the new farce in copper, page-7

McCrae 'flabbergasted' by CuDeco's savaging
August 24th, 2010

CUDECO might consider itself the sale of the century at the moment, but so do short-sellers who yesterday continued to hammer the Gold Coast copper explorer's share price.

The rush to sell CuDeco has prompted company chairman Wayne McCrae to seek a corporate watchdog probe into the shorting of 1.4 million shares.

Short-sellers have made a fortune on CuDeco over the last four trading sessions as they slumped from a high of $4.83 to yesterday's low of $1.67.

The shares fell another 20 per cent to close at $1.705 yesterday, or almost a third of their level early last week before the Gold Coast company's long-awaited resource update for its Rocklands project in central Queensland.

CuDeco's update last Wednesday triggered an avalanche of sell orders as investors chose to dismiss any prospect that they could share in a potential $3 billion copper bounty in the next 10 years.

The company announced a measured resource of 30.9 million tonnes at 1.24 per cent copper, enough ore to deliver 3 million tonnes of copper a year over 10 years, worth up to $280 million a year.

But Mr McCrae said the first four years would focus on higher-grade copper at 2.05 per cent, which equates to just under 65,000 tonnes a year or about $500 million a year in revenue.

The bears yesterday slashed the company's value to a two-year low of just $230 million, or about half its expected revenue in its first year of operation.

Mr McCrae, who said he was 'flabbergasted' by the market reaction, also hit back at one media report that said CuDeco's latest resource 'barely makes it as a development opportunity'.

"It completely defies logic," said Mr McCrae.

He said the Rocklands resource, which would be open-cut-mined, was larger and graded much higher than Ernest Henry's new underground mine.

"Ours is just sitting on the surface; you just have to dig it out."

Sydney-based Foster Stockbroking has placed a $1.20 valuation on Cudeco's shares, but it is understood that it based its estimate solely on CuDeco's measured resource with an ultra-conservative processing grade. Just two weeks ago, Foster Stockbroking was targeting a $7 share price for CuDeco based on an expected resource of 100 million tonnes at 1.5 per cent copper.

CuDeco's total resource has been calculated at 245 million tonnes at 0.42 per cent.

Mr McCrae said the measured resource was aligned with the company's environmental impact statement which has been lodged with the State Government.

He said CuDeco's long-term plan involved a staged upgrade of the resource to be funded through cashflow from the initial mining operation which remains on track to start in 2012.

CuDeco said there was sufficient resource to carry a mine beyond its approved lease of 40 years.

http://www.goldcoast.com.au/article/2010/08/24/249865_gold-coast-business.html