Thanks Jay - always appreciate your input - with you it is definitely quality over quantity. Glad to see that your other picks are performing nicely today. Although CCC has been a laggard among your top 5 selection group, it has ticked so many boxes, and (IMO) presents a very safe entry at the moment:
* Half yearly cash flow & production report due soon, which will show substantial profitability of current mines, and potential for large near-term cash flows/profits from Vaalbank, DeWittekrans & Penumbra.
* Confirmation of no new capital raisings (thanks Champ2003). Strong basis for new projects to be funded via existing cash flows & (low cost EDF) debt. AIM listing and consolidation possibly by end Mar 2011 - this will move Conti onto the radars of larger funds/investors. London investors have a proven record of supporting African based miners. Highly regarded international broker RenCap due to release comprehensive research report on Conti.
* News on 20,000m (or more?) Botswana drilling program due soon. News about Botswana discussions with Indians, as per Paydirt article. New Conti advertisement suggests Botswana target may rise to 9bt.
* 2 year high & rising RB coal prices. SA not affected by floods. Has stable weather patterns, 100 year history of coal mining, excellent infrastructure, ready access to skilled labour & technicians.
* Sth Africa now has BRICS membership: immediate benefit seen with important Indian delegation heading to SA tomorrow to buy/secure coal assets.
* Coal sector running hot, with top analysts predicting it will outpace gold & oil in 2011.
* Massive spending on new coal fired power plants in China, India & S/E Asia. Serious talk of "peak coal" in China (witness recent imposition of quotas on domestic production)
* Highly respected management with excellent connections in SA & regional coal industry. Proven track record(s) of production. Proven ability to identify & acquire assets at fire-sale prices. Consistently over-delivering: exceeding estimated production levels, fast mine development, promoting company aggressively in media & to institutional investors, strong news flow, plus the occasional surprise package like KORES JV at Vlakplaats, and Vaalbank fastrack via Total's Forzando operations.
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If you observe many stocks which performed exceptionally well in 2010, like MHM, AFR, PEK, AVB, LYC, PEN, SDL etc you will notice that the charts show long periods of SP stagnation, or even decline, before lift off. Those investors who identified value, stuck to their research, accumulated at value prices, and remained patient, were handsomely rewarded. So too, I believe that patient LT investors in Conti will be duly rewarded.
Cheers,
M.
CCC Price at posting:
72.0¢ Sentiment: LT Buy Disclosure: Held
