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IRL - India Resources

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I'd suggest it's probably the shadow of a placement they're likely going to have to do to get Surda over the line come Q1 CY07.
 
Currently there is a non renouncible rights issue with attached option at 20 cents. Existing listed option has dropped down to 8 cents and current shares have dropped down at less thatn issue price. If you consider at the time of listing it was 40 cents for share and 20 cents for option. WIth additional sharess issued at 20 cents the excess dilution will probably make the share price at 16 cents.
However reading between the lines the production at copper plant to begin in January 08 (?). Even some delay will come due to Christmas etc the actual production will not be later than March 08. The share price will take a turn around (I am holding my bit too as after buying them at 36 cents I can not just dump them at a big loss - psychologically).
I have had a chat with a senior executive of IRL couple of months back and he vaguely advised to hang on the shares until March 08. He definitely has vested interest being a company executive - but should I listen to him or dump ?
Smart people like Chris Ellison (MIN part owner, ex MD of Monadelphous), Andrew Forest etc are major investors.
What the fourm group about IRL - future ?

Regards
 
Hey Miner,
I bought into IRL a few weeks ago @ 26 after reading about them (can't remember where?) but based on their potential production

4500 tonnes Cu @ $8000/tonne = $36million gross revenue
less costs ? maybe $6000/tonne = $9 million net income
with 165 million shares after rights issue, gives 6c per share which at current SP of 21c is pretty good. If they double to 9000 tonnes p.a. then the equation looks even better.

Obviously other things to take into account like discount price of Cu to Hindustan as part of the deal with them, but anything over the initial 4500 tonnes production is at LME prices, so I would have to agree that SP will be rerated by Mar 08.

Just my
 
I hold a small parcel and recently received the placement / options info..
I paid way to much but seeing its a small parcel have put it away for long term, i too think once they commence production and get some income flowing things should be a lot more positive however till then I cant see any growth there doesnt seem to be much confidence in the stock. On the upside the projects and management both seem good, and production close.
 
IRL features in a interview with the Wall Street Journal

http://www.wallstreetreporter.com/page.php?page=featured&tab=2&id=27389

IRL plans to re-open and operate the Surda Mine with an initial objective of delivering annual production of 4,500 tones of copper concentrate. The HCL Surda Mine closed in January 2003 and for the six years prior produced a total of 1,473,000 tonnes at an average grade of 0.9% copper. Production is targeted for start up in Dec07-Jan08. IRL also has a couple of exploration projects in the resource rich states of Rajasthan and Orissa.
 
INDIA INTO COPPER PRODUCTION AHEAD OF SCHEDULE Diversified minerals explorer India Resources (ASX:IRL) has today commenced copper concentrate production at its Surda project in eastern India. The production milestone has completed a rapid period of development for India Resources, which is in production two months ahead of schedule and less than six months since it listed on the Australian Stock Exchange (ASX). India Resources Chairman Michael Kiernan said production of first concentrate at the Mosaboni Concentrator at the Surda project was a significant achievement for India Resources and its shareholders. It follows the hoisting of first ore from the Surda mine in September. “We are into copper production, and are now poised to capitalise on India’s copper potential with leading edge mining techniques, and access to one of the world’s largest markets,” he said. “The Mosaboni plant is fully functional, has produced its first concentrate and will now be ramped up toward full production and our initial annual target of 4500 tonnes of copper concentrate per year,” Mr Kiernan said. India Resources expects full scale mining at Surda to start ahead of schedule in December. The Company has more than 200 people on the ground in India. The Mosaboni concentrator has a total annual capacity of more than 900,000 tonnes of ore. The initial production at Surda is projected at around 400,000 tonnes per year. For further information, please contact: Michael Kiernan Eoin Rothery Warrick Hazeldine Chairman Managing Director Purple Communications Tel: +61 (0) 8 9324 7002 Tel: +61 (0) 8 9324 7009 Tel: +61 (0) 8 9485 1254 Mob: 0418 904 165 Mob: 0420 904 332 Mob: 0417 944 616


Market re-acting postively to this news of production..
 
So where to from here guys and girls?????
What kind of share price would we be looking at in the coming months?
I bought in at 24c some two months ago and am trying to get an idea of what kind of price I should be targeting in the medium term.

Typically the announcement came on a big down day on the ASX
 
i dont know much about the co personally, but in the short term the market tends to appreciate when companies begin cash flow, so i would think that 30 - 35c would be an acheivable target.

providing the market stays around these levels...
 
Options (as issued recently in IRL)

I didn't know whether to place this in the IRL thread or here ... probably here since it's a beginners question.

I signed up to buy some more IRL shares and as part of the purchase plan, there were attached options. To quote:


I look in my commsec account, and as well as increasing my shares of IRL, I can see IRLO. Currently trading at around 6cps.

Do I correctly understand that these were acquired free, I can sell them or do whatever I like with them?

I have some learning to do about options I guess. Like, what happens when they expire (Dec 09) ? Do they get converted to ordinary shares automatically, do I have pay a difference?
 
Re: Options (as issued recently in IRL)

Yes you can sell them, but if you think the company's shares will rise substantially by DEC 09 you'd want to keep them. Assuming they are American style options (may have to check on that), they can be exercised at any point until they expire.

Being a call option they are the option to BUY shares at the strike price before DEC 09. So at any point in time when the shares are higher in value that the strike price, you would profit if you exercised the options to buy the shares and sold the shares straight away. For that reason, the option will also rise in price so you can just sell it instead of exercising it.



Since I don't know the stock in particular, here's an example.

Stock ZZZ is $1. You have an option with an exercise or strike price of $2. It only has 'time' value now, probably a few cents. If the stock rises to $3, your option now has $1 (3-2) of intrinsic value, and a few cents of time value. If you were to exercise the option at that point, you would buy the shares at $2 and could then keep them, or sell them for $3. It would probably be silly to exercise the option and sell them when you could just sell the option for slightly over $1.
 
Plenty of cash now to double copper concentrate production

COMPLETION OF SHARE ENTITLEMENT OFFER AND PLACEMENT

India Resources Limited (“Company”) announced a non-renounceable share entitlement offer on 8 October 2007. The offer closed on 5 November 2007. As previously advised to the ASX eligible shareholders lodged acceptances for a total of 40,958,197 and the total shortfall was 41,326,872.

Pursuant to Section 1.9 of the offer document, the Directors have received agreements to place the entire shortfall of 41,326,872 shares. The shares will be allotted by 13 November 2007.

The Company is pleased to advise that it has also agreed, as previously announced on 8 October 2007, and subject to the successful completion of the allotment of the issue above, to raise $2.36 million (before costs) through a share placement of 11,800,000 fully paid shares with a free attaching option, at a price of 20 cents each, to institutional and sophisticated investors. This is due to settle and be allotted by 16 November 2007.

The above capital raisings have successfully raised a total $18.8m and provides the funding towards doubling the copper production at our Surda copper mine in India which commenced operation earlier this month ahead of schedule.
 
prawn_86 said:
i dont know much about the co personally, but in the short term the market tends to appreciate when companies begin cash flow, so i would think that 30 - 35c would be an acheivable target.

providing the market stays around these levels...
Click to expand...


This owes me 40c (only a small parcel) looking at its charts I dont even know how I paid this much. Maybe I typed incorrectly or something.. Anyhow I have taken it off my watch list and hope to forget about it.. That way in two years when I remember I might be pleasantly surprised..
 
Markets don't seem to like this one much, do they?

Positive news on production starting but the SP still sits at a 3c discount to the recent 20c placement. I suppose having the offer undersubscribed wasn't a good sign either.
 
Dear Jack Junior
You are lucky.
I bought the share at 37 cents and option at 20 cents.
Insult to injury I again bought the rights at 20 cents just to see it going down at 17 cents. I am still holding it with hope (!)
Michael K (famous Consolidated Chairman) is also the chairman for this company and the copper site is really very good. The senior management is also very good. But since MK is too busy in else where including building his assets in MON so IRL is currently a bad boy in share market.
Probably I have posted it before, the share is worthy to hold until March 08. Remember no cyclone will be at India from now to March and the weather and productivity will be fantastic as well.
Keep fingers crossed.
 
Excellent agm presentation - click here.

This is one company worth holding onto. Cashflow Q1 2008 and further projects / leases to be explored.

$20 mill in the bank and market cap < $30 mill

Cheers
 

From what I know they are aiming to produce "4500 ton of copper concentrate". This is tricky because if you look at one of their anns, or was it the prospectus, the metallurgical works was done on a high recovery of about 98%, but the concentrate grade is only 25-28%. Logical because the smelter is close by, and I don't think the deposit is huge. However the plant, when fully upgraded, should be able to handle 900,000 tons and at 1% it should be 9000 tons of copper. So I have no idea which one we should be looking at.

To be conservative 4500 x 0.25 x 8000 = $9 million dollars gross (assuming no discount). Extraction using the current shaft is difficult, that's why I think it was quite slow and inefficient to mine and they are looking at doing a decline, would cost around 4M (not sure when that would happen). Also the plant needs a bit of work to get to 9000 tpa production. I think Michael said during AMEC today that it would cost around 10M, if I didn't hear him wrong. The cash they have now should be enough to fully fund this development.

Does anyone have any idea about mine life?
 
IRL has several projects in India. The most advanced project is the Surda project (copper). The HCL Surda Mine closed in January 2003 and for the six years prior produced a total of 1,473,000 tonnes at an average grade of 0.9% copper. The good thing is that the mine and the 900kt concentrator is literally free. And the smelter is only 5km away. Currently, the company plans to produce 4500 tons of concentrates pa of grade averaging 25-30%. The bad thing is IRL has a deal with HCL (expiry 2014), to sell concentrates at a discount price. How much of a discount is still a secret, but we can speculate that the worst case scenario would be a 50% discount to the first 4500 tons of concentrate and the rest would be at LME price. The initial production without the ramp up would be 4500 tons of concentrate pa.

Curiously, I asked Chairman Michael Kiernan what the Indians were doing wrong. He explained that because they were mining using a shaft, the mining process is grossly inefficient. IRL plans to dig a decline and produce 9000 tons of concentrates. Given that the concentrator has a capacity of 900,000 tpa, at 0.9% it could produce nearly 30,000 tons of concentrate grading 25%. So I think this 9000 tons pa estimate is very conservative.

Regardless, let's use that for calculation.

4500 * 0.5 (discount) * 25% * 4000 (less mining costs) + 4500 * 25% * 4000 = 2,250,000 (pre ramp up, discounted concentrate) + 4,500,000 = $6,750,000 pa. That gives a PE of 4.7, in the worst scenario. This is not taking IRL's other interests, which are showing promising drilling results into consideration.

IRL has sufficient cash to fund the ramp up (decline - est 4M + upgrade of concentrator - est 10M).

Snap Shot:
Market Cap: 28M (non-diluted, all oppies exercisable price above current sp)
Sp = $0.170
Cash: 21M
Oppies exercise price = 20-60 cents
MD recently participated at rights issue at 20 cents a share (spent 100k)
 

Thanks for your update.
Where as I have no doubt on the future of IRL few things were appeared to be interesting.
Why Michael K is hiding the level of discount to HCL (Hindustan Copper)? If he has asked the investors to fund the rights then as an investor himself he should not keeping the secret card close to his chest. Is not it unethical as per ASIC code of conduct as he can manipulate the factual information in his favour ?
$100 K investment on rights is peanut for him considering the level of free issue options he has . Aa a promoting director he needs to demonstrate his faith in the project by investing more like he has done in MON or Mr Talbot has done in SDL.
Ironically readin teh annual report and other corporate information from the website Mr Michael K's Chief Operating Officer is in Indian, his Main person in INdia is an Indian and the most of the crew are indians. There are handful of Australian expats. How he is going to turn the wheel in an alien country with 95% people from India, Indian bureaucracy, 'honest'politicians, 'honest' law and order protectors, and in the state of Jharkhand where abiding of law is a funny concept.

Any way I am still hopful because our Midas Michael will do something like others are doing in the same place : Mittals and Tatas - keeping the administration in good book.

Regards
 
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