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I find it amusing how people forget, most if not all mining companies, especially the specs trade at huge premiums for having SFA!
Yet CCI with 21c -22c cash to come trades at a massive discount
Say what you will but the facts are
1. Management acquired a project a few years back for $8m or so and our now selling it for $41m = 500% return
2. They will have a huge cash box of $31m
3. They will be giving shareholders back about 15c per share per their guidance
4. They will still have plenty of cash left to acquire new projects and hopefully repeat this highly rewarding exercise
Interesting article I was reading too
Here's a stock with little downside risk but appealing upside potential.
The listed Chrome Corporation (CCI.AX
CHROME CORP3 July,200803/07/2008 17:41 Sydney, Australia.
Value Change % Change
0.145 -0.015 -9.380%
Company overview
Real-time quote
CCI.AX , 0.145, -0.015, -9.380%) has copped two bids so far this year for its main asset ”” a 74% equity in the Ruighoek chrome project in South Africa. Both offers are worth more than five times the $8 million price paid by CCI three-and-a-half years ago for the asset.
With the price of chrome metal soaring (due to rising demand as a substitute for the more expensive nickel in stainless steel) it's possible there could be more suitors in the wings before the auction is over.
Any sale will result in a capital return of up to 15c a share ”” or two-thirds of the company's share price of 22c at the close of last week's trade. The company will remain a listed cash-box ready for new opportunities.
Chrome Corporation was born out of the shell of onetime West Australian nickel hopeful which almost went under with the failure of its Bulong lateritic nickel project in the late 1990s. Capital reconstructions and shareholder changes followed and three-and-a-half years ago directors came across the opportunity that is now restoring its fortunes.
South African solicitor Martin Brinks was trolling through titles to idle prospects seeking opportunities under that country’s "use it or lose it" minerals policy.
What turned up on the lawyer's radar was the moth-balled Ruighoek chrome project, a mine and treatment plant operated by a joint venture of Billiton (60%) and Anglo-America (40%) from the early 1960s until 1993. Annual production was 75,000 tonnes of contained chrome from underground operations before the project closed and the plant was put on care and maintenance. The price for chrome was then about $US65/tonne. Today, the price is $US300-350/tonne for lump ore comprising 40% chromium oxide.
The Australian company bought the idle project for $8 million, including the issue of $6 million in redeemable convertible notes in April, 2005.
The company has since invested in a feasibility study to re-open the project as a larger open-pit operation with capacity to produce 300,000 tonnes of ore/year. By mid-2006 the company reported a resource estimate in the old workings of 1,555,576 tonnes of 44.44% chromium oxide, including a measured reserve of 416,146 tonnes.
The company also has prospecting rights or applications over surrounding ground with resource potential estimated at 12.9 million tones of similar ore.
The project site is described as being two hours drive from Johannesburg on the western rim of the Bushveldt igneous complex, which is the source of 60% of the world's chrome.
CCI now has 143.56 million issued shares, which sold as low as 8c last year before the potential value of the project attracted investor attention. Earlier this year they traded as low as 16c, but they shot to a high of 24c after the company announced on March 5 a proposed agreement with AMCOL International Corporation to sell its 74% interest in the Ruighoek project for $41 million.
AMCOL is a New York-listed specialty minerals company headquartered in Arlington Heights, Illinois, with operations in 26 countries. Its market capitalisation is around $US1.2 billion.
At the price bid, and after deducting $6 million for redemption of the convertible notes, that represents net cash/share of 24.4c. At the time of the announcement, CCI directors proposed a meeting to approve the deal for April 11 followed by with a proposed capital return of up to 15c, leaving the still listed company with not less than $8 million in net cash.
On April 4, CCI announced an unsolicited offer of $45 million cash for the same asset from New York venture capital firm York Capital Management. That would lift the net cash backing for each CCI share to 27.2c. The company’s planned general meeting to approve the first deal was cancelled and re-scheduled to June 30 or such earlier date to be announced.
Other assets remaining with CCI apart from the cash, include its value as a shell of at least 1c a share plus substantial tax losses from its Bulong disaster. That's why I see no downside in it, a certain if perhaps modest profit and potential for further upside in the next month or two.
Yet CCI with 21c -22c cash to come trades at a massive discount
Say what you will but the facts are
1. Management acquired a project a few years back for $8m or so and our now selling it for $41m = 500% return
2. They will have a huge cash box of $31m
3. They will be giving shareholders back about 15c per share per their guidance
4. They will still have plenty of cash left to acquire new projects and hopefully repeat this highly rewarding exercise
Interesting article I was reading too
Here's a stock with little downside risk but appealing upside potential.
The listed Chrome Corporation (CCI.AX
CHROME CORP3 July,200803/07/2008 17:41 Sydney, Australia.
Value Change % Change
0.145 -0.015 -9.380%
Company overview
Real-time quote
CCI.AX , 0.145, -0.015, -9.380%) has copped two bids so far this year for its main asset ”” a 74% equity in the Ruighoek chrome project in South Africa. Both offers are worth more than five times the $8 million price paid by CCI three-and-a-half years ago for the asset.
With the price of chrome metal soaring (due to rising demand as a substitute for the more expensive nickel in stainless steel) it's possible there could be more suitors in the wings before the auction is over.
Any sale will result in a capital return of up to 15c a share ”” or two-thirds of the company's share price of 22c at the close of last week's trade. The company will remain a listed cash-box ready for new opportunities.
Chrome Corporation was born out of the shell of onetime West Australian nickel hopeful which almost went under with the failure of its Bulong lateritic nickel project in the late 1990s. Capital reconstructions and shareholder changes followed and three-and-a-half years ago directors came across the opportunity that is now restoring its fortunes.
South African solicitor Martin Brinks was trolling through titles to idle prospects seeking opportunities under that country’s "use it or lose it" minerals policy.
What turned up on the lawyer's radar was the moth-balled Ruighoek chrome project, a mine and treatment plant operated by a joint venture of Billiton (60%) and Anglo-America (40%) from the early 1960s until 1993. Annual production was 75,000 tonnes of contained chrome from underground operations before the project closed and the plant was put on care and maintenance. The price for chrome was then about $US65/tonne. Today, the price is $US300-350/tonne for lump ore comprising 40% chromium oxide.
The Australian company bought the idle project for $8 million, including the issue of $6 million in redeemable convertible notes in April, 2005.
The company has since invested in a feasibility study to re-open the project as a larger open-pit operation with capacity to produce 300,000 tonnes of ore/year. By mid-2006 the company reported a resource estimate in the old workings of 1,555,576 tonnes of 44.44% chromium oxide, including a measured reserve of 416,146 tonnes.
The company also has prospecting rights or applications over surrounding ground with resource potential estimated at 12.9 million tones of similar ore.
The project site is described as being two hours drive from Johannesburg on the western rim of the Bushveldt igneous complex, which is the source of 60% of the world's chrome.
CCI now has 143.56 million issued shares, which sold as low as 8c last year before the potential value of the project attracted investor attention. Earlier this year they traded as low as 16c, but they shot to a high of 24c after the company announced on March 5 a proposed agreement with AMCOL International Corporation to sell its 74% interest in the Ruighoek project for $41 million.
AMCOL is a New York-listed specialty minerals company headquartered in Arlington Heights, Illinois, with operations in 26 countries. Its market capitalisation is around $US1.2 billion.
At the price bid, and after deducting $6 million for redemption of the convertible notes, that represents net cash/share of 24.4c. At the time of the announcement, CCI directors proposed a meeting to approve the deal for April 11 followed by with a proposed capital return of up to 15c, leaving the still listed company with not less than $8 million in net cash.
On April 4, CCI announced an unsolicited offer of $45 million cash for the same asset from New York venture capital firm York Capital Management. That would lift the net cash backing for each CCI share to 27.2c. The company’s planned general meeting to approve the first deal was cancelled and re-scheduled to June 30 or such earlier date to be announced.
Other assets remaining with CCI apart from the cash, include its value as a shell of at least 1c a share plus substantial tax losses from its Bulong disaster. That's why I see no downside in it, a certain if perhaps modest profit and potential for further upside in the next month or two.
