CGG - Citadel Resource Group

[jman2007]

Stunning and surprising gold drill results today from Jabal Shayban.

http://www.citadelrg.com.au/links/announcements/180308-shayban-exceptional-results.pdf

To quote:

"39m at 37.8 g/t Au from 5m to 44m, including 12m at 100.5 g/t (uncut)"

"The bonanza grade intersection reported in drillhole SH031RC represents part of a blanket of supergene enrichment within the oxide zone covering the Shayban hill. This is known to extend over at least 200m of strike, could be up to 100m wide, and remains open to the north along strike."


It looks as though the gold projects in CGG have a substantial value and need to be taken very seriously. Until now CGG traded solely on the value of Jabal Sayid.

Good volume and price action today in the face of bearish miner sentiment.

These results will require an adjustment to management and analysts approach to the company. A 33% increase in the drilling effort for the project has been the immediate response.

Cripes BSD!

Looks like they definitely hit the jackpot with that hole.... very impressive width and grade to say the least! I think even CGG will be quietly pinching themselves here, up until now, the market has attributed almost no value to their other prospects, but that may indeed change as you mentioned.

If they can demonstrate continuity of these grades along strike, and 200-300m would be enough imo... then this has the potential to be a real company-maker on the grades alone.

It will be interesting to see if this can break through 30c and maintain support in the 31-15c bracket.

The next round of drilling reults will be very interesting indeed. I imagine they will tighten up on line and hole spacing, and drill this zone out as quickly as possible.

Cheers
jman

 

[jman2007]

"200m at 2.51% Cu extends lode 4 mineralisation - Jabal Sayid"

A further steady trickle of positive news from Jabal Sayid, this mineralised zone (from 220m - also ended in mineralisation) occurs updip of the previously defined mineralised envelope, so basically there is mineralisation closer to the surface than they expected.

As indicated in the Owl report supplied by Miner, with the recent resource upgrades at Jabal Sayid it may turn at that lodes 1,2 and 4 are actually part of 1 larger system. Deeper drilling to 1000 below surface underneath lode 4 targeting the high-grade extensions is planned for later this year.

Haven't been watching the trading ultra-closely, but it appears to me that momentum on the buy side is slowly building, which harks back to BSD's earlier observations in this thread.

Cheers
jman

 

[Sean K]

This is really becoming very interesting. Can't get over those recent grades and intersections and the lack of real follow through in the sp. Potential breakout alert (AGAIN!) for ADV now CGG.

 

[Sean K]

Halt for a capital raising.

Wonder if that will mean the price retreat from the 30s again?

Request for Trading Halt

Citadel Resource Group Limited (ASX Code: CGG) requests a trading halt of its securities (CGG) & (CGGCA) with immediate effect.

The trading halt is requested in contemplation of a proposed capital raising (Placement).

It is requested the trading halt remain in place until the earlier of CGG making an announcement in relation to the Placement or market open on Monday March 31, 2008.

Might depend a bit on the price I suppose.

In "contemplation" of a "proposed" capital raising? LOL. Well, are they going to do it or not? Bit weird Does it mean they've been approached by an investor with a bag of gold or something?

 

[jman2007]

Halt for a capital raising.

Wonder if that will mean the price retreat from the 30s again?

Might depend a bit on the price I suppose.

In "contemplation" of a "proposed" capital raising? LOL. Well, are they going to do it or not? Bit weird Does it mean they've been approached by an investor with a bag of gold or something?

Yeah I agree,

The wording does seem slightly odd, I can't really imagine them releasing an announcement like: "Citadel Resource Group is pleased to announce that we are thinking about a $XM Capital Raising".

Timing wise, I'm not really too surprised by this, as their reasonably aggressive exploration strategy and resource drilling focus at Jabal Sayid must be burning a fair bit of cash. The 30c mark prove to be a tough nut to crack this time around (again!).

Maybe they found black gold?

jman

 

[cowboy]

First timer on the Forum.

Went to a Gold Day seminar on 26 March and impressed with presentation from CEO of CGG.

Had a look at their Balance Sheet - 31/12 07. Cash situation was about $6 million - so probably not much left.

Also, concerned to see a Deferred Tax Liability of $72 million! Checked the ASX announcements and this "liability" relates to the former Vertex Group and a company in Saudi Arabia. I'm not sure if its a real liability!

Exploration announcements have been fantastic - looking forward to their next announcement on capital raising

 

[jman2007]

First timer on the Forum.

Went to a Gold Day seminar on 26 March and impressed with presentation from CEO of CGG.

Had a look at their Balance Sheet - 31/12 07. Cash situation was about $6 million - so probably not much left.

Also, concerned to see a Deferred Tax Liability of $72 million! Checked the ASX announcements and this "liability" relates to the former Vertex Group and a company in Saudi Arabia. I'm not sure if its a real liability!

Exploration announcements have been fantastic - looking forward to their next announcement on capital raising

A warm welcome to ASF Cowboy,

Yes the exploration and infill drilling results as of late have been very encouraging. Probably some recent value in the sp is attributable to the Jabal Shayban drilling success.

BSD has some very interesting comments re the trading patterns of CGG on an earlier post in this thread, and I'd encourage you to have a read if you haven't done so already. Our resident t/a guru Kennas should be able to provide some addtional insights as well, if this is your area of expertise/interest.

Wasn't aware of the tax liability issue, but I'll definitely be having a dig as it potentially sounds a little concerning.

jman

 

[crisstoff]

Just been looking at this share and have noticed that according to the December Top 20 Shareholder list that Opes-Prime Sharebroking Limited hold 10.8M shares.
Assuming that the Trading Halt was not for this reason, it may be a bit of luck that they are in a Trading Halt as maybe they can place the shares off-market. It may be ugly otherwise.

Other than these comments it has some fantastic grades and potential.

What does everything of their management getting these projects into production and in what timeframe?

 

[BSD]

What a dissapointing result today after such a positive announcement.

Placing almost $30million worth of stock to instos at almost no discount is an enormous feat in this market and the failure of a bucket-shop sends the stock south on fears of forced sellers.

Opes has been a huge seller in the market since the reported 10m shares at December 30. The only issue (in the short term) is the number of shares associated with Opes in the holding of Anz Nominees Cash A/c on the register.

In any case, this is all noise and long-term investors shouldn't give a stuff about such rot.

More important is the obvious support for the company from instos willing to punt $30million and the fact CGG can now drill like crazy on the highly prospective projects and seriously advance the bankable feasibility studies on Jabal Sayid and Jabal Shayban.

Interesting that they noted an intention to 'explore' the nickel sulphide (not laterite) and platinum group element projects with this cash. Their ground is obviously virgin territory, the gold project has surprised everyone - what could happen if they have something semi-decent in Ni sulphides and PGEs ???

Enough ramping!


As for the 'deferred tax liability' of $72m in CGG's balance sheet - from what I can ascertain, this is an accounting treatment stemming from the back door listing.

Under IFRS (apparently, I am NOT an accountant) the increase in assets from the acquisition/introduction of ~$240m worth of 'exploration and evaluation assets' on the balance sheet, must be matched by the corresponding 'tax liability' associated with the potential benefit.

The accounting treatment accounts for the potential tax liability against the sale of the asset. ie 30% of $240m = $72m.

Nothing to worry about - but I do stress I am not an accountant.


The big picture is now even bigger with plenty of fully financed drilling to come. Hopefully the forced selling from those financed by the Opes Prime Bucket Shop creates a bigger buying opportunity for the liquid amongst us with a time horizon in years not days.

 

[jman2007]

What a dissapointing result today after such a positive announcement.

Placing almost $30million worth of stock to instos at almost no discount is an enormous feat in this market and the failure of a bucket-shop sends the stock south on fears of forced sellers.

Yes they have done well,

But unfortunate with the timing of the release which coincided with the Opes downfall, which looks to have sparked a bit of panic selling across the board today.

On the upside, CGG look to be increasing their profile amongst sophisticated Australian investors, and the fact that this offer was oversubscribed and completed within 24 hours attests to the potential of Jabal Sayid and Jabal Shayban. The big instituitional investors may now be dipping their feet back into the market, and shrugging off the continuing doom and gloom coming out of the US.

Looks like Wadi Kamal is next on the hit list, with this $29M I'll be looking for an accelerated effort towards the completion of the Jabal Sayid BFS, and some aggressive exploration drilling at Jabal Shayban. Kennas's chart shows some clear resistance around 30c, so I'm not too surprised to see a retreat from this mark. But then again, this is a long-term hold for me.

Thanks for the take on the tax liability, which may well be more of a book-keeping requirement rather than a "current" liability so to speak.

Cheers
jman

 

[jman2007]

Interesting article in Highgrade about CGG,

Main points:

A.) Recent funds from Cap rasing will be used for the bankable feasibility study at Jabal Sayid, and to place deposits on long-lead items such as grinding mills to reduce waiting times.

B.) CGG believe Jabal Sayid could support a 3-5MT/annum operation, beginning as an underground operation - via a 3.9km decline (which they're already de-watering) into the high-grade guts of the ore body and eventually transform it into an open pit.

C.) Saudi Government keen to provide assistance - they are installing a power grid to the site (apparently from a private conversation Ms Scotland had with the Saudi Mines Minister).

D.) Source of water 50km away, at a place called the Haratz. Medina (120km away, pop over 1 million) has also offered to sell CGG their wastewater. The govt may build the pipeline (not guaranteed) which would support a 10-20MT/annum operation, so water should hopefully be plentiful.

E.) Possible dual listing on the TSX or AIM, but probably not going to happen over the short-term.

Cheers
jman

 

[Sean K]

I haven't had time to look more closely at this ann, but it seems pretty good for CGG on the surface. Will add more comments later.

JABAL SAYID PROJECT RAPIDLY PROGRESSING TOWARDS BFS

Highlights:
• Delineation of high grade core in Lode 4 and Lode 2 (31 Mt at 2.3% Cu) provides focus to forward planning for Stage 1 of Jabal Sayid development.

• Underground mine concept shows potential for a low cost, bulk tonnage mining operation at Lode 4 and Lode 2 targeting the stockwork resource. • Completion of Feasibility and Development to be fast tracked following successful completion of financing. Rapid advances made in planning include;
o Recruitment of first class core team of geo-professionals under the leadership of Michael Hulmes (COO).
o Pre-feasibility study utilising a local and International team of mining, metallurgical, environmental and water consultants with expected completion in Q2 2008.
o Activities for Crushing and Grinding (Comminution) testing are underway.
o Underground access work has commenced with the expediting of pumps to site and finalization of contracts for stabilisation of workings and underground drilling for resource categorisation.

• Recent Lode 4 drilling extends the mineralization closer to surface and at depth;
o BDH4011 (assays pending) has successfully intersected the upper part of Lode 4 stockwork mineralisation 100m closer to surface than any hole previously drilled.
o BDH 4012 (assays pending) drilled to 688m, the deepest hole drilled by Citadel at Jabal Sayid, intersected Lode 4 stockwork to the end of hole.

Technically, it's winding up....

 

[jman2007]

Yeah the ann is pretty broad-picture, hand wavy type stuff,

But obviously good for CGG to keep moving forward on the BFS front, looks to have been a flood of recruitment in the last few weeks with experts and work groups in various areas being formed and coming on board.

What do you reckon Kennas, is this possibly primed as a breakout candidate? Volume looks to have been picking up, but the sellers continually keep coming out of the woodwork approaching 30c, but I wonder how long this cycle can be kept being repeated before the sellers begin to dry up.

jman

 

[Sean K]

What do you reckon Kennas, is this possibly primed as a breakout candidate? Volume looks to have been picking up, but the sellers continually keep coming out of the woodwork approaching 30c, but I wonder how long this cycle can be kept being repeated before the sellers begin to dry up.

jman

Yep, still potential breakout. Been so for a year.

Looks like Jabal Sayid is turning into a decent deposit.

220m @ 1.1% Cu.... sheeesh.

Mentioned on Egoli yesterday:

Citadel Resources Group Limited (CGG) advised that significant tonnages are expected to be added to its Jabal Sayid minerals resource in Saudi Arabia following the release of new copper intersections closer to the surface than expected. The new copper-gold-silver intersections, including strike lengths of up to 223 metres at 1.11% copper, were more than 100 metres above the existing Lode 4 resource envelope at Jabal Sayid. “This has provided yet another bonus to our drill expectations at Jabal Sayid which continues to stamp its presence as a potentially world class minerals project,” CEO Ms Ines Scotland said. “We’ve previously announced that Jabal Sayid is open at depth and along strike, but we didn’t realize it’s also open towards surface. This is a fantastic copper project and it just keeps getting better,” Ms Scotland said. “Drillhole 4011 has intersected plus 2% copper mineralization 100m above the current resource boundary and this has been affirmed by BDH4013 which was drilled for metallurgical samples.

 

[jman2007]

kennas,

CGG been building up momentum steadily since early last month, imho fairly significant that it is holding firm @ approx 34c when you take into account the historical resistance level @30c indicated on your chart. This is the first time we have seen 30c broken since I have been a holder.

I sometimes like to think of Cu as a it of a barometer for the health of gobal markets, and with the current strong demand and the way Jabal Sayid is shaping up, the signs are promising imo.

BSD/kennas, love to hear your comments.

jman

 

[Sean K]

Fantastic break up from long term resistance. Note that it tested 30 after breaking through and it firmed as support.

So, what have they got?

Copper:
Jabal Sayid: 56Mt @ 1.6% Cu (JV 50%) 74Mt including Au & Zn - (to be significantly upgraded with recent drilling noted above.)
Gold (5 EL’s):
Shayban: currently drilling, 250,000oz + new drilling 39m @ 38 g/t
Lahuf: 6km from a historical 6Moz Au producer with a resource of 1.2 Mt at 2.83 g/t Au down to 100m and open at depth. Resource from surface to 80m 1.7Mt @ 2.6 g/t.
Baydan: adjacent to Shayban, 600,000t @ 16.6%Zn & 2 g/t Au
Bari: ancient gold workings covering 1.4 km of strike with historical drill results including 39m at 7.32 g/t Au, 12.86 g/t Ag and 84m at 6.75 g/t Au and 5.1 g/t Ag.
Wadi Kamal: virtually unexplored layered ultramafic complex where recent exploration has upgraded the project to a high priority.
Muraijib-Bil’iwy (100%): limited trenching of a major alteration system which covers an area of 6km x 2km intersected 32m at 1.75 g/t Au and 12m at 1.8 g/t Au.

Need to crunch some numbers on all that to find an IGV but looks pretty damn impressive.

Just some broad numbers on Jabal Sayid which is the most advanced and going into production in 2011/12.

Initial mining study on Jabal Sayid (50% JV) plans for:
2 to 3 Mtpa,
Producing 45kT to 60kT pa copper (99m - 132m lbs) Copper @ $8500 tn, Opex 0.96c lb = $95m - $126m,
Income $382 - 510m less opex = $287 - $384m
CGG share $144 - 192m pa.

Capex $300m, Is the JV funding any of this?

MC about $385m fully diluted. Is that right? 1.1b @ .34c?

Assume capex is half debt and equity perhaps, so dilute $150m, MC to $535m add in costs up to production ($5m a quarter) incl current BFS $60m ish through another raising, MC dilutes to about $600m.

Cash in the bank after raising??

Pretty broad but just on Jabal Sayid income of $150- 200m pa, smack a pe of 10 on it and it might be worth about $1.5b - $2b MC. Current forcasted pluck MC of $600m. So, looks cheapish.

Then add in those other projects. Shayban will obviously be a mine as well.

Any adjustments/comments on those back of the envelope figures welcome.

 

[jman2007]

Fantastic break up from long term resistance. Note that it tested 30 after breaking through and it firmed as support.

Any adjustments/comments on those back of the envelope figures welcome.

I am actually considering taking another bite of the cherry at some stage, and topping up with some more CGG. Breakout looks to be confirmed now, with some more positive price action pushing it up another 10.3%

Haven't had a chance to have a good look at your figures, but will do so over the next few days. Fairly remarkable turnaround in sentiment, just wish I'd loaded up more at 21.5c...

jman

 

[Sean K]

I am actually considering taking another bite of the cherry at some stage, and topping up with some more CGG. Breakout looks to be confirmed now, with some more positive price action pushing it up another 10.3%

Haven't had a chance to have a good look at your figures, but will do so over the next few days. Fairly remarkable turnaround in sentiment, just wish I'd loaded up more at 21.5c...

jman

Aaaaghhhh!

Kennas says to himself, 'golly, must buy some of that now that it's broken through, and the figures look great'. And doesn't.

jman, I'm going to do some more work on the above figures to put it in some type of cleaner order. Would appreciate your thoughts though. I'm sure there's gaping holes.

 

[jman2007]

Fantastic break up from long term resistance. Note that it tested 30 after breaking through and it firmed as support.

Need to crunch some numbers on all that to find an IGV but looks pretty damn impressive.

Any adjustments/comments on those back of the envelope figures welcome.

Hey mate,

Sorry for taking a while to get back to you on this (been completely side-tracked chasing girls... unsuccessfully .

I'll have a crack at a hypothetical IGV for Jabal Sayid:

Contained tonnes of copper, Inferred:

52.1Mt @ 1.13%Cu for 587,600t contained Cu.
Assume long-term price of Cu @ US$ 8000/t = US$ 4.78B

Contained tonnes of copper, Indicated:

22.2Mt @ 1.84%Cu for 408,480t contained Cu.
@ $US 8000/t = US$ 3.27B

Bear in mind that in all likelihood we will see some substansial resource upgrades at Jabal Sayid (certainly in terms of the overall tonnage anyway), if announcements from CGG as in "200m @ 2.51% Cu extends Lode 4 Mineralisation" are anything to go by (26/03/08).

Contained tonnes of zinc, Inferred:

421,000t contained zinc
Long-term Zn price more subjective US$2000/t?
= US$ 842M

and

67,000t contained zinc Indicated:
= US$ 134M

Au and Ag credits are more difficult to predict, at this stage there seems to be multiple mineralisation styles within the lodes, and representative Au grades seem to be between 0.35g-0.95g/t, and 13.5-69.2g/t Ag. Resource estimate for these metals due out later this year. Possibility that the Au could be practically extracted using a low cost heap-leach approach perhaps??..

Well, minus the Au and Ag credits I get a IGV for JS of US$ 9.03B, with of course, CGG earning a 50% interest in the project. Hmmm, not bad : I've double-checked the numbers, but would appreciate any comments/corrections to them. Very ball-park stuff at this stage. Also worth mentioning that a substansial portion of the IGV is based on inferred tonnes, but I would expect the quality of the tonnes to improve as more infill/extensional drilling is carried out over the next 12-18 months.

Yep, fully diluted, MC of 385M'ish looks correct.

I'm not really in the know when it comes to opex/lb for a Cu outfit, I assume the 96c/lb is some kind of industry average figure then. Your other assumptions look reasonable,

Have a look at this link from the CGG website:

http://www.citadelrg.com.au/links/news-articles-media/wiseowl-digging-for-arabian-treasure-251107.pdf

Potentially there is also a target potential of 2.5Moz Au from Shayban and other prospects, plus the Ni and PGE etc projects - which I haven't even factored in yet. Wise Owl use a base-case scenario of capex US$350M of which there will be a 50% split between debt and equity as well.

Earlier in this thread BSD mentioned a possible debt-funding option offerred by the Saudi Govt (up to 75%). Not 100% sure how CMCI and Vertex fit into the broad scheme of things in terms funding any development, but my understanding is that they are now major shareholders/investors (?) in CGG.

Comments welcome.

Cheers
jman

 

[Sean K]

Absolutely amazing results from CGG just in.:

JABAL SAYID RETURNS OVER 300 METRES AT 2.7% CU

TREMENDOUS HIGH-GRADE COPPER INTERSECTION

The latest results from diamond drilling of Lode 4 confirm the consistency of the Lode 4 mineralization at depth and further supports the case for down plunge potential. Diamond drillhole 4012 was targeted to pass through the western side of the massive sulphide part of Lode 4, and to test the down plunge continuation of the main stockwork mineralization.

o This hole returned 301m at 2.7% copper and 0.29g/t gold from 350m, with several high grade copper zones including 19m at 4.0% copper, and 27m at 5.0% copper;

o At 2.7% copper this intersection is higher grade than the high grade core of 25Mt at 2.3% copper identified in the current Lode 4 Mineral Resource. This new high grade intersection will be used in the calculation of the upgraded JORC Mineral Resource due out later this year.

o It also includes a gold zone of 46m at 0.80g/t gold and 39.7 g/t silver from 350m. Precious metal credits are not included in the current JORC resource.

o The hole is the deepest drilled so far by Citadel at Jabal Sayid. The tail of the hole intersected a high grade zone of over 5% copper (27m at 5.0% copper) in the down plunge position. There is no drilling below this intersection, meaning that the orebody remains open at depth.

o It demonstrates the continuous nature of the copper mineralisation. Lode 4 essentially has no internal waste, meaning that mining and stoping designs are simpler, and can be geared towards higher mining rates.

Turning into a world class asset by the looks.