Here is the Huntley report on CMR They still maintain spec buy rating
Investment Rating CMR is developing the Browns project near Batchelor NT. First ore from the base metal Oxides project is set for 3Q08. At 13.4Mt and growing, Oxide resources are just under 20% of the 73Mt total excluding uranium. A pre-feasibility study for a follow-up Sulphide development of up to 4Mtpa capacity is underway. CMR is an opportunity to participate in realisation of considerable value at advanced projects and exploration properties. It has no earnings history, is subject to development risk, low liquidity and high share price volatility. Sulphide development is well funded following the landmark Hunan (HNC) deal. Delayed Oxide production and growing debt heighten near term risk. Net debt is $54m. Management is struggling with credibility and needs to build a track record. Exploration upside appeals but at present CMR is Speculative and only for those acutely aware of the risks.
Result Description We are now beyond surprise with CMR announcements and so report dispassionately on the 2Q08 update. Downgrades to the Browns East sulphide resource and Mt Fitch uranium resource are only partially counterbalanced by upgrades to the Browns sulphide and Mt Fitch oxide resources. A substantial overall shift in tonnage from Inferred status into the higher quality Measured & Indicated categories is a positive feature. But the disappearance of 50% of the admittedly higher risk "inferred" Browns East sulphide resource, declining from 30Mt to 14.6Mt, takes a toll on our valuation. We reign in our Sulphide mine life assumption from 20 years to 15 at 4Mtpa and lower average grades due to the reduction at Browns East.
Impact Overall, our CMR valuation falls 28% from $5.10ps to $3.65ps. We assume near term Cornell repayments are fulfilled at a $1.30 share price, prior $1.50, so some additional dilution. We include a reduced $50m for exploration upside, equivalent to a conservative 6% of our valuation overall. New CMR management has cleared the decks with respect to geology and resources. We believe this is a solid, conservative resource base for exploration to begin to add up. We realise for many, ourselves included, this will be small consolation near term as resource upgrades were anticipated this time around, not downgrades. Very clear potential to begin to grow resources remains.
Recommendation Impact (Last Updated: 01/08/2008) Unchanged. Price data based on previous close. Previous Close Market Cap $1.39 $182 (million) 52 Week High/Low $5.15 - $1.30 Sector Materials
Intrinsic Valuation $3.65 Note NPV at 15% discount
Moat Rating None Risk High Company Beta 0.82 Sector Beta 0.94
