CTS - Contact Resources

[elcruzy]

Young Trader - the dust is settling somewhat...do you know where or can you post the current major shareholders of CTS? there's alot of good buys out there but before i decide to top up with a medium term hold like CTS i'd like to know. thanks.

deep yellow DYL is looking interesting, Palading PDN just took up a shortfall for $15mill. DYOR

 

[Sean K]

Young Trader - the dust is settling somewhat...do you know where or can you post the current major shareholders of CTS? there's alot of good buys out there but before i decide to top up with a medium term hold like CTS i'd like to know. thanks.

deep yellow DYL is looking interesting, Palading PDN just took up a shortfall for $15mill. DYOR

elcruzy, the first place to look is a company's web site.

http://www.contactresources.com.au/corporate-top20share.html

Also, nice that DYL is going OK today, but please don't be tempted to try and hijack threads in the future. Only comment on other stocks like this unless they are interrelated in some way. Mining U is not enough. Cheers! kennas

 

[insider]

A nice floor is forming at 56 cents however there is a ceiling at 60 cents... It'll be interesting to see how quickly this stock will return to it's high once market confidence returns... Unless the XAO says different

 

[exgeo]

Latest presentation shows a drilling rig in Peru, along with a natty 3D flyaround animation of what and where they intend drilling (link to YouTube on the CTS website). If their hypothesis is correct, then the current JORC represents only a small portion of the possible resource. Let's see what the rotary lie detector comes up with ("Phase one drilling to be complete, or nearly complete by Dec 2007")

 

[moses]

By E-Lodgement
Excellent Uranium Bulk Sample and Recovery Results from
Kyrgyzstan

Key points:

• Bulk sample results return average uranium grades of 0.048%.
• Recoveries of uranium up to 93%.
• Results indicate potential expansion of current JORC resource of 0.94Mlb of
Inferred uranium and 0.771Mlb of Indicated uranium.
• Resource is at surface, lending itself to cost effective mining and near to
processing facility.
• 240 hole shallow auger drill program planned to recommence in September.

Australian based uranium development company Contact Uranium Ltd
(“Contact” or the “Company”) remains on track with the development of the
Kamushanovskoe project in Northern Kyrgyzstan, following the results of bulk
sampling which show highly encouraging uranium grades and recoveries.

The results were provided by the Company’s geological consultants, IMC, who
coordinated the sample on the company’s behalf.

The latest bulk sample was a composite of five 30kg samples collected from
pits dug at the sites of drill holes drilled in the 2007 program, with typical grade
and peat composition. These samples were taken from the surface down to
the base of the mineralisation as indicated by drilling.

The average grade of the bulk sample was 0.048% U, which is significantly
higher than the average 0.037% grade calculated in the current JORC
resource.

The latest tests also measured the recovery of uranium from the peat ore, at
various temperatures and concentrations of sulphuric acid. Recoveries as
shown in Table 1 ranged from 77% at lower acid concentrations and
temperatures up to 89% at higher acid concentrations and temperatures,
reaffirming earlier excellent recoveries obtained by Soviets ranging from 80-
95%.

 

[insider]

I don't think its much at all Moses... 1 Million Pounds is nothing... No offence but the market isn't reacting... Corachapi is the one to watch I guess

 

[moses]

I'm not impressed either, just keeping ASF up to date with the news.

In fact I sold CTS this morning, not because of the ann but because I'm selling everything to go bargain hunting next week.

 

[insider]

Well I guess that makes two... Only i sold CTS last week (This Message must be at least one Hundred Characters)

 

[resourcesman]

bargain hunting next week? looks like you guys are anticipating an imminent fall.... any TA indicators saying this is about to happen?

 

[moses]

I think there's enough info on the thread XAO Analysis to suggest that today is a great candidate for being a weak top before the next dive down.

 

[exgeo]

Hallelujah, the Peru drilling programme finally starts. CTS expect it to take about 3 months to complete.

 

[bliimp]

The momentum has been with CTS today!

Made it to 60c with 500k share turnover and 1000k buy to 275k sell (with 1hr to go today).

"Word" has it that UBS has been quietly accumulating shares and options and to quote Young Trader ... when an Insto buys stock and reaches a 5% holding it must release a "becoming a substantial shareholder" notice .... so, by buying options they avoid this as there is no requirement for option holdings

Kennas quoted on 3rd August that

UBS bought 1.5m shares + bought 3.5m options
Meryl Lynch bought 1.9m shares but sold 1m options
Toll Hurst sold 1m shares but bought 1.1m options

Is anyone with a full service broker broker able to confirm insto purchases for both shares/options for month of August!

If UBS is buying, could it be on behalf of Mega Uranium! (a possibility mentioned earlier in the thread due to the relationship between Mega-ARV-CTS)

 

[toc_bat]

It has been mentioned by some people here that CTS is a possible take over target, so how are options treated when a takeover bid is made, are they simply valued at bid price minus excrecise price? or are people expected to convert their shares?

bye

 

[dubiousinfo]

It has been mentioned by some people here that CTS is a possible take over target, so how are options treated when a takeover bid is made, are they simply valued at bid price minus excrecise price? or are people expected to convert their shares?

bye

There will usually be an offer made for the options as well as the shares.
At times this can result in arbitrage situations arising. However you need to be quick.
The MFS takeover of S8 was a good example. Early on in the offer period the price of the oppies made it better to buy oppies and accept that offer, however during the closing weeks this turned around and it was more profitable to convert the oppies and accept the offer for the heads.

 

[YOUNG_TRADER]

Hi guys just thought I'd let you all know that CTS has a really good video/google earth type presentation on the Corachapi Uranium project

http://www.contactresources.com.au/investorinfo-presentation.html


Also re who's been buying etc

I know that UBS has continued to buy the options at a much greater rate than the shares ie 3-4 options for every share they buy, Meryl's has continued to buy as well as had Toll Hurst but they aren't going crazy, I was also surprised to find out that Macquarie and Citi Group have also been dabbing their toes in, I'll try and find out more,

Also re the Mega uranium connections, we have all covered (courtesy of Bliimps research) that Mega owns alot of ARV and ARV took a 6% stake in CTS, we also know that one of Mega's directors (exploration I think) is
(I think) the head of ARV's team, so that makes one go hmmmmmm, but what I didn't realise untill recently is that one of CTS's directors (a Mr Robert Grover) was a former director of RPT and as we all know RPT was taken over by .... you guessed it Mega, so if you join the dots a picture starts to emerge and it looks "Mega" lol

Anyway all that aside, they have a very high grade uranium project thats at surface and drilling has commenced, with a JORC upgrade due out in 3 months, this would explain why the Insto's seem to be getting on board now rather than later

CTS​

Mkt Structure

Shares
80m +55m 20c 30/6/08 opies + 10m 50c 30/06/08 opies


Cash
$10m + $15m in options, as I'm assuming all options get exercised o work out mkt cap, I add it to cash balance = $25m in cash


Mkt Cap @ 70c = $100m Current
Mkt Cap @ $1.44 = $210m Target 1
Mkt Cap @ $2.70 = $390m Target 2




Projects



Corachapi Uranium, 100%, Peru
JORC 3.8Mt@ 0.115% U = 9.6M lb's U

This is 1 of the 2 main projects in Peru and is located in the Macusani District of Peru where companies such as Solex, Vena, Frontier Pacific, Strathmore Minerals and other Canadian Uranium companies have been working away for a few years now,

Whats amazing though is of the entire Macusani District, Corachapi and Pinochio are by far the best and most advanced projects,

Corachapi, or "Chapi" as its referred to in historical IPEN reports I dug up, was the second most advanced deposit and had a JORC resource of 1.6Mt's @ 0.15% U which was based mostly on the extensive work done by IPEN (Peruvian Institute for Nuclear Energy) and IAEA (UN International Atomic Energy Agency) this involved drilling, trenches and adits

Natuarally I was sceptical of the "historic" figures, as if this deposit was so good, how did CTS manage to get it so cheap?

Well lots of researching increased my confidence, particularly one report which was prepared for the Canadian companies Frontier Pacific Mining and Solex,

http://www.frontierpacific.com/pdf/report_macusani.pdf

Also the fact that CTS's follow up work yielded results consistant with the historical estimates, and this was found to be the same for the other companies working in the area.

http://www.frontierpacific.com/macusani.php
http://www.solexresources.com/s/Home.asp
http://www.strathmoreminerals.com/s/Macusani.asp
http://www.venaresources.com/Peru/Divisions/Macusani/

Valuation
9.6M lb's U @ $15 lb = $144m = $1.10c CTS
9.6M lb's U @ $30 lb = $288m = $2.20c CTS

These are takeover values, based on peer takover etc,

For project production Grigor assumed the following parameters

• capital expenditure US$25m, I say US$40m• operating cost US$15/lb, I say US$20 lb
• head grade 2,500 ppm, I say 1,250 ppm
• recovery rate 85%, I agree
• annual prod’n 640 tpa U (1.4 mill lb) I agree
• uranium price of US$95/lb, I agree

So I will use more conservative/negative estimates than Grigor

JORC 3.8Mt@ 0.115% U = 9.6M lb's U
85% Recovery = 8.16M lb's U recovered at cost of US$20/lb sold US$95/lb Margin = 8.16M x US$75 = US$612m

Less Cap Ex = US$612m - $40m
Less $72m contingency etc, cost blow outs blah blah
= $500m USD = $625 AUD (USD 80c)

So a rough NPV of the project = $600m AUD = $4+ CTS Note this is a very very rough calculation to highlight the potential of the project if its brought into production,

For now I prefer to use the $15 lb value figure

Pinochio Uranium, 100%, Peru
No real figures to crunch, but this was the only site of historical production by IPEN so there must be some real value here


Kyrgyzstan Projects Uranium, 100%, Kyrgyzstan
JORC 2.079Mt's @ 0.037%U = 1.71Mlb's U
First pass JORC and although its low grade its within 6m of surface and to quote the company is "easy to extract, lies on the doorstep to power, water and labour infrastructure, and is in close proximity to the Kara Balta uranium processing facility."

The JORC's low grade and small size is a bit misleading thoug, see from the drill results, I saw many 1-2m hits at grades of 0.1% U to a max depth of 6m. This would make these deposits some of the shallowest I have ever seen.

All up their are 4 potential deposits, each 3.5km's long by 0.5km's wide, and if we assume 2m's thick of Ore = 10Mt's @0.1% U

4 potential deposits = Could be 40Mt's @0.1% U = 88M lb's U

Even if they only firm up 1/4 of this = 22M lb's U! @ $15/lb = $2.75c more value to CTS


Valuation
Most of the above was POTENTIAL UPSIDE ie nothing really firm yet, so lets just work with the JORC

1.71M lb's U @ $15 lb = $25m = 17c CTS
1.71M lb's U @ $30 lb = $50m = 34c CTS



Management
This appeared to be the weakest part of the company, as Grigor was sceptical of thier abilities,

However I disagree, CTS has managed to source the 2 former senior IPEN Geologists/Engineers who worked on Corchapi and Pinochio, so that is a major bonus in my view,

In addition to this, the companies current Exec Chariman Dr Richard Napier, is also heavily involved with IMCI the group that CTS acquired the Kyrgyzstan projects from, so for the Kyrgyz side of things this is also very positive, in addition to these recent projects, CTS has the automatic right to earn 20% in any of the projects pegged by IMCI

I will agree that CTS needs some better know people on the board, Twiggy or Kiernan may help :

My biggest gripe with management would be a lack of PR, but then I thought the same about MTN management, I have learnt though that eventually mkt will awake to a companies potential



Summary

- Corachapi is worth between $1.10c - $2.20c depending on the EV per lb value applied
- Pinochio adds alot of potential value but can't be quantified at present
- The Kyrgyzstan projects have alot of upside to but for now the JORC adds 17c to 34c in value again depending on the EV used.
- A connection to Mega Uranium has been made, although not 100% established
- Some excellent ex IPEN geo's/techies who discovered and developed the Peru projects
- Exec Chairman's other company IMCI will continue to generate projects for the company in Kyrgyz
- Cash + Opies of $25m = 17c


Total Value = $1.44c - $2.70c
I prefer to use the $15 per lb figure so $1.44 is my value for now

Research reports

http://www.intersuisse.com.au/files/... - May.pdf

http://www.uraniumanalyst.com/images...ril07FINAL.pdf

 

[Miner]

An open letter to those who argued heavily for CTS

What do you think of the CTS future. When PDN has struck a fall where CTS will end upto ? A suicidian nuclear explosion by itself killing all investors?

It is unlikely that CTS will be able to offer any thing in next 5 years or wait for a takeover.

 

[insider]

An open letter to those who argued heavily for CTS

What do you think of the CTS future. When PDN has struck a fall where CTS will end upto ? A suicidian nuclear explosion by itself killing all investors?

It is unlikely that CTS will be able to offer any thing in next 5 years or wait for a takeover.

When I was just a little girl
I asked my mother what will I be?
Will I be pretty, will I be rich?
That's what she said to me:

Que sera, sera. What ever will be will be
the future's not ours to see.
Que sera, sera. What will be, will be.

When I was just I child in school
I asked me teacher, what should I try?
Should I paint pictures, should I sing songs?
This was her wise reply:

Que sera, sera. What ever will be will be
the future's not ours to see.
Que sera, sera. What will be, will be.

When I grew up and fell in love
I asked my sweetheart, what lies ahead?
Will we have rainbows, day after day?
That's what my sweetheart said:

Que sera, sera. What ever will be will be
the future's not ours to see.
Que sera, sera. What will be, will be.

Now I have children of my own,
They ask their mother, what will I be?
Will I be handsome, will I be rich?
I tell them tenderly:

Que sera, sera. What ever will be will be
the future's not ours to see.
Que sera, sera. What will be, will be.

 

[YOUNG_TRADER]

An open letter to those who argued heavily for CTS

What do you think of the CTS future. When PDN has struck a fall where CTS will end upto ? A suicidian nuclear explosion by itself killing all investors?

It is unlikely that CTS will be able to offer any thing in next 5 years or wait for a takeover.

I have already posted in detail why CTS is a takeover target, just like MTN it will be ignored and its share price will struggle until a takeover offer comes and Mega seems to be the prime candidate,

I am bullish on Uranium long term because the fact is over the last few years the world has trended towards nuclear power, many nations are building nuclear reactors which will need plenty of uranium, Uranium is a long term Bull period.

U say CTS won't be able to supply anything for 5yrs? I'd say probably 2, but then name another company whose mkt cap is under $100m who stands a serious chance of supplying U in the next 5 yrs?

Bottom line even though CTS's deposit is in Peru on top of a mountain, its at surface unlike some Nambian hopefuls whose ore is 100ms+ below surface! Also the grade of its deposit is 0.1%-0.3% U vs the nambian hopefuls who are around the 0.01-0.03% mark, thats 10x higher

Anyway in volatile mkts such as these I don't think fundamentals matter

Hi guys just thought I'd let you all know that CTS has a really good video/google earth type presentation on the Corachapi Uranium project

http://www.contactresources.com.au/investorinfo-presentation.html


Also re who's been buying etc

I know that UBS has continued to buy the options at a much greater rate than the shares ie 3-4 options for every share they buy, Meryl's has continued to buy as well as had Toll Hurst but they aren't going crazy, I was also surprised to find out that Macquarie and Citi Group have also been dabbing their toes in, I'll try and find out more,

Also re the Mega uranium connections, we have all covered (courtesy of Bliimps research) that Mega owns alot of ARV and ARV took a 6% stake in CTS, we also know that one of Mega's directors (exploration I think) is
(I think) the head of ARV's team, so that makes one go hmmmmmm, but what I didn't realise untill recently is that one of CTS's directors (a Mr Robert Grover) was a former director of RPT and as we all know RPT was taken over by .... you guessed it Mega, so if you join the dots a picture starts to emerge and it looks "Mega" lol

Anyway all that aside, they have a very high grade uranium project thats at surface and drilling has commenced, with a JORC upgrade due out in 3 months, this would explain why the Insto's seem to be getting on board now rather than later

 

[jman2007]

No news for a while,

Well should be 5 weeks into the drilling program by now, anyone know if it is a RC or an aircore drilling program? Difficult to see any clear trends emerging in the chart recently, other than the strong baseline support around 50c mark which the techies have picked up.

 

[greenfs]

No news for a while,

Well should be 5 weeks into the drilling program by now, anyone know if it is a RC or an aircore drilling program? Difficult to see any clear trends emerging in the chart recently, other than the strong baseline support around 50c mark which the techies have picked up.

If you like I could sell my holding and then the sp would assuredly move in a positive direction. My broker has been a 1+ year supporter of this stock and is convinced that one day it will be taken over $1+ price. What do they say - patience is a virtue - I think.