30.3 mt @ 1.70% cueq, page-130

I posted this a while back and thought I would re-post it for the benefit of the new posters who cant be bothered doing their own research.


After reading the quarterly again and revisiting some newspaper quotes ( past and present ) I have done a back of the envelope calculation.

No doubt there will be plenty that can shoot my numbers down but here goes.

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 Buletin 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%20-

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


From the CDU website today ( call it $8500 p/ton AUD )


So $1billion divided by $8500 = aprox 118,000 ton of CU

For a 3 mt process plant to process 118,000 ton of CU concentrate you need the grade to be a whisker under 4% ( what was the bulk test result grade again ? )

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

But what about the JORC scream the non holders from the bleachers !

Well 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 19.9% of Rocklands for $130m ? Clearly the Chinese dont think its worth $4 obviusly they think its worth considerably more aand they probaly consider they have got an absolute bargain .

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 ?

We currently have $121m in the bank with another $57m to be paid by Oceanwide so that will give us $178m cash with 178m shares on issue ( aprox) 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 22m share at $4 and we are fully funded mine debt free with only 200m shares on issue. 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. ( yes after the DFS is done they could borrow the money and not issue any more stock )

So We could have a billion a year revenue with only 200m shares on issue that's gross revenue per share of $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.

So We get EBIT of $4 per share - take off tax and royalty payments and we are looking at $2 to $3 dollars per share dividends. ?

The question is ? how many years will it run at the high grade before dropping down to 1.7% quoted in the recent upgrade ? I dont know but I imagine Oceanwide think its going to be quite a few because they probably wouldn't pay $4 USD for 30mt at 1.7% particularly given its only 1.7% because of the " by catch " minerals LOL !


Cheers Hoot