My honest opinion on this is that the company is toast. The copper price at $3/lb could have forgiven some fumblebuck klutzery in the design, commissioning and DFS, but at $2/lb or less, there isn't that luxury anymore.
What do I think will happen? Well, it's anyone's guess, but I think that barring some ludicrous white knight investor who can't do sums just stumping up cash and losing the lot, the debts will eventually become unpayable, resulting in default.
Under a default, existing shareholders are going to have 0.1c shares worth nothing at all, and/or the mine will sit there incomplete and nothing much will happen. If this was macquarie or NAB or a Western bank we could fairly certainly predict what's going to happen, but with Minsheng Bank we might be in a kind of half-nonsensical Chinese fairy tale land where anything could happen to save face - but it won't be good for existing Aussie holders, but maybe not complete devastation.
For example, one option is for a technical default, and Minsheng takes over or appoints an administrator to handle its interest over the mine, gets the company trading again on the ASX, and lets the share price plummet down from $1.10 to 10c or less. Then they can issue new shares to the other Chinese concerns (Sinosteel, oceanwide) at knock-down prices and dilute out the existing holders until they feel they have enough of an ownership premium to satisfy themselves.
I think this is a very remote possibility - the plant isn't complete, or running, or commissioned. Too much risk remains with too complex a body of mineralisation (I won't say ore) with an unproven machine for extracting copper. It's not like HGO or a low-grade complex mine which has been running for a while and the price of copper has fallen and threatened its debt or profitability. In those situations banks have much less risk and a better idea of operating costs at which it could be mothballed or restarted.
For CDU, the mill needs to be completed first, then started up and run and commissioned in order to show that the mill actually does its job and treats the ore as advertised, before they could shut it down and sit on Care and Maintenance and await a better copper price. I mean, if you complete the mill it's good, but if you haven't run it to show it works, its just some shiny kit getting rusty in the bush.
That's a big ask.
As for the viability of the mineralisation at the end of the day, I think it has always been marginal, due to the native copper and mix of chalcocite, oxide and sulphide. You'll note that AOH relies exclusively on the sulphide portion of Little Eva, and has binned its own native copper and oxide deposits (Blackard, etc) as too hard, too difficult to treat, and too capitally intensive. That tels you all you need to know about CDU's oxide and transitional ore.
CDU Price at posting:
$1.11 Sentiment: Sell Disclosure: Not Held
