CDU - Cudeco Limited

A valuation attempt from Trade4profit, for those who don't know him, he has been very accurate in predicting or calculating movements and values of CDU over the last few months, and even got his name in the papers.

From the shark pool, HC
(Sorry, image was too big to attach)

__________________________

From my hc post, for those who may not have seen it...

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Las Minerale strike is about 3.6km long...

Give or take a billion dollars or so!

But even the slightest bit of luck with future targets (as generated from the recent SAM survey)...CDU may well be looking at up to 12km of mineralised strike from various targets throughout the tenement (maybe even more?)

Indulge me for a minute...

12,000m (srike) x
50m (width) x
500m (depth) x
3.7 (sg)...
= 1,110,000,000 tonne rsource

Assume 1% Cu average = 11,100,000 tonnes contained Cu

Thas an in-situ value of $111 billion dollars

lol...now I finally have a high side figure to be proud of!

Clearly this is pie in the sky stuff...but just 6 months ago, had you told me CDU would be sitting on a near 100m tonnes resource today (1,400x350x55x3.7=99.7m), I would have said you were dreaming.

Anyway...it is clear form the SAM survey they have enough targets here to be drilling for years...lol...and still not find all there is to find. Perhaps they should simply carpet drill the entire tenement?

Anyway, here is an image of the recent SAM survey, overlayed on the tenement...updated to current information, with a bit of "guestimated interpretation" thrown in by me..

Seems our original plans were out due to various coordinate variations (not adjusted for true versus magnteic north)...the current lot a pretty close, but still may need adjustment once on-site, survey referenced photography comes to hand.

Cheers!

pharaoh said:

A valuation attempt from Trade4profit, ...Las Minerale strike is about 3.6km long...

..CDU may well be looking at up to 12km of mineralised strike from various targets throughout the tenement (maybe even more?)

Indulge me for a minute...

12,000m (srike) x
50m (width) x
500m (depth) x
3.7 (sg)...
= 1,110,000,000 tonne rsource

Assume 1% Cu average = 11,100,000 tonnes contained Cu

Thas an in-situ value of $111 billion dollars

...Clearly this is pie in the sky stuff...but just 6 months ago, had you told me CDU would be sitting on a near 100m tonnes resource today (1,400x350x55x3.7=99.7m), I would have said you were dreaming.

Anyway...it is clear form the SAM survey they have enough targets here to be drilling for years...
Cheers!

Click to expand...

Yeah Pharaoh
just a few comments:
I checked out last weeks announcement with the drill hole & SAM plots - picked on holes 140, 122, 142 as representative holes with a little rock descptn & did some rough trig calculations (with a few assumptions...) to just get my head ard possible geomtry of mineralised horizons, whether the main imaged 'targets' (purple zones) really do correlated roughly with the fat mineralised horizons intersected in the drilling etc. Seeing dolerite in hole 140 made me think 'is the SAM was picking up stringers or bands of these mafic dolerites as opposed to ore zones in the stratigraphy?' (the SAM cannot distinguish rock types, it's only delineating conductive vs non conductive zones) but decided on the limited info that in this case (Las Minerale) it didn't matter since the dolerite is in the mineralised zone anyway...to cut a long story short surface position of max SAM intensity correlates well enough with (multiple) horizons intersected at depth= reasonable level of confidence that for at least Las Min & Double Oxide, the SAM is probably picking up mineralised zone. The area sure looks juicy and I have no additional info, but here's a bottom end calc using the above method for a bit of perspective:
assume there's at least 3000m of mineralisation in both Las Min & DO (that can be reasonably guessed from current drilling & SAM); widths are all over the place, but conservatively assume at least 30 m of economic grade material; drilling intersects mineral horizon max depth at ard 273m in an inclined hole, say ard 240m vertical depth (I don't know the angle), so blow the total economic zone down to ard 300m depth (unless there's an almight big structure cutting the zone off at depth, it'll probably go much deeper...); specific gravity (sg) of av crustal rock is ard 2.7-3 (3.7 is v.high, is this the figure typically used- where did he get that?) so assume 2.8 sg. Assume 1% Cu and Cu A$MetricT $9900 there abts. CDU shares ard 75 mill (is that right?).
3000X30X300X2.8= 75 600 000 MetricT, @ 1% CU=75600MetricT
@ A$9900= A$748 440 000 @ 75mill shares = minimum $9.97 of Cu ingrd value per share or there abts (not taking account of costs) following method quoted by pharaoh... does that sound reasonable?

Archinos said:

Yeah Pharaoh
just a few comments:
I checked out last weeks announcement with the drill hole & SAM plots - picked on holes 140, 122, 142 as representative holes with a little rock descptn & did some rough trig calculations (with a few assumptions...) to just get my head ard possible geomtry of mineralised horizons, whether the main imaged 'targets' (purple zones) really do correlated roughly with the fat mineralised horizons intersected in the drilling etc. Seeing dolerite in hole 140 made me think 'is the SAM was picking up stringers or bands of these mafic dolerites as opposed to ore zones in the stratigraphy?' (the SAM cannot distinguish rock types, it's only delineating conductive vs non conductive zones) but decided on the limited info that in this case (Las Minerale) it didn't matter since the dolerite is in the mineralised zone anyway...to cut a long story short surface position of max SAM intensity correlates well enough with (multiple) horizons intersected at depth= reasonable level of confidence that for at least Las Min & Double Oxide, the SAM is probably picking up mineralised zone. The area sure looks juicy and I have no additional info, but here's a bottom end calc using the above method for a bit of perspective:
assume there's at least 3000m of mineralisation in both Las Min & DO (that can be reasonably guessed from current drilling & SAM); widths are all over the place, but conservatively assume at least 30 m of economic grade material; drilling intersects mineral horizon max depth at ard 273m in an inclined hole, say ard 240m vertical depth (I don't know the angle), so blow the total economic zone down to ard 300m depth (unless there's an almight big structure cutting the zone off at depth, it'll probably go much deeper...); specific gravity (sg) of av crustal rock is ard 2.7-3 (3.7 is v.high, is this the figure typically used- where did he get that?) so assume 2.8 sg. Assume 1% Cu and Cu A$MetricT $9900 there abts. CDU shares ard 75 mill (is that right?).
3000X30X300X2.8= 75 600 000 MetricT, @ 1% CU=75600MetricT
@ A$9900= A$748 440 000 @ 75mill shares = minimum $9.97 of Cu ingrd value per share or there abts (not taking account of costs) following method quoted by pharaoh... does that sound reasonable?

Click to expand...

Its good to get some balance..except that you can safely assume they have 100mil shares ,with the options left to exercise and that 10 mil directors options will be hard to stop as I feel the majority of other shareholders may well be his mates!!!!! So your figures need a little more dilution....and some diamond holes would be nice.Cant see the update being out before the vote.I dont know how long it takes to drill the holes they need and be assayed ,but as the rig is not on site I think you assume it wont be done by vote time.I feel we will get more drill results but its not what we want

A mine this size costs at least USD500m now and in five-ten years time when first production could take place it will cost at least USD0.70 per pound to produce.

This would take a big chunk out of the bullish $4lb spot copper price in that model.

No one in their right mind would subscribe $500m of equity at current prices - but even assuming $300m of debt - you could still assume total shares on issue will eventually be a MULTIPLE of the 100m floating around at the moment.

If Wayne keeps issuing stock like confetti to himself, who knows how many could be on issue at production?

Most companies with a pumped up price like this would do a placement.

Which broker will put their name to an issue of CDU above $4?

Archinos - thanks for the post - interesting to hear a reasoned perspective.

The 3.7 sg figure is the figure that was used in the updated 17 July JORC announcement. Widths used in that announcement were 45m.

I know nothing about this stuff but can you speculate on any reason that might justify them using this higher (3.7) sg figure vs the 2.7 - 3 figure you suggest? (just wondering if there might be some geological feature that could have caused them to use a high figure or are they just being optimistic).

Another thing is the width's they've used (45m) do seem a little high vs recent drilling, though if the recent deeper holes -140,141,142 show mineralisation across the widths they've indicated then maybe its reasonable.

Grades are going to be the interesting factor, because part of the attraction of the initial announcements were the high grades being intersected over wide zones - obviously higher grades translate to a much more economical mining prospect. The grades in recent holes haven't been as high as the earlier grades found in the original Las Minerale holes - though there have still been large intersections of high grade (e.g. 30m down hole of 3%). My limited understanding is that a lot of the recent holes are 'locator holes' and so a bit more hit and miss and then they've followed up with more targeted holes (i.e. like 140,141,142 mentioned above) that it states have intersected large down hole widths of mineralisation. When the assay results from these come back I'm assuming it will give an idea of how grades are going as they move along the strike zone.

One other comment - I think you're out by a zero in the in-ground contained copper estimate - you've got 75M tonnes of ore @ 1% would give 750,000 not 75,000 tonnes of contained Cu (10 times as much). So translates to approx $100/share in-ground value on your calculations - though as stated by having fun, would be lower based on dilutions (about $70/share).

(and of course in ground vs discounted NPV value of recovered ore after production costs, averaged at long term copper prices and after taking up-front capital costs into account is a massive difference - I've done sums under various scenarios - but the inground face value figures still probably explain some of the excitement over this stock).

To me though its still all about the grades. If we look at URL - large contained resource but at marginal grades and their BFS didn't come back brilliantly. Grades over 1.2% overall would be fantastic, the 1.6% used in the original JORC would be even better but on current drilling I think unlikely - but who knows what grades they will hit on future drilling.

Archinos, nice quality info post.
That's one of the things I like about this site over say HC, it's more involved discussion and not "yeah go abc, go" with no fundamental intelligence behind it

I am no miner, consider me learning, and a collector of info on cdu

I am extremely bullish on CDU, and my amateur opinion of the stock is that the grades will be good, not 3% the whole way through, but hey they will be higher than normal, and the size of the find will be massive, and continue to grow, as they keep running pilot holes and keep extending the strike zone more and more

This will mean a massive economical mine will be possible
I am finding it hard to value though, is there a basic process of valuation that can be followed now, based on what we know

A few opinions already - so cuttlefish are you saying roughly $70 per share before costs, based on the numbers we've all thrown around

As they say, I know we shouldn't try to value explorers before getting concrete values, but I think it is important to try and do so here, and debate the possibilities of what could be a monster

cheers

pharaoh said:

A few opinions already - so cuttlefish are you saying roughly $70 per share before costs, based on the numbers we've all thrown around

Click to expand...

No - I'm definitely not saying that. All I'm saying is that is the contained copper value per share of Archinos's speculation on a possible hypothetical resource.

The value of this stock depends on a whole variety of factors from capital startup costs, dilution for capital raisings, NPV discount rate used, mine life and annual production, per lb production costs, long term copper price, grade, recovery rates, the lead time to mine startup, and of course the big one - the actual resource size which depends on length, depth, width and grade. These are all variables which need to be considered to come up with a valuation. I don't think anyone at this point in time could provide an accurate valuation with what we know at this stage so any valuation is speculation - but all of the factors mentioned would make the stock value much less than the face value of the contained in-ground resource.

Thanks guys
I had to run out the door last night so my post was a little rushed - sorry if the decimal was put in the wrong place but I thought it was a worth while exercise...
Some thoughts on the sg value: typical text book values
earths crust 2.82
pure magnetite 5.2
basalt 2.74 - gabbro 2.95 (mafic rocks- Mg&Fe bearing=heavy)
granite 2.66
It would seem that the value 3.7 is v.high - I assumed typical crustal rock makeup with some room for mafic intrusions (the dolerite), but even accounting for some sulphides 3.7 still seems too high. It may be that they conducted some geophysical modelling on some gravity data across the prospect & 3.7 was the value they used (model values are 'relative' to eachother- while the values plugged in might start out with standard rock values, the modelling & drive to have a geometry 'pop out' at the end of the process starts to dictate what values are finally used). Otherwise we could be cynical and suggest that the larger value was used to 'beef up' the tonnage...
I admit what I posted was off the cuff - back of the envelope stuff, but I was shooting for a minimum ballpark estimate (taking a lot of what they've got at face value and then cutting back - as cfish & co. point out there are heaps of other factors which will determine whether or not the project will be economic). Based on what has been released however, to use 12km of strike length, no matter how juicy it may look, is way way out there (as was admitted...).

Any CDU followers heard of a new float called Beacon Minerals?


One of its tennements in North Qld near CDU is meant to be geologically similar ie large 50-100m intercepts of 1% Copper + Moly credits

Deciding if to put in for IPO,

Comments appreciated

Re other company floats and Cuduco, there were two references to Cuduco in last Saturday's Australian one in a possible takeover column mentioning it continues to rise and the other headed Nearology alluding to companies infering Olympic Dam possibilities and that a new IPO WAS PLANNED FOR A COMPANY WITH TENEMENTS IN THE MT ISA - CLONCURRY REGION CLAIMING PROXIMITY TO CEDUCO 'S SIGNIFICANT FIND.
The same article said that the geologist who has been advising on Ceduco ASX releases has now adopted a more positive tone in respect to latest release.
Over the past week there have been some buying orders of 100,000 and an undeclared buying order ie. where the quantity is not stated- interesting eh?
Sorry I can't quote verbatim from the Australian but had to return it to my daughter.

Echelon is going to float their subsiduary that has a lot of tenements in the area, including the ground adjacent to EXS's which is SE of Rocklands. The subsiduary is called Sovereign resources - will be on a 4 for 5 priority placement to existing ech shareholders.

When buying or selling how does one place an order so you do not disclose the quantity you wish to buy or sell so as not to flood the market? Would be grateful for advice as I have a substantial holding in cdu which I may wish to unload in the future. Thanks

Anyone know why this one is retreating southwards at a rapid rate of knots?

Related to falling copper prices, or something else?

THought?

feeding_the_fire said:

Anyone know why this one is retreating southwards at a rapid rate of knots?

Related to falling copper prices, or something else?

THought?

Click to expand...

One thing u forget..this stock headed north at "rapid" rate on speculation only..not production so anyone would expect a major correction..watch this drop more I think and in fact I wouldnt be buying this stock anywhere at these ridiculous levels..my opinion only guys

petal said:

When buying or selling how does one place an order so you do not disclose the quantity you wish to buy or sell so as not to flood the market? Would be grateful for advice as I have a substantial holding in cdu which I may wish to unload in the future. Thanks

Click to expand...

"flood the market" hehe what is your holding..in excess of 10million shares..hmmm if u have a large holding that u bought long ago at cheap levels then the old saying is..dont be too greedy hehe

You might be interested in todays latest broker report.
Might explain some of the buying.

Speaking to MiningNews.net on the sidelines of the Excellence in Mining and Exploration conference in Sydney, Dawes said his updated net present values on CuDeco were similar to those in his earlier report, which while never released, was widely touted in newspaper articles during CuDeco's incredible July share price run.

"I was hoping to have it here today but I haven't finished it," he said.

Dawes said the $25 per share valuation attributed to CuDeco in the earlier report – when CuDeco was trading around $2/share – was conservative, and the lowest of three valuations based on different scenarios.

"I actually had three targets, the initial was $25 [per share], the second was $45, the third was $64. I said [to the journalist] ignore all those, work on the basis we've got 100 million tonnes … at 2% copper, that's 2 million tonnes contained copper.

"At the time the price was $US7000 per tonne, which would have made that a $US14 billion in-ground value, or $18 million Australian. Then you've got to ask how much capital is required, how much in operating costs, interest costs, tax etcetera and what does the NPV come up to? You've got $18 billion, and I've come down to $2.5 [billion]. That's pretty conservative to me."

Dawes was critical of the Australian Stock Exchange, which forced CuDeco into a trading halt and a halving of the project's resource statement after the shares had run to $10 in early July.

Dawes said a site visit by the exchange's representatives would have helped them understand the calculations used by CuDeco.

"If he'd been there, he would have had a different view," Dawes said.

"I've been to site and I believe the scope of the project is enormous. I think we will wind up with well over 100Mt at Las Minerale, and I'm sure we'll wind up with another resource, possibly the same size, at Double Oxide.

"This is potentially just huge."

Dawes – whose Martin Place Securities is a major shareholder of CuDeco – also defended the options packages of the company's directors, under which numerous in-the-money options have been issued.

Dawes said the packages were decided when the company was trading at 22c/share, and as a result were fair.

But wait - there's more!!

Cudeco is nominated for the mining discovery award at the excellence in mining and exploration awards..
must be quite a few people who think there is copper out there.

canny said:

"I was hoping to have it here today but I haven't finished it," he said.

Dawes said the $25 per share valuation attributed to CuDeco in the earlier report – when CuDeco was trading around $2/share – was conservative,

You've got $18 billion, and I've come down to $2.5 [billion]. That's pretty conservative to me."

Dawes – whose Martin Place Securities is a major shareholder of CuDeco – also defended the options packages of the company's directors, under which numerous in-the-money options have been issued.

Dawes said the packages were decided when the company was trading at 22c/share, and as a result were fair.

Click to expand...

Laughable

My personal favourite is the fact he has identified the definitive $25 per share NPV but hasn't (three months later) finished his research piece.

"I havent finished my research note - but I have three target prices and think Wayne should issue himself $30million worth of stock. "

What is this bloke valuing BHP and Oxiana at?

Or does he only specialise in companies his 'research' house is set in?

Ummm im in shock that noone has even said anything about today's article in the AFR, about Cudeco.

gday josh what did it say mate, i live way out bush no one ear mate herd of AFR let alone CDU. regards beach