CBH - CBH Resources

[Rafa]

i had one decisions to make...
CBH or JMS...

Picked CBH... and JML is up 3 cents since then...! CBH down 1cent!
oh well...

 

[michael_selway]

i had one decisions to make...
CBH or JMS...

Picked CBH... and JML is up 3 cents since then...! CBH down 1cent!
oh well...

Both have low Forward PEs

JML - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS -5.4 -1.7 4.8 19.9
DPS -- 0.0 0.0 0.0

CBH - Earnings and Dividends Forecast (cents per share)
2005 2006 2007 2008
EPS 1.4 -2.5 13.1 19.5
DPS 1.0 0.0 0.5 3.0

thx

MS

 

[CanOz]

CBH is on the move but its going to be an effort to plough through the sellers today. If it breaks .42 it may breakout. Fingers crossed.

 

[michael_selway]

CBH is on the move but its going to be an effort to plough through the sellers today. If it breaks .42 it may breakout. Fingers crossed.

Yeah Hopefully

Treasure hunt FEATURE

Although resource stocks are all the rage right now, investors are wary about exploration minnows. Which is exactly what makes them such a good catch, Tim Treadgold explains.


TD The resource boom is moving on. While over the past few years just about every mining stock has risen in harmony with commodity prices, most of the easy gains are gone. The low-hanging fruit has been picked.

Today, you can sum up in a single word the future driver for fast profits from resource stocks: discovery.

A whiff of what investors want came when CuDeco (CDU) startled the market recently with its Rocklands copper discovery in north-west Queensland. Despite being forced to backtrack with some of its claims, the fact remains that Rocklands is a significant discovery and CuDeco, which traded as Australian Mining Investments until July 20, has risen 10-fold from about 30 ¢ at the end of May to about $3. Such a gain was referred to as a "10-bagger" by the dinkum speculators of bygone booms, when the twin principles of exploration and discovery were well understood.

"People don't understand the exploration process, which is all about taking grassroots exploration through mineral exploration, through resource definition, through feasibility studies and on to production," Lewis Johnson, a director of Bell Asset Management and private client adviser with the stockbroking firm Bell Potter, says.

He adds that not even the experts you may pay to help invest your money have a firm grasp on the exploration process "because many of them have never even seen a mine".

Johnson's sobering assessment of why exploration is a dirty word in the investment community can be seen two ways. Either it's a warning to keep clear, or it's a marvellous opportunity to get ahead of the game - a classic case of the one-eyed man ruling in the kingdom of the blind.

It could well be the latter. With just about everybody investing by the index ¿ in other words, in large, established resource stocks ¿ many of the small explorers have been neglected.

"The exploration sector is overdue for a revival," Rob Brierley, head of institutional broking at Hartleys, a Perth-based broking house, says. "There are issues holding back field work, such as continued problems with land access, and simply getting enough opportunity because so much prospective land is locked inside the major mining houses.

"Having said that, there are excellent examples of discovery driving some of the smaller mining stocks. Independence Group (IGO) with its Tropicana [gold] strike east of Kalgoorlie is one, and perhaps you really ought to be looking at Jubilee Mines (JBM) as a discovery story as much as a nickel producer, because it continues to report excellent new finds."

The wood from the trees

Ian Christie, an analyst with Perth-based Argonaut Securities, says the resources boom has made it hard for a junior explorer to "stand out from the crowd". He says that will change, especially among the smaller Australian-listed oil and gas stocks, which have made the US their home.

"At the end of 2003, there were six [Australian] companies with a focus on the US," he says. "When I last counted there were more than 20 purely focused on the US, and that's omitting companies with an interest here and over there."

But only a handful of analysts follow the exploration sector and there's a serious lack of coverage by big brokers. As Bruce Maluish, managing director of the emerging zircon producer Matilda Minerals (MAL) says, intense activity in the iron ore and uranium sectors has drowned out good news from elsewhere among the explorers.

"It is a bit frustrating, but the view seems to be that iron ore and uranium are the only games in town," Maluish says. "The problem with that is that most of them are really picking over discoveries made as far back as the 1960s, so we're not going to see much original happen with them."

David Harley, chief executive of the titanium minerals explorer, Gunson Resources (GUN), and a former president of the Association of Mining and Exploration Companies, agrees with Maluish. "There is a fundamental problem that investors have drifted away from the sector," Harley says.

"Not enough people understand the process we go through, the risks involved and the potential rewards, which can be substantial."

Getting in early

Johnson says anyone contemplating adding exploration stocks to their portfolio should diversify, aiming for a spread of risk across commodities and locations. Of course, as these stocks are speculative, you should also allocate only a small percentage of your total assets to them.

To be successful, an investor in exploration stocks must first do homework, understand the business as well as its terminology and the role of multiple arms of science, and be prepared to sift the difficult and dodgy from real opportunities to get in on the ground floor of what could be a change in sentiment towards exploration over the next 12 months.

To help with this filtering process, AFR Smart Investor has picked its own top five exploration stocks and top five small resource stocks that are already in production.

You never know, one of these could be the next CuDeco, or Salinas (SAE; up from a low of 21 ¢ to a 12-month high of 89 ¢), Rox (RXL; 9 ¢ to 65 ¢), Independence ($1.38 to $3.61), or Breakaway (BRW; 14 ¢ to 48 ¢).

BEST EXPLORERS

Independence Group

Combining the best of both worlds, Independence (IGO) is using strong cash flow from a nickel project to fund exploration. Its top target is a gold play called Tropicana located 250 kilometres east of Kalgoorlie, in a poorly explored region with potential.

Independence has another factor that makes it attractive: quality management. The team that floated the company in early 2002 is led by former WMC staff who understand the disciplines involved.

Cash, thanks to the price of nickel, is flowing into Independence at a rate of about $30 million a year, largely from the Long/Victor nickel mine that was acquired in a tender process six months after Independence floated.

Exploration around the old mine has expanded nickel reserves, ensuring that the company can continue funding projects that are aimed at converting Independence from a one-mine company into a business with multiple assets.

Breakaway Resources

Largely ignored by investors for years, Breakaway (BRW) burst onto the scene earlier this year when it was chosen as the vehicle for a management buy-out of the exploration division of a big producer. The result is the creation of a business with some of the best prospects for discovery in Australia.

The key to Breakaway is a combination of management and "drill-ready" exploration projects. Both of these have come from the Canadian-based LionOre Mining International, which is switching from mining to mineral processing and technology development.

The rebirth of Breakaway has seen a corporate makeover and the raising of $13.5 million in fresh capital. The capital complements cash from royalties generated by a copper project in Queensland.

Armed with cash, skilled management and a vast tenement package, Breakaway is expected to generate a news flow to boost its profile as a promising explorer.

Rox Resources

Floated just two years ago, Rox (RXL) has spent most of its life in the sin bin with a share price of about half the 20 ¢ paid by foundation investors.

This saw it face the classic dilemma of all explorers ¿ either discover something or struggle to raise fresh capital.

But everything changed earlier this year when Rox announced the discovery of a potentially world-class zinc and lead deposit in Laos, in South-East Asia. Spectacular assays from drilling saw the company's share price soar from 9 ¢ to 65 ¢ in a matter of days, rewarding the few who stuck with the stock.

More work is required at the Pha Luang project but professional investors have spotted the potential, chipping in another $6 million to fund more drilling in a country that once seemed remote and inhospitable, but which has gained credibility following the success enjoyed by copper and gold producer Oxiana (OXR) at its mine in Laos.

Minotaur Exploration

This company has turned exploration into a legitimate business. Five years ago, when trading as Minotaur Resources, the company discovered the Prominent Hill copper and gold ore body in South Australia, which initially attracted BHP Billiton (BHP) as a partner, but was later sold to Oxiana.

The process of discovery and sale was complex, and led to the dissolution of Minotaur Resources, and the birth of Minotaur Exploration (MEP), with roughly the same management and package of tenements. Minotaur has cemented its relationship with Oxiana, spun off a uranium exploration company, Toro Energy (TOE), and acquired stakes in other explorers, including Mithril Resources (MTH) and geothermal energy company Petratherm (PTR).

Minotaur could dispose of advanced exploration projects for cash or sell them to alliance partners such as Oxiana, which uses Minotaur as a project generation business....

thx

MS

 

[michael_selway]

...Salinas Energy

Largely unknown to local investors because it has chosen to do its oil and gas exploring in the US, Salinas (SAE) is an Australian business run by a management team with a record of discovery best seen through an earlier business called Voyager Energy.

An independent operator until late last year, Voyager was a partner in a series of oil discoveries in WA, eventually proving to be a tasty takeover morsel for Arc Energy (ARQ).

Rather than move to Arc, the Voyager team struck out with Salinas, and an oil and gas tenement package in California. Managing director John Begg says his aim for Salinas is to increase business to a market value of $500 million within three years, a target that implies strong production and a reserve of 20 million barrels of oil.

Begg's record at Voyager indicates that the target might be achievable. If not, he's shown himself willing to take a profit rather than hang around for production build-up.

BEST SMALL PRODUCERS

Perilya

limited

Mark Twain's comment about reports of his death being exaggerated also applies to the plum asset inside Perilya (PEM), the fabulous silver, lead and zinc mines of Broken Hill. Ignored by bigger companies as too old and difficult, Perilya has restored the mines and is starting to spin off fat profits.

At June 30, the once-struggling gold producer had $135 million in the bank, largely thanks to high zinc prices, and was producing a quarterly cash flow of more than $70 million.

The key to cash is the gap between a zinc production cost of US66 ¢ a pound and a zinc price of more than $US1.50 a pound.

More can be expected from Perilya as it expands production at the old mines and opens new ore bodies.

There is also potential for revival in the company's gold division where there is one mine, Daisy Milano in WA, being developed, and at least five other projects in the exploration phase.

Consolidated Minerals

Marked down severely after a fall in the price of manganese - Consolidated's (CSM) primary product - and an internal management brawl, there are positive signals from a company that is mapping out a future as a nickel producer.

Disillusioned investors are yet to reward Consolidated for its change of focus. However, with the price of nickel stuck sky high at more than $US25,000 a tonne, there is little doubt that Consolidated is a revival in the making.

Key assets, apart from the manganese cash cow in the Woodie Woodie mine, are the Beta Hunt and Alpha nickel mines in WA and a big tenement package that contains a large resource of nickel. Capping off the nickel strategy is the potential to create value from the acquisition of troubled nickel explorer Titan Resources (TIR). Trials with a new ore-sorting system could see Titan become a jewel in Consolidated's nickel-plated crown.

Aust. Worldwide Exploration

Overlooked in the 2005 stampede into petroleum stocks created by the oil price rise, Australian Worldwide (AWE; see page 90) is emerging as one of the best-placed companies in the thin ranks of the local mid-tier oil and gas sector.

Cash flow from a string of new projects has backed aggressive exploration, making AWE a stock to watch and a takeover target.

The company has three key assets in production: the Bassgas and Casino gas projects in Victoria and South Australia respectively, and the Cliff Head oil project in WA.

Cash on hand totals more than $227 million with the 2007 pre-tax and depreciation profit forecast at around $120 million. Apart from cash and production, the real kicker with AWE may be potential from its exploration of nine wells over the next year. Given historic success of 25 per cent, at least two wells may lead to future development opportunities.

Straits

Resources

Three years ago, when most investors were ignoring metals, Straits Resources (SRL) pocketed a handsome $90 million profit from the sale of the Nifty copper mine in WA to Indian group Aditya Birla.

Armed with the cash, Straits invested in expanded coal production from its Sebuku mine in Indonesia, gold from the Mt Muro mine, also in Indonesia, and copper from the Tritton mine in NSW. The result is a business developing a balanced portfolio of energy and mineral assets.

The outlook, which potentially includes the development of a gold and antimony mine at Hillgrove in NSW, is of a business that may soon have five operating mines, boosting a revenue base of about $500 million a year thanks to high coal, copper and gold prices. The market, which had treated Straits harshly after the Nifty sale, is slowly warming to the stock, more than doubling its share price over the past year.

Kagara Zinc limited

Operating in the remote far north Queensland, Kagara (KZL) has been one of the genuine surprise performers over the past year thanks to high zinc prices and the promise of increased copper and gold production.

The key to Kagara is a series of mines and exploration prospects along a richly mineralised sequence of rocks near Cairns.

The area has seen waves of development over the past 100 years and is dotted with historic mines. Kagara snapped up the lion's share of the best ground in the region after its 1999 float, a time when minerals were in the doldrums, and Kagara was the only mining float of that year; a classicfirst-mover advantage.

Today, Kagara is producing zinc and copper from various locations, and planning to become a substantial gold and silver producer. Next year, thanks to new mines, zinc output is forecast to reach 50,000 tonnes, and copper output should rise to 30,000 tonnes. Si

thx

MS

 

[Sean K]

Seems to have broken that resistance around $0.40 now, on volume. Confirmed upward trend now, imo. To be proved wrong probably.

 

[YOUNG_TRADER]

Fat Prophets Buy Recommendation up to 46c (Will take it up to resistance level)

Volume has really picked up, watch for a break above 46c, it'll be a hard fight though

 

[Nick Radge]

Note the date:

BOTTOM LINE
28/8:
EW Trend: Up
Price Trend: Down
Trend Strength: Weak
Broker Consensus: Intermediate BUY

LAYMANS ANALYSIS
28/8:
VIDEO ANALYSIS (2 mins 14 secs)
CBH is another Zinc related stock and is one that has been covered in the earlier days of these pages. I continue to like CBH and like its bigger brothers ZFX and KZL we are seeing some coiling action. Unlike those two, CBH is yet to break out with any conviction. An attempt was made last week but failed at $0.42. A move again through $0.42 would be deemed very bullish, especially if accompanied by high volume. Like many breakout scenario's, we would ideally like to see a close outside of the congestion area and high volume. A clean break with follow through would place the major highs at $0.59 on the table, if not more. The larger picture is very bullish but $0.42 is paramount to ongoing advances.

TECHNICAL DISCUSSION
28/8:
If prices penetrate and reverse, or penetrate on low volume, then defensive action should be swift. Failed breakouts are the scourge of traders, especially since such methods have become more popular over the last 10 to 15-years. The wave-4 low was a very bullish bar and we're now trying to move higher. The $0.42 is very important and must be broken before long positions are initiated. Ideally protective stops should be placed below $0.34, although $0.37 would be acceptable for those looking to be slightly more aggressive. Being a wave-4 I would expect a minimum move to the wave-3 highs set back in May but as we know from the performance of KZL and ZFX over the last week, we could easily start to think in bigger numbers.

This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

Past performance is not a reliable indication of future performance. This material has been prepared based on information believed to be accurate at the time of publication. Subsequent changes in circumstances may occur at any time and may impact the accuracy of the information.

 

[nizar]

Thanks Nick

 

[michael_selway]

Thanks Nick

I 2nd that

Yep, ZFX, KZL, PEM, CBH all doing well now

thx

MS

 

[2020hindsight]

CBH is on the move but its going to be an effort to plough through the sellers today. If it breaks .42 it may breakout. Fingers crossed.

Gee I hope youre right canuck- But I wish you'd be more specific in defining your terms - by breakout do you mean .46? .50? 1.00? Like you say, fingers crossed.

 

[nizar]

Yep, ZFX, KZL, PEM, CBH all doing well now

Yeh but KZL the only one at all time highs...

 

[CanOz]

Gee I hope youre right canuck- But I wish you'd be more specific in defining your terms - by breakout do you mean .46? .50? 1.00? Like you say, fingers crossed.

.425 was where i had my buy order (and a price alert at .42). If it cleared the sellers there it should move up to .46 (as mentioned by others) relatively easily. Lots of resisitance to come at .46 but volume lately would suggest that it could push through. Nick's analysis by the way, was the final straw for me to place the buy order (only as a subscriber to his newletter i got it a day earlier).

Cheers,

 

[Freeballinginawetsuit]

Yeh but KZL the only one at all time highs...

How was the rebound of KZL today!. 10% from AM dump to PM close SP. This stock is a winner long and short trading

 

[sleeper88]

Well since all zinc stocks are going up..anyone have any thoughts on TZN?

 

[hypnotic]

Well since all zinc stocks are going up..anyone have any thoughts on TZN?

Zinc stocks is deinfitely going well and probably still undervalued imo. The zinc stock in the LME has continually been on the decrease. Now that the market seems to have picked up again it'll be interesting to see what happens to the zinc stocks in the next few weeks.

Hm... i have been watching TZN it's dropped a lot since the run on the approval of the Angas Zinc project. I like the potential though

Hypnotic

These are merely my own thoughts.

 

[Fab]

Yep. I am also wondering what is going on with TZN. I bought at the peak at 1.70 and I am waiting for TZN to shoot up again. Hopefully like ZFX.

 

[Sean K]

Fat Prophets Buy Recommendation up to 46c (Will take it up to resistance level)

Volume has really picked up, watch for a break above 46c, it'll be a hard fight though

Pushing $0.46, I'm much more confident that this is breaking up and the volume is great! Looks good to push through.

 

[rwkni1]

Yeah, it definately looks the goods, but whats the go with this takeover - it seems to be dragging on for a rediculous amount of time. Their latest update this morning showed they'd only increased their holding by about 1% to 71% over the past 8 days. At this rate this thing will go forever - but i think if it is resolved near term that could be a catalyst for another push up.

 

[CanOz]

I think CBH will struggle today, being Friday...profit taking before the weekend.