CSE - Copper Strike

[chakvetadze]

I understand the market not liking the dilution but here are the facts:

Post transaction: 222M shares
Market cap: $26M
Cash and SYR value: $17M

Therefore, Enterprise Value of Mineral Sands assets: $9M.

To me, that's very cheap. I know SYR paid next to nothing for it but they also paid $300K for Balama and it's now worth $160M after four months and not a single drill hole.

Any half decent profitable mineral sands project is worth $50M minimum every day of the week. CSE have just jagged most of the Tanzanian coast line for $9M at todays closing price of 12c. Medium to long term, this will prove to be a bargain in my opinion.
It's a good deal for both CSE and SYR. The market has initially "panicked" at the CSE dilution. I bought 500,000 at 12c average today. Was hoping for 10c but saw support come in at 11c.

 

[pavilion103]

This one has exploded on massive volume! wonder what will happen next.

 

[basilio]

WE will all be blown to smithereens and come down in a million pieces of blacked carbon..:run:

Hopefully the SYR graphite find continues to be developed. It would be fantastic to see commercialization within `12 months. (I wonder what will be required ?)

What would also be excellent news would be a quick drilling of the Tanzanian mineral sands leases with some equally great news on that front.

God knows everything else is looking like ****e.

 

[chakvetadze]

With SYR doubling after the 287m result from the first hole, the mineral sands deal with CSE now looks too expensive to me. I would rather they canecl the deal or limit the dilution given CSE is now at 17c.
Balama is massive and perhaps it would be better for CSE to stick to 107M shares and a 9.5% holding in SYR for now.

 

[basilio]

The Tanzanian mineral sands deal has been canceled by CSE. As noted with the huge surge in SYR prospects and SP the dilution to CSE's 11 m shareholding was an unacceptable price for the proposal. Good news

At $1.90 SP for SYR CSE is worth around 18.5c for its SYR stake alone.

 

[basilio]

Looks as if SYR will be developing the mineral sands under its own steam. Naturally CSE will also benefit through its shareholding.

I think this is a very good direction for both companies. I just don't think the long term price of graphite will be anywhere near the current price. IMO there could easily be many more large deposits of graphite found. And I won't accept that countries will allow the world supply to be dominated by a single company or a single mine. Just too dangerous a proposition.

I just noticed that another African explorer has drilled a very promising graphite find. Easily accessible and excellent grades. There could be many more...

Check out CDT
http://www.castleminerals.com/downloads/announcements/cdt_20120509.pdf

 

[basilio]

I noticed on other forums a back of the envelope analysis of where SYR/CSE could be in a short space of time,

Back of envelope sums for Balama:

Annual throughput: 1.5M tonnes
Average grade: 13.5%
Graphite concentrate produced: 200,000 tonnes
Cash cost: $300/tonne (Will be less as strip ratio is zero and labour cheap)
Price received: $2,000/tonne (assumes a collapse in price of 50%). Again, conservative.
Margin: $1,700/tonne
Annual free cash flow: $340M
Tax and royalties: $100M

NPAT: $240M.

All well and good. But when I look around it seems that the most productive present graphite mines don't produce more than 80,000 tons of graphite a year. Going to 200,000 tonnes so quickly seems puzzling ?

It would be interesting to know the CAPEX on such a plant and how quickly it could be put into production. I would think that SYR management would have some estimates fairly quickly.

http://www.slideshare.net/GraphiteExploration/electric-graphite-initiating-coverage

 

[chakvetadze]

Actually those back of envelope calcs are conservative. I don't think SYR will have any problems selling 200,000 tonnes of premium large flake graphite per annum at $2000. because SYR will have the largest deposit and highest quality graphite, they can undercut the competition. I've no doubt car manufacturers would sign up for 200,000 tonnes of supply at $2000/t given they are currently paying $3000+.
There is a 600,000 tonnes shortfall predicted in 2014. Who will supply that?

Capex on a plant of that size would be around $80M. I don't think SYR will have any problems raising equity/debt. 3 months payback could see them borrow the lot and have no further dilution.

 

[chakvetadze]

Nice 13% jump today to 21c. Still looks too cheap based on holding of 11M SYR shares.

 

[chakvetadze]

Closed at 24c. Big discount to asset backing of 31c. Cheap as chips.

 

[Boggo]

Stopped out 60k at 0.225.
Too many new opportunities popping up at the moment to mess around giving back profit.

(click to expand)

 

[basilio]

New announcement from SYR. (in which CSE has a 11% stake.)

They are undertaking fresh drills at the Balama West deposit essentially to see if they can identify a really rich graphite hot spot.

Also starting drilling at Balama East which will just show they have squillions of extra tons of high grade graphite.

The money shot however is at the end of release. The scoping study is progressing well and they anticipate release in early May. Also

Significant progress has been made in securing off take partners and a statement will be released soon.

http://newsstore.fairfax.com.au/apps...y&sortBy=0

 

[basilio]

SYR Quarterly report is very, very encouraging. (Shares in SYR are CSEs largest asset)

The plans to mine the graphite are well advanced with pilot work, infrastructure development and community consultation all in place.

The digging and processing appears to be even cheaper than previously anticipated. they are suggesting a cost of $100 a ton.

Looking at the progress to date there should be some serious profits from SYR within 12 months.

http://newsstore.fairfax.com.au/apps...6+charts&f=pdf

 

[basilio]

12 months later and CSE is still well below the highs of 2012

But there has been a decent jump in the past 2 days as SYR has also taken off. If /when SYR announces its confirmed JORC figures, an offtake agreement and the start to its graphite mine we should see a Billion dollar deal.

Lets see if this is not another blind alley.

 

[basilio]

From SYRAH Thread.

The Syrah train is moving... Big jump in SP from 2.50 to $3.60 in the past month. Why?

Two big announcements. Firstly a MOU of an offtake agreement with Chinalco. Looks as if Chinalco will buy 80-100,00 tons of graphite for their aluminum process. That is effectively underwriting the modest capital cost of their initial production.

Then today Syrah announced production of battery grade spherical graphite from their Balama deposits. This will be the core of millions of electric car batteries that are in line for production in the next few years.

http://www.syrahresources.com.au/sit...m Balama.pdf

http://www.syrahresources.com.au/sit...s Report.pdf

 

[basilio]

Big jump in CSE to 33c (up 14%) . Seems to be as result of speculation on Syrah.

Glencore takes close look at Syrah Resources
PUBLISHED: 0 hour 9 MINUTES AGO | UPDATE: 0 hour 4 MINUTES AGO
Share Links: email

Swiss commodities giant Glencore is understood to have made an informal approach to Syrah Resources that could value the graphite and vanadium junior at up to $2 billion.

http://www.afr.com/p/business/companies/glencore_takes_close_look_at_syrah_iOgwVxWkZH91bO4dbOGyZN

 

[basilio]

CSE still powering along. Currently 38c. One would have to ask if/when questions are asked.

If Glencore is looking at a $2b price tag the valuation for Syrah is around $15.. CSE would be around the $1.20 mark

There is much more detail in a SMH article which highlights the potential value of Syrahs huge Vanadium deposits.

This will fly..

http://www.smh.com.au/business/mini...-race-for-syrah-resources-20140710-zt27k.html

 

[basilio]

Trading Halt. No surprise there. Will be fascinating to see how SYR responds to the ASX questions.

 

[basilio]

Back on line: Still powering up on the basis of a leaked informal Takeover approach.

I think this smells. I can certainly see the huge value in SYR/CSE but IMO this looks like a deliberate kite flying exercise to push the SP up and perhaps attract other interest.

 

[basilio]

I think the takeover speculation on SYR/CSE is very suss. I don't doubt the value of the graphite/vanadium resource but I can't accept that Glencore were serious with an open ended informal offer.

Makes one wonder just who waned to see some serious action on these shares. Certainly a few shares have changed hands...

Glencore takeover rumour doesn’t add up

The Australian
July 14, 2014 12:00AM


Robin Bromby
Business columnist


SORRY, the big rumour of the week makes very little sense.

This is the big Glencore International can’t wait to get its hands on Syrah Resources (SYR) yarn that has sent the latter stock rocketing, and taking with it neighbouring graphite players in Mozambique, Triton Minerals (TON) and Metals of Africa

http://www.theaustralian.com.au/bus...ur-doesnt-add-up/story-fnciihm9-1226987437411