By David Haselhurst, ninemsn MoneyMay 7, 2008, View portfolio...

By David Haselhurst, ninemsn Money
May 7, 2008,
View portfolio

Here's a stock with little downside risk but appealing upside potential.

The listed Chrome Corporation (CCI.AX


CHROME CORP7 May,200807/05/2008 10:26 Sydney, Australia.
Value Change % Change
0.250 +0.025 +11.110%

Company overview
Real-time quote
CCI.AX , 0.250, +0.025, +11.110%) has copped two bids so far this year for its main asset — a 74% equity in the Ruighoek chrome project in South Africa. Both offers are worth more than five times the $8 million price paid by CCI three-and-a-half years ago for the asset.

With the price of chrome metal soaring (due to rising demand as a substitute for the more expensive nickel in stainless steel) it's possible there could be more suitors in the wings before the auction is over.

Any sale will result in a capital return of up to 15c a share — or two-thirds of the company's share price of 22c at the close of last week's trade. The company will remain a listed cash-box ready for new opportunities.

Chrome Corporation was born out of the shell of onetime West Australian nickel hopeful which almost went under with the failure of its Bulong lateritic nickel project in the late 1990s. Capital reconstructions and shareholder changes followed and three-and-a-half years ago directors came across the opportunity that is now restoring its fortunes.

South African solicitor Martin Brinks was trolling through titles to idle prospects seeking opportunities under that country’s "use it or lose it" minerals policy.

What turned up on the lawyer's radar was the moth-balled Ruighoek chrome project, a mine and treatment plant operated by a joint venture of Billiton (60%) and Anglo-America (40%) from the early 1960s until 1993. Annual production was 75,000 tonnes of contained chrome from underground operations before the project closed and the plant was put on care and maintenance. The price for chrome was then about $US65/tonne. Today, the price is $US300-350/tonne for lump ore comprising 40% chromium oxide.

The Australian company bought the idle project for $8 million, including the issue of $6 million in redeemable convertible notes in April, 2005.

The company has since invested in a feasibility study to re-open the project as a larger open-pit operation with capacity to produce 300,000 tonnes of ore/year. By mid-2006 the company reported a resource estimate in the old workings of 1,555,576 tonnes of 44.44% chromium oxide, including a measured reserve of 416,146 tonnes.

The company also has prospecting rights or applications over surrounding ground with resource potential estimated at 12.9 million tones of similar ore.

The project site is described as being two hours drive from Johannesburg on the western rim of the Bushveldt igneous complex, which is the source of 60% of the world's chrome.