interesting valuation, page-5

After the release of the Sep Quarterly the other day, I think it is time to have another look at the current valuation of CSE based on its SYR holding.
After discussing with my tax guy I am sure that I have this tax issue nailed now. Basically full tax is payable at 30% on the gain in value above the cost base. There is a tax credit available of $1.5m to offset any tax payable upon the sale of SYR shares. So the calculation as to current value of CSE is as follows:

106.845m shares on issue - no oppies so no further dilution.

Cash as of 30 Sep 13 = $1.75m

SYR shares held = 11 million

Value = 11m x $2.84 = $31.24m

Tax on gain (cost base is $300k from what I can see in the annual report)

$31.24m - 0.3m = $29.94m x 30% = $9.282m
Less tax credit of $1.5m = $7.782m

Net after tax cash = $31.24m + $1.75m(current cash) = $32.99m less tax of $7.782m = $25.21m

$25.21m/106.845 = 24.0 cents per share.

With CSE trading at 17.5 cents you would have to ask what is the problem and how does CSE get their share price up to full value?

Speaking to my broker he believes that any insto's interested in the SYR story are buying SYR shares, not CSE as its defacto. This means the valuation gap needs to be closed by retail shareholders. This isn't happening at the moment.
I think CSE will eventually sell their SYR shares to one or a number of insto's which want a decent slice of the SYR pie however they either cannot buy it on-market (not enough free float) or get SYR to make a placement to them (which SYR does not need to do at present). I am not sure when this will happen however I would think that once more news on SYR is released (feasibility study with new resource, mining license, etc), then more and more insto's will be looking to get on board the SYR story, so CSE will be approached for a sale.
We also must remember that while in the short term CSE directors are probably happy to say that SYR is worth more than the current price so we are happy holding, their obligation is to the shareholders to maximise their returns so the only way to do this will be to realise full value for the holding by selling it. Trading at a 38% discount to its underlying worth is NOT in the best interests of shareholders so I am expecting the directors to take some action on this over the coming 12 months or so.