A good roundup of the current situation i received a couple of...

A good roundup of the current situation i received a couple of days ago.

The expectation in the market clearly was for some good news on one of their projects (Chingola Rock Dumps). The news was poor because the initial due diligence suggested 2 of the 3 dumps they had access to were unviable, but leaving a third as economically viable. Had they all been economically viable, they would have pressed the button to complete the acqisition and got on with pre feasibility. As it stands, and under their agreement with the potential vendors, they have access to a further 5 dumps, which they will now negociate on, test, drill and firm up further ore. The time delay created because of this (approx 3 months) has caused a)traders to sell, b) the last remaining creditors from the recap to bail and c) some of the placees to bail.

The main game however, remains very much in tact. Kangaluwi, which has had almost $40 mill spent on it (pre GFC) by ZRL and Glencore, has 12,500 samples awaiting assay (which was work that could'nt have been done due to financial constraints at the time. So far 2000 samples have been tested, giving them an initial resource of 21 mill tonnes @ 0.89% copper, or 194,000 tonnes of in situ metal, worth $1.5 bill USD. A further 2000 samples are currently being assayed and we should have those results in a couple of weeks. Depending on those results, these sample have the potential to sharply increase the current Jorc.
Further to Kangaluwi, they also own a neighbouring deposit called Cheowa in JV with Glencore. Current JORC is 6.5 mill tonnes at 1.13% Cu (or 75t tonnes worth $585 mill USD).

By way of comparison:

Stock market cap resource grade total in situ tonnes

ZRL $18 mill 27.5 mill tonnes 0.94% 267,000
DML $386 mill 51 mill tonnes 1.5% 750,000
CDU $291 mill 30 mill tonnes 1.24% 371,000
SFR $958 mill 9.62 mill tonnes 5.5% 553,000

ZRL have to overcome some credibility issues associated with the previous management, and the latest news hasn't helped that cause short term,

Round Up:

Kangaluwi :

To date they had only drilled out 25% of the known strike before financial woes got the better of them on 2007. Even then, they were unable to get any of the samples tested. Today, with the company recapitalised, they are been able to assay 15% of those samples and are currently testing a further 15% as we speak. The upside here is potentially huge.

Cheowa:

To date they have 6.5 mill tonnes @ 1.13% Cu. A good start. Glencore, last week, pushed to fast track the exploration progam here. Drilling will proceed in the next 2 months.

Chingola Rock dumps:

1 of 3 dumps has viable ore in it....the others do too, but there is difficulty in seperating the overburden (barren ore) from laden ore because over time they have been reblended. Basically, they are too hard to call. Going forward, they have first right to negociate on a further 5 dumps and will announce something there within the next month.

On a final note, it is worth reflecting on the current state of tight supply in the global copper market. Market commentators and analysts have recently become very vocal about the supply demand equation in the next 4 years with some suggesting a further 50% rise in copper prices on the cards.