CDU - Cudeco Limited

[BSD]

How do the CDU punters feel about the granting of 7,000,000 more options to Wayne at $0.50?

These are valued at $3.80 each in the meeting notice

Is Wayne really worth another $26 million when he already owns 11 million shares?


This reflects poorly on management.

Surely if they believed so much in the project the oppies would at least be at the money

The shareholders can confirm 'mug status' by letting this through

With no insto money - Wayne may be about to get even richer

 

[pharaoh]

who cares as long as he brings in the goods
And he must be in my mind, if he is going ahead with these

only time will tell of course

 

[ttnt]

i think he is worth of those 28m,
please note the recent annc, they mentioned 'Sub Audio Magnetics
(SAM) ground geophysical survey ' to be interesting.
Maybe there are some issues regards to those.

Let time to prove...........................................

 

[pharaoh]

ttnt, can you explain further please
thanks

 

[cuttlefish]

Barney - as BSD pointed out somewhere much earlier in this thread, Net Present Value is a common approach to valuing mining companies. This basically discounts future cashflow back to todays value - theres an NPV function in excel.

If you have a stab at a conservative resource estimate, work out some per tonne mining costs, remember to do things like factor in recovery rates etc. as well, spread it out over 10 or 15 years depending on how much you think they can pull out a year etc. and you'll get an annual net cashflow to plug into the NPV calcualtion.

Then in that calculation decide on a discount rate (BSD suggest .15 in a previous post on here) and remember to factor in a lead time till mining (??? 3 years??? more?) and up front capital costs. Also when converting your overall company value to a share value, remember to include/dilute for the options that company has on issue. e.g. CDU has about 50 million shares but also about 50 million options that are well in the money so effectivley form part of the companies issued capital. (and maybe another 10 million if the shareholders meeting approves the issue to the directors).

You'll find in tools like the comsec company research page show the market caps based on only issued listed shares, and not the options so do your own calcs on market cap for companies based on the issued capital information described in the companies recent appendix 3b announcements.

There's a feasability study somewhere amongst copper co's (CUO) recent ASX reports - look through that and you'll see the long term copper price they've used for the base case for the CUO feasability study, and also things like cost per lb estimates , capital costs for startup etc. Remember to factor in exchange rates etc. as well.

What you'll find is that you end up with about 10 numbers you can tweak (including ore tonnage and grade) that will give you wildly varying values anywhere from $1 to $50.

Other ways to get some idea of potential value is to compare the ore size and grade to similar companies - copperco isn't a bad one to compare to I reckon - its a pure copper company, still a year away from production but also at least a year further along the path to production than CDU, has relatively similar sorts of grades to what CDU are talking about etc. etc. but they have a feasability study complete, various other agreements in place including financing, a proper resource estimate etc. Remember when comparing two companies you should be comparing they're fully diluted market capitalisation (i.e. not share price - because different companies have different amounts of issued capital so share price isn't a reflection of relative value unless you factor in the amount of shares each co has - i.e. market cap).

Look at how the market values them and to a pro-rata comparison to CDU based on what you think CDU's ore and grade will be - however remember CDU is still early days - they don't have anything more than an inferred JORC at the moment - no metallurgy, no finance, no indicated/measured reserves, no feasability study, no finance etc.

The big question mark is how much copper has CDU actually found - both in terms of tonnes of ore as well as the overall grade across the entire find.

As others have said, investing in companies at this stage is risky.

With any stocks you invest in, beware of ramping and price spikes - make your own decisions on a value - then be conservative - because even if its theoretically worth more the market might still not end up valuing them that way.

Remember as well that copper prices rise and fall, interest rates rise and fall, mine startup capital costs blow out as well as timeframes, etc. etc. so nothing is certain.

One piece of advice - if a stock has risen very strongly for a few days and volumes are high, its probably a risky time for a novice to enter it. Another thing to get a handle on is stoplosses. If you do decide to enter on a punt you need to set a stop loss to prevent the situation you had where you hold and hold until eventually panicking and selling at the bottom.

You'll find that emotions are the biggest factor to control in investing/trading - so having your own ideas on value, price, and - prior to entering a trade - knowing the conditions under which you'll buy and sell (both positive and negative) and then sticking to them are important.

 

[barney]

Barney - as BSD pointed out somewhere much earlier in this thread, Net Present Value is a common approach to valuing mining companies. This basically discounts future cashflow back to todays value - theres an NPV function in excel.

If you have a stab at a conservative resource estimate, work out some per tonne mining costs, remember to do things like factor in recovery rates etc. as well, spread it out over 10 or 15 years depending on how much you think they can pull out a year etc. and you'll get an annual net cashflow to plug into the NPV calcualtion.

Then in that calculation decide on a discount rate (BSD suggest .15 in a previous post on here) and remember to factor in a lead time till mining (??? 3 years??? more?) and up front capital costs. Also when converting your overall company value to a share value, remember to include/dilute for the options that company has on issue. e.g. CDU has about 50 million shares but also about 50 million options that are well in the money so effectivley form part of the companies issued capital. (and maybe another 10 million if the shareholders meeting approves the issue to the directors).

You'll find in tools like the comsec company research page show the market caps based on only issued listed shares, and not the options so do your own calcs on market cap for companies based on the issued capital information described in the companies recent appendix 3b announcements.

There's a feasability study somewhere amongst copper co's (CUO) recent ASX reports - look through that and you'll see the long term copper price they've used for the base case for the CUO feasability study, and also things like cost per lb estimates , capital costs for startup etc. Remember to factor in exchange rates etc. as well.

What you'll find is that you end up with about 10 numbers you can tweak (including ore tonnage and grade) that will give you wildly varying values anywhere from $1 to $50.

Other ways to get some idea of potential value is to compare the ore size and grade to similar companies - copperco isn't a bad one to compare to I reckon - its a pure copper company, still a year away from production but also at least a year further along the path to production than CDU, has relatively similar sorts of grades to what CDU are talking about etc. etc. but they have a feasability study complete, various other agreements in place including financing, a proper resource estimate etc. Remember when comparing two companies you should be comparing they're fully diluted market capitalisation (i.e. not share price - because different companies have different amounts of issued capital so share price isn't a reflection of relative value unless you factor in the amount of shares each co has - i.e. market cap).

Look at how the market values them and to a pro-rata comparison to CDU based on what you think CDU's ore and grade will be - however remember CDU is still early days - they don't have anything more than an inferred JORC at the moment - no metallurgy, no finance, no indicated/measured reserves, no feasability study, no finance etc.

The big question mark is how much copper has CDU actually found - both in terms of tonnes of ore as well as the overall grade across the entire find.

As others have said, investing in companies at this stage is risky.

With any stocks you invest in, beware of ramping and price spikes - make your own decisions on a value - then be conservative - because even if its theoretically worth more the market might still not end up valuing them that way.

Remember as well that copper prices rise and fall, interest rates rise and fall, mine startup capital costs blow out as well as timeframes, etc. etc. so nothing is certain.

One piece of advice - if a stock has risen very strongly for a few days and volumes are high, its probably a risky time for a novice to enter it. Another thing to get a handle on is stoplosses. If you do decide to enter on a punt you need to set a stop loss to prevent the situation you had where you hold and hold until eventually panicking and selling at the bottom.

You'll find that emotions are the biggest factor to control in investing/trading - so having your own ideas on value, price, and - prior to entering a trade - knowing the conditions under which you'll buy and sell (both positive and negative) and then sticking to them are important.

Hey Cuttlefish, Thank you for that great reply. At this stage I will need to a bit of research/study before I am up to speed with all of the detail but I certainly followed the basic concepts. There is a lot to learn about all these mining stocks, but time well spent I think.
Just as a matter of interest Re Your advice above on stop losses(I dont know whether I should post it here but it was certainly related to CDU in my case so Ill ask anyway) For those who dont know, I did a very large sum of money on CDU cause I was a novice and bought in high just before the trading halt etc.etc. As it went down just prior to halt I was also trying to "average down" (yeah I was doing everything wrong) ,thinking from what I had seen in the past few days it would automatically go back up almost immediately...right??...WRONG....Anyway my stupidity is history, and lots of people have pointed me in the right direction in that regard,(thanks again) but I am interested in anyones opinion on the fact that you can get "trapped" in a trade by a trading halt/suspension with little warning and no way of escape when the sp gaps as CDU did.(In my case over 50%) A stop loss wouldnt have saved me in this instance as far as I understand Is that true? I would think that the ASX should have more "concrete" regulations with regard to trading halts. eg If a company intends to have a halt, I believe it should be announced during morning trade and not come into effect until close of trade that afternoon; that way all traders can go about their business and setup whatever positions they are comfortable with by the end of the days trading. Now obviously I am still on "L" plates, but perhaps some of the more experienced traders here can give their opinions on whether that concept of trading halts would work, and be fairer all round?? PS If what I have suggested is basically dumb because of something obvious I am missing dont crucify me.........somebody has to ask dumb questions (PS I'm not really that dumb at all.....just mentally challenged :dunno: )

 

[NettAssets]

Hi Barney,

I don't think the idea of notified trading halts will work in the midst of a share spike or dump. The idea is to just stop trading and let the emotion get out of the way and a little sanity return.
I think you have to honestly ask yourself if you would have bailed out if you had known a trading halt was coming and the market was still pushing up or if you would have been caught up in the moment and raided the visa for a few more before it was too late cause that 20 gap up is going to happen as soon as the halt is lifted.
I believe you said before that you got advice to buy when you did - if this is so and it was someone with as AFS licence then they are they ones that should be dumped on for not advising extreem caution in such a market.
John

 

[cuttlefish]

Barney,

I pretty much agree with what netassets is saying - prior notification of an impending trading halt would probably not necessarily have had a positive effect on the situation and could in fact have caused an even bigger spike prior to the halt. Unless you have a clear plan, prior to entering a trade, of how you are going to go about exiting it, then emotions are going to be the dominant factor in how you exit.

A plan could have been as simple as - if it goes below $6 I'll sell. If it goes above $10 I'll sell. Otherwise I'll hold.

Or it could have been as complex as - I'll follow the course of sales and if I see the whachamy indicator cross the thingamy and do a fangionizzio retracement of more than 3.9% with volume increase greater than 40% while VWAP is below current price then I'll exit 30% of my position.

Either way, the challenge is sticking to it once you've entered though.

good luck with it.

 

[Archinos]

Barney,

..Or it could have been as complex as - I'll follow the course of sales and if I see the whachamy indicator cross the thingamy and do a fangionizzio retracement of more than 3.9% with volume increase greater than 40% while VWAP is below current price then I'll exit 30% of my position...

Oh my god! Ha ha ha...

 

[havingfun]

Does anyone know if the diamond drill rig has arrived yet???

 

[BSD]

i think he is worth of those 28m,

who cares as long as he brings in the goods
And he must be in my mind, if he is going ahead with these

only time will tell of course

Only $28 million for a bloke who created the wonderful term "extrapolated resources" (?) - he probably should get more for that effort alone.

Chip Goodyear, the CEO of a little metals play called BHP, had a USD$5m package in 2005.


http://www.bhpbilliton.com/bbContentRepository/Reports/bhpb_ltd_concise_ar05.pdf

I think Wayne may turn out better at mining shareholders than copper

If he had any belief or respect for his shareholders - he would put a $4.00 strike on the options

 

[havingfun]

How do the CDU punters feel about the granting of 7,000,000 more options to Wayne at $0.50?

These are valued at $3.80 each in the meeting notice

Is Wayne really worth another $26 million when he already owns 11 million shares?


This reflects poorly on management.

Surely if they believed so much in the project the oppies would at least be at the money

The shareholders can confirm 'mug status' by letting this through

With no insto money - Wayne may be about to get even richer

You asked it ,they answered it , you dont like what they said.
As for 'chip' whoever calls himself that should be lucky anyone pays him at all.Is 'chip' a hands on guy,does he get his overalls dirty,did he find their tennaments ,explore and drill them?for 65k a year? Has he done this before and been screwed over by the big boys[oh no thats right he is one of the boys]or does he oversee an already established mining giant from his office chair.If BHP drops to $15 will 'chip' reduce his wage to 2.5mil or continue to claim his wage??You do have a valid point,but so does wayne.

PS god only knows how they could actually do this without insto money...nothing can happen without them...FMG

 

[BSD]

Without insto money Wayne sure as hell wont raise the hundreds of millions required to mine a decent copper reserve.

Let alone anything that could actually be described as 'the copper find of the decade'. Have a look at how much Prominent Hill, Lumwana and Tampakan are going to cost. All multiples the size of Wayne's "extrapolated reserves"

FMG didnt get $3bn from mums and dads and Wayne is no Twiggy.


My original point about instos is that anyone who was actually an investor and not a trader waiting for a bigger idiot, would not vote for Wayne to dilute them further at $0.50 or get $26million gifted to him.

As I have said previously, anyone who is an investor would invest in the list of superior copper plays across the globe with market caps far below CDU and planned production many years before CDU could possibly sell anything from Rockfields.

They would at least expect a hurdle wfor Wayne to enrich himself further.

Regardless of Waynes sob story, which was thrown out of court, nobody deserves $26m for sitting on a drill rig.

I will happily drill for a year (by proxy of course) for $26m and anyone who paid me for it would be a goose.

The bloke has $$$$millions$$$$ worth of stock already -the $60Kpa is a joke.

If wearing a pair of overalls deserves $26 million, I am keen. But surely the owners/shareholders of CDU could get better value for money than having their 26 million dollar man on the back of a drill rig.

Shouldnt he be finding financiers to fund an engineer/geo to do a feasibility study???

But it would take the fun out of it to see an NPV from someone not enriched with options

 

[barney]

Hi Barney,

I don't think the idea of notified trading halts will work in the midst of a share spike or dump. The idea is to just stop trading and let the emotion get out of the way and a little sanity return.
I think you have to honestly ask yourself if you would have bailed out if you had known a trading halt was coming and the market was still pushing up or if you would have been caught up in the moment and raided the visa for a few more before it was too late cause that 20 gap up is going to happen as soon as the halt is lifted.
I believe you said before that you got advice to buy when you did - if this is so and it was someone with as AFS licence then they are they ones that should be dumped on for not advising extreem caution in such a market.
John

Hi N/A, C/Fish, appreciate your comments..... Thinking about it, you are both right..........Especially the part about letting the market settle before entering.....That is probably the most valuable lesson Iv'e learned...........the old story........"If you play with fire, you're gona get burned" (3rd degree in my case :evilburn: .....the banadages should be off by about the year 2010...lol)

 

[barney]

Barney,
Or it could have been as complex as - I'll follow the course of sales and if I see the whachamy indicator cross the thingamy and do a fangionizzio retracement of more than 3.9% with volume increase greater than 40% while VWAP is below current price then I'll exit 30% of my position.

Hey C/Fish, Wouldn't it be better if the whachamy indicator did not cross the thingamy until after the doovalacky showed signs of retracting to the whateveryoucallit? Thats how it looked on my chart! Cheers.

 

[havingfun]

Without insto money Wayne sure as hell wont raise the hundreds of millions required to mine a decent copper reserve.

Let alone anything that could actually be described as 'the copper find of the decade'. Have a look at how much Prominent Hill, Lumwana and Tampakan are going to cost. All multiples the size of Wayne's "extrapolated reserves"

FMG didnt get $3bn from mums and dads and Wayne is no Twiggy.


My original point about instos is that anyone who was actually an investor and not a trader waiting for a bigger idiot, would not vote for Wayne to dilute them further at $0.50 or get $26million gifted to him.

As I have said previously, anyone who is an investor would invest in the list of superior copper plays across the globe with market caps far below CDU and planned production many years before CDU could possibly sell anything from Rockfields.

They would at least expect a hurdle wfor Wayne to enrich himself further.

Regardless of Waynes sob story, which was thrown out of court, nobody deserves $26m for sitting on a drill rig.

I will happily drill for a year (by proxy of course) for $26m and anyone who paid me for it would be a goose.

The bloke has $$$$millions$$$$ worth of stock already -the $60Kpa is a joke.

If wearing a pair of overalls deserves $26 million, I am keen. But surely the owners/shareholders of CDU could get better value for money than having their 26 million dollar man on the back of a drill rig.

Shouldnt he be finding financiers to fund an engineer/geo to do a feasibility study???

But it would take the fun out of it to see an NPV from someone not enriched with options

You insto boys dont like or think anyone outside of BHP or RIO can own anything of significance,do you.He'll get his insto money ,but it wont be from AUST.If your keen to earn 26mil, get off your **** and go look,invest your time and money,live in a transportable....f.... mate you sound like the tax office ,dont risk or invest a cent,dont do any of the hard work,yet are pissed off when someone else does and profits from it..no-one is stopping you from potential riches just be prepared to risk all of your time and lose all your money.Not keen...didnt think so

 

[Phantom_Trader]

! Geophyscial Survey increses target strike trend
Announcement out a moment ago with results better than expected and the comment about unexpected similar results in surrounding area must also be investigated will make for a great day tomorrow!

 

[pharaoh]

Huge...

Total inferred Las Minerale minerlization strike length increased from 1200m to 3600 - goodness me!

The results are better than expected and note the mention of unexpected similar results in surrounding area

Double oxide (TIM) target strike increased to 2000m

Gold grades up 4 fold

GAP Geophysics presenting a full report in 2 weeks on the newly identified anomolies

***** Nice - anyone else think this will run tomorrow

 

[havingfun]

! Geophyscial Survey increses target strike trend
Announcement out a moment ago with results better than expected and the comment about unexpected similar results in surrounding area must also be investigated will make for a great day tomorrow!

mmmm, i can feel that insto money, we will even have yours BSD...

 

[powerkoala]

10 dolar baby.... yihaaaaaaaaaaaaaaaaa..............
now this time.. i wont let you go easily......