as confident as ever with cap

It has come to my attention over the past three days that even the shareholders of CAP (who I consider to be an intelligent bunch) also get their thoughts in a bit of a twist if the share price heads in the wrong direction.

I can perfectly understand the frustration, but I keep my head about myself rather than question management, BMG, the ASX, the JORC etc etc. CAP is still the same company it was on Friday evening when the stock made it's highest ever closing price of 88cents.

Just because the stock had it's last trade at 69.5cents does not change the fact that Hawsons has 220Mt of high grade concentrate in the ground.

It does not change CAP's JV relationship with BMG.

It does not change the credibility of NS.

And it certainly does not change the fact that CAP will be a mining powerhouse in no more than 5 years time if the cards fall the right way.

I for one had high hopes of CAP closing out the year at over $1 but it is apparent now that this is not likely. Nevertheless I am still delighted with being up 27.5cents on each and every share that I bought less than half a year ago.

What everyone has to understand is that CAP is not the most liquid stock going around. Remember the day CAP rose 22%? Some may say that was traders jumping on board for the JORC, and if it was simply that, then the fact that the stock rose 22% merely on anticipation is a reflection of how a stock with less than 100M shares on issue behaves.

Now I have sent of an email to NS to enquire about why the drill assays were not attached to the JORC announcement. Being the experienced man he is, I'm sure Nick has a reason for this. Such an obvious omission must have a plausible reason behind it. When I get news on this matter, I will inform the CAP forum.

The other issue that has arisen is the concern with Nick's comments in the BRR interview; with particular focus on whether BMG will pay up the $25M in March 2011 or March 2012. Personally, I think for the professional relationship between BMG and CAP to stay strong, BMG will be eager to make this milestone payment. Some may say that BMG have no incentive to pay up before the deadline, but infact they do. It is BMG's endeavour to get Hawsons into production as quickly as possible, and holding back from milestones in the JV would only serve to fracture the inter-company communications and relationships. This is a joint venture, both business's will need to pull their weight if they want this to work!

Now, why has the stock fallen? Some say it is profit taking, some say it is merely a stock returning to neutral TA levels, and some believe that someone is manipulating the share price. Your guess is as good as mine as to what the answer is. I firmly believe in the 'overbought stock' theory because CAP was always going to have to retrace and consolidate at some stage. We may as well get it out of the way now before soaring to new highs in the new year.

I think that is all I have to say. Reality is I am in this for the long haul, and consider these price movements to be trivial in relation to the bigger picture. I am as confident as ever that CAP is coming on in leaps and bounds. I have a look at the share price every day for interest's sake, but, as naive as it sounds, I don't care if CAP trades at 60c or 90c right now. All I know is the proof is in the numbers. And by that I mean that..

1. CAP pay no capex at Hawsons. Potentially could save the company upwards of $500M.

2. If Hawsons reaches production of 20MTpa in 2015, CAP will have a net of 4MTpa. Earnings on this would be upwards of $70/tonne. After taxes, CAP makes a profit of $49/tonne. PE of 10, and production at 4MTpa gives an EV of about $2B. Could mean a share value of $20/share in 2015 from Hawsons alone.

3. Hughenden JORC out soon. Could be a 400MT inferred resource by February. CAP have a 20% stake. Rule of thumb is 0.25-0.3 cents per tonne in EV at the exploration stage. Could be an EV of around $25M from the JORC or 25cents/share during Q1 2011. At the production stage, the inferred resource could be upwards of 1.5Bt. Rule of thumb is 2-3 dollars per tonne in EV at the production stage. Potentially an EV of around $750M in a few years when coal production begins. Could mean a share value of $7.50/share in 3-4 years from Hughenden alone.

4. Euriowie is full of tin and tungsten at industry standard grades of around 0.4%. Lot's of potential here with this one. Will await further drilling in 2011 before it's full potential is unleashed.

5. Management are always looking for more aquisitions. You never know, CAP could grab another Hughenden or Hawsons in 2011. You just never know.

6. Look through the hundreds of well informed posts that everyone on the CAP forum has made in 2010. From boofy to toph and from stakes to function, and to everyone else who makes the CAP forum special, I thank you! May you all have a fantastic xmas. At the beginning of the year if you were told that CAP would be trading at around 70cents I'm sure you would have taken it. I know I would.

CAP has a huge future ahead of itself. And always remember that things don't go up forever, even in the best performing stocks like SFR and AUT. There are always weeks where sellers seem to take control, but sure enough, the buying always power through. I'll be away for a little while after xmas but I trust I'll return to see CAP trading upwards nicely, and maintaining a strong trend of growth in the share price.

This week everyone has been offered a second chance to get those topups before CAP says goodbye to the sub $1 prices in 2011 for good. Make the most of it. As I said on the CCC forum the other day, exploit the cheap prices!