Does it really even matter if the spot price of lead falls, even by 50% from here?? Not really. Lead's spot price has spiked far more so due to speculation and hedge fund activity rather than LME inventory stocks, and most analysts would be awake to that....and would expect lead to come back in any case.
When HNC bought into the company and signed the joint venture agreements a year or so ago, the price of lead was less than a third of what it currenty is.
In Dec 06, the USA & European presentation by the company.....
.....based it's upside case with lead at a price of US$0.75/lb......with copper @ $3.00/lb, cobalt @ $15.00, nickel @ $10.00/lb and uranium @ $60.00/lb. On those numbers, the NPV @ 10% equated to $16.55 per share.
Even The base case saw the NPV @ 10% amounting to $8.14 per share, using commodity prices (all in $US/lb) of copper $1.50, cobalt $12.50, nickel $6.00, uranium $50.00, and lead at $0.35.
Looking at the base case, CMR is well undervalued.....the upside case, and CMR is massively undervalued.
Gazing at the spot prices given in both scenarios, I know which scenario I'd lean towards as being representative of where future commodity prices might lie closer to.
Nothing wrong with this company....plenty of cash, production nearing, fantastic drilling results recently released suggesting an even larger orebody than previously thought, and support by the Federal Govt to boot.
Happy days ahead.
CMR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
