesting to watch as an observer how that whole Chinese deal/Russian buying thing played out, very strange if you ask me

Anyhoo just ran some number for fun and here's what I got

380M shares + 120M (ish) opies avg conversion price 33c

So total capital = 500M

Cash current = $270m
Sale proceeds to be recieved = $160m
Option exercise = $33m
Total = $463M

NTA Share = $463m/500m = 92.5c

There are 2 further factors worth considering,

1. The company has kept the Cape Lambert South Project which is IMMEDIATELY South and touching the main Cape Lambert Deposit and magnetic surveys have found a 3km long anomoly which looks similar to the much larger anomoly the discovered at the main Cape Lambert deposit which after much work was found to host 1.5Bt's and eventually sold for $400m

I would imagine any ore discovered here would also be naturally sold to the Chinese, so in a way CFE already have a buyer lined up IF thats IF they can drill out another deposit



2. The company is propsing to give back $100m in 2 parts, in specie distribution and dividend, using the 380M shares currently on issue = 26c a share


Key points
NTA should be 90c vs SP 50c
Company has the Cape Lambert South Porject which does look promissing

DYOR
Click to expand...


Hey Nioka,

As I have said above the company is trading at about 60% of its cash backing and it also has a promissing looking project to the South of the main deposit

My guess is its a combination of these disgusting mkts and some back alley dealings that have resulted in the current mis-match between the company's NTA and the value the mkt is putting on the company

This article was an interesting read
http://www.theaustralian.news.com.au/story/0,25197,24182242-30538,00.html

Regulator should check Cape Lambert and its players

Bryan Frith | August 15, 2008
CORPORATE regulator ASIC should take a look at recent events concerning Cape Lambert Iron Ore to satisfy itself as to whether or not there might have been a breach of the takeover and substantial shareholding provisions of the Corporations Act.

The Foreign Investment Review Board and federal Treasurer Wayne Swan should also have a look to see whether there might have been a contravention of the Foreign Takeovers and Acquisitions Act (FATA).

Any enquiries should focus on the behaviour of Russian steelmaker Evraz -- part-owned by Russian billionaire Roman Abramovich and the state-owned China Metallurgical Corp.

Evraz created a stir last month when it popped up with a 19 per cent shareholding in Cape Lambert, only days before shareholders were scheduled to vote on approval of the sale of the company's 1.56 billion tonne Cape Lambert magnetite project to CMC for $400 million.

The bulk of the holding -- 15 per cent -- came through the purchase of listed options, which began back in April, and which were exercised immediately before disclosure was made.

The buying created speculation the Russian group had its own designs on the iron ore project and that it might seek to block the sale to CMC by voting against it, or make a bid for Cape Lambert as the shareholding might not be sufficient to prevent the sale going through. Cape Lambert's share price ran from 70c to 92c.

Alternatively, it was thought Evraz might use the stake as leverage to try to expedite Chinese regulatory approval of the Russian group acquiring majority ownership of Delong Holdings, which is listed in Singapore and owns a steel mill in China's Hebei province. Delong is controlled by Chinese businessman Ding Liguo.

In February, a complicated arrangement was announced in which Evraz would acquire at least 51 per cent of Delong, in a deal that valued the Chinese company at $US1.5 billion, but as yet regulatory approval has not come through.

Evraz gave credence to the bid speculation. The Russian group invited Cape Lambert's directors to a meeting in Singapore after its stake was disclosed where they were given the impression that Evraz didn't believe the sale to CMC would be good for the Australian company. The Cape Lambert board allowed Evraz to conduct due diligence and believed that a bid was in the wings.

Cape Lambert originally proposed to sell 70 per cent of the magnetite project to Delong for $250 million but that fell through. Delong acquired 40 million Cape Lambert options and exercised 12 million of them, giving it a 4.4 per cent shareholding in Cape Lambert. It proposed to exercise the remaining 28 million options, which would have lifted its holding to 13.25 per cent, but as yet that has not happened.

The Cape Lambert shareholder meeting was held on July 27. Representatives of Evraz and Delong attended and made it clear they wouldn't oppose the sale to CMC or a proposed $37.7 million capital return to shareholders, but would oppose the issue of 8.5 million options to employees and 11 million options to directors, all exercisable at 52c a share.

As a result, Cape Lambert withdrew the resolutions relating to the options and the sale to CMC was approved.

ASIC might well be interested in the like-mindedness of the voting intentions of Evraz and Delong in relation to the various resolutions.

It's possible for parties to have an understanding as to voting intentions without triggering a relevant interest in the other's holdings, but if they act in concert in relation to the company's affairs then they are associates, and that would trigger a relevant interest. If Evraz and Delong were associates, they would have a relevant interest in 24 per cent of Cape Lambert, without either making a takeover offer and that would be a contravention of the Corporations Act. It would also mean the substantial shareholding provisions were contravened.

Whatever, it's now clear that Evraz did have designs on the Cape Lambert iron ore project but it was not in conflict with CMC; in fact, it's difficult to avoid the conclusion they were working towards the same purpose.

Only three days after shareholder approval for the sale to CMC, Evraz announced that it had signed a co-operation agreement to establish a joint venture to develop the $1 billion project, with a projected annual output of 15 million tonnes of magnetite concentrate. Evraz would have a 75 per cent economic interest in the project and CMC the remaining 25 per cent. The deal was announced before the project had transferred to CMC.

It was anticipated that all of the output would be shipped to China, with CMC entitled to sign an off-take agreement for up to 60 per cent of the output.

There's no way that was all agreed to in the three days after approval of the sale. It's clear the negotiations would have taken some time and have been under way while Evraz was accumulating its stake. It appears Evraz had no intention of making a bid and that its buying was aimed at supporting the sale to CMC.

That raises the question as to whether Evraz and CMC are associates under FATA. If that were the case then it would have a relevant interest in Evraz's 19 per cent shareholding in Cape Lambert. And if, as is likely, CMC only received FIRB approval to acquire the iron ore project, then it would be in breach of FATA.

It must be wondered what the Treasurer thinks of all this. Swan presumably thought he was approving a Chinese acquisition of the iron ore project, but it now transpires that a Russian group has majority ownership, while the Chinese get all the iron ore. Evraz still needs FIRB approval to participate in the joint venture.

If Evraz now gets Chinese regulatory approval to consummate the Delong deal, it will need to exercise care to ensure it doesn't fall foul of Australia's takeover rules.

Under the substantial shareholding provisions, if a party holds more than 20 per cent of a company it is deemed to have the same relevant interest as the company has in any shares. Evraz has already bought 10 per cent of Delong from Best Decade, a company controlled by Ding and which owns 78 per cent of Delong. Evraz has also entered into put and call options over another 32 per cent, and on exercise Best Decade would sell another 9 per cent to Evraz, giving it 51 per cent.

Evraz would then be required to make a mandatory bid for the remainder of Delong, but Best Decade would retain 26 per cent.

Once the put and call options were exercised, Evraz would own more than 20 per cent of Delong and would have a relevant interest in Delong's 4 per cent of Cape Lambert. As Evraz already owns 19 per cent, that would take it above the bid threshold. One way to avoid any problems would be for Delong to sell the 4 per cent stake before Evraz goes above 20 per cent of the Chinese company.

Meanwhile, Cape Lambert raised some eyebrows by issuing the 8.35 million options to employees despite not putting the matter to shareholders for approval. For added measure they are exercisable at a lower price of 50c a share.

Cape Lambert wanted shareholder approval so it would not have to include the options in the 15 per cent of the capital that ASX allows companies to issue on a non-pro-rata basis in 12-month period without seeking shareholder approval. It apparently has now issued them on the basis that they are included in the 15 per cent and don't need shareholder approval. It might be legal but it's questionable behaviour.

bfrith@acenet.com.au
 
nioka said:
CFE is an odd stock. MCC have paid, or are paying, more for part of the companies assets than the present market cap. They could take over the company, get their cash back and still own all the assets. With a wiley Russian partner they must be aware of this.They could buy the company with the companies own cash. Why isn't there more action in the market place for the CFE shares? With cash on hand and another potential iron ore deposit these shares must be underpriced. Am I missing something here?
Click to expand...

Yes I think you are right nioka. I think it has been also pretty obvious that there has been manipulation of this stock to sell it down. However, if its evraz they better be careful as they could finish up doing porridge on this one. Could be their mates though, if they have inside knowledge of a potential takeover bid. Or it could be someone else trying to buy the company at rock bottom prices. In any case, if the commies want to takeover CFE as you suggest, my understanding is that they would have to bid at least 75 cents, which was where they did their smelly accumulation.

I do reckon there is some rather shifty work going on with this stock. Maybe ASIC should have a look at this (per the post from Y_T) as I doubt if normal market forces are at play here. But whatever, dont trust the commie mafia, or the chinese mafia if it comes to that! And whilst ASIC are at it, maybe they should have a look at BRM. I reckon there has been manipulation going on there as well.

And whilst I am on about the mafia (and let's put the hedge funds into that category as well) ................I was chatting with some mates last night and we all came to the conclusion that it is about time short selling was made illegal. If short selling persists, then the stock market is lttle better than betting on the inside horse in the 5th at "wherever" - too open to manipulation, to the detriment of "normal" investors (and by that I mean people who do not have access to the same knowledge). Maybe we should start another thread on this topic.
 
Buddy said:
And whilst I am on about the mafia (and let's put the hedge funds into that category as well) ................I was chatting with some mates last night and we all came to the conclusion that it is about time short selling was made illegal. If short selling persists, then the stock market is lttle better than betting on the inside horse in the 5th at "wherever" - too open to manipulation, to the detriment of "normal" investors (and by that I mean people who do not have access to the same knowledge). Maybe we should start another thread on this topic.
Click to expand...

IMO, short selling is betting on a company to fail. To incentivise people to want a business to fail just doesnt seem right to me. That's like a bookie taking bets on a horse to finish last. Not only will trainers and jockeys drug their horses to go fast and win the prizemoney, they will also decide to drug their nags to finish last.

That isnt to say i blame short sellers for the market conditions at the moment asthere are various other issues at hand however short selling is something we can surely live without.
 
Family_Guy said:
Just out of interest, if ASIC were to investigate improper dealings, would CFE go into a trading halt for the duration?
Click to expand...

I doubt that would happen. CFE are not to blame. It would be other parties in the trading that would be investigated unless there was evidence that CFE were involved as well.
 
Guys try and ignore the noise and focus on the fundamentals

1. 90c NTA in cash alone (to be recieved) vs 50c Share price

2. Prospective grounds South of the Main Cape Lambert Mag body with a 3km mag target

If a takeover were to come it would have to be at a premium to the cash AT LEAST, given there is 90c cash a 75c is just out of the question

If I were them I'd put in an offer at 95c, 90c cash and the extra 5c = $25m would get them the South Project, a bargain when you consider it could host a large Mag body like its big brother a few kms North

Also 95c is a very nice premium to current levels and while I doubt it will go through/be accepted in these mkts who knows it just might
 
CFE is listed at AIM as well, and issued 240 million shares in AIM. The valuation could be about 60 cents.

Cheers
 
points see this link to the company's web page, pretty sure shares on issue are what I thought them to be ie 500M fully diluted

http://www.capelam.com.au/corporate_summary.21.html



Also looks like someone else see's what I see
http://www.theaustralian.news.com.au/story/0,25197,24182025-23634,00.html

Cape Lambert Iron Ore (CFE) 51.5c

FROM Criterion's bargain-basement file we highlight the odd lowly market valuation ascribed to this Pilbara junior, which is bulging with cash after selling its eponymous magnetite project to China Metallurgical Construction Group (CMC) for $400 million. One reader is puzzled why Cape Lambert is trading on a market cap of $230 million (including in-the-money options) when it's sitting on cash (including $160 million yet to be received from CMC) of $430 million.

A likely reason for the valuation gap is the intent of Evraz, the Russian group which has a 19 per cent holding in Cape Lambert. Instead of blocking the sale and making a takeover tilt as expected, Evraz shocked everyone -- Cape Lambert management included -- by doing a deal with CMC to take a 75 per cent stake in the project.

With the share price tanking from around 80c after news of the back-room deal, Cape Lambert now feels vulnerable to a low-ball offer from Evraz. But such an outcome is not inevitable.

The other uncertainty is what Cape Lambert does with the dough. The company has proposed a capital return of 26c a share to distribute $100 million or so, but that still sees plenty left over.

Cape Lambert is not officially a cash box in that it retained tenements at the prospective southern end of the project and expects to spend $5-8 million on drilling a few holes. If proven up, any resource would have enhanced value given its proximity to the 1.5 billion tonne main resource.

As for the rest of the stash, management has been entertaining all manner of proposals from other WA juniors; and has looked as far afield as West Africa. Such a foray might not exactly thrill Pilbara-centric investors, but iron ore explorers have to go where the iron ore is.

Cynics might argue there's nothing more dangerous than a cashed-up miner searching for a reason for being. Unless we've missed an extenuating factor -- which is always possible -- we agree that Cape Lambert rates as a speculative buy.
 
I am lucky for holding cash at hand recently wondering between a few stocks to jump in again, such as GBG, SDL or BMN, finally, I voted for CFE, at least it is a safe play, brought some parcel today, it is just a matter of time CFE will go back to 60's.
 
It is hard to work out why the SP of CFE continues to hover around the 50c mark. This values the company at less than the actual cash in the bank. There is another $80m to come from the sale of the iron ore deposit this month and another $80m still in the pipe line. There is the probability that $100m will be returned to shareholders as a capital repayment and special dividend in the very near future. That alone could be worth close to 25c share. The company has other assets.

One confusing factor is the notice that Power United Limited, with a Hong Kong address, is now a holder of 11.49% of the company by aquiring 49 million shares at a price of 32.7c share. Where did they come from? Another problem is the resignation of Ian Burston. Why?

Regardless of the problems, the company must be worth more that today's price. I have increased my holding today based on that assumption.
 
From todays AFR.

Cape Lambert readies for Pilbra drilling.

Cape Lambert Iron Ore says drilling will start on its Cape Lambert South project in Western Australia's Pilbara after it was granted an exploration licence.
 
YOUNG_TRADER said:
As for the rest of the stash, management has been entertaining all manner of proposals from other WA juniors; and has looked as far afield as West Africa. Such a foray might not exactly thrill Pilbara-centric investors, but iron ore explorers have to go where the iron ore is.

Cynics might argue there's nothing more dangerous than a cashed-up miner searching for a reason for being. Unless we've missed an extenuating factor -- which is always possible -- we agree that Cape Lambert rates as a speculative buy.
Click to expand...

I think YT's article raises a few very interesting points, and I generally agree with the sentiment. Essentially imo, they're still a bit of an unknown quantity, for a junior to have access to this much capital is totally unprecedented, especially under the current market conditions. Perhaps there really such a thing as "having more money than you know what to do with?"..:rolleyes:

On the other hand, they could just put the money in the bank, earn squillions off the interest and pay out a dividend until until I'm old and grey.:p:

jman
 
So what the blue blazes is going on here now?!...

Did anyone else recieve a notice in the mail today from 'Power United Limited' re the upcoming shareholder meeting? I've never heard of them before, but apparently they've "recently become a substansial shareholder in Cape lambert Iron Ore Ltd and currently has a shareholding of 11.49% in the Company".

Essentially they want to get rid of about half the Board, and seem rather concerned about CFE's proposal to become involved with the Marampa Project in Sierra Leone, which I have to admit I currently know very little about. They basically seem to be saying that the business plan is nothing but a shame designed to pass control of the company to mysterious (and as yet unidentified?) parties associated with the current owners of the project... :confused:

One thing which strikes me, if true, is that the CFE Board issued 8,350,000 options to employess and consultants on the 8th of Aug, yet Power United claim that the resolution was withdrawn on the 28th of July by the Board at the GM!! Surely this cannot be ethical?

I have absolutely no idea where this is going to end up, and feel that this is further damaging the CFE sp and investors confidence in them. I also have no idea whether to vote or not. I think this will ultimately be fought out by the big players, rendering my somewhat tiny holding largely irrelevant.. so what chance do the little guys have? :(

Any feedback/comments from you regular CFE posters welcome.

Something doesn't feel right to me... :cautious:

jman
 
Family_Guy said:
OK, so now Mick Gatto is in on the action and some other crook as well. Fantastic. And while the rest of us sit hear and wonder what the hell is going on, the disclosure has been poor, allegedly.

I'm not sure if i should dump and run but i just cant see why the company SP is so low considering its bank balance.

Story==> http://business.theage.com.au/busin...amberts-big-cashbox-20080916-4hyg.html?page=1
Click to expand...

It does sound a bit like the thugs are moving in on CFE and the cash box. I mean, just look at who's who now. We got Ruskies, Commies, "business people" of dubious character, and Melbourne mafia on the register.
I must admit that I am a bit cautious about the proposed investment in Afreeeca. Not sure this is a good plan. Maybe CFE should be wound up and the cash distributed to shareholders. After all, it does seem to be lacking a raison d'etre.
 
Buddy said:
Maybe CFE should be wound up and the cash distributed to shareholders.
Click to expand...

Why would the management do this, when they can stuff around for at least 5 - 10 more years with that cash, while earning their six figure salaries... ;)
 

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