CLE - Cyclone Metals

Another broker report has the following stats on this stock

ASX Code CFE
Price $0.47
12 month price target $0.66
12 month dividend yield 17%
Implied return 58%

Okay firstly, there are currently 2 bidders for CFE. Both are priced at 53c per share. However one is conditional and the other is unconditional. Current market prices are at 44.5c. What i don't understand is why people don't buy at this price and sell to the bidders (its an off market bid). There is a clear profit to be made, or am i missing something? One last question, how does one accept an off market bid?

Thanks for whoever can enlighten me

Hi lemontree - think you'll find it's that CFE is one of two bidders for DMM, rather than being the subject of a takeover offer itself. This is of course the reason for the share price being ain the mid-40s rather than the mid-50s being offered for DMM. CFE is also about to pay a special dividend of 7c per share fully franked following sale of Laddie Annie project - ex-date is 24/6.

That makes more sense, pardon my confusion haha. I still could ask the same question with DMM though, the sp still lingers under 54c. Perhaps the margin is too small, and after stamp duty and what not, there isn't much profit to be had, say if you bought some at.. 51.5c?

Following on from yesterdays market announcement does anyone know how long it will be before CFE start shipping out Iron Ore. By the sounds of it alot of the infrastructure is already there or close by but needs some upgrading.

No Gain said:

Following on from yesterdays market announcement does anyone know how long it will be before CFE start shipping out Iron Ore. By the sounds of it alot of the infrastructure is already there or close by but needs some upgrading.

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I doubt that CFE will ever ship any iron ore. That is not the nature of the business of CFE. CFE will prove a resource and sell that project to a miner. CFE dont appear to be interested in mining at all. Their past record has shown that they have done well by buying "stressed" assets or assets that are not "proven". We have done well with the proving of the Cape Lambert resource and the sale of it to China. From that deal we had a capital return and a dividend. We have also just received a fully franked dividend from the sale or Lady Annie copper mine.

All we need at Marampa is a proving of the resource and necessary access to the rail and port. This appears to be well under way at this stage and a sale of the asset appears to be being negotiated now.

nioka said:

I doubt that CFE will ever ship any iron ore. That is not the nature of the business of CFE. CFE will prove a resource and sell that project to a miner. CFE dont appear to be interested in mining at all. Their past record has shown that they have done well by buying "stressed" assets or assets that are not "proven". We have done well with the proving of the Cape Lambert resource and the sale of it to China. From that deal we had a capital return and a dividend. We have also just received a fully franked dividend from the sale or Lady Annie copper mine.

All we need at Marampa is a proving of the resource and necessary access to the rail and port. This appears to be well under way at this stage and a sale of the asset appears to be being negotiated now.

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Well I hope they negotiate well and get us a good price and return. I won't be saying no to another good dividend

No Gain said:

Well I hope they negotiate well and get us a good price and return. I won't be saying no to another good dividend

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If Tony sage has half the success in the future that he has had in the past then I'll be happy. The value of the cash on hand and the assets held on todays valuations far exceeds the market cap. Sage has been buying shares on market in substantial quantities recently. That is as good an indication of share value that I can think of. CFE has a broad range of interests. The ones with the most potential at the moment are Marampa, Pinnacle and the holding in DMC, details below:

Article Date: Jul 21 2010

Former AIM counter Cape Lambert Resources envisages an ?800 million float this year for its key African iron and coal assets.

Tony Sage, entrepreneurial executive chaiman of Aussie-listed Cape Lambert, says Kukuna in Sierra Leone and Sandenia in Guinea, with claimed combined potential for 6.5 billion tonnes of iron ore, could combine with brown coal interests in Sierra Leone to form a marketable company, in which Cape Lambert would have a significant stake through its 26.2 per cent ownership and management role in project backer PInnacle.

Sage argues China's appetite for African raw materials makes Hong Kong an appropriate market for these ventures, though he has not finally ruled out London. He is also preparing Cape Lambert's Marampa iron ore project in Sierra Leone for a trade sale and hopes to increase estimated resources there from 600 million to a billion tonnes for a possible sale value of around ?400 million.

Cape Lambert has agreed to invest ?30 million for 33 per cent of Marampa Infrastructure, set up to establish crucial rail and port facilities to take its iron ore to market. The agreement is with fellow iron ore play, controversial tycoon Frank Timis's AIM-quoted African Minerals, which has a 20 per cent stake in Cape Lambert and, suggests Sage, the infrastucture venture could eventually yield as much as ?6 million a year for moving third parties' products.

He maintains China's wish to source as much iron ore as possible from outside the giant Rio Tinto-BHP cartel bodes well for independent projects such as these and for Cape Lambert's recently acquired DMC exploration projects in the same region. Sage, who has recently spent nearly ?1.5 million buying more shares in the company, also points to gold projects in Australia and Greece and uranium in Argentina.

Cape Lambert shares trade at the equivalent of 20p Down Under, while AIM has African Minerals at 412p. Though in speculative markets, both look well placed.

Interesting article Nioka thanks for that. It all sounds good for a longer term hold especially with the Chairman buying shares and China looking for other suppliers for Iron Ore. An earlier post has a 12 month target of $0.66 that would be a 100% gain for me, so I'm holding and if there is a little slide in price I might just accumulate a little more.

nioka said:

If Tony sage has half the success in the future that he has had in the past then I'll be happy. The value of the cash on hand and the assets held on todays valuations far exceeds the market cap. Sage has been buying shares on market in substantial quantities recently. That is as good an indication of share value that I can think of. CFE has a broad range of interests. The ones with the most potential at the moment are Marampa, Pinnacle and the holding in DMC, details below:

Article Date: Jul 21 2010

Former AIM counter Cape Lambert Resources envisages an ?800 million float this year for its key African iron and coal assets.

Tony Sage, entrepreneurial executive chaiman of Aussie-listed Cape Lambert, says Kukuna in Sierra Leone and Sandenia in Guinea, with claimed combined potential for 6.5 billion tonnes of iron ore, could combine with brown coal interests in Sierra Leone to form a marketable company, in which Cape Lambert would have a significant stake through its 26.2 per cent ownership and management role in project backer PInnacle.

Sage argues China's appetite for African raw materials makes Hong Kong an appropriate market for these ventures, though he has not finally ruled out London. He is also preparing Cape Lambert's Marampa iron ore project in Sierra Leone for a trade sale and hopes to increase estimated resources there from 600 million to a billion tonnes for a possible sale value of around ?400 million.

Cape Lambert has agreed to invest ?30 million for 33 per cent of Marampa Infrastructure, set up to establish crucial rail and port facilities to take its iron ore to market. The agreement is with fellow iron ore play, controversial tycoon Frank Timis's AIM-quoted African Minerals, which has a 20 per cent stake in Cape Lambert and, suggests Sage, the infrastucture venture could eventually yield as much as ?6 million a year for moving third parties' products.

He maintains China's wish to source as much iron ore as possible from outside the giant Rio Tinto-BHP cartel bodes well for independent projects such as these and for Cape Lambert's recently acquired DMC exploration projects in the same region. Sage, who has recently spent nearly ?1.5 million buying more shares in the company, also points to gold projects in Australia and Greece and uranium in Argentina.

Cape Lambert shares trade at the equivalent of 20p Down Under, while AIM has African Minerals at 412p. Though in speculative markets, both look well placed.

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As you said above Nioka Tony Sage is buying, another notice coming out today, so I've just accumulated some more today. Something good must be in the wind - I hope.

More news regarding CFE:

PERTH (miningweekly.com) Metals explorer Cape Lambert on Friday reported that it would finalise the acquisition of the Leinchard copper project, in the Mount Isa region, in the September quarter.

The completion of the deal has been delayed owing to the project administrator not meeting a number of the conditions precedent.

Cape Lambert made a successful A$8,5-million bid for the Leinchardt project in November. The project was acquired from the administrators of Matrix Metals, which went into voluntary administration during 2008.

While the project was currently on care-and-maintenance, Cape Lambert has previously reported that it planned to start a systematic evaluation of the exploration dataset, with the objective of defining drill targets to start a drill programme in order to define additional oxide copper inventory.

Meanwhile, in its quarterly report for the period ending June, Cape Lambert said that baseline studies for the Marampa iron-ore project, in Sierra Leone, would also start this year.

The Marampa project was at its exploration stage, however, a scoping study was undertaken earlier this year to investigate the viability of establishing a standalone openpit operation and concentrator to produce between two-million and five-million tons a year of concentrate, ramping up to ten-million tons a year.

During the period under review, Cape Lambert signed a binding term sheet with Aim-listed African Minerals for rail and port infrastructure for the Marampa project.

Cape Lambert would gain a 33% stake in the Marampa rail and Pepel port, jointly known as the Marampa infrastructure, for a $45-million investment in the refurbishment of the infrastructure.

African Minerals would retain a 57% holding in the Marampa infrastructure, while the Sierra Leone government would hold a 10% stake.

African Minerals, through a special purpose vehicle, would oversee the refurbishment and daily operation of the infrastructure, which would be completed by March.

Once the refurbishment of the Marampa infrastructure is completed, Cape Lambert would have the rights to a minimum throughput of two-million tons a year.

The Marampa project comprises 305 km² of granted exploration licence, an inventory of hematite tailings and a brownfield exploration tenement representing the extension of hematite mineralisation to the north and west of the former Marampa mining operations, as well as a number of regional exploration targets.

Cape Lambert was aiming to conclude a prefeasibility study by mid-2011.

And still more news;
http://www.capelam.com.au/irm/Company/ShowPage.aspx

"Value Drivers are Mounting Up Initiating Coverage

CFE is an ASX listed, Perth based resources investment company with a geographically diverse portfolio of exploration and development projects spanning a number of commodities, but mainly concentrated in iron ore, gold, copper and uranium. The investment strategy is to acquire and invest in undervalued or distressed resource assets.
CFE have demonstrated a proven strategy of generating shareholder value through the distribution of special dividends, in-specie distributions in new companies to existing shareholders and asset sales that have resulted significant cash assets. We expect this to continue over the next 12-18 months and initiate coverage with a Buy recommendation on the basis that the sum of parts valuation is greater than the current market value.

The current share price equals CFE s cash and cash receivables and therefore CFE s considerable project portfolio is not given any value in the market. We believe this situation will be redressed and a re-rating will occur when asset sales begin to realise significant increases in cash.

We value CFE with a 12 month price target of $0.80 per share. We assume that within the next 12-18 months, the value proposition presented by the Marampa and Mayoko deposits will become clear once cash has been realised for these project through asset sales. We also envisage that value for the Sappes Gold Project in Greece would have realised and other potential corporate transactions involving other assets in the CFE portfolio would have been advanced."

I do like CFE's approach, much the same as GIR. IE - explore, develop a resource then palm off to someone else to worry about the mining.

I havn't looked into their recent projects however, but thier SP does not seem to have done a lot in the term of long term value over the last couple years.

prawn_86 said:

I havn't looked into their recent projects however, but thier SP does not seem to have done a lot in the term of long term value over the last couple years.

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In the last 2 years I have received in dividend (fully franked) and capital returns the full amount of my initial outlay. That would be a long time coming from any blue chip stock. I expect that senario to be repeated many times in the next few years. Who really cares what the SP has done in that time. Actually I care because it does give me an opportunity to increase my exposure at a very cheap rate, something that I have done in the last week.

nioka said:

In the last 2 years I have received in dividend (fully franked) and capital returns the full amount of my initial outlay. That would be a long time coming from any blue chip stock. I expect that senario to be repeated many times in the next few years. Who really cares what the SP has done in that time. Actually I care because it does give me an opportunity to increase my exposure at a very cheap rate, something that I have done in the last week.

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Fair point.

As i said i have kept an eye on them but not in great details (obviously). Are there any upcoming special dividends/distributions?

prawn_86 said:

As i said i have kept an eye on them but not in great details (obviously). Are there any upcoming special dividends/distributions?

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Nothing has been announced yet;
We've just banked a fully-franked 7c dividend cheque; Tony has apparently re-invested his proceeds from that divi and bought a few Million CFE on market. Like nioka, I'm happy to keep a few for longer and add as dips permit.
The chart seems to present an ascending triangle; the alternative, a symmetrical triangle, appears to be on the brink of being broken. Both patterns suggest a strong Bullish bias.

prawn_86 said:

Fair point.

As i said i have kept an eye on them but not in great details (obviously). Are there any upcoming special dividends/distributions?

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As some of the deals are completed then we can expect that a percentage of the profit will be distributed. There is still $80million to come in from the original Cape Lambert sale. There is the big one, Marampa with figures as high as $800million mentioned but I believe the target is around,$500million. Details below;( note the mention of September)

By Devon Maylie
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--Mineral investment company Cape Lambert Resources Ltd. (CFE.AU) is conducting final resource tests for its Marampa iron ore project in Sierra Leone in preparation for putting it up for tender at the end of September, the company's executive chairman said Wednesday.

Cape Lambert finalized its purchase of Marampa from African Minerals Ltd. (AMI.LN) in 2009 and has already drawn interest from several Chinese companies including China Railway Materials Commercial Corp. and China Metallurgical Group Corp., as well as one Swiss firm, Tony Sage told Dow Jones Newswires.

African Minerals Ltd. is a major shareholder in the company with 19%.

"Our business model is different," Sage said. "I don't want to sit there and mine. We are more like a fund management."

During the past few years, junior miners have struggled to raise money for projects. Sage said Cape Lambert is one route to funding.

For Marampa, he is preparing the asset for sale later in the year.

Earlier this month, he concluded a deal with African Minerals over rail rights. For the first two years of production, which he forecasts to begin in 2012, the owner of Marampa can transport up to 2 million tons of iron ore to the nearby port by rail. That can increase to 10 million tons, he said.

Under the deal, Cape Lambert gets a 33% stake in the railway that connects the mine with the port of Pepel. African Minerals owns 57% and the Sierra Leone government 10% of the railway, Sage said.
-By Devon Maylie, Dow Jones Newswires; +44 (0)20 7842 9483; devon.maylie@dowjones.comhigh ....................................

And there are quite a few other projects that CFE have under way. A read of the latest report is worthwhile.

No Gain said:

As you said above Nioka Tony Sage is buying, another notice coming out today, so I've just accumulated some more today. Something good must be in the wind - I hope.

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Nothing as good as a director buying. Here is Sage's latest purchases as announced;
30th july 500,000
13th july 1,000,000
7th july 1,000,000
29th june 1,000,000
6th May 1,000,000
28th April 1,000,000

Is that ever a confidence vote.

nioka said:

And still more news;
http://www.capelam.com.au/irm/Company/ShowPage.aspx

"Value Drivers are Mounting Up Initiating Coverage

CFE is an ASX listed, Perth based resources investment company with a geographically diverse portfolio of exploration and development projects spanning a number of commodities, but mainly concentrated in iron ore, gold, copper and uranium. The investment strategy is to acquire and invest in undervalued or distressed resource assets.
CFE have demonstrated a proven strategy of generating shareholder value through the distribution of special dividends, in-specie distributions in new companies to existing shareholders and asset sales that have resulted significant cash assets. We expect this to continue over the next 12-18 months and initiate coverage with a Buy recommendation on the basis that the sum of parts valuation is greater than the current market value.

The current share price equals CFE s cash and cash receivables and therefore CFE s considerable project portfolio is not given any value in the market. We believe this situation will be redressed and a re-rating will occur when asset sales begin to realise significant increases in cash.

We value CFE with a 12 month price target of $0.80 per share. We assume that within the next 12-18 months, the value proposition presented by the Marampa and Mayoko deposits will become clear once cash has been realised for these project through asset sales. We also envisage that value for the Sappes Gold Project in Greece would have realised and other potential corporate transactions involving other assets in the CFE portfolio would have been advanced."

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I don't know where the above was printed but in Todays Sunday Times in Perth it repeats it with the following:

The Sunday Times, August 1, 2010, Page 53.

Hot Stocks Section;

Paul Adams D.J. Carmichael.

BUY
Cape Lambert (CFE)

“CFE is an ASX listed. Perth-based resources investment company, with a geographically diverse portfolio of exploration and development projects spanning a number of commodities, but mainly concentrating on iron ore, gold, copper and uranium. CFE has a proven strategy of generating shareholder value. We expect this to continue in the next 12–18 months.”

Bought in 10k at 0.35, and another 10k at 0.375 after thinking further about it. After reading the report several times I can't see why this share isn't trading higher, only for the fact that the business model itself isn't a traditional miner, i.e. CFE doesn't actually mine resources, but it just proves up the reserves etc and sells it off. This is offset by the market cap of 200 million and the cash and cash equivalents of approx 200 million. So fundamentally you get all the projects (Marampa, Leichardt Copper, Australis etc) as the bonus.

Target of 72 cents by the end of the year as the Marampa project gets off the ground and a more solid figure can be put on it, even at a low of 200 million, it doubles the current NTA?

Maybe I'm just a bit too in love with this stock atm, can anyone mention anything negative about it? Like I'm trying to find bad aspects to this stock but I'm coming up blank.

Idk, this is just my opinion, holding on for the double in price.