ARH - Australasian Resources

Will ARH have rub offs from AUM?

A friend put me onto this yesterday a lot of upside here and directors are optimistic ...good location and plenty of iron ...haven't crunched any numbers yet but will be looking into it

I have been a holder since December (SHN) - Broader market only catching on now as to how massive this iron ore deal is going to be.

IMO this is a no-brainer to .50 cents

cheers

Kariba how do you come to 50c a share???I've only started to look at this over the last couple of days,and as I see it ...it's all going to depend upon how many shares are issued to Prof C.Palmer ...if its 51% ok maybe that would take us to a market cap of 250 mil which would be undervalued
Can anyone shed some light

bought a small parcel this morning

has winner written all over it

as soon as the deal is done for the billion tonnes of iron ore the share price will rocket

Australasian Resources (ASX: ARH) is pleased to advise that with the settlement of the Citic Pacific transaction, discussions related to Australasian Resources’ potential project on the Southern Block at Balmoral commenced in earnest last week. Good progress has been made towards finalising the terms and conditions necessary to consummate a deal with Professor Clive Palmer, and the Mineralogy group, over the right to mine one billion tonnes of magnetite iron ore on the Southern Block at Balmoral.

There's a lot I don't understand about this deal...the biggest thing that has been bugging me is- Why is clive palmer selling this block to ARH?
First I thought that since he already own's 22 million shares it might be like a buddy deal (NB 720 million shares issued + 65 mill various options)and that he's friends with members of the board.
Yeah I didn't put much thought into it and it's been bugging me ever since so I've come up with this theory...

Maybe wer'e looking at it wrong in that ARH aren't buying 1 billion tonnes from clive palmer but the professor is buying ARH with a billion tonnes of iron ore

bear with me... at current market cap ARH is 120 m. 1 billion tonnes is worth 288+ million in the ground (this is what Palmer got from citic + royalties)
using fuzzy logic if ARH issued Palmer with 288 m. worth of shares at current sp. Palmer would own 70% of the company (not taking into account original holdings + royalties)

I know there's some holes in my theory but why I like the idea is that if it were true then it would make sense for Palmer to sell the rest of his tenements to ARH and get a double bite of the cherry (and 60 billion tonnes of ore is a big cherry)

I still have problems valuing this company and without knowing final details of the deal it's near impossible
but heres some more fuzzy logic...Fortescue estimate $10 profit per tonne for there Mt Gibson operation
ARH 1 billion tonnes of ore at 70 % iron = 7 Billion$

And there's a lot to like with Citic who have agreed to get the infrastructure sorted out

OK a lot of conjecture their and nothing really concrete I hope this generates some more disscusion and please feel free to rip into my fuzzy logic and add some estimates of your own

It seems pretty hard to generate interest in this company...but I'm going to have one more crack
I figure once the deal has gone thru the market cap should be around $500 million and there will be 2 billion shares on issue (Mineralogy gaining 1.4 billion)
leaving a sp = 25 cents (currently 16.5 )
I've pulled all these numbers from a hat but I do like them...and if the deal hasnt gone thru by august I bags ARH for next months stock tipping comp

I'm still throwing number's around and was hoping somebody might help...
I'm trying to figure out in what range the market cap should fall post deal
I know it's not a reliable yardstick to compare with other companies but...
Gindalbie Metal GBG has a value of .63 $/t
Grange Resources GRR =.94 $/t
both these companies are magnetite ore but in different stages of development...and I'm not sure wether because GBG has a 50% jv should I be multiplying .63 by 2 ???
I've seen the figure 500 million for market cap but with no rationale to back it up...
Presently I'm trying to make up a graph of projected sp. vs differrent market cap's and share dilution
If anyone could throw me some idea's it would be much appreciated
NB.
1. 619mt x .63 = MC 390m divide no. of shares (projected) 1.4 billion = sp 27c
2. 1 Bt (projected) x .63 = MC 630m divide by 1.4 billion =sp 45c

Again any help on this would be appreciated

I bought this stock midway through breakout 3 weeks ago. The market corrected and it fell, but it quickly rebounded and ARH is on another run. I would forget about the fundamentals you are stating as many exploration companies in west oz are looking around for any deposits they can get their hands on. Volume is good for ARH, its "new point of resistance" is 15.5 cents (around that) it was 12 cents, and if it pushes past 20 cents its going to run. I put 30k into them and I'm not getting out in a hurry.
All the best in your share trades.

my TA is minimal but I'm pretty sure what's going to push it past 20 cents is the impending deal signed with mineralogy

Success comes from iron will
John McCarthy

July 19, 2006

CLIVE Palmer is a different kind of businessman. If you were told he was from the Gold Coast you wouldn't be surprised.

Then there's that property developer/National Party background and a truckload of cash from China in his bank account thanks to the recent sale of an iron ore project in the Pilbara to CITIC.

You never feel that you are dealing with someone who has just pulled off a $290 million plus deal with the Chinese Government and unlike many businessmen, Palmer doesn't mind talking about his wealth.

But it wasn't as if success came overnight. Palmer has worked on the iron ore project since the mid '80s when he bought it off the US-based Hanna Group and there was the odd failure before the successes started to roll in.

"Projects like this don't happen in three or four years," he says.

"It's a lot of hard work."

He thought he had a deal in 1999 when he stitched together a consortium of some of the world's biggest players to build and mine the ore and ship it to a steel mill in Newcastle. It fell apart when part of the transport route was discovered to be heritage listed and his cosy relationship with the NSW Government fell into acrimony.

The Government wanted its $30-odd million in grants returned and Palmer wanted his project. He tried to sue for $500 million.

About $140 million was also spent on engineering studies and exploration of the ore body.

"I'm still trying to resurrect it," he says of the consortium.

Palmer also once spent $1 million trying to get the then-Soviet Russians to take iron ore from the project, but all Palmer was offered in return was a trade: for all the iron ore, the Soviets would give him an equivalent value amount in cinnamon.

When Palmer announced the putting together of his Pilbara consortium, the market and other producers laughed.

"They would, wouldn't they," he says.

But these sorts of deals require massive capital which is why his company, Mineralogy, took the different route with CITIC of selling the rights to mine and develop.

He took a $US215 million (then worth about $A290 million) up-front payment as well as yearly royalty of up to $US100 million.

He still has plenty of ore to negotiate over, as well. He estimates 160 billion tonnes, but that is not definitive.

The deal with the Chinese represented a small part of the strategy. He has effectively carved the ore body up into blocks to be sold off and believes the plan has a net present value of about $7 billion.

"What we have done is we have marketed 1 billion tonnes of ore which is enough to to produce 12 million tonnes of product over a 30-year period," he says.

"We have four more of these tied up with the Chinese on the same formula."

CITIC already has Foreign Investment Review Board approval.

Mining junior Australasian Resources is also negotiating with Mineralogy over the right to mine another 1 billion tonnes of an adjoining southern block of the ore body.

A feasibility study is expected to be completed in the next few weeks and Palmer is also now negotiating with the Indian Government.

The huge interest in his deposits stems from the stranglehold companies like BHP Billiton, Rio Tinto and CVRD hold over iron ore.

The three cleverly bought up and developed iron ore years ago and now go into negotiations with steel makers knowing that they hold the upper hand.

But China was never going to be happy with that for too long.

The $300 million Palmer received recently is not his first fortune. He says he already had about $40 million in assets, having made his first fortune in property and retired before he was 30.

But retirement was never going to suit him. Anyway, he says he was getting too fat sitting around doing nothing.

He vows he hasn't stopped making fortunes yet andis willing to bet that he will add $400 million to his personal wealth by the end of this year.

How? He's not telling

From another article 2004

If all else fails, Palmer will have gained valuable experience. He's already in demand as a lecturer on "major projects and their funding".

In 2002 he was appointed an adjunct professor in the business and law faculty at Geelong's Deakin University. The position carries no salary, but it allows Palmer to use the title of professor. Palmer didn't finish the journalism and government degree he started as a teenager. Instead he made a fortune selling property in Brisbane. He later worked for Queensland premier Joh Bjelke-Petersen and then turned investor in medical and technology research.

The rubber never pulls them out and it beats wet undies.ARH did volume of 4 mil in the last 15 minutes today ,all of it at 19.0 cents (and broke the back of the sellers), yesterday its volume was at 17.5/17.0 cents.As I said two days ago if it does volume it will easily push past 20 cents and perhaps run all the way to who knows were.All the fairy traders sold out in the last week and this is its next volume push.For your knowledge look out for the signed announcement on thier ore deal in the next week and the immediate share restructure!, but I didn't tell you about that one.

Freeballinginawetsuit said:

For your knowledge look out for the signed announcement on thier ore deal in the next week and the immediate share restructure!, but I didn't tell you about that one.

Click to expand...

When you say share restructure are you meaning the deal with CP and the immenant share dilution or are you thinking there will be a consolidation?
I've played with a few more numbers
If CP looks at making 400 million from this deal ; read "success comes from an iron will"
And I'm guessing that he is looking at 50% ownership ...so maybe he's expecting a market cap of 800 million
So 800 divided by 1400= 57 cents per share
I can't understand why no one else is getting on this bandwagon...
anybody tell me where I'm going wrong

You are not going wrong. If you had taken my advice yesterday you would be 15% ahead already. I am not saying anything more about the share restructure but it has nothing to do with Palmer he gets his anyway.

No worries I got on at 16.5

Nice, hope it punches through 20 tommorrow

ARH 1 billion tonnes of ore at 70 % iron = 7 Billion$

Kgee - i'm no expert and others may be able to shed light but I think the answer to your question lies in the fact this is magnetite... it is 1 bt ore of 30% Fe, ie 300mt of iron - this they say can be beneficiated to 70%... this is the big question - while they may be able to do this in a lab the question remains is it economic.. are the impurities too high (silicon etc?), what will happen when large quantities are tried?

BHP had problems with HBI plant using haematite - RIO is similarly struggling with its Kwinana plant - even tho the technology exisits it needs to be proven for various types of ore

CP picked these deposits up for next to nothing and has burnt a lot of bridges in the past trying to develop them - investors may be cautious... but one thing you can say is he is persistant!

56gsa said:

ARH 1 billion tonnes of ore at 70 % iron = 7 Billion$

Kgee - i'm no expert and others may be able to shed light but I think the answer to your question lies in the fact this is magnetite... it is 1 bt ore of 30% Fe, ie 300mt of iron - this they say can be beneficiated to 70%... this is the big question - while they may be able to do this in a lab the question remains is it economic.. are the impurities too high (silicon etc?), what will happen when large quantities are tried?

BHP had problems with HBI plant using haematite - RIO is similarly struggling with its Kwinana plant - even tho the technology exisits it needs to be proven for various types of ore

CP picked these deposits up for next to nothing and has burnt a lot of bridges in the past trying to develop them - investors may be cautious... but one thing you can say is he is persistant!

Click to expand...

Yeah I wouldn't be surprised at all about me getting the grades wrong (this is the first time I've ventured into Iron ore )
but you would have to be optimistic that it was economically viable with citic buying the other 2 blocks in Balmoral with a price tag of over a billion dollars including infrastructure costs-I spose you have to believe that they know what theyr'e doing.
I wish this thread was generating a bit more interest...it would be nice to get a few informed opinions...well anyway we should know over the next week wether the deal is going thru and hoprfully after that some resource upgrades

Freeballinginawetsuit said:

Nice, hope it punches through 20 tommorrow

Click to expand...

Made it through 20 alright but any idea why the big sell-off today?