The Trader Centralhttp://www.thetradercentral.com/ORD Plan SARCO...

The Trader Central
http://www.thetradercentral.com/

ORD Plan SARCO IPO

SARCO (A joint venture betwen ORD rvier Resources and China NonFerrous Metal) have announced they intend to list their Laos Bauxite/Almunia project on the ASX by early 2012. SARCO plan to raise up to $200 million for the project. The company are currently in on-going talks with a number of Chinese parties in regards to debt- financing and off-take agreements. The Advisory team include: RBC Capital Markets, SRK Consulting, Allens Arthur Robinson, Ernst & Young. SARCO has the potential to be the second largest Almunia stock on the ASX providing an attractive investment for investors.

Project Background

ORD River Resources are in a strategic alliance with China NonFerrous Metals to develop the Bolaven Plateau, together the company have formed ?Sino Australian Resources Co.? Under the alliance ORD has a 49% stake in the company while China Non Ferrous Metals has a 51% stake. Sino Australian Resources have established a Bauxite JORC of 130 mill tonnes. Estimates of the total resource are between 2-2.5 billion tonnes. Sino plan to develop an Alumina refinery producing 600,000 tonnes a year, from there the resource will be directly shipped to markets. The Laos Bauxite project has the strength of close existing infrastructure (Road and Rail which allows for cost efficiency. Estimated Capex for the refinery is US$ 570 million, which is considerably low when given the potential output for the project and the quality of the resource.

Sino have been drilling relentlessly for the past few months as part of their feasibility study for the Laos Bauxite project. Drilling for Yuqida finished in January this year with a total of 793 holes drilled and 4750 samples. Remaining field work is expected to be completed later in the year with resource calculation for LSI and Yuqida due in the upcoming months. Once resource upgrades have been announced there should be a significant re-rating of the company.

The SARCO IPO will be of interest to a number of Asian buyers due to the reliance on other continents for bauxite. More importantly the project has a number of key points:

Large Resource
High demand market
Relatively small capex
Close existing infrastructure
Asian ownership


ORD shares closed at 10.5c