I think the problem with any company turning a major corner like CFR has done with the Madagascar project (INHO) is the inevitable naysayers and PR issues that follow.
Most of the long-termers will have vivid memories of all the failures of the past and that makes it difficult to do a level-headed analysis of the future. Yes, there is always the possibility that they end up chasing their tail again, but it is also very possible that we're on the verge of a positive breakout.
All the signs right now are very positive, with an experienced partner in Varun, a very promising looking prospect in Madagascar, and all the old projects that may or may not add further boost if they finally deliver results. Personally I'd take the safe approach and discount the old projects and purely look at CFR as a speculative buy based on Madagascar and Varun only... and leave myself open for a pleasant surprise if any of the others work out after all.
And with regards to SP languishing and options expiring, I am cautiously optimistic. After all, CFR has got a large vested interest in making this work; if the options get in the money then this will be a major source of working capital for them to draw on once they get converted. That reason alone has made me take a punt on some of the options at the ridiculously low prices they are at still.
And if the major sell-offs in the last week have been long-termers getting out of what they believe to be a sinking ship, then all the better that they be cleared out now. At least those buying now will be investors interesting in the developing story in Madagascar, and moving shares into their hands will provide support for the SP going up as more news gets released. In the mean time, the down-selling will provide some excellent bargains for those interested in getting on board now.
As always, do your own research... but I have made up my mind about taking a real stake in this opportunity.
CFR Price at posting:
0.8¢ Sentiment: ST Buy Disclosure: Held
