mining and the markets, page-34

re: the biggest challenge facing cmr Cuzo – always enjoy reading your posts – especially the results of your detective work. As an old Agatha Christie fan, I think you have a touch of Hercule Poirot in you.

But relax and smell the flowers (or the money). CMR was $1.41 at the start of the year. It is up 200% this year because it has solid achievements. It has moved from being a wannabe to a (hopefully) successful miner in the near future. You say ‘the way I look at it, if I can see real value in CMR, surely predators must also be able to see it’. Yes and No. Value is different for different people.

For the Olys of the world CMR is the jungle king. For them it is obviously undervalued and therefore vulnerable. I am sure they would point to Extrata taking out MIM or BHP taking out WMC as examples of Australian shareholders selling out Australian mining houses at what turned out to be a gross undervalue. (Or say you should give thanks to Peter Costello and Zeus for preventing Australian shareholders from selling Woodside Petroleum to Shell for three times less than the current share price). It is undoubtedly true that Australian investors, especially institutions, can grossly undervalue Australian mining assets.

Clearly there has been non-trivial selling pressure on the CMR register recently. It seems GT is buying not just Buck House but also Edward 111’s claim to the throne of France (Oly will presumably claim at least an earldom). MH is harvesting his well-deserved crop. And for punters, the share price going from 20 cents to $4 plus means it is time to sell and move to the next small cap to turn into a ten bagger or more (like the super punter Peter Woodford and PGM). But there is no reason to panic just because there is some selling. We only need to worry if there is an underlying fundamental problem in CMR. I can’t see it. More importantly there is also a new range of investors who will be buying if CMR continues to kick goals.

For many institutions CMR is not yet investment grade. It has massive problems – just successfully commissioning the oxides mine is a Herculean task – further the sulphites may not be commercial - and the expected uranium resources may not exist (CMR has only a established a modest resource to date). So the ‘conservative’ investment funds or predators will hold off until these uncertainties are resolved. Look at Newcrest– the big boys will not move on Australia’s premier gold miner until it has an established track record of successfully commissioning its Telfer mine. If and when CMR establishes an earning stream from its oxides mine, a bankable feasibility study of the sulphites and a significant increase in its JORC compliant uranium resource, there will be a flood of Australian institutions looking for a better investment than T3. In the interim a successful scrip-based takeover of CMR by an aggressive junior miner would not be anywhere near my top ten concerns about CMR.

I hope Oly and the other optimists are right and CMR shareholders are sitting on a bonanza. But in my opinion, we don’t need to spend $250,000 (or whatever) on a PR campaign now – that money would be better spent on hiring a couple more drillers, expediting assay results etc. It is all very well to say ‘sell the sizzle, not the sausage’. But first we need a sausage. Let’s get our sausage, then we can sell the sizzle. No-one is going to pinch our sausage while it is cooking on the BBQ and we are posting on HC.