re: 3 metres at 13% rigged ploughPerhaps FXR should give their...

re: 3 metres at 13% rigged plough

Perhaps FXR should give their nickel projects to a company that would be able to mine them profitably, like IGO or JBM.

Now they are jumping into iron ore...

Speculator from teh bulletin mag gave them a thrashing last week...and rightly so...article below.

Cdchi1

Cu later
04/05/2005




Wheels fall off mining boom
Bisiness Directions: Pacific Hydro
The Speculator



I've quit the downed nickel-copper producer as it has jumped into the hazy fog of iron ore prospecting.

As soon as our nickel-copper producer Fox Resources (ASX code: FXR) announced a diversion into low-grade iron ore prospecting earlier last week, I decided to dump them. Investors put their money into this relatively small company as an income-earning emerging producer of nickel and copper concentrate. It had its own cheaply purchased infrastructure in place, contracts with a Chinese buyer to ship out of the Pilbara port of Dampier and promising exploration targets to extend reserves around its Radio Hill mine.
On April 6, shareholders were mildly encouraged with the news of a “spectacular drill intersection” at Ruth Well, 13km north of Radio Hill. The intersection was 4m below 53m in depth and it returned 5.9% nickel, 10.3% copper and 0.3% cobalt. The shares held at around 52.5¢.

Then the bombshell. On April 14, the company sought a trading halt pending an announcement. Last sale before that was 50¢. On a further request, the stock was suspended on April 18. Come April 22, Fox was reinstated to trading after announcing it was acquiring a major magnetite iron deposit 10km from the port of Cape Lambert near Karratha, WA.

The stock opened hopefully at 59¢ and closed at 56¢ on a turnover of nearly 2.1 million shares. It was the last day of trading before the Anzac weekend and, despite the investment euphoria over iron ore, it looked like the smart money was getting out and the wood ducks flying in.

Buyers of iron ore primarily want high-grade hematite (62%-plus iron) with low impurities. That generally meets standards for direct shipping ore, requiring no expensive processing before exporting. Fox has acquired a magnetite resource with an initial target size of 250 million to 500 million tonnes, and hopes of an iron content greater than 30%. Such a target was suggested after Robe River Mining spent eight years drilling 22,000m of reverse circulation and diamond drill core from 189 holes in the 1990s when it was owned by North Ltd. North was taken over by Rio Tinto in 2001 but the iron ore hopes were already on the backburner.


The earlier Robe work does not comply with current standards for resource estimation, so much more remains to be done to meet Fox’s hopes of becoming an iron ore producer. If a sufficient resource is established, the project will then require an iron ore concentrator and a pellet-making plant. We are talking many millions of capital investment ahead of shipping a product.

Fox has entered heads of agreement to buy the project holder, Mt Anketell Pty Ltd, and its 220sq km exploration licence application for 25 million shares, 25 million listed options exercisable at 75¢, cash of $2m plus a 20% free-carried interest through to a bankable feasibility study. In addition, Fox is placing 15 million shares, plus attached 75¢ options, at 58¢ to raise $8.7m. That will blow issued capital from 67 million shares to 107 million. I sold at 55.5¢, having missed the initial frenzy.

The market in junior resource stocks is increasingly choking on a share scrip oversupply. In the past two years, we’ve had about 120 new resource floats, some two-thirds now trading under their issue price.

One trick new companies tried in hopes of holding investors was the “loyalty” option, issued to those who stayed for at least several months after listing. One such company is Jupiter Mines (ASX code: JMS), which listed last December after raising $3.8m from a public issue of 19 million shares at 20¢ through sponsor Montagu Stockbrokers. That took issued capital to 51.38 million shares.

Jupiter’s prospectus dangled the offer of a non-renounceable one-for-two issue of options at 1¢ to holders three months after listing. Exercise price is 20¢ by January 31, 2007. But in mid-April, when the shares went ex-entitlement to the non-underwritten options issue, the shares were trading around 14¢, well below their 20¢ issue price.

Jupiter’s major projects are a large nickel play 28km south of Widgiemooltha, also south of Kambalda, WA, and 75% of the Klondyke gold project in the Pilbara where prospectors have established an indicated resource of 290,000 tonnes of 1.7gpt. Together with inferred resources, Jupiter believes it may have a total resource of 4.16 million tonnes of 1.9gpt.

Bought as ordered
10,000 Cooper Energy @ 26.5¢ $2690

Sold
10,000 Fox Resources@ 55.5¢ $5467
(Bought 60¢; 1.09.04)