ASQ - Australian Silica Quartz Group

[Lucky_Country]

Strong start too the week looks like a definate push too get a foothold in BAU.
Tightly held and not many willing sellers.

 

[Broadside]

I can answer that from my Point-of-View Broadside...

1) United Minerals is not a Bauxite Pure Play (Really it’s an IO corp)
2) United Minerals holds only 25% of the Bauxite Deal
3) Their Bauxite resource, as far as I researched (Not too far to be honest), is not as well defined as the historical BAU tenements (Which r also in a good area).
4) UMC is valued at 200m undiluted MCap. Bau is approx. 80m diluted.
5) My DCF fair Value assessment of UMC, offset by risks, comes in at approx 240m MCap... So UMC is fully valued at this point in time (Very possible future value depending on developments).
6) My DCF fair value on BAU, offset by risks, comes in at approx. 200m Mcap diluted, so there is much upside from the current valuation of 80m diluted.

I’m not saying that UMC is no good - Just from my P-o-v BAU has more upside and potential in regard to Bauxite/Aluminium.

I am prepared to be corrected on these points - I honestly havent gone beyond this preliminary assessment because I didn’t see it being worth my time.

Pat

Thanks Pat I appreciate your response and accept most of your points. The 25% is a two edged sword, a refinery is a major capital investment so having a big brother on board is a plus for me. I would dispute UMC is fully valued on the IO side but it's not appropriate for me to discuss that on this thread, and I accept the fact that it's not a pure bauxite play is a minus for some investors. I'd expect a spin off down the track for this reason.

Great to see BAU getting some real interest the past few days.

 

[pattyp]

Some great trading today - very exciting stock

http://www.platts.com/Metals/News/8726170.xml?src=Metalsrssheadlines1

Power, bauxite shortage to drive aluminium, alumina prices higher

"We expect the aluminium market to be in deficit in 2008, moving into
deeper deficits in 2009 and 2010. Supply surpluses loom further out, but
inventories will remain low relative to history," Citigroup said, adding that
the main drivers of the deficit were supply curtailments induced by high power
costs and shortages, and continued robust demand growth (8%/year).
It said this outlook would support prices above $2/lb for the next five
years. "However, in the short term some weakness is expected following a
reversal of recent dramatic inflow of investment funds," it said.

The bank noted that a bauxite shortage was looming. "Bauxite supply
growth is expected to slow. The third party traded market is increasing in
importance, and access to high quality bauxite will be a key source of
competitive advantage. The alumina market has seen some relief from spot
rising prices recently, but over supply is expected until 2010," the bank
said, adding that in subsequent years however a tight market loomed.

 

[Lucky_Country]

Stars aligning for BAU with articles like this tommorow should be a strong day.
Where it ends Im not too sure but the run may even accelerate with good news.

 

[pattyp]

I think at share price of $1 the Market Cap would be fairly valued based on the known vs. risk...

We'll have to see how optimistic the market is, but I think we will see 1buc sooner rather then later...

Add some developments... China deal, Refinery JV, official resource estimates.... and BANG!!!

Thats just my opinion... Its a guess, no promises from me

Pat

 

[Lucky_Country]

Agree with the $1 sooner than later !
A few good news flows and BAU will be heading into blue sky a bit of media attention too make it more widely known and it will be hot property.

 

[pattyp]

Ooooooww!

http://www.bauxiteresources.com.au/index.htm

Nice new website... Must be getting their act together for some serious business!

Good to see

Technically speaking - Depth looks good today, maybe a bottom...?

Pat

 

[qq830821]

got 1000 BAUO at 0.3 speculating the news on China's visit. but on top of it, still think its a good company, sustained at 49c

 

[grace]

I just received a newsletter about the China visit with lots of pictures, and some more company news. Tried to link it but failed (was a very large file).

Should be on their website I imagine. Worth a read, and/or sign up for newsletters if you are a holder or potential holder. They must have grabbed my email address when I was hunting down the top 20 list some weeks ago...

 

[qq830821]

read through the whole thread this afternoon, realise that we have been concentrate on the demande of the bauxite, the story sounds fancy however, how abou the supply side. i did some research re the supple side. most of the research paper i read are in chinaese. so bear with me if my infor is differ from what u have
1. with chin'a current reserve, there will be more than enought to use until year 2030
2 the refinary process is kind of labour intensive... how will this affect bau's profitability
3 to chin'a definiation, to be qualified as BAU must have >40% content and A/S≥2.5
3 the resources the company current have are they economic demonstrated resources or subeconomic demonstrated resources

 

[grace]

I was sent today by Bauxite Resources some research by Capital Investment Partners. Interesting read. I again can not upload it. Not sure why not. This research was dated 9/5/08. I have saved to my hard drive. It is not on BAU's website, nor Capital Investment. Can anyone give me a hint. I upload charts fine. Just having trouble with other documents.

 

[grace]

I was sent today by Bauxite Resources some research by Capital Investment Partners. Interesting read. I again can not upload it. Not sure why not. This research was dated 9/5/08. I have saved to my hard drive. It is not on BAU's website, nor Capital Investment. Can anyone give me a hint. I upload charts fine. Just having trouble with other documents.

I found a link for an extract of the whole report though, so here it is.

http://www.datafilehost.com/download-0f2cdcc6.html

 

[pattyp]

read through the whole thread this afternoon, realise that we have been concentrate on the demande of the bauxite, the story sounds fancy however, how abou the supply side. i did some research re the supple side. most of the research paper i read are in chinaese. so bear with me if my infor is differ from what u have
1. with chin'a current reserve, there will be more than enought to use until year 2030
2 the refinary process is kind of labour intensive... how will this affect bau's profitability
3 to chin'a definiation, to be qualified as BAU must have >40% content and A/S≥2.5
3 the resources the company current have are they economic demonstrated resources or subeconomic demonstrated resources

Hi qq830821,

Im travelling at present and cant give an adequate response to your question... Will come back to this next week!

"the resources the company current have are they economic "

This is an extremely subjective question - economic depends on location, depth in ground, transport, and processing facilities. If you check out some of the info on Darling Ranges bauxite (BAU website good place to start then look to the Other D.Ranges Bauxite miners) ... Its avg. Alumina levels are 30% but they have a better make up which allows for processing to be less energy intensive. Bau is in good location and has (Based on other players mines in the area) top quality Bauxite...

China has a lot of Bauxite as you point out - problem they have is energy! They dont have enough to create the aluminium... This is one of the key points that are creating a problem in the supply/demand equation.

One last point - There is enough Iron Ore and Coal to last a long time also... Problem is getting it and processing it in alignment to demand growth!

Anyway, keep researching and i'll get you some data/extracts when I get home!

Not advice, just my opinion!

Pat

 

[qq830821]

Hi Guys
i have attached a PEER analysis for BAU have a look if you are interested

 

[qq830821]

Hi qq830821,

Im travelling at present and cant give an adequate response to your question... Will come back to this next week!

"the resources the company current have are they economic "

This is an extremely subjective question - economic depends on location, depth in ground, transport, and processing facilities. If you check out some of the info on Darling Ranges bauxite (BAU website good place to start then look to the Other D.Ranges Bauxite miners) ... Its avg. Alumina levels are 30% but they have a better make up which allows for processing to be less energy intensive. Bau is in good location and has (Based on other players mines in the area) top quality Bauxite...

China has a lot of Bauxite as you point out - problem they have is energy! They dont have enough to create the aluminium... This is one of the key points that are creating a problem in the supply/demand equation.

One last point - There is enough Iron Ore and Coal to last a long time also... Problem is getting it and processing it in alignment to demand growth!

Anyway, keep researching and i'll get you some data/extracts when I get home!

Not advice, just my opinion!

Pat

Hi Pat
thx for the reply. i reckon the porblem is energy as well however, by saving that, there are many other countries that can produce this resources with lots of electricity, as far as i can remember these countries have low cost labours as well, compare to those countries. whats australian's comparative advantage? we have relatively high cost of labour high cost of energy and high infrastructure cost. any cost advantages from processing BAU will probably be wiped out by the higher labour, infrastructure and energy cost?

 

[Broadside]

Hi Guys
i have attached a PEER analysis for BAU have a look if you are interested

Pointless posting a peer analysis but maybe that was your point....I am sure, however, everyone is well aware it is early days and is a speculative investment.

 

[qq830821]

Hi Guys...
just have sth in my mind and cant figure it out..need your help
1 Assmue i buy BAUO for 30c for say 10000 options....as its a US option, we can execute the BAUO at anytime and buy the BAU shares @ 30c per share. we can them immedicately sell the 10000 BAU @ 50c making a riskless profit of (50c-30c)*10000=$2000? well, thats just sounds too good....but thats at least how i understand...anybody?

 

[Broadside]

Hi Guys...
just have sth in my mind and cant figure it out..need your help
1 Assmue i buy BAUO for 30c for say 10000 options....as its a US option, we can execute the BAUO at anytime and buy the BAU shares @ 30c per share. we can them immedicately sell the 10000 BAU @ 50c making a riskless profit of (50c-30c)*10000=$2000? well, thats just sounds too good....but thats at least how i understand...anybody?

qq that's assuming that conversion from options to heads is instantaneous, it actually takes a few days...so not quite an arbitrage...the discount on the options is certainly a good way to get in cheap though.

 

[J.B.Nimble]

...the discount on the options is certainly a good way to get in cheap though.

I take it this is a hypothetical question qq? With BAUO trading at 31.5 and 20 cent exercise, it doesn't sound like much of a discount against the heads which are starting to trade sideways in 50 to 55 range

 

[qq830821]

I take it this is a hypothetical question qq? With BAUO trading at 31.5 and 20 cent exercise, it doesn't sound like much of a discount against the heads which are starting to trade sideways in 50 to 55 range

Hi Nimble, thax for the reply. however,you got me all confused!!!!!
i thought if i buy BAUO @ say 31c a option... at the maturity date, i can sell it @ the market value?? where does the 20c come from? and if i decide to turn the options into ordinary share.what are the procedures ?? anywhere on the interest?

thx