CZI - Cassini Resources

$10m in the bank no more cash worries could be the start of something special !!!

Paavfc said:

$10m in the bank no more cash worries could be the start of something special !!!

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Could go down to cap raising price as well.

Porper said:

Could go down to cap raising price as well.

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Would only be for a short period of time imo..

Paavfc said:

Would only be for a short period of time imo..

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Now below cap raising price. Always possible after the initial euphoria.

It will be interesting whether the sophisticated investors bail out or hang around. If the prior it will be look out below. A washout could present a buying opportunity at substantially lower levels. Let's see.

Porper said:

Now below cap raising price. Always possible after the initial euphoria.

It will be interesting whether the sophisticated investors bail out or hang around. If the prior it will be look out below. A washout could present a buying opportunity at substantially lower levels. Let's see.

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A savvy trader could have made a small fortune trading this one over the past couple of months. I've just held onto my parcel bought for 18c just before the cap raising was announced figuring that I would just as likely botch the trade if I tried trading it post raising. Will wait for the drill results.

CZI - top pick for 2019 stock tipping competition.

The West Musgrave nickel-copper deposit is the largest undeveloped nickel deposit in Australia. Oz Minerals has entered into a joint venture with Cassini whereby it is earning up to 70% equity in the project by funding exploration, research and planning up to the conclusion of a Definitive Feasibility Study (which will take the project up to a decision to mine).

My decision to include this stock in the 2019 stock tipping competition is based on:
a) the long term investment thesis and
b) anticipation that a Pre-Feasibility Study for the West Musgrave project, being managed by Oz Minerals, will be released later in 2019.

The Neo-Babel deposits were discovered decades ago by Western Mining which was acquired by BHP which performed further exploration using more modern techniques. Cassini purchased the deposits from BHP in 2014.

Since then they have progressed exploration of Neo-Babel and broadened out to explore other highly prospective nickel-copper sulphide and gold deposits in the region.

In 2016, in order to progress exploration and the feasibility of the project, given the collapse of nickel and copper prices at the time, Cassini entered into a joint venture partnership with Oz Minerals whereby OZL is progressing towards a 70% earn in through funding of exploration, testing and planning through to a definitive feasibility study. OZL has actually accelerated the exploration program and OZL management have talked up the prospects of development of the West Musgrave project.

Although the West Musgrave mineral deposits are unusually close to surface, allowing open pit mining with very low strip rates, the resource is remote and transport and energy costs make the project challenging.

Since acquiring what might have been considered a marginal prospect in 2016, further infill drilling and regional exploration of nearby deposits have only reinforced the prospect of the region being a very significant Ni-Cu resource with prospects for a low cost operation with a very long mine life (30+ years). There is also the potential that the near surface regional deposits that have been explored are connected at deeper levels. West Musgrave is unusual in that the Neo-Babel sulphites are so close to surface.

Recent further metallurgical testing has resulted in higher recovery rates too.
The Pre-Feasibility study should provide a sound estimate of the potential resource and the scenarios around economic options around developing West Musgrave as a new regional mining centre.
The investment thesis is based partly on the long term demand outlook for Nickel for use in electric batteries. Recently, Cassini issued a share placement to a strategic investor within that industry. I understand that the nickel sulphate mineralisation at West Musgrave is very suitable to use in electric battery production.

Cassini has an impressive management team including Mike Young who led BC Iron into a joint venture arrangement with neighbour Fortescue Metals to bring their stranded iron ore deposit into production during the iron ore boom. The geological team includes geologists who were behind the original identification of the Neo-Babel deposit by Western Mining back in the day. Richard Bevan, CEO, is a straight forward, uncomplicated communicator who has managed to look after shareholders and prudently steer this little ship through some tough times for a cash strapped junior explorer. The relationship with OZL appears to be going well.

All going well, the release of a Pre-Feasibility study in 2019 with further commitment by OZ Minerals intentions and a firmer understanding of the economic prospects of the project and its likelihood to proceed could be a catalyst a significant rise in share price.

Furthermore, if the economics of the project turn out to be as compelling as is hoped, with Oz Minerals as the majority partner underpinning the project, there may be some prospect of Cassini being able to borrow the money it will need to tip into development of the project without needing to dilute existing share holders by raising funds through share placement.

I am not an expert in anything that I have mentioned above. E&OE. DYOR.

It's far too early to call it, but there is a potential cup and handle formation appearing in the CZI chart.

We have the cup which formed between Nov 18 and Feb 19. Will we get the handle followed by a break-out? Check out the volume over that period. The profit takers who supplied big volume after the run up in price back in late 2018 may be gone now.

There are several potential good news events that may arise this calendar year. The release of the West Musgrave Project (JV with Oz Minerals) Pre-feasibility study and further drilling and exploration results in other prospects to come in. Plus Oz Minerals are now actively talking up the West Musgrave project.

I'm calling this a break-out. I'm not on my usual PC at the moment so I am posting the commsec chart.

Pre-feasibility study for Neo-Babel Ni/Cu project due out in September. All talk from OZL (senior partner) is positive. One catalyst for re-rating the stock (aside from the increased confidence in the indicated resource from the recent drilling program) is that the nickel produced will be nickel sulphate, so suitable for the battery market (nickel is used in the cathodes of lithium ion batteries). The recent strategic placement with Tichi, a major Chinese battery material producer and potential off-take partner, plays into this theme.

I topped up at 10c the other day. Still time to jump aboard but DYOR. Thinly traded and a specki. I have confidence in the management team to find a path to production with the least dilution of existing holders. The two most recent strategic capital raisings confirm this IMHO.

I remember a few years ago when they did a capital raising at three point something cents a share and their paid investor relations spruiker phoned me up and said, more or less, look you can apply for as many shares as you want and you will probably get them and that this was the one opportunity to load up. Well I bought as much as I was comfortable with at that time, because the arse had fallen out of the nickel market.

I'm hoping that this stock will reach 30c on a positive decision to mine. That may be optimistic - DYOR.

An interesting overview:

https://stockhead.com.au/resources/...cassini-resources-is-riding-the-battery-boom/

It's worth noting that Cassini now own a couple of ex-Western Mining resources. Geologist, Dr Jon Hronsky was recently awarded a Membership to the Order of Australia for services to mining. He is a board member of Cassini and was with Western Mining when they basically rewrote the geological map of the western end of the continent (back in the 90's if my scant knowledge serves me). Western Minerals got taken over by BHP who have divested out of many of their prospects, including the OZ Minerals/Cassini joint venture Neo-Babel prospect, on the basis that they did not represent tier-one projects.

West Musgrave project pre-feasibility study imminent.

West Musgrave is Australia's largest undeveloped Copper-Nickel project in a relatively underexplored remote region of Western Australia that is highly prospective for nickel-copper-PGE sulphide deposits and gold.

The West Musgrave Copper-Nickel project joint venture (OZ Minerals 70%, Cassini Resources 30%) was due to release their pre-feasibility study (PFS) towards the end of CY19. That got pushed back into C1 20 (first quarter, calendar year 2020). The reasons given at the time were to expand the study beyond the scope of what is normally accepted for a PFS to allow:

- further resource and metallurgy studies,
- investigate and de-risk opportunities for significant savings and processing efficiencies and provide further upside to the project economics,
- provide a clearly defined single-path forward for the bankable feasibility study (BFS),
- reduce the overall timeline to production.

For more details see the company presentation from September 2019.

Both CZI and OZL have recently confirmed that the PFS is on-track for release this quarter.

The latest update from Oz Minerals (p14) states that a "Bulk flotation circuit pilot plant successfully completed in Canada confirming process design criteria assumptions". If my memory is correct, I think this included testing of a novel crushing technique due to the ore qualities found at the deposits.

Initially the project was conceived to cover two open pit mines in close proximity (the Nebo and Babel deposits) but has since grown to include the Succoth and One Tree Hill deposits with the potential for discovery of further deposits within the region to be added into the project over time.

The project will be a long life (multi-decade) low cost large-scale open pit (low overburden) operation with the potential to grow into a district scale mining camp over coming decades.

Last week, Ashanti Capital wrote to all shareholders (attached). Ashanti is proving institutional stockbroking advisory to Cassini. Their letter talks up the project and invites shareholders to register interest in an investor briefing.

I have heard a rumour that the PFS will be released in February. Either way, it is due to be released in February or March. Their letter claims that the "likely" highlights of the PFS will include:

- Delivery of a detailed, high quality PFS,
- A significant increase in the mine life,
- Delivery of a maiden Ore Reserve,
- Robust project economics,
- Mitigation of key project risks.

It would appear from the Ashanti letter that there will be an investor marketing push around that event.

I am anticipating that the PFS will surprise the market to the upside on the forecast economics of the project and the overall net present value (NPV) of the project. I am therefore anticipating a significant re-rating of the stock price upon release of the PVS with further upside following release of a BFS within twelve months of the PVS.

For these reasons I have chosen CZI for the Feb 20 stock picking comp.

Up 22% today, what’s that about. Study results due out soon?

Padowan said:

Up 22% today, what’s that about. Study results due out soon?

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Xeroderma pigmentosum

Padowan said:

Up 22% today, what’s that about. Study results due out soon?

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It's "speculation," but not unfounded as last month five directors/managers exercised their options and injected $820k into the company, and they did not need to as there was more than enough.
Their recent quarterly report was very encouraging so maybe someone on the ground has leaked a bit of information and this has spurred the price up.
Anyhow, OZL which has a major interest (70%) in the West Musgrave Project and Cassini quickly put a halt to trading today to scotch rumours.
I suspect it is too late.
When combined with the recent exercise of options, it is difficult to think yesterday's spike was mere speculation.
(I hold OZL but not CZI.)

Pre-Feasibility Study out this morning. Stock about to resume trading any moment (I assume 11am).

http://clients3.weblink.com.au/pdf/CZI/02201572.pdf

PFS includes Nebo and Babel but not Succoth or One Tree Hill, so further mine life/expansion potential still to come IMHO.

NPV $800m (IRR 20%)
26 year mine life for 10Mtpa production
Annual production of 28Ktpa copper and 22Ktpa nickel in concentrates
C1 cash cost US$0.9/lb Cu and US$1.30/lb Ni
Off-grid renewable power
Project continues to be assessed against Oz Minerals capital allocation framework.

Opened at .12 and dropped back to around .09. Looks like the market didn't take to it too well.

Austwide said:

Opened at .12 and dropped back to around .09. Looks like the market didn't take to it too well.

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We always knew what was there, but not quite as much as we know now.
As production is years away, the likes of CZI rely on new finds for big price jumps. Also, OZL has a 70% share in the project, so while in future years CZI will be a great stock to hold, the upside is presently with OZL who derive the lion's share.
What I did like was their commitment to renewables. Overall renewables costs are declining almost 10% compound, so by the time they are up and running it is likely that energy costs will be much less than they outlined in their PFS.
The other good news is that the tenement is huge and potential for new finds is definitely there.

Well that was not what I was hoping for. Another case of buy the rumour, sell the fact? Maybe the market is not happy with the assumptions used for nickel and copper prices which are both higher than the current spot prices. CZI share of the NPV is $240m with a pre-production capital investment required of $300m for an operation that produces 8.1ktpa of Ni and the same of Cu in concentrate (CZI share) over the first five years. The PFS only looks at only mining the Nebo and Babel deposits with Succoth and One Tree Hill likely to add significant additional ore reserve plus all the other tenements in the region waiting to be explored.

I think this is the type of project that is going to be very attractive to a downstream Ni user being such a long life project with options to increase production to the upside. I think a lot of shareholders are hoping for a scenario where CZI are able to find an offtake partner for their share that will also stump up the money for the construction.

If today's market sentiment is anything to go by I might have to put these shares back into the bottom draw and wait for the bankable feasibility study which should be in about eighteen months time. OZL have to free carry us until then. I don't care which way you dice it, as far as I see it a market cap of $40m seems a very low value for the CZI 30% share of this project.

"The much-anticipated release last week of a pre-feasibility study into a $995m development of the remote Nebo-Babel nickel-copper project in Western Australia was meant to send the shares of Cassini Resources (ASX:CZI) into orbit.

"It didn’t happen, not yet anyway."

...

"So even a hard-nosed assessment of the PFS suggests the value to Cassini of its 30 per cent stake in Nebo-Babel is a multiple of its current market cap.

"It all makes for an interesting couple of years ahead for Cassini, with there being the possibility it gets a bid for its stake as development gets closer. Macquarie reckons a decision to mine in late (calendar) 2021 is on the cards."

Barry FitzGerald: Cassini is worth much more than its share price suggests

Nothing has changed fundamentally but the chart... boss ... the chart...

The chart boss, the chart. Made serious money on this one after the last post. Taken it all out now @19c. Still carrying some shares because according to the books I'm picking up OZL shares at about 1/3 current market price. Some speckie gold prospects in the share price too.

New Norcia. That's a place that needs heeling and reconciliation. I'd like to see CZI embark on a serious process of reconciliation with the traditional owners at New Norcia.