SRL - Straits Resources

[Gurgler]

Was a little surprised that this stock didn't have a thread already. It's a an mineral exploration, development and mining company involved in production of copper, gold and coal over three locations: Tritton mine in NSW, Whin Creek cooper mine in WA and Mt Muro gold mine in Indonesia - all wholly owned.

It seems to be starting to recover from a difficult 12 months. In January, FN Arena wrote about it thus:
Worst May Be Over For Straits Resources
FN Arena News - January 19 2007

By Chris Shaw

From a share price of more than $4.50 in the middle of last year it has been a downward slide to levels close to $3.00 in recent months for copper producer Straits Resources (SRL), but Austock Securities suggests this offers a chance for investors to reassess the company's prospects.

As of today, it is now at $3.83 heading upwards - see attached chart. I'll be keeping an eye on it.

 

[doogie_goes_off]

Dividend news may have been a little dissapointing for some, seems to be stadily traded but no real upward support, maybe capped by Au price? I think they have good diversity - a secret to success when oversupply hits a particular commodity.

 

[Gurgler]

Now in Trading Halt - wonder why? Any suggestions?

Interesting that the recent move over $4 in the past fortnight has been sustained. Note the kick two days before the pre-Straits Asia ann on May 4. Insider knowledge ?

 

[Col Lector]

Straits is bennefitting big-time from its exposure to the increasing coal price and its substantial increase in coal tonnage; also antimony/gold in new england coming on stream later this year...to add to existing Au production from Muro in Indonesia. Add also approval pending for salt project in WA; AND increasing copper production (albeit largely & lowly hedged in current year).
A breakout even??? Tentatively I do think so. Kennas?

 

[lazyfish]

Hi Guys, just happen to see this. Btw I am new here so hello everyone

Wise-owl.com "Stock of the week": Straits Resources Ltd
July 9, 2007
Tim Morris, Wise Owl analyst

Stock: Straits Resources
Code: SRL
Recommendation: BUY

Strong performances by BHP and RIO have occupied much of the spotlight at the big end of town recently, as their stock prices have finally started to surge. However, Straits Resources (SRL), a recent entrant into the ASX 200 index that hasn’t received much attention, also has the potential to deliver strong returns.

SRL is emerging as a real force in the resources industry. Its principal activities involve the production and sale of copper and coal, and exploration. Straits controls and operates the Whim Creek and Tritton Copper operations in Australia, and the Mt Muro Gold Mine and Sebuku Coal mine in Indonesia.

Increasing production numbers combined with favourable hedging contracts commencing in the near future, will result in SRL generating significantly more cash flow. Strong earnings are forecast for 2007, 2008 and 2009.


SRL’s core project, the Sebuku Mine, has been performing well with 834,000 tonnes of coal produced in the March quarter, keeping in line with the 4m tonnes forecast for the full year. Construction is underway at the site to further improve on this number and we should see this take effect in 2008.

This year is going to be a very busy one for Straits with a number of production and exploration activities to come on line. Record production numbers are expected at Sebuku and there will be a ramping up of activities with the new installations and purchase of washplants in the UK. Mining costs are forecast to be lower, so cashflows should improve.

At Salt Creek, an infill drilling programme has commenced, while at the New Central Kalimantan Coal Tenement, field exploration is underway with results expected in the next few months.

Besides the prospect of the company not delivering on its production forecasts, one of the key risks remains its exploration activities, which have the potential to burn a lot of cash and discover nothing. However, such risks are a given throughout the industry, and we remain confident in the company.

The ingredients for a share price rise, increasing cashflow, and news flow to the market, are all present.

The strong Australian dollar may impact SRL’s overall financial performance but with hedging contracts in place, this should be mitigated. The new hedging contracts for SRL’s products are favourable compared to last year’s, and should therefore flow through to this years financial performance.

Wise-owl.com currently has a buy recommendation on Straits Resources Ltd.

Source: http://www.compareshares.com.au/wise5.php

 

[Col Lector]

A conspiracy theory...can anyone else see some interesting possibilities...?AMCI Investments Pty Ltd became a substantial holder in Straits Resources Ltd on October 5 with 15 million shares (7.7pc).
Thats a $72 mill initial investment
The question being...just who are AMCI Investments Pty Ltd?
And what are their intentions regarding SRL??

Hans Mende is a director of AMCI Investments and a shareholder of its ultimate parent company, AMCI International AG. A major global player with a coal focus.
He is also the same Mr Mende associated with the Pallinghurst bid for ConsMin (CSM).
These guys are active... they have recently offoaded $600m of coal assets to CRVD; floated/taken a sizeable stake in Whitehaven Coal Ltd; increased its interest in Gloucester Coal Ltd Oct 4 from 7.9 million (10pc) to 10.6 million shares (13.1pc). & then forked out $75mill on 7.7% of SRL, the next day!
Very active! Are these moves by AMCI actually strategic preparations for AMCI's promised "contributions" to the Pallinghurst CSM consortium. If so, what does AMCI's sudden $75 mill investment in SRL entail for SRL, Pallinghurst & its sp going forward??
Pure speculation of course..be warned

 

[Col Lector]

And then there's Lake Torren's JV to add a bit more spice to the SRL mix...
From The Age...SRL earning 70%
Kroombit and Lake Torrens projects fire up interest in Argonaut ResourcesBarry Fitzgerald
October 8, 2007

GARIMPEIRO has previously described Argonaut Resources as a three-trick pony in that if it wasn't to get some sharemarket applause for its gold/copper interests in Laos, then it would for its Kroombit zinc/copper project in central Queensland, or its copper/gold hunt at its Lake Torrens prospect in South Australia.

While Garimpeiro always thought that it would be Laos that would be exciting, it's actually been Kroombit and Lake Torrens that have fired up interest in the stock. So much so that it rose 15.5¢ or 54 per cent last week to close at 44¢ on Friday.

Laos might yet overtake the other two. But for the moment at least, it is the prospect of near-term production from Kroombit after some strong confirming drilling results (nine metres at 7.1 per cent zinc), and the high-risk but big-time potential of Lake Torrens that the punters are interested in.

By mid-November the group should be somewhere near a compliant resource estimate for Kroombit, which in itself would go a long way to justifying the group's $59 million market capitalisation.

Final approval from SA's Primary Industries and Resources for Argonaut and its funding partner, Straits Resources, to start drilling on exploration licence 3195 at Lake Torrens isn't hurting either.

Fifty kilometres from Teck Cominco's Carapateena copper/gold discovery and 75 kilometres from BHP Billiton's Olympic Dam monster, the prospect contains the sort of magnetic and gravity anomalies that get explorers for so-called iron oxide copper gold (IOCG) deposits excited.

What's more, WMC — now part of BHP and the group that discovered Olympic Dam — punched some holes into the property and intersected what Argonaut says was "intense magnetite and haematite alteration typical of Olympic Dam and Carapateena".

A racier interpretation of it all comes courtesy of the New Zealand tip-sheet, "Ten Bagger Quarterly".

It makes the claim that Argonaut has about a 20 per cent chance of finding the next Olympic Dam, and an 80 per cent chance of hitting significant copper and gold mineralisation.

It added that if "all dreams come true" and Argonaut hits an IOCG, the shares will be a 75-100 bagger. And if it fails, the downside is modest given the company's other projects. No argument with that last bit but the 20 per cent:80 per cent prediction is utter crap.

 

[gfresh]

I believe that investing in Straits may be a good bet to mitigate much of the risk of ARE, with the safety of not being a 'nothing' if no significant results are found at Torrens.

The fact that SRL holds 70% rights to Argonauts Torrens tenement, means that if ARE hits the jackpot, SRL will be the ones mining the stuff, and making the majority of possibly billions of dollars. Seeing as Straits is also forecast for an improved EPS next year, means that even if no success at Torrens, still not a bad stock to hold onto.

Share buy back is also being undertaken at the moment, allowing you to get in for fair discount of $4.70 on current shareprice, if you own SRL before this Friday. Worth investigating if you are keen.

 

[Col Lector]

It's SRL's diversity of income/projects that makes it attractive. Particularly that it has within its suite of projects a number that have huge upside potential eg, The Lake Torrens Project. Coal has been a major plus recently, but Strait's exposure to gold&antimony is often overlooked...
*Muro producing with expl upside;
*Yandan - stunning Au drill results but barely rates a mention.
&
* Hillgrove NSW starts production this quarter & will add significant revenue...initial annual prod estimates of 10000t antimony (currently $USD5570/t with cash cost ~ $2000/t) and 20000oz Au.

The Hillgrove Gold Project, located near Armidale, New South Wales, was purchased by Straits in March 2004. Since that time Straits has been pursuing an aggressive development plan, encompassing additional resource definition, metallurgical testwork and design and mine planning, which culminated in the completion of a Development Plan in late 2005. In June 2006 Straits announced that formal board approval had been given for the Stage 1 development of the Hillgrove antimony/gold mine in NSW. Straits have commenced construction of a demonstration process plant capable of achieving initial mine production rates of approximately 10,000 tonnes per annum of antimony metal and 20,000 ounces of gold (equivalent to 90,000 Au ounces of total production output). In addition tungsten will be produced as a by-product. The initial capital expenditure of the Hillgrove Mine is forecast at approximately A$30 million, which includes process plant expenditure of A$15m and pre-production underground development. Forecast cash costs over the first five years of the Hillgrove operation are A$0.97/lb antimony produced after gold by-product credits. These cash costs exclude any by-product revenue from tungsten which could be significant. .

 

[Col Lector]

Now, thats a chart! Maybe even a breakout candidate. Plenty of activity recently lots of small players but also some large parcels being accumulated & offloaded by substantial holders/directors. Somethings cooking.....

 

[michael_selway]

It's SRL's diversity of income/projects that makes it attractive. Particularly that it has within its suite of projects a number that have huge upside potential eg, The Lake Torrens Project. Coal has been a major plus recently, but Strait's exposure to gold&antimony is often overlooked...
*Muro producing with expl upside;
*Yandan - stunning Au drill results but barely rates a mention.
&
* Hillgrove NSW starts production this quarter & will add significant revenue...initial annual prod estimates of 10000t antimony (currently $USD5570/t with cash cost ~ $2000/t) and 20000oz Au.

Hi does anyone know the mine life of SRL?

Earnings and Dividends Forecast (cents per share)
2006 2007 2008 2009
EPS 19.3 22.7 50.9 85.9
DPS 10.0 8.0 10.0 13.5

http://www.theaustralian.news.com.au/story/0,25197,22662673-18261,00.html

thx

MS

 

[countryboy]

i keep looking at this stock..Lake Torrens has me interested.I'll throw this up for general comcumption and please feel free to shoot me down in flames,BHP have signaled what many commentators have been saying that the resources sector is about to move into a period of consolidation with its takeover of RIO, Plenty of talk about other targets such Zinifex and the OX. im looking at mid cap miners that may fill the bill for aquisition. anyone think straits fits that category? for me their are 2 upsides Im almost prepared to gamble on..... 1 most mid cap miners will be gobbled up in the next 24 months and..... 2 lake torrens reveals its potential

any comments ?

 

[doogie_goes_off]

A nice 37c rise thus far today. Someone must have re-assessed the fundamentals of this one. They certainly are a soild mid-cap producer.

 

[ormond]

SRL could be in for a good day tomorrow due to Straits asia resources up 9% today[SRL -55%]
Coal supply problems in china will help asx coal companys over the next few months.
Also lake torrens drilling results due soon which could be the icing on the cake.
Any one else on this co.
cheers ormond

 

[aleckara]

Just wondering if there are any particular reasons why this stock has plummented from its highs other than the credit crunch business.

It seems like they have a significant junior coal production. I'm new to the coal game.

 

[cruise61]

Just wondering if there are any particular reasons why this stock has plummented from its highs other than the credit crunch business.

It seems like they have a significant junior coal production. I'm new to the coal game.

Try again

Hi Alec , i just think its the whole recession thing driving this one down .

Sadely USA fails we all feel the brunt

SRL did have its highest ever profit in the first half 126.3 mil so that isnt to be sneezed at

They aquired 33% of RIM whom own 80% of MCM

An earlier report stated Straits holds a portfolio of mining investments, development projects and exploration ground for copper, gold and coal, in Australia, Indonesia, Brunei, and now Madagascar

Seems to be alot of shares exchanging going on but thats normal.

Certainly could be one to watch when the hard times are over

I wouldnt pannick yet they are growing and investing so that is a good sign

 

[oldblue]

Hi Alec.

Have a look at recent announcements on the company website.
They have a fairly complex corporate structure and plans to simplify this by a de-merger were scrapped recently. This has contributed to the weakness in the SP, IMO.

 

[aleckara]

Thanks everyone,

Will keep away from this one for now. Not until the dust settles will I consider it.

I look at their profit of 125mil in their report is "gross profit". Afterwards it doesn't look so pleasing. A minority interest whoever that is seems to be taking all the profits and leaving the shareholders with a loss.

Maybe that's just a quick glance. Better opportunities elsewhere right now IMO.

 

[YOUNG_TRADER]

Funnily enough Straits has been one of my trades over the last few days,

Coal is one of the few commodities yet to show weakness ...... yet, fundamentally it is an energy bulk ie like oil or gas rather than a building bulk such as aluminium or iron ore

It is very very cheap on forward P/Es and such, however for now is just a trade for me as on any given day it can just nose dive (look at RIO down 15% today eeekkkk)

 

[cruise61]

Thanks everyone,

Will keep away from this one for now. Not until the dust settles will I consider it.

I look at their profit of 125mil in their report is "gross profit". Afterwards it doesn't look so pleasing. A minority interest whoever that is seems to be taking all the profits and leaving the shareholders with a loss.

Maybe that's just a quick glance. Better opportunities elsewhere right now IMO.

Wish i had 125ml gross profit ,thats a pretty good profit.

Company has good cash flow and assets over 1.04 bil

Sure there net was only 6.0 mil after all out but they did do some aquiring of good stock.

and yes coal is still good price .

I think they are a strong company with good assets .