some sunday figures

When I look at the 8 May annc and do the sums - Cluff only stand to obtain rights over 10 square kms - not a massive plot of dirt by any Aus standard - correct me if I'm wrong - but assuming I'm right, then it would have to be a pretty deep and rich patch of dirt to sustain some of the high expectations floating around in these threads of 100+ Mt.

By way of comparison, UMC in W.A. are sitting on 264 sq kms of dirt for it's Pilbara project - they have drilled 156 holes - have a railway running through the middle of their patch, and have a large Kimberley bauxite exploration program about to get under way - now UMC are about to release their maiden JORC where everyone is expecting at least 100+Mt of DSO (>58% Fe) just in one small part of it's Pilbara project - now with all the above and being pre JORC they are sitting at about $2.27 - and fully diluted they have only 153M shares.

Working out CFRs potential SP upon the annc of the Indian fields could go something like this (using a formula developed by Bungy234 on the UMC thread post #3155327 – thxs Bungy):

A value of $8t for UMC's Railway DSO which is way below the sector average of $12t.

When all the listed and unlisted options are converted, UMC will have 158,266,568 FPOs on issue.

Once the maiden JORC (expected this week) is announced, converting the tonnage into a fair value share price can be done using a simple means of calculation:

V = 8 ($8 per ton)
T = ? (Tonnage)
F = 158,266,568 (FPOs)

(V*T)/F = share price

e.g. initial JORC of 100Mt

(8*100,000,000)/158,266,568 = $5.05 (share price)

Note that the value of the share price increases by 5¢ for each 1Mt. Therefore, when the JORC is announced, all you need to do is multiple 5¢ by the number of millions of tons. Another way is to value the share price by $1 for every 20Mt.


NOW when we take the above and use it for CFR we get something like the below - (and please tell me where any figures are wrong):

V = 8 ($8 per ton - stick with the lower for India due to lower labour costs)
T = ? (Tonnage)
F = 2,108,925,068 (FPOs)

(V*T)/F = share price

e.g. initial estimates of 40Mt

(8*40,000,000)/2,108,925,068 = $0.15 (share price)

The above doesn't take into account the RISK associated with the Tonnage figure being an ESTIMATE ONLY for the Indian tenements, and the RISK associated with actually obtaining all necessary licenses, approvals, funding and agreements (with SAI) nor does it include any value for the Australian operations.

At the end of the day, we are looking at a small area of prospective land area with a lot of RISK. Unless we are able to fluke a very large (but reasonable) estimate in excess of 100+Mt in the announcements we are waiting to see, then IMO I can't see CFR being a great multibagger spec just yet.

Any thoughts Sunday punters??