CAZ - Cazaly Resources

[tarnor]

Up youre, Cazaly
The political umpire has robbed an upstart WA miner

GIANT resource company fails to renew lease on iron mine, which is picked up by upstart larrikins who proceed to make a mint: it sounds like the plot of a great Australian film. Except it almost happened in real life. When mining giant Rio Tinto accidentally let their exploration lease over 40sq km of rocky earth in the Pilbara lapse last year, a small concern called Cazaly Resources cut a cheque for $1779 to take over mining rights to the plot – which includes an unexplored iron ore deposit thought to be worth as much as $300 million a year. They got the lease and Cazaly's founders, who named their company after South Melbourne Australian rules legend Roy "Up There" Cazaly, worked fast. They arranged financing with investors and inked an offtake deal with BHP Billiton to allow the upstart company to fully exploit the reserve, known as Shovelanna. Cazaly's stock price jumped from 45c to $2.38. It was a fair mark.

But the dream came crashing down late Friday when West Australian Resources Minister John Bowler, snatched the Shovelanna ball away from Cazaly and handed it back to Rio Tinto – yesterday causing Cazaly's stock price to plummet back down to 66c. The political umpire agreed with an appeal by Rio Tinto under Section 111A of the WA Mines Act. Rio Tinto claimed it had intended to renew the lease and that its previous investment in Shovelanna warranted maintaining its claim – all in the public interest, of course. But don't ask what that is, because, ironically, Mr Bowler refuses to release his reasoning to the public. In any case, Rio Tinto's was a disingenuous argument at best. The company has invested relatively little money into Shovelanna and hasn't drilled there since 1985. It has simply kept the deposit out of others' hands.

Mr Bowler's decision not only appears grossly unfair, it sets a dangerous precedent in Western Australia. On a practical level, it reinforces the already entrenched duopoly of Rio Tinto and BHP in the Pilbara, sending the message that small players are not welcome in the state and that investors shouldn't bother with them. While Cazaly shareholders might have thought the law was the law, Mr Bowler has cavalierly abrogated their legitimately acquired property rights to the Shovelanna lease, making Western Australia appear frankly Third World. It is not a good look in a state where politicians have come to grief for being to cosy with big business (remember the WA Inc days). Good public policy would have seen Mr Bowler leave it to the private companies to work it out, rather than award an undeserved free kick to the big guy. If Rio Tinto wanted the Shovelanna lease, it could have made Cazaly a commercial offer and paid the price for its sloppy paperwork. Cazaly plans to appeal against the ruling, and with good cause. Whether that appeal will succeed is another question: West Australian law makes it very difficult to overturn a ministerial decision on public interest grounds. And a court win would just send the case back to Mr Bowler's desk.

 

[Broadside]

I agree 100%.
I am a member of the public.
I fail to see how it is in my interest, or my family's, that Cazaly be awarded this tenement over Rio or vice versa.
Now if I were a shareholder of Cazaly, that would be another story altogether........

It is in the public interest to have resources developed, more revenue for govt coffers. RIO had no intent to develop in the forseeable future, they have had this tenemant since about 1981 and have not drilled a hole for 16 years.

It is also in the public interest that laws be upheld and ministerial discretion be transparent. I had a 1000 share holding so my loss is immaterial compared to most, but I still think it is an absolute travesty.

 

[BraceFace]

It is in the public interest to have resources developed, more revenue for govt coffers. RIO had no intent to develop in the forseeable future, they have had this tenemant since about 1981 and have not drilled a hole for 16 years.

If it is in the "public interest" to have resources developed so there is more revenue for the country, then please explain to me why it is in the "public interest" not to mine, export and utilize our country's massive Uranium deposits.
Does the pubic interest only extend to resources that are considered safe in the hands of overseas governments with questionable ethics and ideals?

Public interest - what a crock.
Our resource industry is thriving and is driving the WA and national economy as a whole along at an astounding rate. To imply that awarding the tenement to Cazaly would open up this resource and add more $$ to our economy is probably true but the magnitude of this change to our GDP wouldn't even register on the radar. A piss in the ocean if you like.

Theoretically and idealistically, yes maybe you guys are right and perhaps the state could handle their PR a bit better. But when you look at the big picture, who is really going to give a proverbial in a few months when this all blows over? Our economy will continue to power along nicely thank you very much, even if RIO decide to sit on this one for another 16 years.

 

[123enen]

Why do we assume that the public interest argument revolved exclusively around the development and exploitation of the resource.

Perhaps the public interest also revolves around the way in which CAZ pulled the rug out from underneath RIO.

Is the public interest served by upholding a weakness in the renewal process that allowed one company to strip a tenament from another company that intended to renew the licence and made the payment?

 

[Broadside]

123enen that is a fair question, it could be argued that public interest is served by not rewarding the opportunistic CAZ. My view is that the mining laws are clear and RIO knew the law. You snooze you (should) lose.

Braveface - if you think the state's best interests are served by maintaining a cosy duopoly I guess we agree to disagree. Developing the resource may be a mere drop in the ocean but it is still in the public interest in terms of royalties for the government and taxation revenue. I agree in a few months no one will care, but perhaps they should, we do have a right to expect good government who explain their decisions, to remove the possibility or stigma of corruption and uncertainty.

 

[pussycat2005]

Why do we assume that the public interest argument revolved exclusively around the development and exploitation of the resource.

Perhaps the public interest also revolves around the way in which CAZ pulled the rug out from underneath RIO.

Is the public interest served by upholding a weakness in the renewal process that allowed one company to strip a tenament from another company that intended to renew the licence and made the payment?

The payment was refunded! ended of story!
They also failed to renew the tenement back in 1989
and there is another tenement they failed to renew on another deposit !

 

[tarnor]

fair and equitable administration of the act is in the publics best interest this is an extremely important in a legal sense... Otherwise you will see costly court cases at the publics expense as well as undermining any security of clear and equitable procedure and process..

PAst precedents as i've mentioned all have the clumsy party who failed to renew missing out(accept for 1 -genuine public interest involved)... read back over the thread..


but if you want to go for a sympathy arguement which is bearly remotely public interest you migth want to conider RIo's failure to learn from their mistakes and wasting our money while we cover thier behinds...

"
The latest bungle surrounds the L47/13 lease, which forms part of Dampier Salt's big evaporative salt operations near Karratha. According to Department of Industry and Resources records, Rio had been required to renew the licence by August 16.

Though it paid the required $11.88 fee on July 28, it failed to lodge the necessary documents in time and the licence was declared dead on August 16.

Realising its error, the company applied for a new tenement, L47/162, over the same ground on September 14. Luckily for Rio, the error was not spotted by a rival, as it was at Shovelanna."



RIo are simply above the act and it would appear also that the ministers can't challenge them.. If you want to be fair you now have to go back and reverse previous decision over the last how many years to all adversly effected parties who did not recieve the special priveleges that have just been applied to RIO.. A company thats public interest arguement is so flimbsy from use it or lose it principle that they could of potentially been stripped of the tennement for not meeting expenditure anyway... grr :/

 

[Odduna]

It will be interesting to see what the courts decide in this case.

Only problem with the judicial review is that they will only consider the arguments presented before it.

If it was a merit review by a tribunal, we would find out the whole story.

 

[pussycat2005]

Perhaps the minister acted under duress! Perhaps his decision becomes void! Perhaps BHP comes charging into the arena!
CAZ has won in the court of public opinion, to DATE
Lets see if they can win in the court of law!

Excellent time for the Liberals in WA to rally behind CAZ and perhaps see a liberal victory at the next election. Win Win for the small mining co's and more importantly a win for u mining.

Alan Carpenter is a shifty is as shifty does b**tard! of a premier!

I used to refer to him as a rio licker!

Lets see this saga really unfold :swear:

sorry if I'm getting ahead of myself :

 

[pussycat2005]

Cazaly on it's own, BHP washes their hands. What a horrible blow.
What now???

Cazaly on its own: BHP
From: By Andrew Trounson and Kevin Andrusiak
April 26, 2006


BHP Billiton is to eschew the lure of booming iron ore demand and leave junior miner Cazaly Resources to battle alone against Rio Tinto in its dispute over the Shovelanna iron ore tenement, despite further evidence Rio has no immediate plans to develop the lucrative deposit.

BHP's deal with Cazaly to buy planned production from Shovelanna would have given Cazaly a big slice of some $300 million a year of revenue, but was conditional on the junior being awarded the tenement. Now that Western Australia's resources Minister John Bowler has rejected Cazaly's application in favour of Rio, the deal is set to fall through and has virtually killed off any chance of BHP and Rio slugging it out in court.
While BHP and Rio are racing each other to expand production to meet rising demand in China and secure market share in the face of competition from Brazil and each other, it appears the rivalry does not extend to BHP taking on Rio and the West Australian Government.

"It is up to Cazaly to pursue options as they see fit," a BHP Billiton spokeswoman told The Australian yesterday.

The BHP spokeswoman declined to comment on whether BHP would now make the same offer over Shovelanna to Rio. But it is unlikely Rio would be interested, preferring to hold Shovelanna as a long-term opportunity.

That means the ground could lie untouched until at least 2025. Industry insiders have told The Australian that Rio did not include the Shovelanna tenement in its July negotiations with the West Australian Government for royalty relief on future iron ore developments over the next two decades.

The negotiations were held just weeks before Cazaly pounced on Shovelanna - estimated to be worth up to $6 billion - after a courier failed to lodge vital documents from Rio with the West Australian mining registrar.
If the report from the industry insiders is true, it could mean the ground will lie virtually untouched by Rio for 46 years despite Mr Bowler's proclamation that it was in the "public interest" to hand the ground back to Rio.

A Rio spokesman couldn't comment yesterday on whether Shovelanna had been included in the negotiations on royalty relief.

But Cazaly managing director Nathan McMahon, still seething over the state Government's silence since it stripped Cazaly of the ground, said his company could have been adding $17 million a year to government coffers within three years through royalty payments if Shovelanna stayed in Cazaly's portfolio.

He added that Cazaly had tried to negotiate a deal with Rio after legally pegging the ground in August, but its invitation to pay Rio 150 per cent of all money it had spent on Shovelanna plus a royalty fee on all iron ore mined was rejected. "We knew Rio had a history of being litigious," Mr McMahon said. "To me, being snubbed meant they were going to rely on being part of the big business machinery and go straight to the Government to get relief."

Rio is believed to have spent about $500,000 on Shovelanna, meaning Cazaly was offering $750,000 for an asset that it expected to generate about $300 million in revenue annually from for 20 years.

Cazaly's deal with BHP was the key to developing Shovelanna, which lies near BHP's existing iron ore and rail operations. The deal with Cazaly would have resulted in Cazaly handing over its ore at the mine gate, allowing BHP to feed it into it rail network that carries ore to Port Hedland for export.

The deal would have also solved the problem posed by the high phosphorous levels in Shovelanna ore that are a turn-off for steels mills, since BHP would have blended it with its other ores.

Cazaly expected to generate a margin of up to $85 million a year on the deal after the cost of mining and initial ore crushing.

The deal was also dependent on Cazaly proving up a reserve of 100 million tonnes of ore. The current inferred resource amounts to 216 million tonnes.

 

[tarnor]

http://www.crikey.com.au/articles/2006/04/26-1551-6360.html

WA Inc going hard for Rio

Michael Pascoe

How a minister overturned a century of precedent to shaft Cazaly Resources



Date: 26 April 2006


WA Inc going hard for Rio

Rio Tinto isn't the first big miner to have a dog eat its homework on the way to the WA Mining Warden. Previously though, canine incidents have been dealt with according to the law – instead of whispering in a minister's ear behind closed doors.

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WA Resources Minister John Bowler is on the nose with just about all the WA mining community except Rio Tinto for overturning a century or so of precedent to shaft Cazaly Resources. There's no shortage of comment (eg The Oz here and here, SMH and The West) on this dodgy deal and I can't find a word being said in Bowler's favour. No wonder he appears to be in hiding when he needs to be out presenting an extremely good excuse for appearing to do the very wrong thing. It makes one suspect he doesn't have a good excuse.

The sole subscriber has slipped us another couple of shovels to use in burying Bowler. One is a copy of the flowchart DoIR uses in processing lease renewals which specifically deals with applicants who might have paid their rent but not renewed their paperwork (eg Rio) – the tenement is expired and the rent is refunded. End of story.

The second shovel is an example of the way the WA system is meant to work – a case from 1987 when the postman's dog swallowed a WMC renewal application. Despite all WMC's size and importance, the Warden's Court did the right thing and WMC lost out. Both Bowler and Rio should read the Warden's well-considered judgement, including these bits:

Western Mining Corporation is without question a major producer and explorer. The contribution by Western Mining Corporation to the economy in this State and in particularly the Goldfields is very significant.

From my experience as a Warden, Western Mining Corporation is very professional. Its presentation of material put before me in my capacity as Warden is usually both competent and comprehensive. Any reasonable person would hold some sympathy for Western Mining Corporation in this instance. If an application is posted to the Mining Registrar then in my view having regard to the importance of an application for renewal, perhaps it would be prudent that the Mining Registrar be telephoned several days before the expiry day to confirm whether or not the application for renewal has been received, and if not then the applicant should cause an application to be delivered to the Mining Registrar. Now it may be that such instances of failure of delivery are rare but in my view a good system assumes some failures may occur and procedures should be put in place to remedy any such failures.

It was a case of too bad, so sad, but that's the law – and as a big, rich company, you only have yourself to blame.

Rio obviously doesn't see things that way. Given Bowler's silence, one is left to form speculative opinions about just how much importance Rio attached to the Shovelanna deposit anyway. Rio had sat on the dirt with no plans to do anything with it for two decades. And according to The Oz today, nothing's going to happen there this side of 2050. That compares with Cazaly's plan to start mining immediately. It's not just Bowler who's looking dubious here.

Hi for anyone who is interested in this make sure to tune in to the 7:30 report tommorow.. They're doing a feature on the RIO/bowler shanadigans..

I sent of a very detailed email today and someone rang called ros childs? I didn't know who she was at the time and had a bit of a rant lol.. She was interested in talking to holders who had lost a substantial amount. The report will be aired tommorow as far as i can tell.. could be very interesting!

I'm out of caz at 63.5 today a very dissapointing investment a complete waste of time researching and money...will probably be my last long termer i'm going to stick to the short term stuff and trend trading!

Still hoping bowler will be washed up on the beach and popped by some kid with a stick

cheers

 

[RichKid]

I'm out of caz at 63.5 today a very dissapointing investment a complete waste of time researching and money...will probably be my last long termer i'm going to stick to the short term stuff and trend trading!


Still hoping bowler will be washed up on the beach and popped by some kid with a stick

cheers

Tarnor,

Thanks for the info on the TV prog.

Sorry to hear about the mishap but one thing I've learnt (via losing money in small speccies) is that if the sp hinges on one deal or one well or one report or something very high risk like that then it may be too risky to play longterm, especially in the speccies field. That's why diversified or well backed (asset and cash wise) juniors can go on long runs. CAZ was always a speccie as we were speculating about an unknown outcome, guess you could say that for most things in shares, coin tossing and all that.

btw, I agree completely about the confirmation bias comments raised earlier, Van Tharp puts it nicely in his book (Trade Your Way to FF...).

The other issue is volatility, if it rises as CAZ has it must be expected to have a very high probability of going down as fast so that's not the type of stock you'd want to hold long term unless you really mean looong term and you can afford to lose all that money. But considering that CAZ may be back to nothing it may be a long wait, as opposed to a co well on it's way to a long production life. Check out some of the stocks that the major brokers are covering, that would give some indication that the co is expected to be around for awhile (hence generating brokerage fees into the future). Those stocks aren't always 'speccies'.

btw, if RIO isn't going to develop the deposit then it's a waste of resources to see a co who could have done it sit idle, certainly not in the public interest imo in that sense. But there are other arguments to consider too like the fact that RIO owned it and had every intention to continue that ownership.

 

[pussycat2005]

If your in Sydney please email Jim BALL and express your questions doubts and disgust at what happened to cazaly.

He was discussing it last night on the midnight to dawn program on 2GB and he's absolutely livid. I hope we can get Nathan McMahon doing some interviews on Sydney Radio.

Anyway Jim's email is Jimball@optusnet.com.au

I want an answer, everyone does.

ps TARNOR if BHP weren't so tactical with their comments about washing their hands from the whole saga then I'm sure CAZ would have gone up another 10c today. Such is life and the Chess games big business play.

 

[123enen]

If your in Sydney please email Jim BALL and express your questions doubts and disgust at what happened to cazaly.

Can we email Jim and express that the desicion was right and a job well done?

 

[tarnor]

i'm sure you can .. but while you're at it you should shoot yourself in the head and improve the gene pool ..

sorry mate but take the time to seriously look at this :/

 

[123enen]

I didn't squander my money on a gamble like Caz - you did.
And you think my gene pool needs eradicating

 

[pussycat2005]

I didn't squander my money on a gamble like Caz - you did.
And you think my gene pool needs eradicating

Alan Carpenter has entered the house!

 

[123enen]

Hello Pussycat,
This is for you

 

[pussycat2005]

Actually can we all play a little game and see what sort of wierd and wonderful concotations we can come up with using those two piccy's I'm sure there must be some photoshop wizards

 

[pussycat2005]

i don't have photoshop but here's an idea for someone to play with! :