In case people have been living under a rock, African Minerals (AML) is in administration. This has a huge impact on the viability of CFE's Marampa Mine and the royalty from the Timis Marampa Mine(refer as Timis to prevent confusion).
Timis Royalty:
Like CFE, Timis needs access to infrastructure. Timis was granted
temporary access to the rail and port by AML. This can and probably will be revoked after an initial 3 month period which has now passed. I'm guessing the majority of CFE shareholders did not know this. You can forget the
potential 4 years.
http://www.*.co.uk/companies/rns/141212ami6477z
ARPS
ARPS is the actual Owner of the Rail and Port and was owned by AML and 10% by the SL govt. I say was. Note that Shandong now effectively own ARPS and Tonkolili. I highly doubt they are going to allow Timis to use it any more.
http://www.investegate.co.uk/africa...-by-pxf-facility-lenders/201503031125533981G/
Infrastructure:
Every Marampa study/projection was based on infrastructure agreements with AML. The current agreement for rail is 2Mt p.a. Does this continue? I have no idea. If the company dissolves I highly doubt it. That's not the only issue. The projections are based off increased access of 5-15Mt p.a. through a better rail and deep water port system and that was a key selling point. There are no agreements for this. Therefore any such agreement would be with the new owners - Shandong - very high risk. Timis and Marampa are effectively stranded in Africa.
Golden Trio:
AML, CFE, Timis Mine - The potential for all 3 close knitted projects to share massive cost savings. Gone.
AML was like CFE's big brother. It was valued at 3 billion in its prime with a mine with significant resources. It was effectively taking significant costs and doubts away. That's gone.
Iron Ore Market:
Unless you're BHP, RIO or Vale you're probably getting pushed out of the market. Years ago airlines did the same thing and killed off all the competition. That industry has obviously changed since then with the rise of hub to hub and low cost internationals. CFE's Marampa Opex were listed as $52-58/ton - above the current rate. Chances are this is far worse with efficiencies towards the end of the mine life skewing it. Speaking of current rate, it's a far cry from $100-120/ton revenue in the same projections. What I'm saying is CFE's secondary plan of producing is out the window and so are the investment rate of returns.
Global economy:
It's not exactly boom time right now...
CFE ownership:
Who ever ends up owning African Minerals almost 20% share of CFE will have serious influence - Don't forget the 25% 2 strike rule. ... I wonder if Tony will put a bid in for it.... but really is there enough cash for a 'buy back' of this scale?
Best hope:
Take over offer from new largest holder of CFE shares. Maybe Shandong will be interested to go with their shiny new 100% owned Tonkolili project. Who ever it is, it will raise the share price.
Or possibly wait for Iron Ore recovery. Like Oil or any other recovery it's a landmine. Could take 1yr, 5yrs, 10yrs, 20yrs before it goes off. Waiting it out is going to have it's costs too, things seem like they are going to get far worse before they get better. Not to mention paying full salaries while waiting for the perfect timing for 'parked' projects.
Meanwhile I've learnt my (expensive) lesson and in hindsight glad I sold when I did and am clawing back losses 0.01 cent at a time through bank interest.
My 2 coppers
(20min delay)