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