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HIO - Hawsons Iron

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Kgee I did a similar evaluation to yours (no write up on my blog as of yet, but I'm slowly working my way through all my companies) but it's a good situation to be in when you can't figure out how undervalued it is, due to the potential being so large!

Do the research and you'll see how many projects CAP has on the boil at once, most of them still require no capital from CAP (lol bad pun) and are all progessing to JORC status. I'm looking for a small rerating soonish, then a larger one as Hawson's comes out, then small ones as the other projects all announce their exploration results. Lots of upside from their many projects from here.

I wouldn't buy anything about 55 cents without more news though, but even that's quite far away...

:2twocents
 
Hey Parlevous
If you get some research done I hope you post it up here
I'm being lazy with my reseach, saying that its pretty difficult with these diversified companies especially with all the differrent JV arrangements.
Might give it another go when we get the resource estimate for the Euriowie tin project... at least thats 100% owned so should't pose too much difficulty of putting a rough valuation to it (on a peer comparison)
I Like the fact that theres only 93 million shares on offer with 20 million cash I can't see any share dilution happening anytime soon!
 
Hi all, I'm a keen CAP holder and things are certainly heating up. If any of you read the HotCopper forum theres quite a few having a fair old go at discussing CAP at the moment. Tonight I tried to put a figure on the Hawson's target if the supposed 1B tonnes comes to fruition.

"I'm not very educated with working out potential earnings from these sorts of projects, all I know is that it could be potentially huge given the size and quantity that Nick is chasing. Anyways here is my best shot.

Say we get that milestone 1B tonne size of Iron @ the high grade 70% Fe. Now from what I remember, 18-20% of an iron ore deposit is recoverable because eventually it becomes too deep to be marketable. Once all payments from BMG are made, we will have a 20% stakehold in this project.

So basically, CAP get approximately a 20% ownership of 70% of 1B tonnes @ 18% recoverable. This is a size of 36Million tonnes of marketable iron for CAP in the supposed mine's life cycle.

The current spot price of iron ranges between $140-$150 per tonne. So revenue on 36Million tonnes would be about $5B.

Once costs of mining are factored in (I'm thinking of earnings from oil and gold deposits), I reckon a fair estimate for profits could be between 15%-20%. That gives us a total profit from the supposed target of about $800M.

I don't know about you, but I'll be quite pleased if the company can earn $800M from Hawsons alone over it's life span given our current market cap is a mear $50M.

What this calcualtion has also made me realise is how much it costs to get all that iron out of the ground. I know a few iron ore midcaps struggled to get their projects going because of this, so hopefully CAP can arrange this funding over the years through cap raisings, joint venture payments and loans.

I really am quite a novice to these calculations so please be critical of my numbers."

There is some speculation on what exactly our free carry position entails. Could any of you please enlighten the rest of us of what it means. Do BMG cover just the feasibility and exploration costs, or will they also chip in for CAP's production costs of up to 4mtpa?
 
I guess that'd be one to contact the directors about, I haven't found any adequately descriptive statements from CAP, I'd assume we have to pay our share of production for any valuations of CAP I'd make, it'd be an incredibly good deal if we don't.

:2twocents
 
The deal with the iron ore is and this along the lines of what Nick has said, CAP have a 20% free carried interest, which means that BMG pay for all mine construction and processing and keep paying until mine output is 20mtpa, which CAP get 4mtpa of.

Their iron ore area is massive 6bt plus. Once they prove their 1bt.
Just how big a play this really is for CAP gets lost in their other other ventures, and maybe thats a good thing for those wanting in whilst the share price is at this level. :)
:)
 
I'm in today at 49c.

With a market cap of $47mil it is cheap with cash of $20mil and likely to get a cash bonus of $25m if they can prove the resources with the MD seems very confident about. They also have fingers in lots of pies and some very good JV partners investing a lot of money into their projects.

(From: Boofy - Hotcopper)
1ChartofCAP121010.jpg
 
I'm in too, bought in today at 50c. I'm not sure if the MD's certainty is genuine or propaganda, but if he is right we'll all be smiling :) They have fingers in a few pies... here's hoping some of them are yummy :)
 
I've also joined the party today at .485. Good performance on a tough day to close above 50c. Sets it up well for coming days if the markets can stay sensible.
 
Synergy said:
I've also joined the party today at .485. Good performance on a tough day to close above 50c. Sets it up well for coming days if the markets can stay sensible.
Click to expand...

I had a buy in at .485 too but got too impatient after the open and got in at .50. Glad to see it close avove that ... although just a little :)
 
Congrats to all new holders. Just by chance, would any of you mind possibly throwing some numbers out there for how you reckon we could evaluate Hawsons. Optimism often gets the better of me, so it would be good to bounce some ideas of each other.
 
Work off 4mtpa. Remember out of the 81mil CAP receive 28mil goes back into the ground.

without the use of plowing figures I quote Nick from the interview in April 2010"....4mtpa to CAP....is a substantial amount of money, quite enormous..."
:)
 
I haven't done the sums yet (some boring day I'll do them), but it's just extra cream on top of the cake, CAP already gets paid a large amount just for progressing Hawson's Iron.
 
When these guys scope out and get set in the infrastructure will definitely signal the extent of their iron ore area.

Just of interest I noted in Stage 3 of the BMG earn in, it mentions that BMG are to fund a BFS to the tune of 20million. Why I point this out is that Nick in one of his BRR interviews was asked if they (CAP) could provide a BFS, he seemed to believe this was a good possibility.

If so, would this increase CAP's interest in the project.:)
 
Valuation for Hughenden Coal Project,
Has anyone else tried putting a valuation on the JV with GUF ?(20/80)

Currently GUF has 360,000,000 shares @ 55 cps, Market Cap = $198 million

From their website the Stonebridge report say that the Hughenden Project represents 67% of GUF’s NPV by project.
I’m assuming that CAP’s 20% share has being taken into consideration. So if GUF had 100% ownership, Hughenden would represent 83.75 % of NPV (by project).

MC – Cash x NPV

$198 mil - $25mil (estimate) x 83.75%
Hughenden NPV =$145 million
CAP’s 20% = $29 mil

NB :
Ev/t =$0.36. ($145 million NPV divided by target estimate of 400 Mt)
Which is quite high considering they have no JORC, but they do have railway at doorstep of southern tenement.

Any thoughts? I'm not 100% sure of my working out
 
Quarterly came out today. Coal delay, Iron on track, Tin assays: 4m @ 0.38% after 15m, Copper/Gold going ahead smoothly.

For mine, apart from the coal, all seems to be going to plan. Some on HotC0pper reckon that the tin grade is too low, but industry standard is around 0.4%. Given we have further to drill, it seems to be going alright so far. I've fired off an email to the company for some clarification on the timelines with the tin, so I'll copy the reply if I think there are some important points.

Anyone else have any thoughts on recent progress? It's gotten a bit quiet here in the past few weeks ;)
 
RE: Kgee the Iron seems to me to be the big valuation. Based on the iron project alone we'll see today's price fairly valued (perhaps even more) the coal the gold the copper the tin, everything else is just added on for free, don't fret trying to fairly value everything, the market RARELY accurately gauges the "fair" value of anything, just the "popular" value of something. Just be comforted that the NTA is much higher than today's prices, based on the free carry 20% mine and the payments for the BFS that CAP will receive. We'll be getting revenue and be cashflow positive even with our aggressive exploration programs (thanks to our partnerships we have lots of free carried exploration to look forward too), CAP's future looks bright barring GFC version 2.

:2twocents
 
ParleVouFrancois, just as a side note, I've been following your blog recently. It's really really interesting, and you seem to be making alot of coin out of your research. I particuarly like to read your opinions on CAP because of obvious reasons. ;) Keep it up!
 
Why thank you 5haretrader :) It serves as much as a record keeping of my trades as a conventional blog, but I do quite enjoy talking on and on about shares so it serves as a good outlet (instead of boring my friends or relatives with my shares talk).
 
I know exactly what you mean. If you have a HC account you should make your presence known on the CAP board. The more opinions on things the better. At the moment there's been a bit of a discussion on the value of the copper project with AIV and also what we can expect in terms of the share price throughout November in readiness for the JORC news in December.
 
Ahh okay, I've checked the HC CAP thread a few times but I didn't think that there was that much activity by the members. I'm usually on the MHM or CFE or CCC threads over there, I guess I'm going to have to frequent the CAP thread more. I'm on HC as well, similar username (not exactly the same though).
 

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