Copper fever hitsLiliana Molina July 15, 2006TO the true...

Copper fever hits
Liliana Molina

July 15, 2006

TO the true believers, a paddock near Cloncurry is the promised land.

With the fervour and smug satisfaction of those who have staked retirement savings on a penny dreadful that has turned bolter, shareholders in Australian Mining Investments are convinced the Rocklands Group project is going to spawn the biggest copper mine in the world.

And why wouldn't they?

Investors who got in when the stock was trading at 30¢ in May have seen it shoot up to $7.11, a hike of 2270 per cent, before it was suspended two weeks ago.

Shareholders at the extraordinary general meeting in Cloncurry this week were treated to a tour of the site, complete with hard hats proclaiming that the company's new name, CuDeco, made it "the new force in copper".

Thousands of kilometres away lie the sceptics, led by the Australian Stock Exchange's expert geologist who is unsatisfied by the information for AMI's next drilling report.

The other head sceptic is the Australian Securities and Investments Commission, which forced the company to drop a resolution at an extraordinary general meeting to grant directors more options.

Leading the believers is veteran mining entrepreneur Wayne McCrae, chairman of AMI.

Mr McCrae is genuinely excited about the prospects of the deposit after disposing of what became the Century Zinc mine, and believes he is sitting on a big copper find.

"The copper price is going to keep going up and up," he said.

"All the cars are going electric now, all those motor dealers are going to need copper to make the electric cars.

"The only thing I'm interested in doing right now is drilling it up as quickly as we possibly can before a major mining house makes a bid.

"Any money that comes to me (through coverting

options) goes straight back into the company (to) use that money to drill for the next 18 months.

"All the money is going into the ground."

When asked if he expected to make his fortune out of the deposit of 59 million tonnes of copper, he said he didn't care, and at nearly 59 years old had no plans to retire.

"Wealth to me is living out here. I can come out here and not have anyone hassle me," he said.

"I'll probably make a few bob; the money is totally irrelevant."

The uranium anomaly identified in reports from the 1970s by CRA has been registered at 39 per cent, but Mr McCrae has no plans to wait for the State Government to change its uranium mining policy.

"What we've tried to do is focus on being a copper miner, not uranium," he said.

"What we'll probably do is a joint venture. We're not interested in looking for uranium – we're just interested in looking for copper."

Mr McCrae has been hassled quite a bit the past two weeks, with the company's Gold Coast office receiving about 150 telephone calls a day from shareholders, would-be investors and the media.

He has been so busy over the past two months that he has not even been able to get a haircut.

But he said he believed the company had been keeping the market well informed, and felt "a bit targeted" by ASIC.

The band of shareholders who attended this week's EGM were typical retail investors – locals who know Mr McCrae, and those eager to make a killing on a speculative stock.

"The little shareholders are going to be the winners," Tasmanian Dianne Schofield said at the site, estimating that her investment was up by about 100,000 per cent.

Mount Isa's Don Cathcart said he bought in at 2¢ before the stock was demerged; but shareholders generally were reluctant to talk about their expected winnings.

The number who bought in on the advice of promoter Barry Dawes, who heads Sydney-based Martin Place Securities, is unknown.

History shows that Mr Dawes is a promoter of the old stock, spruiking the potential of speculative stocks.

"We have, to date, visual mineralisation of up to 150 metres. We haven't got the assays back, but it's looking good"
Martin Place Securities has been revealed as the broker who will peg AMI stock at $25.

Analysts are the third force on the sceptics team.

ABN Amro Morgans chief mining analyst Chris Brown said not enough work had been done to prove a resource was there, mainly around the inferred mineral resource of 59 million tonnes at a grading of 2.04 per cent copper equivalent.

The equivalent is important as it means the resource has been assessed using copper grades as well as gold and cobalt grades and the company has not given any indication of how the assays have been converted.

AMI plans to revisit already drilled holes, increasing the drilling program from 10,000 to 60,000 metres, a program that will take another 18 months.

"We have, to date, visual mineralisation of up to 150m," Mr McCrae said.

"We haven't got the assays back, but it's looking good.

"We have drilling assays back at the 90, 92m, and it's sloping around between 60 and 80m."

The continuing suspension of shares has made other investors more nervous.

The talk in some circles is that some traders have refused to settle their trades because of the delay in shares returning to the boards.

And once it does come back on the likelihood of profit taking – when investors who have made a killing decide to sell out, pushing down the share price – is high.

There was no stampede of institutional brokers or advisers to the door of Cloncurry's Leichhardt Hotel for the EGM this week.

Security guards kept the small band of media out of the meeting, which was only open for shareholders.

But a minor disturbance broke out during the tour when Mr McCrae spotted a geologist from a neighbouring mine, owned by Exco Resources, taking down GPS information.

The geologist said the AMI boss had given him permission to attend the tour, but workers claimed he had been breaking off from the group walking through bushland.

For Mr McCrae, who survived a horrific helicopter crash in 1991 that has him now with part of his hip in his lower leg, the past two weeks of media and financial attention have been hard going; but he remains optimistic.

"This is as rough as a helicopter ride – maybe rougher," he said