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CNF - Continental Goldfields

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thnaks YT,

i know that its an explorer so cashflow isnt the main cause of price movement, i was just curious.

im very tempted to throw a small amount at the options to see if i can double it quickly all or nothing lol. pure gambling, might as well go to the casino :)

what is the other downside to this co in peoples opinion? apart from its spec nature.
 
Well given the new info, its time for an analysis update, so here goes,

p.s. given the fact that this new Deposit size and grade info was hidden in the Notice of general meeting ann I think the mkt is yet to fully wake up to the potential of this company.


CNF​


Mkt Structure

Shares
135m
+ 25m 20c Opies 30/9/07 Listed Opies
+ 50m 20c 30/6/10 Unlisted Opies





Cash
$7m + $2m in a listed investment which they are looking to capitalise on = $9m




Projects


Vandiferrous/Carbon Steel Project Carbon Steel/Pig Iron/Vanadium, 50%, South Africa

Pre JORC Compliant Resource 419Mt's@59.9%Fe + 1.7%Vanadium +11.9% Titanium

= 251Mt's Fe + 7Mt's Vanadium + 50Mt's Titanium[/B]


Net 50% to CNF = 125Mt's Fe + 3.5Mt's Vanadium + 25Mt's Titanium

Now the Fe content alone should be valued at about $2/t but lets be conservative and say 50c/t, that means based on the Fe contnet alone CNF's interest is worth $60m

Now the amazing thing about this deposit is its Vanadium grades, PMA which was and still is considered to be the vanadium king of the world has a mkt cap of $200m and its main and only project is its Windimurra 100Mt's@0.47%Vanadium

Now the newcomer to the Vandium game is AXO who also has a mkt cap of $200m and its Balla Balla project is 104Mt's@46%Fe + 0.63%V2O5+14%Ti

Company/Mkt Cap/Deposit Comparison
AXO - $200m - 104Mt's@46%Fe + 0.63%V2o5 + 14%Ti
PMA - $200m - 100Mt's@0.47%V2o5

CNF - $20m - 419Mt's@59.9%Fe + 1.7%V2o5 +11.9% Ti (50% Only)
So net to CNF - 210Mt's@59.9%Fe + 1.7%V2o5 +11.9% Ti

What becomes immediately clear is that CNF's deposit has an amazingly high grade of vanadium being over 3.5x higher than PMA's and over 2.5x higer than AXO's, this combined with good grades of Titanium should ensure that CNF's FerroVanadiumTitanium projects is one of the lowest cost projects in the world

A recent report on all the different magnetite plays on the ASX by Stateone stockbroking, cited AXO as one of the lowest cost producers and although its not directly mentioned in the report the main reason why AXO will be the lowest cost producer is due to the huge credits it will recieve from the production of Vanadium, to go one step further AXO was never meant to be considered as a Magnetite play, but rather a FerroVandium type play, or a Vanadium play with Fe credits,

So when considered in this light and coupled with the fact that CNF's deposit has 2.5x higher grade of Vanadium, it is clear that when and if CNF bring their deposit into production they should be one of the lowest prodcution cost deposits in the world, in BOOM times this is not as relevant, but 10 yrs from now when commodity prices are contracting, it will be low cost high margin deposits like CNF's that will be able to weather the storm.

Infrastructure/Steel Mill/Plant
More good news is that the project comes ready with most infrastructure, including an ex-Iscor/Mittel Steel Plant.

Early Estimates
The project will use 1M t's p.a. of Magnetite Ore to feed the 350k t p.a. Steel Plant and "should generate revenues in excess of $200m p.a. with considerable multipliers in secondary Industrial activities"

The company describes this project as a turn key project, ie given its a historical project it won't take much to get it going.


Conclusions
Given the very high grade nature of the deposit -59.9%Fe + 1.7%V2o5 +11.9% Ti

The historic resource - 419Mt's

The exisitng infrastructure - Steel Mill, Plant etc

You can really appreciate why it is a turn key style project waiting to go,

Now it should be noted that there will still be a large funding risk and offtake risk and as such I cannot be too bullish in my valaution of this project, however, given all the available information and comparative Mkt Capitalisations, I would say the company deserves a mkt cap twice its current given the upside


Bow River Diamonds, 20%, W.A.

This project surrounds RIO Tinto's Argyle Diamond mine operation which is Australias and one of the worlds largest diamond mines.

Again it is still very early days to make a call on the value of this project

Grab samples have yielded some significant results so far though



Placement
It should be noted that 45m shares were placed at 12c recently, these shares from what I understand it were placed to Sophisticated Investors who are very unlikely to stag a profit, but may do so nevertheless,

Thus as with ACS caution is advised when buying, however buying at or close to 12c seems safe both from a chart/technical perspective and in terms of the placement


Summary

- A large placement done recently at 12c
- Chart wise 12c seems to be long term support
- A very interesting looking vandiferrous/carbon steel operation, that could become of one the worlds highest margin/lowest cost FerroVanadiumTitanium projects
- Although the company is still speculative and very early stage, it appears very cheap given the upside and current Mkt Cap
 
Well done YT.

While I do agree that it is undervalued, there are a couple things i would like to point out/ask.

Im just trying to play the devils advocate.

I have talked to someone with a lot more geology knowledge than myself and they say that AXO will be able to mine their product open cut due to it being at the surface, whereas CNFs body is likely to be in horizontal layers at depth.

now im not a geologist, i just thought i would point this out, hence the reason why you have conservetely estimated 2X current mkt cap.

Also the deposit is fairly remote and not close to any infrastucture.

Im not downramping, just trying to present the 'other side'
 
Prawn, a devils advocate is always welcome :p:

CNF's deposit is open pittable as well, it just goes to a depth of 200m, there is no way they would consider this deposit if it was a proposed underground mine!

The big think to get your head around is the significance of the Vanadium grades, I can't stress how much of a difference it makes, imagine 1 g/t Gold vs 3g/t Gold or 1% Copper vs 3% Copper

Most of the worlds Vanadium deposits are sub 0.5% so being 3x higher than that ensures that you will have much higher, if not the highest margins

Also the Fe grades of 59.9% are almost comparable to most Pilbara Hematite opertaions, this is exceptional when u consider the avg W.A. Magnetite project is 35% Fe, so 30%-35%Fe vs 55%-60%Fe (I think you can see the difference)

So yes while I am unsure exactly where it is located in terms of Inrastrucutre, the fact that they have access to a cheap ex Mitel Steel Iscor, Steel Mill/Plant etc means that they will probably slash 10's of Millions of dollars off the Cap Ex side of the equation.


Anyway $20m mkt cap with $9m cash, I think its too cheap, this week will show whether the mkt agrees ;)
 
thanks YT,

i think the info i was given was with regards to an older project of theirs, not the new Vanmag one.

once again you seem to be on the money. :D
 
I took a position this morning at open.

Kicking myself I didn't get in earlier but still happy with the price I have paid - I would have held out longer but there is such tight volume being traded, I would have been annoyed to miss out completely.
 
The technical graphics looks good to me....
I would say breakouts of its downtrend...
might be the influence of YT :D:D

but October is coming so soon........
I am worried with the recession that is scheduled to be coming on every 10 years......
 
looks like the oppies are still a great buy and have not taken off yet... very interesting to see it hit the 20c now and be able to convert them over with no loss...
 
Looks like everyone has been listening to YT again,almost no overhead resistance ans the seels are drying up,looks like those options werent such a bad buy after all.Might not be a bad time to take some profits at 100% from YTs firts comment BUT there seems to be no holding it back.The optimistic sells dont seem so unrealistic any more
 
Hey guys,

Remember its still not a 100% play, so please don't just read my post and buy, also don't chase it up too much unless you research it yourself and like what you see.

Bottom line please do your own research and be comfortable with the story before you buy.
 
Hi guys, I got a question. :p: I noticed that on the proxy form it actually says

With an expedited drilling program, Continental aims to delineate a target mineralisation of between 100M and 125M tonnes of 55-60% magnetite containing an average of between 1.3% to 1.7 % V205 and 10% to 13% TiO2 (these estimates are based on the previously published reports, geological mapping, drill hole data and known continuity of the mineralisation in the region).
Click to expand...

So there is quite a huge difference between the quoted estimate and company target (419MT vs 100MT-125MT). Why is there such a huge difference? The grades are certainly excellent.
 
I reckon the only reason why CNF went up so much yesterday was to keep the options (CNFO) in play, which expire at the end of this month. Noticed how it struggled past 20 cents.
 
Stop_the_clock said:
I reckon the only reason why CNF went up so much yesterday was to keep the options (CNFO) in play, which expire at the end of this month. Noticed how it struggled past 20 cents.
Click to expand...

You have to be kidding me?

If your definition of "struggled" is "only" going up 30% in a single day, when it went up 30% the day before and whatever the day before that, then you have to be joking.

Either that or you are just trying to downramp - which is it ?

There is nothing about 30% gain that can be described as struggling.
 
Please read my last post again you seem to misunderstood me...it struggled past the 20 cents mark, meaning once it got to the 20 cents mark, then it struggled to go further!

I see it as being a pump to get the options (CNFO) into the money...simple as that!
 
Stop_the_clock said:
Please read my last post again you seem to misunderstood me...it struggled past the 20 cents mark, meaning once it got to the 20 cents mark, then it struggled to go further!

I see it as being a pump to get the options (CNFO) into the money...simple as that!
Click to expand...

the high was at 23 cents, i would rather see a good increase and then watch it settle instead of running to the moon in one day.

if it struggled to get past 20 cents on a 30% increase what do you call a good day? 100% increase without struggling?
 
lazyfish said:
Hi guys, I got a question. :p: I noticed that on the proxy form it actually says



So there is quite a huge difference between the quoted estimate and company target (419MT vs 100MT-125MT). Why is there such a huge difference? The grades are certainly excellent.
Click to expand...

419Mt's is the historic resource, however from I think early 2000 they introduced the new JORC code, so this "old" resource does not comply as the drilling was done pre the introduction of this JORC code, basically what that means is too classify this as a current JORC resource, all new drilling needs to be done,

So the 100Mt's-125Mt's is the JORC they hope to establish after first pass drilling, as more and more drilling is done it should be able to outline the whole if not more than the historic resource.

As I say with hard minerals (ie not Oil or Gas) a historic resource is almost as good as a current one as the minerals don't just get up and walk away, I hope this helps explain
 
YOUNG_TRADER said:
As I say with hard minerals (ie not Oil or Gas) a historic resource is almost as good as a current one as the minerals don't just get up and walk away, I hope this helps explain
Click to expand...
Any idea how much changed in the Jorc code and how widely spaced their historic drilling was?

You're right in that a chunk of metal seldom gets up and walks away, but I'm curious as to how much of that historic resource was inferred.
 
doctorj said:
Any idea how much changed in the Jorc code and how widely spaced their historic drilling was?

You're right in that a chunk of metal seldom gets up and walks away, but I'm curious as to how much of that historic resource was inferred.
Click to expand...

Well that I have absolutely no idea on, hence why CNF is still considered to be specualtive in nature,


This is what they had to say in the report "Since 1969, 29 diamond drill holes and 181 percussion drill holes have been completed over 1 16km strike in the deposit which targeted Vanadium bearing magnetite layers as opposed to iron Ore bearing magnetite."


Given the amount of holes I don't think they could have been that closely spaced so I'm gonna have to say Inferred probably, what do you reckon Doc?
 
Thank you for this story YT ! Bought some in the last days between 15,5c and 19c.

In the comparison with AXO you should to be aware that AXO is sitting on a nice cash amount of approx 100 Mio AUD, about 50% of the current marketcap. So the enterprise value to compare the valuation with CNF should be around 100m USD.
And not to forget, the 104 Mt’s are only reserves, in addition AXO is having about 326 Mt resources with 44% FE, 14% Ti and 0,64% V205.

Nevertheless, based on these figures the comparison is still looking fine…

AXO – $100m Enterprise Value – 430 Mt’s Fe 44% + 0,64% V205 + 14% Ti
Net CMF - $15 m Enterprise Value – 210 Mt’s Fe 59,9%+ 1,7% V205 + 11,9% Ti

Lets hope for a good yield… Imo 100% should be possible in the next 6 months.
 

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