from todays smh

Cazaly up but may miss mark

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August 2, 2006
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Day traders may have missed a crucial point in the explorer's announcement.

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CAZALY Resources is starting to show its cards in the next stage of the battle over the disputed Shovelanna iron ore tenement.

The Perth explorer's share price doubled in heavy trading yesterday after it released a legal opinion from Wayne Martin, QC, which cast doubt on the decision to hand back the deposit to Rio Tinto.

Cazaly snagged the deposit last year when Rio's paperwork had failed to reach the warden's office in Marble Bar on time, but was later stripped of it on "public interest" grounds.

But it seems some optimistic day traders may have glossed over the fine print in Cazaly's announcement yesterday.

The legal opinion was made in October and clearly failed to sway Western Australia's resources minister, John Bowler.

In hindsight, Cazaly may have done itself some damage by getting the opinion from Martin. Formerly the counsel assisting the HIH inquiry, Martin was appointed chief justice of WA's Supreme Court earlier this year.

Cazaly is about to lodge an application with the court for a judicial review of Bowler's decision. That means Martin is likely to excuse himself from the case, costing Cazaly a supportive vote.

Rio Tinto wouldn't comment on Cazaly's decision to release Martin's legal opinion yesterday. But it would seem fair to assume the mining group has a barrister or two on its side with a different view of the Mining Act.

Cazaly shares, which traded as high as $2.40 when it seemed to have bagged the Shovelanna deposit, languished around the 30c mark before it started to slowly leak more information about its Shovelanna appeal.

Yesterday's announcement was enough to push the shares as high as 84c, but they dropped back later in the day to close 22.5c higher at 63c.