Around the Traps ... with THE FERRET 08:10, Thursday, 2 February 2006
Sydney - Thursday - February 2: (RWE Australian Business News) - *******************************
Child care is a growth industry so we suppose it was only a matter of time before MACQUARIE BANK (MBL) made its move for a bigger slice of the action.
CHILDS FAMILY KINDERGARTENS (CFK) last night revealed that the bank would become a "strategic investor", forking out $10.9 million for a 30 per cent stake.
"This is a significant turning point in the company's development considering that we have been listed on the ASX for less than 12 months," Childs says.
"Macquarie's investment will facilitate CFK's goal to be a leader in the listed childcare sector in Australia by enabling a faster pace of portfolio growth."
Macquarie will pay a maximum of 38c a share for Childs, which compares with 42.5c before the trading halt.
Childs shareholders will be hoping for some improvement when trdaing resumes today.
So will Macquarie shareholders, of course, after yesterday's $4.93 dive to $63.45 after the less-than-stellar profit guidance.
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This column's item on HERALD RESOURCES (HER) was the kiss of death for the stock.
It snapped a long winning streak with a 15c fall to $1.25 before closing at $1.35 yesterday.
Something in the December quarterly report, which finally made it onto the ASX announcements list after 8pm on Tuesday night, must have put the market off.
In response to "numerous enquiries" as to the effects of price changes on the economics of the project the company revealed that since August zinc and lead prices had risen so much that the projected cash flow from the Dairi project was up from $US288 million to $US834 million and net present value from $US121 million to $US420 million.
But estimated capital cost is also up, from $US118 million to $US133 million, or from 31c to 41c a pound of zinc.
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Gold is setting 25-year highs almost daily and although gold stocks are moving up nicely traders are generally still cautious.
Cautious?
Traders are downright paralysed - so far - if an editorial we chanced upon on the Gold-Eagle website is any guide.
The writer, Aubie Baltin, says he checked the stock tables and found they were "absolutely amazing".
In 1975 most gold and silver stocks were trading at under $US2 and a lot were penny stocks under US50c.
Even with gold up 600 per cent from the 1971 low of $US35 to the 1975 top of $US200 most gold and silver shares did little to make anyone wake up and take notice.
It was not until gold retraced its first big sell-off and got back above $US200 did the gold and silver stocks start their historic bull market that would end at unimaginable prices as gold soared to its still recodr $850 in 1980.
Some examples were:
Lion Mines had a 1975 price 7c and a 1980 price of $US380!
Yes, that's right, it's not a misprint.
You could have bought 10,000 shares of Lion Mines in 1975 for around $US700 - and if you held on for the whole five years until January 1980, you would have netted a profit of $US3.8 million.
Mr Baltin says there's no question about it, that was one of the biggest financial opportunities in history.
"I don't know of any other time, not even the dot.com bubble (how may of us could get in on the IPO's anyway) where in only a five-year time span you could have turned so little money into so much wealth," h says.
"You only need to make one good investment decision in your whole life to be super successful."
Mr Baltin believes the market is now at that same juncture as in 1976-78, but only this time the fundamentals are even better for gold and silver than they were back then.
"The similarities between the 1970s and today are uncanny."
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Meanwhile, out there in the penny arcade, Bob on the email points out that AUSTRALIAN MINES (AUZ) has been busy on the news front with two announcements last week and a couple already this week.
The shares last week climbed from 1.5c to as high as 2.4c with daytraders in particular in full flight on Thursday and Friday.
The shares had another big day yesterday with the price peaking at 2.9c before closing at 2.8, up 0.8c on the day.
Last week Aust Mines announced a joint venture deal with PIONEER NICKEL (PIO) agreeing to fund $2.25 million in exploration to gain a 51 per cent interest in any nickel found surrounding Aust Mines's Blair Nickel Mine, near Kalgoorlie.
The deal is worth potentially $5.25 million for Aust Mines, should it not commit any funds throughout the project through to Feasibility Study stage, diluting its interest to 30 per cent in the process.
Aust Mines can focus on production and exploration at its Blair Nickel mine as well as its Duplex Hill South gold prospect, saving its funds to advance these projects.
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Elsewhere among the gold minnows, MICHELAGO (MIC) recently highlighted some good gold hits at the Gold Ridge mine in the Solomon Islands, including 29m at 3.17 g/t gold, and 9m at 8.08 g/t.
It's a much better environment for the company to work in now than in 2000 when a political coup shut the mine down.
The Australian and NZ presence maintains peace, and there is a lot of goodwill to get the mine up and running, as it used to be about 30 per cent of the nation's GDP.
MIC owns 38 per cent of ASG, the vehicle that owns Gold Ridge.
ASG plans to list on the AIM markets in June or July.
The shares were on the mpove yesterday with a 0.4c rise to 4.5c before closing at 4.4c.
Its 12-month range if 8.3c/3.5c.
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