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