potential dividend yields at $3.80, page-54

Time to re hash my old post again seeing we are trying to read between the JORC lines -Some of the numbers re shares on issue are out out of date but the url links should still work !




I have revisited some newspaper quotes ( past and present ) I have done a back of the envelope calculation.


The China daily article from march last year said.

The Rocklands mine, near Cloncurry, Queensland, will have a 10 year exploration time frame and an annual production capacity of 3 million tons. It is expected to generate about $960 million in revenue annually

-http://www.chinadaily.com.cn/cndy/2010-03/10/content_9564437.htm-

The Gold Coast Bulletin said !

CuDeco has secured the sale of a minimum 60 per cent of its total production from Rocklands which is due to be mined from the end of next year.
The 20-year offtake deal is understood to be worth about $600 million a year to CuDeco.

- http://www.goldcoast.com.au/article/2011/04/28/311051_gold-coast-business.html -

-So if 60% of production = $600m - 100% of production must be $1 billion ( close enough to $960m ! )-


From the CDU website today ( call it $7200 p/ton )


So $960m divided by $7200 = aprox 134,000 ton of CU

For a 3 mt process plant to process 134,000 ton of CU concentrate you need the grade to be a whisker under 4.5% ( what was the bulk test result grade again ? )

Dropping the grade to 3% at todays copper price and gross revenue drops to $650m

From page 14 of the EIS initial advice statement !

The Project is expected to mine and process approximately 3 million tonnes of ore per annum for a mine life of 10 to 20 years, from as many as four open pits. Mining is anticipated to be by conventional open cut methods using excavators and trucks Metal production will comprise copper, gold and cobalt with -copper being the dominant commodity exceeding 100,000 tonnes per annum)-

-http://www.derm.qld.gov.au/register/p02415aa.pdf


Exco had finalised EIS approval, a JORC and an ORE reserve that on paper didn't look a whole lot worse than Cudecos yet Exco management sold the whole project ( 100% ) to Xstrata for $175m- Conversely Cudeco have just sold only 30% of Rocklands to O.W and NAAIL for $170m ? Clearly the Chinese dont think its worth $3.80 & $3.60 obviously they think its worth considerably more and they probably consider they have got an absolute bargain .

M & G now want to pay $32m for another 8m shares !

So to quote the crash test Dummies again ! "The Wayne McCrae says the JORC is a piece of crap !" LOL.

Moving on I will play devils advocate and quote from the M.D in yesterdays quarterly report where he stated that Cudeco would go mining with little or no debt ?

The company will around 200m shares on issue ( aprox) and will be debt free -The $53m plant from Sinosteel has been ordered, we have all the rolling stock and plenty of cash to complete the housing accommodation village, Townsville port facility and on going drilling programs.

So worst case scenario the company issues another 20m shares at $4 and we are fully funded mine. I personally think they wont need to issue that many as the JORC upgrade, bulk test results and further Wilgar success should enable the company to issue less shares at higher price after the M.L is issued.

So We could have a between $650m to a billion a year revenue with only 200m / 220m shares on issue that's gross revenue per share of between $3 and $5.

So whats it going to cost to get it out the ground ? Well to start with we have the Cobalt, gold, pyrite ,magnetite and sulphuric acid credits to reduce the cost. Given that and the low cost nature of open pit mining close to transport with only 2/1 strip ratios - I couldn't see all up costs including admin being more than $200m on top of the aforementioned income from other mineral credits.



Cheers Hoot