post bfs; what happens next?, page-12

A few reminders:
- GIP has potentially the lowest tantalum mining costs in the world, mainly because of the feldspar component.
- GIP has stated it has the potential to be the biggest supplier of tantalum in the world.
- SGW has lots of tantalum, but it's costs are very high, to the point where profitability is threatened without quality, long term contracts.
- Not all tantalum deposits are the same. Unlike most, GIP's has very low radiation levels, which is becoming an increasing issue and is a prime consideration for the Saudi deposit, which is also a different mix of minerals.
- Much was made of the threat of Brazil and its traditionally huge deposits, over which SGW had some options. It is noted from SGW's recent report that things aren't working out for them.
- The promoter of the Saudi deposit has written to me to say that he has no plans to list on the main board, which brings in to question whether there are any plans of significance. He has also said that if GIP's mines go ahead, the chances of the Saudi one will be affected. Others in the industry have questioned whether he even has the required rights.
- I've never thought the BFS would / should make much difference, but that landing contracts and MOU's would. Thus far I've been proven wrong, for GIP already has initial offtake agreements and despite a mining boom in particular in which a lot of rubbish has shot up, GIP's price this year could be politely described as "stable" (Note - for those who got in on the placement last August-September, when I first started posting on this subject, the story is rather different, but given the world class deposits, still disappointing).
- GIP has said that its feldspar could be worth more than its tantalum. Thus far it has eleven claims over at least six different minerals in a region of the world that was once rich, has been virtually untouched for decades and has not exploited using modern surveying and mining techniques.
- The outcome of the Egyptian Cabinet turnover remains to be seen, but GIP has maintained its rights are secured by Egyptian law regardless of such things.
- The AIM listing shares have now been turned over.
- Labour and fuel costs are cheap in Egypt and the Government is keen to get the economy going again. GIP is getting in on the ground floor with two world class deposits virtually gifted to them with extensive drilling results worth many millions thrown in. All they have to do is find the capital to exploit it fully - capital which is not supposed to be forthcoming from the Egyptians. A little mining has already been done for the pilot study. The first deposit is huge, sticks high out of the ground and can be mined using one's fingernails if one really wanted to. The second deposit is bigger than the first. The other nine mines recently announced are an unknown quantity, except that they have been mined before and are in an area rich in mineralisation.
- GIP stated long ago that it was looking for a gold mine interest in Africa for cash flow. Being virtually gifted nine gold etc ex-mines in Egypt was a good start. GIP further stated about a year ago that it was considering debt funding. My understanding is that even the World Bank has been considered. With nearby Libya back in the fold, Iraq in the rebuilding phase, Dubai being the world's new powerhouse economy and a lot of breakthrough things happening elsewhere in the region, this region of the world could in some senses be a new China of sorts as times go by.
- The Diggers and Dealers is next week and Cabot reports on Monday night.
- SGW's previous head stated about nine months ago that there were no signs of any new tantalum sources coming onto the market. Given that ludicrous statement, it seems to me that the so called surprises in the last fortnight for SGW were not surprises at all - simply, the culture of secrecy and posturing continues and the broker pumping in the newspapers and broker reports was all too transparent a month ago. Reading between the lines, with GIP due to start full scale mining in December 2005 and Cabot stalling about a rollover of a contract with SGW around that time, GIP has at the very least been noticed by all the players and SGW will struggle to continue to get such a lucrative. long term contract again as last time - a contract which literally saved SGW's bacon during the lean period two years ago when tantalum prices took an uncharacteristic dive (tantalum was the fastest rising commodity in the last half century according to the U.S. Government, who continues to hold strategic reserves) and the gold hedge book was of major concern.
- According to the Japanese, demand for tantalum is back to where it was when things went crazy in 2000. This time around, there has been a significant stockpile built up around the world by the biggest customers and comments by major players last Christmas suggest it will be another year or so before that is worked through. However, it's of little significance given that tantalum contracts tend to be long term.
- The Italians are keen consumers of feldspar and rate most of GIP's deposit as very high class. It's not inconceivable that Turkey could lose its status as a major supplier over time.
- LAF is outrageously overvalued compared to GIP, as I pointed out in a previous post on just that subject. Furthermore, the comparisons relating to quality and risk make GIP look even better in my view. One thing that LAF has going for it in spades is institutional support, of which GIP has none at the moment. Thus far, GIP has been run on a shoe string with remarkably low remuneration for executives by current world "slush fund" standards, a main director who has been buying on market when times were tough and a desire to hold out for the best deal possible. Furthermore, consideration has been given to value adding.
- GIP's first mine should be viable for the feldspar, tin etc components alone. The tantalum could be characterised as a bonus in a way, yet it's just about all that's considered when punters and pot shotters are talking about it. If the feldspar etc is dug up, the tantalum will be anyway. If for some strange reason the exceptionally cheap to mine, high quality and readily available tantalum cannot be sold, it could be stockpiled.
- Technically, GIP is on the cusp of looking really interesting for the first time in a long time on a weekly chart of several years. With any luck, punters might be ready to take it seriously.
- Along with Alpha, I had a hard time promoting GTP three years ago and we got pot shots from every corner. Some of the same has been seen since I first started writing about GIP late last year. GTP appealed to me in potential capital appreciation terms, but had the best fundamentals of any Australian stock I've seen before of since and paid huge dividends to boot and has done well since then. I had hoped that GIP could appreciate in value more than GTP one day. I have another stock under consideration for major appreciation down the track, but will wait to see if GIP works out as hoped before considering writing it up. Like GIP and GTP, it too will be controversial.