back to 26 cents ?, page-18

Hi Draz,

I think that that is correct. If the market wished to see the potential value in Guchab, it could and would. I had thought of Schlangental as more of a wild card than a black horse but anyway.

SBR seems to be doing what it should do so far as I can see and is drilling to be able to produce a JORC compliant estimate and, hopefully, the management will also give us an idea of the mining feasibility - capex requirement, extraction cost, timeline etc.

I am hopeful that Guchab will provide low cost production and, so, I don't see profitability as being that sensitive to Cu price. Cu price might be important to market interest in small E&D companies and producers of Cu but imho a subdued price might be of benefit to us.

This rather perverse view is based on its effect on big miner capex spend on new production projects. At the moment, there seems to be shelving of deep mine projects and long may that continue. Rio T seems to be having a running battle with the Mongolian government over the phase 2 capital spend for Oyu Tolgoi (about $5bn) and imho a prospective tight supply situation might be good for small producers in politically stable regions.

If Schlangental turns out to be a trump card, not a joker, the hard news (JORC compliant estimates) might hit the market at a more favourable time - imho it would be wasted at the moment.

So, it would seem that further patience will be required but soon, if SBR delivers in what it has suggested to us, that might be more to do with waiting for sentiment to turn than waiting for the company's news releases.

One interesting thing that I have read is that debt stricken Chinese corporates are using Cu as collateral for bank borrowings. If so, that could mean that some of the Cu stocks in China might not be available for free circulation.