According to sources and previous company releases, CSD and SPM are expected to release a significant announcement relating to their future relationship. This relationship has been called many things, from a JV to a merger and now a partnership.
Why is it significant?
At the moment, the relationship between CSD and SPM mining is a little messy, with CSD owning 10% of SPM, and SPI (an investment firm that holds the other 90% of SPM) owning 16.7% of CSD with 22.7 million options at 7 cents, plus the right to acquire 50% of the CSD tin project by paying up to 100% of the NPV (which came in at $110 million after tax).
(All this can be found by trawling the announcements on CSD's website.)
Recent comments (and this is only hearsay) have suggested that brokers are wary that CSD could be taken over by SPI. However, those closest to the company know that this scenario is unlikely, yet still, unless it is shown on paper it is hard to deny the possibility.
However, this pending agreement (hopefully out today) will most likely quell that fear. Hopefully (and yes, there are a lot of hopes in this post), the agreement will also give further clarification on how CSD can fund the next stage.
CSD's PFS is based on using the Mt Garnet operation, purchased earlier by SPM for $40 million at a 'fire sale'. The current stated CAPEX is $76 million, which covers the cost of adding a separate tin circuit to the configuration.
IMO, there are a few major announcements that will trigger a re-rating for CSD. They include the following.
1. Clear, transparent relationship with cornerstone investor (SPI). 2. Income from the current SPM operation (10% free-carried). 3. Production of tin.
Of course, there are also other possible triggers, such as the take-off arrangement, funding agreements, and tin price movements.
CSD is significantly undervalued, especially compared to many of its peers and other companies on the ASX. I've posted several valuations up myself, but do the numbers for yourself and you will see. One day, CSD will hit its true value. Today could be the start of its journey.
Let's hope (yep, again with the hope) that this announcement is forthcoming. I place my sentiment as hold until the announcement is out and the full picture can be analysed.
Good luck, long-term holders.
PS - Although this pending announcement could be significant in terns of the share price (hopefully), in regards to the company's future progress, I firmly believe that nothing will stop CSD now from becoming the next significant Australian tin producer, with iron ore and fluorine making it significantly undervalued given current market cap/share price.
CSD Price at posting:
8.7¢ Sentiment: Hold Disclosure: Held
