re: eddie-cfr Hello Tigerten, This stock could do anything...

re: eddie-cfr Hello Tigerten,
This stock could do anything depending on the details of the deal with Packer..........I really think I going to have to just trade the price action.
I have no experience with the quality of management involved here and wonder how firm they are going to be with Mr Packer. They certainly appear to be in a weak bargaining position given their limited cash. In the end it'll depend on whether Packer is buying cut or uncut product to a large extent. If the company intend giving away the uncut ruby to let Packer cut and market it himself then we're in trouble. On the other hand if Packer wants this company to work and take advantage of his holding in the company he will pay close to market for cut rubies. It'll all come down as to quality of management and their ability to strike a bargain that is good for shareholders..........of which the MD is a significant one (also has plenty of oppies)
I'd be interested in your thoughts on the costs as a % of revenue in an operation like this as I have limited experience in the resources sector. They are supposedly going to START with 250,000 ca/year. If we assume they come up with this quantity (cut) eventually once production ramps up further and they are of a similar quality to the past (I believe we have had an average of $100/ca) then the sums can be quite awesome. Even assuming 80% costs we get 5 mill profit.............you would have to assume that costs would be nowhere near this level as the rubies are not far beneath the surface. These are real back of the envelope calculations with not much thought but there is obvious potential however you figure it out........unless Packer strikes a really bad deal for CFR.
The areas surrounding the recently dug Trench 11 are on a raised terrace on the southern bank of the river flats. These older high level gravels were deposited before the recent alluvial gravels, and rubies contained within these gravels are apparently of much higher quality and is another promising area to follow up. This may have had something to do with the project getting the go ahead (the discovery of these higher quality stones further from the riverbed).

Any further thoughts on the cashflow possibilities and/or the quality of management are welcome.

Cheers,

Ed.