summary of srb

Posted this on TS... so thought I may share it here as well:

I have wanted to say something about this company for some time, but I have been waiting for them to get down to where I wanted to enter before saying anything as they can be quite illiquid.

Essentially this could be one of the most undervalued stocks on the ASX. They have a tremendous board consisting of some very reputable people, such as Robert Champion De Crespigny, John Richards and Don Lewis.

The price has been trending down ever since a three way merger formed Scarborough as it stands today. Scarborough are very similar to Minsec (MSX) in that they want to be a resources investment company, rather than a straight miner. That being said, Scarborough also have mining interests as well as investments. Below is a summary that I have compiled about Scarborough and its assets:

-25% of the Lady Loretta Zinc Project with Falconbridge as the major partner. This project has a jorc resource of 13mt@17% Zn, 5.9% Pb and 97g/t Ag. The project is in feasibility stage and concentrate production is targeted for 2009.

-100% of the Sappes Gold Project (Greece) which has reserves of 582,000 ounces of gold. Production rate should be 100,000 ounces per annum with a cash cost of around $US170 an ounce. There is potential for an extension of resources as well.

-100% of the Vostok Copper project in Kazakhstan with a non-jorc resource of [email protected]%Cu. They are seeking a joint venture partner to fund exploration and feasibility costs.

At one time SRB were also negotiating for rights to a significant gold project in an ex Soviet country. I will try to dig up exactly what happened to that.

-In addition to the above projects SRB have cash and asset holdings of $US63.7m, which amounts to 79.5c per share. So essentially all of the above projects are being valued at around $A20m as there are only 102m shares on issue. The Sappes and Lady Loretta projects in particular have significant potential to become serious cash cows for SRB.

Finally, SRB are in advanced discussions regarding a possible merger with Minsec (MSX). This would result in two of the best managers in the resources industry (Robert Champion De Crespigny and Keith Liddell) coming together on the new board. It was also result in an even larger scale resources house with more diverse interests.

This is one to be on imo… hard to pick a bottom but I am in with an average of $1.01. Downside is limited and in the long term I must admit I find it difficult to see anything but upside… DYOR!