AZR - Aztec Resources

[RichKid]

Hey folks!

Anyone interested in Aztec Resources AZR, AZROA(options)?

Currently AZR is bouncing between 10c and 11c.

It's got a high grade Iron ore project on Koolan Island in WA and big international investors (eg CITIC (multi billion dollar Chinese state owned co), Societe Generale). Also a Tantulum project in the Kimberley, but I haven't heard much about it.

Looks like it's struggling to complete the right shoulder of a Head and Shoulders reversal pattern. Maybe the start of an uptrend or further sideways movement. Brokers have it valued at between 20c and 24c (See www.aztecresources.com.au for broker reports etc).

Makes me wonder if it's creating a base from which to rise again as 10c has provided considerable support.

Aztec also has a high profile, highly experienced chairman (Ian Burston, ex-Portman mining) and hope to start producing by 2H 2005. BFS to be completed by Jan/Feb 2005. It's listed on the London Stock Exchange AIM and the Berlin Stock Exchange.

I can't understand why all the positive news has not resulted in a price rise- maybe it was expected or people have forgotten about the company because of oil and gold.

(The options AZROA are very volatile at the moment.)

Any views? Observations on technicals or fundamentals?

RichKid

 

[Joe Blow]

Re: AZR Aztec Resources- Little guy going Up?

Hi Rich!

crocdee picked AZR for September's Stock Tipping Competition.

I haven't done much research on it just yet but it's certainly an interesting one and has made its way onto my watchlist.

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Hi Joe,

Thanks for that, didn't realize it had been picked- so many entries now, good to see the list growing!

There's also a free broker report of AZR at aer.com.au (a good site for free reviews- no price targets though for the free versions).

I was also trying to get a chart up for AZR showing the H&S pattern over the last year (OHLC) but can't figure out where to find free charts to post here- any tips about where I can find one in future?

I don't use personal charting software or I could have done it myself.

Thanks,
RichKid

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Okay, I've found a place to get free charts from (BigCharts). As I understand it they're completely free and there is no trial period so I can keep using it- what a relief to be able to use charts (I love TA!!!).

This first chart is to show the head and shoulders pattern, although it may not turn out to be a reversal as all the fundamentals are strong (see posts above). Still, the TA odds are in favour of a downturn as volume corresponds to the classical pattern. Only the odd shape of the shoulders is worrying but 10c has solid support. If it doesn't complete the reversal in the next two weeks I'd think the reversal has failed.

(Hope you find this useful Crocdee)

RichKid

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

And these are the options AZROA. I expect it to fall back to about 0.003 again and to trade between 0.003 and 0.006c but it's a bit too early to call it that accurately yet.

RichKid

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Well, looks like that support is holding for AZR, and AZROA is trading more or less as predicted (except 0.006 is looking too high now). (See charts above). The positive resource estimates will keep it going sideways till it resumes the uptrend IMO. Question now is will it fall back to 10c support or find higher support?

I've been in and out of AZROA- anyone else trying this? Risk is high now for AZROA as it may step down to a new support level but the underlying share AZR is knocking on 14c so it may keep the option at the current level.

Anyone else following AZR or AZROA? Any views? Fundamentals are strong for the non TA people.

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

ian burston is in china this week. they need $60mil to build the port. a deal with the chinese should give the sp a kick and get the oppies home. should also help get the bankable feasibility over the line. a positive announcement maybe next week. my thoughts only.

regards croc

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

That's interesting Croc, thanks. Looks like the market is ready for some action now as the stock has woken up from it's lazy 10c-12c range. Let's hope Burston has some luck in China. sp falling to 14c (support?), options plummeting too- coming close to expiry (Jan 05). Let's see where this settles.

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

hi richkid
i don't have any doubt about this stock it is only a matter of time but they really need to get the oppies over the line. they have until 31-1-05 and there is $25mil at stake. i wish i had some more money to buy more at these levels.

regards croc

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Hi Croc,

Well looks like they've got the funding to finalise things- hope these oppies (AZROA) get going- a bit cheap at $0.003 in my opinion (AZR at $0.155) but it depends on how AZR is going to travel- I can see it at 20c+ just don't know why it isn't getting there- hopefully there'll be some success with the current work before the oppies expire and it'll jump as it did recently.

Are you thinking of buying in now that they've got funding? I hope to have some soon to sell on the next leg up- $0.003 is providing good support (touchwood!!). Might drop to $0.002 but volumes are tiny (ie only a few hundred dollars worth the last time it fell there) and the AZR price was lower.

Noticed that AZR rises before annoucements and then settles a bit lower- no firm trend though. With iron ore prices expected to do really well next year this'll be a goer. The market should notice it soon- a real alternative to the blue chips IMO for exposure to iron ore.

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

hi rich

i don't think they have full funding yet to build the port and definetly no news on any contracts with china at this stage. bfs is not complete yet they got $3mil last week to progress it. md is also have talks with the japanese.

things are looking good but it all takes longer to put it all in place than we would like.

i would buy more but don't have any funds left am into mul too heavily and will ride it out.

it's just a matter of time with azr it will happen fast when it all starts and i thinkn it's no too far away. the new year will reveal all.

regards croc

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Hi Croc,
Yep, still a lot to sort out- good news from my point of view is that further resource upgrades or discoveries may be possible, especially with the extra cash. I think that may push it past 16c and maybe on to 20c. Any deal with the Chinese or Japanese to complete the works you mention would be the key.

AZROA- the short time to expiry seems to be killing the oppies; funny how it all comes down to the last few weeks with holidays and all that. At least there's still a good chance with this one.

I can't see all those big instos sitting on the register and doing nothing. Next few weeks will see some action IMO. All broker reports sofar value it at 20c+ (see posts at start of thread).

I haven't heard of any recent reports (last six months) let me know if you hear any news please.

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

hi rich

the only news i can report that hasn't specificaly been mentioned to date [ and which you may already know] is that the chinese were here in perth being entertained by the md 2 weeks before xmas. i'm sure something will eventuate from there the koolan island project is too big for it to fizzle out and with $25mil in the oppies to expire worthless by the end of january doesn't fit with logic [but it could happen] however i still think azr is a winner especially at its last close of 15c. once again it's a waiting game of which i'm prepared to back the md.

have a happy new year croc
ps i think you should research MML ALL THE REPORTS ARE ON THE ASX
i've said it a few times here but noone has taken the challenge. if you think AZR have the goods check out MML and tell me if i'm wrong.
regards croc

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Hey Croc,
I was wondering where the Chinese had disappeared to- glad they were being looked after. Let's hope it works out, as you say it's unlikely they'll let 25m just go like that- also with a huge chinese investor in the stock already I can't see why we wont have some news before then; at these price levels AZR only needs a bit of promising info on the chinese deal to climb to 20c. Things always slow down during holiday periods. Next two weeks will clinch it or maybe they'll keep us on edge till the last minute.

I noticed an article in the Australian, Intersuisse mentioned AZR and tipped it to be one of the handful of juniour resource winners next year: http://www.theaustralian.news.com.au/common/story_page/0,5744,11793162%5E643,00.html

As for MML Medusa Mining, I've had a look, hope you were holding when they ran to 70c. I'll find the thread on it and post more.

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Here's details of the last major announcement referred to above. Might help the 'fundamentalists' if you folks need more info.

Note the last line on upcoming drilling results- this short-term (good) news may get the oppies (AZROA) over the line.

An announcement about a deal with the Chinese would help as well, as discussed above. The fpo's (AZR at about 15c at the moment) have much less risk than AZROA and is going to make it to over 20c easily imo, just a matter of whether it'll happen in January or February. This is not a recommendation and time will tell if I'm right.

From Mineweb.net:

Aztec Resources
Posted Thu, 09 Dec 2004
ABN 45 078 548 562
6 Kings Park Road, West Perth, WA 6005
Telephone 61 8 9420 1700 Facsimile 61 8 9420 1777

Website: www.aztecresources.com.au
Email: azr@aztecresources.com.au
Australian Stock Exchange Code: AZR

ASX Release 9 December 2004

Société Generale backs Aztec to complete Koolan Iron Ore Project Bankable Feasibility Study

SG Australia (“SG”) a member of the Société Generale Group, has today agreed to fund a Bankable Feasibility Study (BFS) for Aztec Resources Limited’s 100% owned Koolan Iron Ore Project, which will help speed the development of the resource. SG will provide Aztec with funding of A$3,000,000 to complete the feasibility study that is already under way and to provide working capital. The feasibility study loan indicates SG’s intention, subject to credit approval, to support Aztec with project finance. The first loan will allow Aztec to fast-track to the project financing stage, saving time with due diligence and documentation. Aztec considers the terms of the SG funding to be attractive. It includes options issued to SG at an exercise price of 23 cents, a premium of 58% to the market price of Aztec shares at the time of approval. SG Australia currently holds 4.7% of shares in Aztec. Commenting on the agreement today Chairman of Aztec, Ian Burston, said “We are delighted with SG’s support, which affirms our belief that the Koolan Iron Ore Project will be a robust long life project. We expect the study to confirm the feasibility of an initial production rate of 2 million tonnes per annum of iron ore over a mine life of 15 years.”

Details of the Project

In October 2004 the Company announced the details of a successful drilling program at Koolan Iron Ore deposit, Western Australia that resulted in a 60% upgrade in the resource. Preliminary modelling work then confirmed the robust nature of the project. At Aztec’s AGM, the company set out preliminary feasibility study parameters which showed that the project would generate free cashflow before tax and depreciation of $240 million.

The preliminary study parameters are set out below:

Mine Output 2mtpa
Life of Mine 15 years
Mineable Ore 30mt
Iron Ore Revenue A$30/t
EBITDA Margin A$10/t
Total Project Revenue $900m
Total Costs $600m
Total Income $300m
Capex $60m
Net Cashflow* $240m

* Before Tax and Depreciation, undiscounted

The above figures assume a 100% fines product and iron ore prices based on 2004 benchmark prices of around $30 per tonne for fines.

Iron ore prices for 2005 are predicted to rise by 25% to $37/tonne for fines and around $47/tonne for lump. Any increase in iron ore prices, together with the potential for some lump product at Koolan, would have a significant positive effect on the project’s profitability. Funding Package SG has offered funding on competitive terms that will enable Aztec to fast track completion of the BFS and to move rapidly towards the realisation of value of the Koolan Iron Ore Project for shareholders.

SG will provide Aztec with loan funds as follows:

Loan Amount: A$3,000,000
Purpose: To fund the costs of completion of the BFS
Term: To June 2007

Lender Options: On signing SG will be issued 15 million options at an exercise price of 23 cents or 58% above the trading price on the date the terms of facility were agreed. The exercise of the options would inject up to $3.45m into Aztec. Moving Towards Development

Aztec is continuing exploration and development activities at Koolan with BFS work progressing rapidly.

Current drilling at Koolan has been focused on confirming and increasing the resource base at Mullet-Acacia and Eastern-Barramundi, identifying potential new resources at Acacia, and deep drilling at Main Pit to confirm continuity and grade of the existing resource for ore reserve estimation. Results of the drilling program are expected shortly.

For further information contact:
Australia
Ian Burston, Aztec Executive Chairman +61 (08) 9420 1700
Rozanne Ichikowitz, Grant Thornton +61 (02) 8297 2522
UK
Laurence Read/Leesa Peters, Conduit PR +44 (0) 20 7936 9095/+44 (0) 7979 955 923
Jonathan Guy, Seymour Pierce +44 (0) 20 7107 8009
Fiona Reid, Grant Thornton +44 (0) 870 991 2318

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Noticed that Aztec have got a mention in the January edition of Shares Mag- there's a section on junior miners and Aztec is considered one that will be re-rated once it completes the BFS stage. The lower risk profile is described as the trigger once the preliminary work is completed, especially with rising iron ore prices. (Thanks to Ghotib in another thread for mentioning the article.)

The next three weeks will see a lot happening for junior resources stocks as people see the cycle continuing, people will be back from holidays as well.

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

hi rich

yep january has to be a big month for AZR, they have too munch in the ground for it not to happen.

bring it on baby.
croc

 

[crocdee]

Re: AZR Aztec Resources- Little guy going Up?

hi rich

news just to hand CBA have increased their holding as of 30-12-04.
sounds promising fingers crossed

regards croc

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Hi Croc,
Yes, looks like CBA have increased their current holding by 20% to 6%. They must be preparing for the activity that is to follow. Maybe they'll want to get in if there is an opportunity for debt finance.

My understanding as far as expected news is that the drilling has continued since the last upgrade in October. Which means they should be announcing any further upgrades this month- or have they taken an extended break due to the holidays?? No suggestions of such a break and announcements are generally limited to a few a month so maybe they'll just announce it all of a sudden just before the funding for the wharf (if the Chinese help out- or maybe some local banks now that CBA has joined)?

Acacia and Barramundi ore bodies- continuing drilling is expected to lead to a further upgrade (see October annoucements). Just a matter of whether the news will come in the next two weeks. The good thing with AZR is that when they make an annoucement it's usually something important (unlike some junior oil explorers) but in between annoucements it's pretty quiet.

 

[RichKid]

Re: AZR Aztec Resources- Little guy going Up?

Found the bit about what to expect in January 2005. Also noted that work on Jetty and related survey work has commenced, so all systems are go once they get a bit of extra money to see it through. The oppies would certainly help if they come through.

From the AGM presentation 25Nov04- see annoucements:

...Drilling work is continuing particularly with respect to infill and
geotechnical programmes and updated resource estimates will
be finalized in January.

Ore density revision will then be available to a higher order of accuracy and additional ore is being currently sought in two additional satellite pits.
We are now confident that an operation can commence at a two million tonne per annum rate and exploration work during 2005 will be aimed at lifting this amount to a three million tonne annual rate at least.