wise owl recommendation

CII - CI Resources Limited Issue Date 12/05/2008
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Recommendation
Recommendation Spec Buy
First Recommended 12-May-2008
Current Price 0.5
Target Price 0.82
Stop Loss 0.36
Earnings
Market Capital $37.5 million
Price Depth Strong

CI Resources has investments in other phosphate producing companies. It's main investment is in Phosphate Resources which operates a phosphate mine on Christmas Island. Phosphate rocks are currently enjoying strong demand due to heightened usage of fertilizer as farmers are increasing yield on crops to supply an increasing population and an emerging biofuel sector. CI Resources will be looking to expand on the mine life and has an application pending for an additional 200 hectares. The application is currently pending in court. The company also own stakes in phosphate mines in China. Through a 51% interest in Xi Feng they own a 32% interest in Guizhou Tiangfeng Chem-Phos (GTFC) Co Ltd in China which operates a phosphate mine. The mine has been plagued by pollution and cost overruns and the company is looking at avenues to clean up the pollution and reduce costs. With Xiangxi Xifeng Chemical Phosphate Co Ltd they have a MOU to develop a phosphate mine in Hunan, China. The company is currently evaluating the project's feasibility. The mine contains medium grade phosphate and through a beneficiation program, the company aims to convert it to high grade phosphate. They are currently looking for a joint venture partner for development of the mine, with the objective of producing 500,000t per annum. Recently, more phosphate projects have been acquired in China which are set to produce an initial 120,000t of phosphate rock with a ramp-up to 300,000tpa.