something special..., page-59

re: something special t4p... T4P,

I respect your research skills and your intelligence, and because of this, I am somewhat dumbfounded by your lack of understanding of TRO...

I do not want to sidetrack people off the outstanding opportunity MMB is (I bought in at 27c and again at 57c), so after this post, I will move the discussion back to the TRO Thread....

If you are asking me about questions about fully diluted shares, you obviously have not read my posts in the past......

If you had, you would know that fully diluted they have less shares on offer than CDU. (approx 94M fully diluted). Their copper alone is almost as good as CDU (and that is a minor metal in the strike) 10.1Mt @ 1.8% Cu, 4.0% Pb, 10.2% Zn, 0.55 g/t Au, 85g/t Ag.

T4P, you go on about 59M tonnes at 2% copper for CDU being $10 Billion when they prove it... TRO has proven it and is truly a world class resource. TRO also have extensions to their resource that have yet to be drilled.

What about the other factors... Close to infrastructure, tick. Power and water, tick. People, tick. License, tick... etc etc.

You go on about "if this" and "if that".... well TRO is not an "if" it is an "is”. 10% Zinc, 1.8% Copper, 85g/t silver, 4.0% Lead and gold as well....

Do me a favour, listen to the brr.com.au broadcasts, watch the investortv broadcast with the Chinese on-site, do the numbers.

The difference between TRO and CDU/MMB is it does not have the investor interest. It IS worth $10 a share. Value has not been realized yet. There was $20,000 in trades on Friday.

If you had been watching, you would know that CVC have been capping and accumulating. Someone out there knows the value.

And what about the Parent TOE.V that owns 54% of TRO. Their holding alone in TRO is worth $1.30 CAD a share. TOE.V shares are currently 84c CAD… yeap 46c less than their TRO value alone. Investors are STUPID!!!!

My point T4P is “10% inground” is stupid. Don’t be stupid. If TRO is not 10% of PROVEN resource with UPSIDE, PEOPLE, INFRASTRUCTURE…… then no mining company is. So where are you wrong T4P??? 10% or TRO?

Here is a highlight of the HC TRO posts…

-----------CDU vs TRO----------

Comparison of CDU with TRO:

Share price: 390;;;87 cents
Shares: 76.44;;; 76.5 mill
Options: 25.6;;;6.34 mill
Fully dil: 102.0;;;82.84 mill

Insitu value ($A): 8.870;;;9.680 Bill
Type: Inferred;;; 85% measured or indicated
Insitu: 25 mill tonnes;;;11.4 mill tonnes
;;;;;;; 59 mill tonnes

Ins. value per tonne ($A): 150.34;;; 862.0 (0.77). Cu=US$3.35 ; Pb: 0.74; Zinc: 1.93; Silver: $12/ounce; omit Gold
Insitu Value per undiluted share ($A): 87.0;;;116.8
Market Cap, not dilut. ($): 298.1 mill;;; 66.5 mill (Ratio: 4.48:1)
Per A$1 Market Cap, insitu value: 29.75;;; 145.5 (Ratio: 1:4.89)

Notes: The ASX queried the CDU's inferred resource of 59 mill tonnes and mentioned that instead 25 mill tonnes ought to be used. Above calculations use 59 mill tonnes instead.
The UDC resource is inferred while 85% of TRO's resource has been measured or is indicative.

CDU's resource has mainly 2.04% copper. TRO has the valuable 10.2% zinc as well as copper, silver and lead.

TRO also has a considerable amount of tailings, possibly some 10 mill tonnes. These were excluded.
The calculations don't use fully diluted values. Had these been used, then UDC would have 102 mill shares while TRO has 82.84 mill shares.

-------------and this--------------

Gerry,

As much as I hated comparing it to CDU (every man and his dog likes to do that), it was the easiest to compare to.

It has similar shares on offer (less actually), more $$$ in the ground, it is JORC compliant, and has higher % metal compared to ore...

It does have some difference obviously, and I am not qualified enough to comment (zinc vs copper mining etc).

What is obvious, is how undervalued it still is.

As far as the comment about hard to mine, well, I don't agree, because all the infrastructure is already there. Also, this is not a mine in whoop whoop. Its not in Iran, the Congo etc etc... Its in NSW!!

Every number crunching exercise I do, shows a mine up and running (lets say in 2-3 years) making $400-$500 Million a year.

This gives a worst case senario of the company having a PE of around 1 if valued at $400 Million. At last account, that would give a share price of $5.

Give it a more realistic PE of say 5 (still low IMHO) it would give it a share price of $25.

I am holding. There is a lot more upside than downside (my personal view on picking stocks), on this one.

-------Compared to JML (also underground) -----------

More research for all you guys... :) I think you owe me a few beers..

I came across this presentation by TRO at the EXCELLENCE IN MINING & EXPLORATION CONFERENCE on the 8-10 OCTOBER 2006. In it, they compare Market Caps between TRO and some other companies.

It seems easiest to compare TRO to JML (Jabiru Metals). Jabiru is also an up and coming Zinc Miner, which look like it will start producing at the end of 2007.

The quote below is from a very recent release (24/10/06) by JML..

"Overall, our total reserves have increased from 1.6 million tonnes to 1.714 million tonnes at 3.0% Cu, 11.3% Zn, 0.7% Pb, 115g/t Ag based on similar mining and metallurgical parameters to previous reserves."

So comparing the two.....

TRO - $77M Market Cap - 10.1 Mt @ 10.2% Zinc.
JML - $300M Market Cap - 1.7mt @ 11.3% Zinc.

Now, TRO has 5 times the amount of metal in the ground and based at their close of a SP of $1 are about 25% of the market cap. So.... a share price of $4 gives them a similar market cap (but more than 5 times the metal) and a share price of $20 gives them the same Zinc in ground to Market Cap Ratio...

Upside?? You better believe it!!!!

There are some differences obviously... some better some worse.

1. JML will have a mine up and running 12 months earlier.
2. The JML orebody is much deeper in the ground.
3. JML is at 1% higher grades.
4. About 100,000 tonnes at JML have to be replaced by Concrete (which is obviously at a cost.

So, what does this all mean to the SP? Well, I think it is obvious...

--------As the technicals go.... 4/11/06-------------

Thanks for the post. Lets look at your numbers for a sec..

Firstly, the resource is 10 Billion tonnes at 16.9 zinc equivalent. Mining over 10 years (slower than the 6 years they predict), that is more like 170,000. Let go low at 150,000 (equivalent).

Secondly, your net profit margin is way too low IMHO. Last Financial Year, Zinifex's profit margin was about 35%. At the start of the financial year, the zinc price was about 50c pound until about Christmas, then it rose to about $1.50 by June. The average sell price during the year could be NO better than about 80c pound. (Have a look at Kitco.com).

So, if their sell was 80c and their margin was 35%, at most, their cost is 50c. That gives Zinifex a profit margin more like 75% not 35%.

Lets allow TRO a cost mining per pound of 70c a pound(Remember it sold for 50c pound at the start of the year, and there was a mine on site producing in 1999 when Zinc was less than 40c pound).

So........

150,000 tonnes * 1.90 zinc price USD * 2200 (converting pounds to tonnes) * 1.35 (currency conversion)= 846 million REVENUE

now use a net profit margin (net profit/revenue) of 60% (70c cost on a $1.90 sale is actually 63%, so lets round down) and we get $507.6 million

507.6 million divided by 80 million shares = $6.34 per share EPS for 1 year.

Next you talk about a dillution of shares where the original shares are only worth 25%. This is WAY overkill... I think being extremely generous with share dilution, would allow them to double (at most) not quadruple... (Remember, permit is already there, so is the infrastructure)

This then makes it 507.6 million divided by 160 million shares = $3.17 per share EPS for 1 year.

Using your PE or 7, that gives a share price of over $22.

---------------------------------
I'm going to run your method again (but I will not be so worse case IMHO)

Lets believe the company can mine in 6 years not 10 (and they have further resources to keep going, as TRO and yourself stated). This would bring yearly output up to 250,000 tonnes (still low using a factor of the 150,000 not the 170,000 - ie 150,000/6 times 10).

250,000 tonnes * 1.90 zinc price USD * 2200 (converting pounds to tonnes) * 1.35 (currency conversion) = 1410 million REVENUE

now lets use a cost of 50c pound (still allows for a non profitable mine only 9 months ago) then net profit margin (net profit/revenue) is 73.6% and we get a profit of $1037 million.

Allow for a more realistic dilution, say 50% more shares, then that make 120 Million shares.

This then makes it 1037 million divided by 120 million shares = $8.64 per share EPS for 1 year.

Using your PE or 7, that gives a share price of over $60.

You said "but previous valuation of $25 are ludicrous given that theyre based on revenues only!". No, they were done on profit, not Revenue. Re-read them. They allow for a profit of $4 Billion from a $10 Billion resource.

Your method, actually allows for a share price between $22 and $60 at current share prices. This does not factor in any upside in the Zinc price, whch will probably happen with the forecast Zinc shortages.

Not only is $25 not ludicrous, it's LOW IMHO. What's the current cost of entry???