share price query, page-11

Another point of interest. De Witt was targetted to commence during 2013. There has been no news on the wash plant option that was flagged in the feasibility study results so we are to assume that Conti will have to fund the purchase of this as well as the rest of the development CAPEX.

Total CAPEX is $111M for the surface operation, and a further $108M for the underground operation.

I would be happier to bet on the sun never rising again than on Conti being able to fund this project. Placing shares is clearly not going to work with the current market cap. Given that they were more willing to place shares than use the ABSA facility to fund working capital, it appears that loan facilities are out the door too. Unless they sell off part of this project to another company, this asset has next to zero value in my opinion.

Ferreira is covering operating costs, but only just (see open briefing). Vlakvarkfontein is generating roughly $7Mpa at best in gross cashflow, and CCC own roughly 50% of this. Penumbra cashflow is delayed for a year. De Witt is going to struggle to be funded. Colombia is going to be in a similar conumdrum to De Witt in that it will require intense capital injection to ramp it up from 100ktpa, let alone the acquisition costs of roughly $15M. And how long will the cashflow from those be locked up if CCC pull off a minor miracle and get them up and running?

Then there's Botswana, the darkhorse project. When the coal sector was seeing better days I was actually quite a big fan of this project if it was utilised properly. But those days of the hot coal sector are over. Compared to NMR it probably doesn't have much value to the market's eyes either. NMR have an inferred resource more than twice the size of CCC's, and an enterprise value of just $6M. In the ground CCC's Botswana coal is probably worth $2M-$3M at best.

To those wondering "what went wrong" and why this has fallen 94% from its highs in early 2011 - it isn't pretty, to use the words of Peter Landau.