Tiger Resources Limited – On the Prowl for the Big One
The Democratic Republic of Congo has been deliberately avoided by most resource-oriented investors in the past. After civil war and contract reviews, it seems that tranquility is settling in upon the central African country. The contract reviews, that became necessary due to the pressure of the global community and especially to better allow the Congolese people to stake an interest in the existing commodity resources, have been generally concluded, with possible amendments currently ongoing. One company who has done its homework, and in addition to that, seems to be sitting on a true copper treasure, is Tiger Resources Ltd. , an Australian explorer that has specialized itself with the development of copper and cobalt deposits in the southern province Katanga. DYOR spoke to Tiger Resources‘ Managing Director David Young about the prospects of an emerging producer in the Congolese “Copperado” and the current situation for foreign mining operations in the Congo.
DYOR: Mr. Young, your main project Kipoi lies in the so-called Katanga Copper Belt in the southern part of the Democratic Republic of Congo. How high do you estimate the total resources of all of your individual project properties (Kipoi, Lupoto, Kolwezi and Sakania) combined?
D.Y.: Our goal is to identify a resource of 1 million tons of copper alone for Kipoi (with Kipoi Central, Kipoi North and Kileba). We have just recently announced a resource estimate of 430,000 tons. Thus, we are expecting more than double our current resources. At the current copper price of 8,000 USD per ton, this would equate to an 8 billion USD metal-value.
DYOR: How do the see the renegotiation of the government contracts? How did the government conceive Tiger’s statement?
D.Y.: After the committee for compilation and evaluation of current contracts, a new sub-committee has now been appointed to accompany further proceedings. We expect an announcement in this regard within the next few weeks. The report of the reviewing process is to be officially announced in the near future. Tiger Resources has already fulfilled several of the requested points, such as the appointment of several Congolese personnel in Tiger Resources’ Senior Management.
DYOR: When will Tiger Resources go into production? When will the initial plants be constructed that are essential for production?
D.Y.: Tiger Resources is scheduled to go into production in the third Quarter 2009. The target for initial production is approximately 35,000 tons of copper annually plus cobalt. We expect an estimated annual cash flow of approx. 200 million USD out of the initial production that will allow us to increase our capacity.
DYOR: Is there cobalt at the surface and when will this be mined?
D.Y.: Yes there is and it will be mined together with the existing copper. We are estimating that close to all operative costs will be covered by cobalt production alone.
DYOR: Is the financing secured up to the beginning of production?
D.Y.: First of all, it is our goal to get all of the expiring options exercised by the end of March. In case of a shortfall, in other words the part of the options not exercised by our shareholders, there are several institutional investors lined up for an underwriting, so that we can assume that ultimately we’d be getting a value of approx. 35 million AUD in the bank. With the current cash inventory and the capital inflow from the option exercise/underwriting, we could have approx. 45 million AUD in the bank. We are estimating a Capex of 40 to 50 million AUD needed to start production. This means that with the aid of a moderate loan, we might be able to make it to production without having to issue any shares at all. Not even for the planned TSX listing!
DYOR: When is the TSX listing to take place?
D.Y.: We will be submitting all necessary documentation to the TSX by the end of March, so that we can be listed on the TSX in the 2. Quarter 2008.
DYOR: Are there plans to drop the Australian listing after Tiger is listed on the TSX?
D.Y.: No, Tiger Resources shares will continue to be tradeable on the ASX as well.
DYOR: What are the conditions for the TSX listing? JORC or Canada-Standard?
D.Y.: JORC-Standard is more than adequate.
DYOR: Why did you recently execute the Macquarie financing?
D.Y.: Macquarie is a very important Australian long-term investor. The investment bank visited the project on site with several of their team, took a close look at everything and spoke to our employees in detail at the site. Macquarie was then ready to invest in Tiger Resources once more at a price above the current stock price. We were then able to acquire 6.3 million AUD at a price of 0.50 AUD per share. Macquarie is acting as a pure financing investor and has no claims whatsoever as to management positions in our company.
DYOR: What is the cash situation, the monthly expenses?
D.Y.: Tiger Resources currently has a cash inventory of approx. 10 million AUD and monthly expenses of approx. 1.2 million AUD.
DYOR: How often are you yourself on site in the Congo?
D.Y.: I am in the Congo on a regular basis and am otherwise informed about developments on the project on a daily basis.
DYOR: How many employees are employed by Tiger in the Congo?
D.Y.: Approximately 100.
DYOR: What is the arrangement of the cooperation with the local authorities?
D.Y.: The cooperation is excellent. In order to fulfill the requirements out of the reviewing process we have hired additional Congolese in our Senior Management who will support us down the road.
DYOR: How resilient is the infrastructure? For instance, have there been negotiations with electricity suppliers?
D.Y.: The infrastructure on Kipoi is excellent. Streets, as well as a rail network are available and a copper smelter is in close vicinity. For more details, please wait for the feasibility study, which we plan to publish in the second quarter.
DYOR: What about the other gold properties in Brazil?
D.Y.: The Brazilian project was given back in 2007. We want to be able to fully concentrate on our Congolese projects. They have enough potential.
DYOR: When will you be attending the next road show or event?
D.Y.: Tiger Resources will be taking part in a road show in Europe in May. Exact dates will be announced.
DYOR: Why should anyone invest in Tiger Resources at the moment?
D.Y.: Tiger Resources owns an excellent resource with copper grades of more than 7 % with its Kipoi copper and cobalt project. The financing of the planned production plant will be for the most part possible with the expected capital inflow the end of March. The leftover manageable capital costs should be financed exclusively with the aid of a loan if possible. We expect the production start for the third quarter 2009. Initially, we plan to mine approximately 35,000 tons of copper plus cobalt, which would give us an initial annual cash flow of approx. 200 million AUD. Our current market capitalization is, even with exercising all options, only 120 million AUD. Compared to the metal value of approx. 8 billion USD (our 60% interest was equivalent to 4.8 billion USD) in the ground, which we plan to achieve by the end of the year, it would currently equate to only approx. 2.5% of the metal value. The market should soon catch on to the fact that the Tiger share price is absolutely undervalued. Prestigious analyst companies in Canada are calculating with 10% of the metal value. With the beginning of production and the planned yearly cash flow we see enormous share potential for the Tiger share price.
TGS Price at posting:
0.0¢ Sentiment: None Disclosure: Held
