SRL - Straits Resources

[Sean K]

Hi kennas, me again... how's things? I was just checking cash backing to add on to the current value of the deal, plus cash, and it looks like about $1.65 to add on to the $2.07 as part of the Asia sale. So, total value is $3.72. This makes their mines and development projects and remaining investment in Asia valued at negative $2.57. I say again, NEGATIVE $2.57. Thanks for listening. Serious face off and I will now go back to my regular bamboozled and bewildered look. Cheers, kennas

 

[J.B.Nimble]

Yes your calculations are correct Kennas. The deal reveals the cash and residual stake in SBI to have a value of approx 800mill AUD. That is 3.70 per share.

Now asuming you attribute some value to Whim copper, Tritton copper, Muro gold, Hillgrove antimony/gold you could be looking at values in excess of 4.00/share, even in these challenging times. Now, how value translates to movement in share price is anyone's guess but starting point would have to be sp greater than nett cash and that should put it over 2.40 in the very immediate future.

FWIW, I think it is an extremely smart deal - reveals the value, retains some exposure to the upside in these assets, gives a massive boost to the balance sheet, thereby creating the opportunity to go looking for opportunity...

 

[prawn_86]

Up 20% at the moment. Perhaps the news will filter through throughout the day

Im watching this with interest, but dont have any spare cash.

The only reason i can think of for it being so far under intrinsic value is the market doesnt fully understand all the things it owns, or that its sceptical of the sale going through...

Who knows

 

[Kremmen]

I sold SRL years ago at something under $1. When I looked at them about a week ago and thought the current price has to be way too low, I should have acted upon that evaluation!

This is a crazy market. I would point out the example of PGL, which is about to embark upon buying back 60% of its own shares because its share price late last year had dropped to not much more than half of its cash in the bank! (When you can buy $1.10 in cash for 60c, you know the market is not behaving rationally.)

 

[Sainter]

Well my $1.50-$2.00 call was way off. Given my recent, less than stellar performance in the market, at least I can say I'm consistent! One to continue to sit and hold I suppose-the embedded value is just too high relative to the shareprice.

 

[Sean K]

(When you can buy $1.10 in cash for 60c, you know the market is not behaving rationally.)

Yes, at a strange point in the market. Two years ago people were paying millions for nothing but an EPL.

Well my $1.50-$2.00 call was way off. Given my recent, less than stellar performance in the market, at least I can say I'm consistent! One to continue to sit and hold I suppose-the embedded value is just too high relative to the shareprice.

It's a fair call Sainter, but would have been unlikely to jump like that on the open. The market has been generally aware of the disconnect in the sp and NTA.

Personally, I'm happy to hold while there's such a massive disconnect, and await the risk money to flow back in to the market. Hopefully, it's his side of 5 years away..

 

[nomore4s]

Well my $1.50-$2.00 call was way off. Given my recent, less than stellar performance in the market, at least I can say I'm consistent! One to continue to sit and hold I suppose-the embedded value is just too high relative to the shareprice.

A bit like that football team you follow :

Chart wise todays action is ok imo, strong break above resistance like that with a huge gap up always leads to a bit of profit taking. The gap looks like it will be filled now and then I think we will see some strong upward movement.

SRL has built a very solid base now since Oct 08. I will look to buy more if the gap is filled (or nearly filled) and we see a positive close around the $1.20 area and will buy my last parcel on a break of $1.60.

A close under $1 is a serious red flag and under 80c is somewhat bearish.

 

[Sean K]

Since the market doesn't like funnymentals (mostly) we should be looking at the technicalities perhaps.

Looks to have formed a bottom as discussed and there was a triangley wedgy thing that has broken up. Now we need to look for support and higher lows and highs. Really need $1.20 to hold and then that $1.50 to be broken to be confident in a medium term upward movement and longer term upward potential. Otherwise, we're just twiddling our willies.

Holding my willy, waiting for an upward movement...

 

[Kremmen]

there was a triangley wedgy thing that has broken up.

That's the best thing about discussions here: The highly accurate use of technical terminology.

Looks like it's creeping above the $1.30 mark on good volume.

 

[Sean K]

That's the best thing about discussions here: The highly accurate use of technical terminology.

Yes, love wedgies!!

I'm anticipating consolidation here between the high and low of the gap / last candle, above previous resistance at $1.20. Well, it's what I would like to see anyway... Then, to take an agressive stance get set for the break up, or more conservatively wait for the break through $1.50. Stops as required... But hey, who knows what skeleton drops out of the closset tomorrow...

I'm halting my own discussion of fundamentals of this stock because it seems funnymentals matter little in this environment.

 

[nomore4s]

Fundamentals still matter Kennas it just takes a bit longer to play out in this environment thats all.

Alot of spec money seems to becoming back into the markets. Alot of smaller caps are starting to move again. Is it just a coincidence that YT is back as well?:
ESG, MEL, MPO, LOD etc etc

 

[Sean K]

Fundamentals still matter Kennas it just takes a bit longer to play out in this environment thats all.

Well, lets hope the funnys are transferred into some decent sp movement soon. Has moved a little I suppose, up 100% is or so from the low, but I anticipate a break through $1.50 to create quite a wave. Surf board waxed up. LOL

 

[J.B.Nimble]

Well, lets hope the funnys are transferred into some decent sp movement soon. Has moved a little I suppose, up 100% is or so from the low, but I anticipate a break through $1.50 to create quite a wave. Surf board waxed up. LOL

I'm feeling quite positive about the last couple of days movement. I was surprised that so many were so keen to take profit so early but I think Wednesday's turn up is the beginning of our upward haul towards at least the level of cash backing. Copper price increases are giving us a bit of a tail wind now as previously the market was rating the copper assets as worse than worthless -Tritton is actually not too bad...

 

[J.B.Nimble]

Ceasing to be Substantial shareholder notice today - AMCI Investments having sold an average of about 830,000 per day for the last couple of weeks - almost a third of the average daily turnover. That flow soon to dry up?
Another 5% up today.

 

[michael_selway]

Ceasing to be Substantial shareholder notice today - AMCI Investments having sold an average of about 830,000 per day for the last couple of weeks - almost a third of the average daily turnover. That flow soon to dry up?
Another 5% up today.

Yeah not bad

Earnings and Dividends Forecast (cents per share)
2008 2009 2010 2011
EPS 4.6 26.3 20.0 30.9
DPS 4.0 3.0 2.5 3.3

thx

MS

 

[Sean K]

Cu is on the rise (for the second) and I am wondering what price Cu needs to be at for Tritton to be economical and have the lights turned back on.

I've looked back through the previous anns but can't find a number.

Anyone else?

It would seem to me that if Cu continues to recover a bit and stabilise then sentiment towards SRL might change a tad. Of course, they have many other projects, but I'm guessing short term Coal and Copper has been the cause of the decimation and continued lack of support.

 

[kbxk508]

Cu is on the rise (for the second) and I am wondering what price Cu needs to be at for Tritton to be economical and have the lights turned back on.

I've looked back through the previous anns but can't find a number.

from their latest annual report, average unit cost for 6 months to 30 Jun 2008 was US$1.57 per pound (currently its US$2.06 per pound)

During the first quarter of 2008 the Tritton mine also suffered from low grade stopes and production congestion ... As a result of these changes and restrictions, the mine was only able to produce 8,372 tonnes of copper in concentrate for the six month period to June 2008. ...

Increased cash costs for the six months to June 2008 followed on from the lower production performance giving an average unit cost of US$1.57 per pound.

kbxk508

 

[J.B.Nimble]

from their latest annual report, average unit cost for 6 months to 30 Jun 2008 was US$1.57 per pound (currently its US$2.06 per pound)



kbxk508

More recently than that the quarterly report for the Dec quarter indicates 6,540 T at 1.21 USD/lb. This was a 20% increase in output over the previous quarter.The output at Tritton was being expanded to 35,000 T/yr but this was hlated due to the GFC. As I understand it they had done the work on the processing plant but stopped the underground development for the extra output. You would expect that costs would probably have reduced further since the Dec quarter and with copper coming back the suspended capacity expansion could be back in the offing. As far as I know Tritton is still producing.

The other one to watch is Hillgrove. Certainly some pain felt with a difficult ramp up but if the process problems are as simple as an upgrade of filtration then there could be a nice turnaround there.

 

[Sean K]

Just broken through the $1.40 speed bump, hopefully it hold eod and forms a platform around there for the attack on the Great Wall of $1.50.

 

[skc]

Missed the fill this morning

Definitely agree with the great wall of $1.5. That's why I am not going to chase this one. I might as well just place a limit order above the high of yesterday, hoping for a close of this morning's gap.