CCI - Chrome Corporation

[ghostworld]

If I were you, I would also contact the media. I'm sure the financial review would be interested in doing a dodgy management story.

Their reasoning was unclear as to why the original market update was much lower than the latest one.

 

[cmh888]

Yes, I think I will forward my complaint on. Thanks for that idea. I am so furious about this. The worst announcement of the year = the highest buy volume of the year, and at prices which defy any financial reasoning (unless you know something the general public doesn't!). I smell a big fat rat.

 

[ghostworld]

Yes, I think I will forward my complaint on. Thanks for that idea. I am so furious about this. The worst announcement of the year = the highest buy volume of the year, and at prices which defy any financial reasoning (unless you know something the general public doesn't!). I smell a big fat rat.

Depending on who the buyer's are and if they now hold a majority share in the the company, the recent announcement could have been used for an arbitrage play.

They either made an educated guessed or know someone privy to the company's accounts that the sale receipts less liabilities were going to be more that 16c. It is only illegal if they used insider information.

For the company's management and directors however its a different story. The announcements they released were unclear and the 10c discrepancy needs to be better explained (if they can explain it at all). Looks like they may have been either fraudulent or negligent.

Hopefully the regulators get to the bottom of this.

 

[bvbfan]

I read the announcement as it came out and I understood that a capital return was likely upto 15c. I didnt't read the announcement saying the company was worth 15c.

I don't know what other projects CCI has but if they had any they may be worth more than 1-2c a share, heck even the shell could be worth 500K or so

 

[ta2693]

Cmh888. Are you still going to lodge the complaint on you 18c trading price?
Today's price is only 17.5c. The ppl who sold at 18c are actually better off.
Why is it the case given the 41m asset sell announcement making the price 24.4 per share.

 

[cmh888]

Yes, have already lodged the complain, and with good reason.

The first announcement stated that on selling their mining project (their only project), CCI would repay debt, keep some funds to scout new areas of interest, and return UP TO 15cents per share to shareholders. After this sale, the company is worth nothing. It will then become one of the thousands of prospecting companies, from my understanding. I think it is very suspicious that hundreds of millions of shares were traded down on the first announcement (compared to the company's average daily trading volume). These trades obviously had to be met with way 'out of the ordinary' buy orders. For the company to announce two days later that their return of UP TO 15 cents per share was, in fact, incorrect by over 70% (in the negative), was absolutely negligent and, in my opinion, highly suspicious given the extra-ordinary volume of buy order placed at prices which were higher than the return the company had announced on the 5th of March.

The other dirty act on the part of CCI when it came to these announcement is that the company has really put share holders over a barrel. The sale of the mining project has to be approved by shareholders, yet shareholders really don't have any option BUT to approve it - they have already gone ahead and borrowed the $6 million from AMCOL to redeem convertible notes, which is repayable from the proceeds of the sale! If the sale doesn't go through (i.e. if shareholders don't approve it), then CCI is is debt to AMCOL to the tune of over $6 million (some penalty fees there). With the company's already poor financial situation, the share price will absolutely plummet. So the only real option is for the sale to be approved.

 

[Rimtalay]

Chrome Corp is in play, chrome ore is fetching record prices. There are other companies looking at this project. Don't be too quick to sell your shares.

 

[TheAbyss]

One sale prospect down and a new one with an additional 25% premium arises plus two other interested parties.

Well spotted Rimtalay "Chrome Corp is in play, chrome ore is fetching record prices. There are other companies looking at this project. Don't be too quick to sell your shares. "

 

[YOUNG_TRADER]

Hey guys,

Just saw this before

I've taken a small position at 24.5c, looks like an arbitrage play to me

They have a takeover offer of $51m cash

They owe $6m

Net offer = $45m cash

145m shares on issue = 31c value

Looks like arbitrage to me, this is the second cash offer and is trumping a previous offer of $45m, in addition the company has recieved anohter 2 expressions of interest for the project, if a bidding war ensues it would be great for shareholders

Thoughts?

p.s. sorry about posting so late, its been a busy day

 

[michael_selway]

Hey guys,

Just saw this before

I've taken a small position at 24.5c, looks like an arbitrage play to me

They have a takeover offer of $51m cash

They owe $6m

Net offer = $45m cash

145m shares on issue = 31c value

Looks like arbitrage to me, this is the second cash offer and is trumping a previous offer of $45m, in addition the company has recieved anohter 2 expressions of interest for the project, if a bidding war ensues it would be great for shareholders

Thoughts?

p.s. sorry about posting so late, its been a busy day

Hm what is Chrome? are there any up to date price history charts?

thx

MS

Business Description
Chrome Corporation Limited (CCI, formerly Preston Resources Limited) is a minerals exploration and development company, focused primarily on the Ruighoek Chrome project in South Africa.

 

[TheAbyss]

A lot of info on CCI plus on the Chrome industry and product including price over time etc in their AGM preso as per attached link

http://www.chromecorp.com/investors/presentations/cci_agm_pres_nov07.pdf

 

[kenny]

Hi Michael,

CCI has about 143.56 million shares, was reconstructed out of the ashes of a WA nickel play (Bulong) and the directors picked up the Ruighoek project from Biliton/AngloA for about $8 million back in 2005. This was covered by about $6 million in convertible notes.

They've done a feasibility study to demonstrate the presence of about 1.5 million tonnes of chrome (~44%) which should be more than enough to justify an open pit setup. I think Bil/Anglo had previously done some underground mining of the chrome back when it was much cheaper per tonne. This was why they moth balled the plant.

The Ruighoek plant is not far from Johannesburg and near other chrome plays. Note that CCI also have exploration rights to surrounding areas and also significant tax losses from the Bulong nickel mess in a past life.

I hope this helps as a starter. I don't hold CCI currently but am looking again.

Cheers,

Kenny

 

[YOUNG_TRADER]

Having originally bought these at 24.5c I bought a few more at 20c and more today at 17c, avg is now 19c

Today the company announced that the original all cash takeover will be going through

and that after Tax, cots, loan repayments and all other matters the company should still have about $31m in the bank = 21c-22c

Am I missing something here?

Surely a company with this much cash should trade at least close to cash backing? not at such a discount

Also this is a mining company that has a huge cash war chest and management that have shown they can buy a cheap prject and sell it for a profit

Will be interesting to see how this all unfolds

 

[ta2693]

I am burnt by this one too. How come it come to 15c
My explanation may because of the politic situation of south Africa. The riot and chao affects all companies doing business in South Africa.

 

[YOUNG_TRADER]

My explanation may because of the politic situation of south Africa. The riot and chao affects all companies doing business in South Africa.

Hi Ta,

They're selling their project in South Africa, so really what happens there shouldn't concern us,

What the company will effectively be is a big cash box and given how hard it is these days to raise cash I reckon that they should trade at a premium to cash

Also managment have sorta proved themselves as wealth creators via the acquisiton and then profitable sale of this project

After Tax, cots, loan repayments and all other matters the company should still have about $31m in the bank = 21c-22c vs 16c SP is the market really this ineffcient and out of whack at the spec end?

 

[urgalzmine]

Hi Ta,

They're selling their project in South Africa, so really what happens there shouldn't concern us,

What the company will effectively be is a big cash box and given how hard it is these days to raise cash I reckon that they should trade at a premium to cash

Also managment have sorta proved themselves as wealth creators via the acquisiton and then profitable sale of this project

After Tax, cots, loan repayments and all other matters the company should still have about $31m in the bank = 21c-22c vs 16c SP is the market really this ineffcient and out of whack at the spec end?

Hey YT

on Commsec it shows that CCI has 1672 million shares outstanding in june 2007. But according to this website: http://investing.businessweek.com/businessweek/research/stocks/snapshot/snapshot.asp?capId=5415927

They have 143 million outstanding shares???

 

[bvbfan]

They consolidated the share structure earlier http://www.stocknessmonster.com/news-item?S=CCI&E=ASX&N=366002

 

[kenny]

My suspicions as to the causes for the sp weakness and sub NTA trading:

1. The loss of blue sky premium afforded by the potential for a bidding war by other suitors for the Chrome project.

2. The lack of firm direction for the company post sale.

3. The usual suspects of market weakness and exit of quick money.

Most of all though, I think when the management formally announce commitment to the return of capital and the clearance of debt (convertible notes) then we should see a strengthening in the sp. Even better if we hear about what wealth creating strategy CCI will be taking in the future.

Markets can be leery and wary of management who have funds burning a hole in their pockets and no dedicated plans. There is perceived risk in someone rushing out to spend the funds on the latest fad sector.

regards,

Kenny

 

[YOUNG_TRADER]

Still 22c in cash is 22c in cash

and the company has indicated they will be giving back up to 15c of that, so buying at 15c-16c gives you a free carried look into wha the company will do with its remaining cash, ie what projects it will go after next

Mr Market is a really funny beast atm

 

[kenny]

I agree, YT.

But 15c cash in hand is better than 15c sitting in the company's account. I could use it how I wish; including buying more CCI. In the company accounts, it could disappear in the accounting or used up with no control or say by shareholders.

Still, one could do worse than buying a dollar for 80c.

Cheers,

Kenny