CGG - Citadel Resource Group

[jman2007]

They must be reading this thread.

CITADEL’S EXPLORATION AND DEVELOPMENT EFFORTS CONTINUE TO DEVELOP THE GOLD ASSETS

CITADEL IS EXPLORING AND DEVELOPING TWO OF ITS MOST PROMISING GOLD PROJECTS – PRELIMINARY EXPLORATION HAS COMMENCED ON SEVERAL OTHERS.

You never know kennas, they may have an insder on the ASF forum..

It was good to get an overview of their gold assets in Saudi, I have to admit I wasn't very familiar at all with some of their lesser-known prospects.

It's interesting that a lot of these anomalies they talk about have not been adequately follwed up by various parties over the years. At Bari for example, those two percussion holes drilled in the 60's in the 'Trench 13' area returned absolutely stunnning results of 39m @ 7.32g/t and 84m @ 6.75g/t, and were seemingly open at the bottom of hole. That's 84m!...

You have to think that either the previous operator felt they had closed off this mineralisation and that the upside was very limited - and walked away from it, or that CGG have omitted a lot of other less spectacular drilling data from this area, or that these untested anomalies are simply symptomatic of a junior minerals exploration industry whch is slowly fnding its feet. It certainly doesn't sound like you could classify their ground as a "mature" play in the sense of company after company having drilled the same patch of dirt for thirty years. A mature exploration field for example would be many parts of the Goldfields in WA.

These high-grade veins/shoots can be tricky as hell though, I've seen a lot of drill data which initially suggested that the Mother of all Mother Lodes had been hit, only to find that the area around it was completely dead. I suppose the catch would be to have a sufficient density of them to make the area amenable to open-pit mning, like CGG mentioned.

The rock-chip sampling carried out at Murrayjib in 1937-38, yes that's right.. 70 years ago, averaged 5.1 g/t for the entire program. Again there is no way that comparable results in Australia would have remained untested for 70 years. It also sounds like an interesting area. The Hail prospect is another area with no work since 1985, despite 33 rock-chip samples from qtz veins and altered wallrock averaging 3.2 g/t Au.

Hopefully we will see some spectacular results during 2009-10 from some of this ground, I think what makes it exciting is that CGG probably even don't know what to expect from these prospects.

jman

 

[Johno]

I just bought into these guys today....the chart has clearly bottomed and its all upside from here IMO. Plenty of potential

 

[jman2007]

23rd Feb - "Continued High Grade Intersections from Citadel's Shayban Project, Saudi Arabia" - 35m @13.48g/t from 9m.

Call me fussy - or a bit of a pessimist, but I don't think this release was really required by the company. The hole looks to be very close to the original collar location of the bonanza discovery in the north of Shayban, so I'm wondering just how much this extra hole has contributed to CGG's understanding of this high-grade shoot - and indeed the deposit as a whole. Just how many extra tonnes this shoot may add to the overall resource also remains to be seen.

I suspect it was just a bit of a carrot on the stick routine from them, to keep the market inetersted given the POG. But the market didn't really react at all to the release, perhaps investors are thinking the same as me?

The 11m @1.48g/t drilled 200m to the south looked a little bit more interesting to me tbh.

j-fusspot-man

 

[Sean K]

I agree jman, seems they're jumping on the au bandwagon recently, which we suggested, but they're telegraphing it a bit much perhaps.

Still, good intersection and grades.

They need to do something though to gain some interest.

Languishing down in the sin bin at the moment.

Any idea when an initial JORC might be out?

Perhaps I should call the boss and not be lazy.....

 

[jman2007]

I agree jman, seems they're jumping on the au bandwagon recently, which we suggested, but they're telegraphing it a bit much perhaps.

Still, good intersection and grades.

They need to do something though to gain some interest.

Languishing down in the sin bin at the moment.

Any idea when an initial JORC might be out?

Perhaps I should call the boss and not be lazy.....

In their 08 Annual they said Q4 2008 for a resource estimate, which has obviously been and gone. A target porential of 500K+oz was also mentioned. They're supposed to be getting a diamond rig over that way this week to start testing some of the deeper targets, it will be very interesting if the grades hold up down plunge as they're hoping... well more interesting than twinning old high-grade holes anyway :

 

[Sean K]

In their 08 Annual they said Q4 2008 for a resource estimate, which has obviously been and gone. A target porential of 500K+oz was also mentioned. They're supposed to be getting a diamond rig over that way this week to start testing some of the deeper targets, it will be very interesting if the grades hold up down plunge as they're hoping... well more interesting than twinning old high-grade holes anyway :

I'll call tomorrow to ask for an update. If they did declair that, as you have found, and not given an update, pretty poor darts really. Doesn't take much to keep on top of your goals, and keep the market informed on why you have failed to achieve them. Perhaps they are one of those companies that just assume no one reads the anns, like a KMN. I doubt that, as they seem to keep the market well informed normally, just their focus has been the copper job. Until now cu has crumbled and au has held up....

 

[jman2007]

I'll call tomorrow to ask for an update. If they did declair that, as you have found, and not given an update, pretty poor darts really. Doesn't take much to keep on top of your goals, and keep the market informed on why you have failed to achieve them.

Any luck speaking to these guys kennas?

Appears to be some decent depth on the buy side building, especially between 11 and 13c now that the big seller at 16.5c seems to have disappeared for the time being.

What do you think the prospects are for a move up into the 16c range? Has traded in the 11-15c channel for some time now.

jman

 

[Sean K]

Any luck speaking to these guys kennas?

Completely overlooked this the past 2 weeks. Been too busy with fish and chips on the beach back home in Melbs. Must still check this though...

Feasability Study on JS is out and they say its viable at current cu prices, which is pretty positive. Especially if you think cu will head higher once global growth turns around in the coming few years, when they are producing. Could go down too I suppose...

Not sure where it's going except sideways on this chart. 10 bottom, 16 top of the range. Looks like it'll trade anywhere between the 2 until something gives....


RESULTS OF FEASIBILITY STUDY JABAL SAYID PROJECT IN SAUDI ARABIA

Highlights:

● Annual concentrator throughput of 3MT of ore per annum
● Copper in concentrate production of 60,000 T per annum
● Life of mine at average head grade of 2.26%Cu
● Capital cost of copper project US$ 249.5M ( US$4,200/T of annual copper production )
● Cash operating cost of US$0.94/lb copper produced, with cost in the first two years as
low as US$0.75/lb after credits
● Heap leach of Lode 1 oxide gold cap to produce 50,000 to 60,000oz gold over first two
years of project, followed by additional production from other nearby gold projects
● First gold production in 10 months, first copper production in March 2011

 

[jman2007]

Feasability Study on JS is out and they say its viable at current cu prices, which is pretty positive. Especially if you think cu will head higher once global growth turns around in the coming few years, when they are producing. Could go down too I suppose...

Interesting article from the web about life for the underground drillers and geo's at Citadel's JS project... :

http://www.arabnews.com/?page=9&section=0&article=120132&d=11&m=3&y=2009

As funny as it may sound, probably not such a bad time to be constructing a project. As you say, they should be in a favourable position once the base metals rebound... sometime. Cu's been going on a nice wee run however.

jman

 

[Sean K]

Trading Halt.

Capital raising.

I thought they had some cash in the bank?



I hope for holders the raising is at a decent price and you get to join in any discount allotment. Hopefully it's not just for the sophisticamacated!


Application for a trading halt

Citadel Resource Group Limited requests a trading halt to prevent trading in its securities taking place in an uninformed market, pending the Company’s announcement on a capital raising.

We are not aware of any reason why the trading halt should not be granted.
We request that the securities of the Company remain in trading halt until an announcement is released to the market, which is expected to be no later than pre open Friday 27th March 2009.

 

[Sean K]

Golly, anyone there make heads or tails on why the ASX has questioned their last ann. Over the coals on some detail there, for sure. Someone must have pointed this stuff out for them to go to this trouble. A geo comment j?

 

[jman2007]

Someone must have pointed this stuff out for them to go to this trouble. A geo comment j?

Btw, it wasn't me...

On a more serious note, some of these supposed indiscretions are a little concerning. I don't think I've seen a resource company get strips torn off them like this for a while. And tbh, the ASX have some valid points.

The reason this is not so good, is that once a company falls under a cloud regarding the integrity of their data, and suspected non-compliance with the JORC Code, this can potentially cast doubt over the whole operation. We have enough risk factors on our plates with CGG operating in a foreign jurisiction without having to add QAQC and data-quality risk to the list, thank you very much.

One of the reasons that the ASX is upset, is with CGG's rather flipant useage of the term "ore". Ore has a very specific meaning under the JORC Code, and basically means the economically mineable part of a Measured and/or Indicated Mineral Resource. To use the term "ore" with repect to an inferred Mineral Resource is really not on (as CGG have done with reference to the JS Lode 1 Oxide Gold cap), because you don't know as yet whether any of it will be economically mineable.

Basically the term "ore" is reserved for describing Ore Reserve Estimates only.

The other point of note is with CGG's useage of the term "historical" in an apparently confusing manner. This is perhaps a little bit nit-picky, as I would consider "historical" in the sense that CGG use it wrt Lahuf and Shayban to imply that the Resource figures are inherited from previous operator's, to be acceptable useage. But there was definitely some confusion between the figures they have been releasing to the market, and what they say on their website, which certainly didn't help.

The cap rasing took me by surprise a little too, if they offer these shares to instos only at a discount price, then the sp could be punished. Not sure where the cash burn has been coming from exactly... they should have had about $20M fromthe last half-year report.

jman

 

[Sean K]

Trading Halt.

Capital raising.

I thought they had some cash in the bank?



I hope for holders the raising is at a decent price and you get to join in any discount allotment. Hopefully it's not just for the sophisticamacated!

Crikey!!!

$22m!!!!!!!!!!!!!

And yes, to instos, at a nice discount. Punters get hammered once again!




Capital Raising

Citadel Resource Group advise that it has successfully undertaken a capital raising.

Shares totaling 213,456,000 have been placed at 10.5 cents per share, raising a total amount of $22,412,880 before costs.

The Placement was made mainly to Australian Institutional shareholders.
Petra Capital exclusively managed this capital raising.

The funds will be applied to the development of the Company’s gold heap leach project at Jabal Sayid.



They will need more than that to develop JS.

Who are they kidding?



Getting a little frustrated with these juniors progressing at snail pace, giving nada back to their majority holders!

 

[jman2007]

$22m!!!!!!!!!!!!!

And yes, to instos, at a nice discount. Punters get hammered once again!

Getting a little frustrated with these juniors progressing at snail pace, giving nada back to their majority holders!

Yeah this is bullcrap mate.

A 30% discount for the sophisticomated, and nothing for us.

Not happy at all.

One wonders just how many shares this outfit will end up with by the time they actually get around to producing anything.

I am seriously starting to question whether I want to remain invested with this mob.

jman

 

[BSD]

Thought this raising to be a good outcome.

The feasibility on the leach project showed $15m of capex required and the company didn't want to have debt based project finance.

The fact they could use the high gold price environment to get $22m in new cash means they go green light on a gold project while still having cash to complete Sayid BFS and further exploration; rather than one or the other.

The price was horrible, but shows how hard it is attracting $20m in new equity for a junior. They will need at least another $50m to fund Sayid copper in the next twelve months (75% of total finance provided is meant to come from the Saudis) - so better to be raising the extra dollars as an imminent producer of 50,000oz at US$380 than to be a company with no cash, a 10c share price and a completed BFS.

As for retail punters not getting a look-in; blame ASIC and the government for the prospectus laws. It costs 100s of 1000s to complete the required paperwork and it is a waste of management time at this point of a project.

Buy your shares now at a small 10% premium if you are dissapointed in the dilution while they are being held down by flippers.

This company remains an exposure to some world class, low cost, high grade copper/gold projects with production imminent and a highly prospective exploration portfolio.

Hopefully they are in the sweet-spot of building a copper mine, partly financed with gold production, in a capital cost downturn that will be ready in time for an improved copper market in 24 months time.

 

[jman2007]

Thought this raising to be a good outcome.

The feasibility on the leach project showed $15m of capex required and the company didn't want to have debt based project finance.

The fact they could use the high gold price environment to get $22m in new cash means they go green light on a gold project while still having cash to complete Sayid BFS and further exploration; rather than one or the other.

The price was horrible, but shows how hard it is attracting $20m in new equity for a junior. They will need at least another $50m to fund Sayid copper in the next twelve months (75% of total finance provided is meant to come from the Saudis) - so better to be raising the extra dollars as an imminent producer of 50,000oz at US$380 than to be a company with no cash, a 10c share price and a completed BFS.

Yes, you're probably right BSD...

My comments probably came through frustration more than anything...

If these resolutions get passed, which they probably will, then the real acid test will be to see how well CGG can contain capital costs and stay within their budget. If the heap leach project goes over budget or is significantly delayed, the market could punish them.

But yes, I do agree with your comment about hitting the Cu market at the right time to maximise J-S's potential.

jman

 

[Sean K]

In retrospect the sell off to the raising price was probably a good short term opportunity.

Expect it to head back near to the top resistance line here, before probably falling over again.

Technically, one to keep a close eye on once it looks to start coming out of this sidways move. Lots of junior charts looking like this and they've been breaking up 20-100% from the lows.

Although, I do expect the overall market to consolidate more significantly shortly, or now, so CGG may have missed the oportunity for a nice jump.

Anyway, worth watching as they have some tremendous assets.

 

[Sean K]

Something fishy on at CGG I reckon. Significant increase in volume and breaking through the 15.5 mark, at 17.5 intra day. Or, could be just people taking advantage of the sell off. Not sure what anns are due off the top of my head.

Will probably completely fall over now. LOL

 

[shag]

it seems commsec require some paperwork now too so u can buy these fellas. bit of a pain. from the bisconnections fiasco.

 

[jman2007]

Something fishy on at CGG I reckon. Significant increase in volume and breaking through the 15.5 mark, at 17.5 intra day. Or, could be just people taking advantage of the sell off. Not sure what anns are due off the top of my head.

Will probably completely fall over now. LOL

I hope not!:

It has been a little odd as you say, a reasonable rise on the back of diddly-squiddly from the company, I can't recall any earth-shattering releases that were due, perhaps it is some drilling results that are really not-so-secret afterall?

jman