CDU - Cudeco Limited

[scanspeak]

soho,

re your comment "dont completely understand it, 30mt was about the expected resource from what i remember? 1.24% is a little slim, but no big deal... "
They were expected to have 100mt, they were talking 59mt 4 years ago, so it is an absolute disaster for holders.31Mt at 0.8%Cu and 0.1 g/t Au is actually less valuable than EXS in pit inventories for the Cloncurry Project!Surprised CDU haven't been slammed harder.
No way they should be worth what they still are.

As Pjemmett elegantly calculated, now that we finally know how much copper we're sitting on, we can conservatively expect a share-price of around $10 when production begins (2012) using a P.E. of 7.

Thats a 400% improvement on todays price in 18-24 months, conservatively, and that doesnt factor in JORC updates, predators, rising copper prices, Wilgar drilling, and other discoveries.

I'm staying the course.

 

[UBIQUITOUS]

As Pjemmett elegantly calculated, now that we finally know how much copper we're sitting on, we can conservatively expect a share-price of around $10 when production begins (2012) using a P.E. of 7.

Thats a 400% improvement on todays price in 18-24 months, conservatively, and that doesnt factor in JORC updates, predators, rising copper prices, Wilgar drilling, and other discoveries.

I'm staying the course.

Production begins in 2012? Didn't they say that there is to be another 5 years of drilling?

 

[skc]

The 31MT are designed as input for 10 years to a 3MT per year processing plant. At 1.24% that makes 37000 tons of Cu equivalent per year, at around $A8,000 a ton (current, but very likely to rise) that makes $A296M per year revenue, say 30% costs then we arrive at around $A200 a year or approximately $1.50 per share per year. A P/E of 7 (just for arguments sake) and we have a reasonable share price of $A10 per share. Looking at the broader resources at Rocklands (245MT @ 0.42% ) and it's still very much a going concern for at least 40years, however the figures of $A100 a share that were being banded around is obviously unrealistic.
Has the selling been overdone ?, absolutely !!

As Pjemmett elegantly calculated, now that we finally know how much copper we're sitting on, we can conservatively expect a share-price of around $10 when production begins (2012) using a P.E. of 7.

Thats a 400% improvement on todays price in 18-24 months, conservatively, and that doesnt factor in JORC updates, predators, rising copper prices, Wilgar drilling, and other discoveries.

I'm staying the course.

I am no mining expert but do copper companies run on a gross margin of 70% revenue? Take EQN they earned $425m in copper revenue and got $205m cashflow from that. So ~50% cashflow from revenue might be a guide?

Plus a 10yr mine life doesn't warrant a PE of 7. If you discount the 10 year cash flow (starting in 2 years) by 12% the equivalent PE is ~4.5.

Lastly there is no mine yet! What is the capex?

On $300m revenue per year generating 50% cash flow with PE ~4.5, the NPV today is $650-700m. Subtract whatever capex is appropriate ($300m? $500m?) and you get the value of the mine itself.

The rest of the price you pay will be for more resource upgrades from Rocklands. But it will be difficult to say that the mine alone is worth $10 a share based on current resource estimates.

 

[Agentm]

what i find interesting is that despite the sentiment, there was plenty of buyers out there more than willing to take it all up..

there is value seen in the share by some investors imho, and of course the ones selling are happy to leave in the belief the game is over for cdu..

i think the sheep on hc had no clue what to do and ran blindly over a cliff in unison myself..

 

[soho]

its going to be ugly at open... you'll be able to buy this stock in the $1's today...

hard to know whether to sell the stock and take the loss or stick the course... dont want to have to believe (or hope) in best case scenarios to justify this stocks spot in my portfolio...

lucky my original position was only $5k... thats nothing compared to some...

 

[UBIQUITOUS]

its going to be ugly at open... you'll be able to buy this stock in the $1's today...

hard to know whether to sell the stock and take the loss or stick the course... dont want to have to believe (or hope) in best case scenarios to justify this stocks spot in my portfolio...

lucky my original position was only $5k... thats nothing compared to some...

The company is still worth about $300m!!!! In my opinion, that is far too high considering that the dream has been shattered.

 

[prawn_86]

its going to be ugly at open... you'll be able to buy this stock in the $1's today...

Soho (and other new members),

Please note it is an ASF rule that if you are going to post a price target that it needs to be supported by the reasons why you think this. Simply saying you think it will open at a price, without analysis, is considered as a ramp/fdownramp and will be removed.

I suggest all new members read the site rules and guidelines.

Thanks

 

[scanspeak]

There's 240MT - the mine life will be 40+ years.

10 years refers to mining the 30MT bonanza zone (commencing 2012) and obviously they'll be drilling other promising targets - Wilgur, Salisbury, and others during this time.

 

[scanspeak]

The company is still worth about $300m!!!! In my opinion, that is far too high considering that the dream has been shattered.

Dream shattered? No. More like a splash of cold water.
The bonanza zone alone contains $2.5Billion of copper - the JORC proves it.

Looks like bargain hunters are moving in.

 

[soho]

Soho (and other new members),

Please note it is an ASF rule that if you are going to post a price target that it needs to be supported by the reasons why you think this. Simply saying you think it will open at a price, without analysis, is considered as a ramp/fdownramp and will be removed.

sorry... was just an opinion... like: "The company is still worth about $300m!!!! In my opinion, that is far too high considering that the dream has been shattered."

should i have said "in my opinion you will be able to buy this stock in the $1's today"...?

what kind of reasons do we need to give to support this opinion? "my dog just barked at a bird, so i think cdu is going to get smashed at open"... is that a reason?

anyway, looks like cdu has bounced... almost got to the 1's...

 

[Joe Blow]

should i have said "in my opinion you will be able to buy this stock in the $1's today"...?

How about something like, "If CDU continues to get hammered by sellers again today it may trade below the $2 mark". It's always a good idea to qualify your remarks if it's just speculation.

Those who make definite assertions (e.g. "This stock is undervalued", "This stock is overvalued", "This stock will bounce back to the $3 mark today") must back up those assertions with some analysis or reasoning to support their point of view.

what kind of reasons do we need to give to support this opinion? "my dog just barked at a bird, so i think cdu is going to get smashed at open"... is that a reason?

If you are unable to explain the relationship between your dog barking at a bird and CDU getting smashed at the open it will probably result in your post being removed.

 

[scanspeak]

Something for the cool heads.
Market cap currenty around $350 Million and sitting on a $8Billion dollar resource.


http://www.goldcoast.com.au/article/2010/0...t-business.html

I

NVESTORS dumped copper explorer CuDeco's shares yesterday, almost halving the company's value after the release of a long-awaited resource update.

The dash to the exits wiped $320 million from the company's value, despite CuDeco doubling its total resource estimate for the Rocklands project near Cloncurry.

The report revealed CuDeco was sitting on 2.27 billion pounds of copper, worth more than $8 billion at current spot prices.

The Gold Coast-based explorer, which plans to start mining at Rocklands near Cloncurry in 2012, identified a measured and indicated resource of 30.94 million tonnes of copper graded at 1.24 per cent.

The initial grades are enough to sustain a 10-year mining operation producing 3 million tonnes a year.

But the total resource has been boosted to 245 million tonnes, measured at the lower grade cut-off of 0.42 per cent copper equivalent.

CuDeco chairman Wayne McCrae drew comparisons with Newcrest Mining's Cadia Hill open-cut mine which has a total resource of 408 million tonnes at just 0.12 per cent copper which has delivered pre-tax earnings of $548 million in the past year.

He said he was disappointed for small shareholders who succumbed to yesterday's panic selling which he said failed to take into account the total resource estimate and the potential yet to be uncovered by ongoing drilling.

The transaction of big parcels of shares yesterday indicated large investors were accumulating stock, raising fears that a weakened CuDeco could become a takeover target.

Among the buyers was CuDeco itself which scooped up around 200,000 shares.

"Any company that took over CuDeco tomorrow could put in a 15-to-20-million-tonne-a-year plant because today we've shown 245 million tonnes at 0.42 per cent," Mr McCrae said from the Rocklands mine site yesterday.

"The resource is good. There's nothing wrong with the resource."

Mr McCrae said investors who understood what CuDeco had in the ground 'had a field day like white pointers surrounding seals'.

Controversy has dogged CuDeco since the company originally announced an exciting copper, gold and cobalt discovery at Rocklands, located along the main transport route to Xstrata's Mt Isa operations.

CuDeco originally estimated an inferred resource of 59 million tonnes in 2006, sending its shares to a high of $10.

It was forced to pare that figure back to 25 million tonnes after a request from the Australian Securities Exchange.

CuDeco shares yesterday slumped $2.34 to close at $2.45 with 12 per cent of the company's stock changing hands.

They hit an intraday low of $2.25, which compared with a high of $6.59 reached last September.

 

[Sean K]

On $300m revenue per year generating 50% cash flow with PE ~4.5, the NPV today is $650-700m. Subtract whatever capex is appropriate ($300m? $500m?) and you get the value of the mine itself.

EQN Capex was about $900m.

Their Opex is about $1.50-60 a lb.

Not sure if they're comparable though due to country and plant size.

Never seen a net income being done by % cashflow before.

 

[JnrTrader]

The resource estimate was well below expectations, and therefore, a sell off was the result. But, nobody knows the true value, people just guesstimate, and it’s here where you can make the real money. Find the point of oversold, and buy in, because while the market is irrational now, it will correct and we will find CDU’s true market value when the dust settles.

My guesstimate is that cdu have a way to fall yet, basically, IMO, the result was a disgrace. After the promise by WM and his team, the 100t resource was expected, measured and indicated may i add.

In 2006, cdu reported 25mt @ 3% cu inferred AFTER originally reporting 75mt @2%

Pie in the face or what?

4 years of drilling, 260,000 metres, over 100m of investors cash, and all they can come up with is 5mt extra, yet a poorer grade results in less contained copper. What a flop IMO


Its very very poor, and i think this will fall below $2

While i note that total resource is 245mt @0.46% copper, this mostly inferred until more drilling is made

I think the 3mpta mine will go ahead....but im not 100% convinced yet.

This will result in approx 300m revenue p.a on average over the 10 years, ending with about 35-85m in net income p.a on average

With a P.E of about 12, and 300m shares on issue, we get a fair market price of $2.00-3.00

You may say why i have added an extra 150m shares, well they need further funding to build the mine. 150m at $2 p.s if they are lucky to get this price, results in 300m cash to build the mine, they may not need this amount, perhaps 150m is enough, and the rest from sinosteel or whatever happens.

Finally, IMO, the days of dreaming of a SP over $10 is well and truly all over
Best case scenario, xstrata come along and buy out cdu for about 500m bucks once the mine has been built and the revenue stream is consistent, but even then, there are probably better opportunities elsewhere.

So much for all of WM’s hard earned going into cdu stock, and the company’s continuous buybacks.

Unless there has been a big mistake in the resource measurement, WM needs to consider his SH next time he talks up an elephant when in fact it’s a mouse, you can’t possibly confuse the two...

 

[Gringotts Bank]

People leaving HC in droves. Good thing. The way the mob fawn over trade4profit (CVI GDN CDU - great record there) and robbb who uses the site to advertise his paid seminars to learn how to draw "speed angles" then sell private one-on-one time, is crazy. And they are the two most voted for posters - says a lot about the sheep on there.

The best ever poster on that site was Ipod and they ousted him for having a go at the self-righteous wankers in position of moderator. He absolutely ruled the daytrade thread because he actually made money. No one else there does... maybe kevi but he ramps like crazy the second he buys anything, then sells into the volume.

HC deletes whatever they want whenever it suits them best. While I detest macraes attitude, he and hotcopper are a good match. Let them sue each other into oblivion.

 

[skc]

EQN Capex was about $900m.

Their Opex is about $1.50-60 a lb.

Not sure if they're comparable though due to country and plant size.

Never seen a net income being done by % cashflow before.

I only had access to EQN's latest half year financials and was trying to use a short cut method based on the relationship between revenue and free cash flow (so I can work out an NPV). Not the most scientific or accurate, but quick and dirty was what I was after.

The capex as per latest CDU announcement was $150-200m.

Based on this, the mine (if built) is probably worth ~$400m, which is probably a bit higher than the current market cap of ~$315m. So may be oversold afterall?

 

[vimuttirasa]

GB - "People leaving HC in droves"

Do you have any evidence to support this?

Having been moderated and suspended from HC a few times I can see where your criticisms come from. They are heavy-handed & reactive. I do like the HC "platform" though - it's more intuitive & easy to navigate. The content, though, is another matter. You get good & bad posters on all forums, so it's hard to judge.

I have been badly cut trying to catch falling knives before, most recently with ELD - so I'm going to sit out this one with CDU for another day at least & see where the floor is, before trading on a bounce.

 

[Sean K]

I only had access to EQN's latest half year financials and was trying to use a short cut method based on the relationship between revenue and free cash flow (so I can work out an NPV). Not the most scientific or accurate, but quick and dirty was what I was after.

The capex as per latest CDU announcement was $150-200m.

Based on this, the mine (if built) is probably worth ~$400m, which is probably a bit higher than the current market cap of ~$315m. So may be oversold afterall?

I find that Capex hard to believe, on the surface of it. Must look in to it more I suppose.

EQN took 10 years and $841m to develop.

 

[Sean K]

GB - "People leaving HC in droves"

Do you have any evidence to support this?

Looks like about 5 people who have droved over to ASF.

trade4profit was a CDU fan eh? lol

Can't get them all right of course.

Everyone has a bad pick, or two.

 

[pjemmett]

The latest announcement from CDU at 16.15 this evening indicates that the company will mine the high grade ore for the first 4 years, this is 12MT at 2.05% Cu equivalent. At current copper prices that SA480M pa. With a CAPEX of $A150-200M and high grade ore resulting low OPEX I would guess that a total profit of around $A1B for the 4 years is possible. That make $A2.32 ps sound very cheap to me... Just my opinion, what the heck would I know.