I'm similar to a lot of other guys on this thread who were first buyin in last year. It is very surprising to see it come back this far especially with a lot of risk taken off the board. The prices you are seeing here are the same as prices we had when the company was still establishing itself and obtaining South African Reserve Bank approval to be able to enter into a agreement with a BEE group. In saying that though, you will need at least a two year horizon (i.e. 2010 min) if you wish to stick it out to the first delivery.
The resource is there, 30klm's away from Eskom power station in an energy starved nation, and we have the option to obtain 70% interest.
The recent capital raising has provided the company with sufficient funds for the next twelve months and to progress to a bankable feasibility stage where we will then again need to raise additional funds.
The land was previously owned by BHP however because they didn't renew their lease before expiry, the government's new legislation to provide equality to the black's lead to the tenement being passed onto Lukale Mining and as a result Comdek formed an agreement with them. As such, a lot of previous drill data was available and the current proven resource was based on historical drill data obtained. the company is currently infill drilling the three tenements in South Africa to prove up the resource and hopefully provide a resource upgrade.
In addition to this main project, we also have other projects that can be progressed such as a tenement through Tiger Coal in Tasmania with close rail and port access, as well as Uranium in Cameroon.
If you have a look at the current price of coal both thermal and coking, that will also give you a good indication of the profitability of the South African project as it is close to the surface and will have a low strip ratio so the costs should be able to be kept to a minimum.
Hope this information helps, it is only a brief start and there is plenty more out there but at the end of the day, you must decide whether the investment suits you and invest accordingly.
RES Price at posting:
94.0¢ Sentiment: LT Buy Disclosure: Held
