Circle Property Share Discussion Threads

[pinhead3] 01/3/2006 18:40

More good news for future price of copper.
'Vedanta Resources rose 9.1 per cent to £10.76 as India's largest copper and zinc producer said lower import duties announced on Tuesday as part of India's budget would boost the country's demand for the metals.'

Copper up again today $4,832.50 tonne (+$54) or $2.20/lb.

[stakeadder] 01/3/2006 18:23

Looks like we've got that retracement guys....

Its looks likely that MM's are WAY short of stock and trying to shake the tree. I topped up today.....this should fly tommorrow.....

[nikesh2] 01/3/2006 18:18

need this to break 88p 2morow

[paul e] 01/3/2006 17:51

Stemis I for 1 thought post 37 was excellent.

Never hurts to be reminded things may not pan out as one hopes!

[stemis] 01/3/2006 17:43

Sorry, I hope that didn't come across too negatively.

There are other upsides to the feasibility study. In particular:-

In the feasibility study METS has developed a revised flowchart and recommends that CRC and MMK consider the implementation of semi-autogenous grinding (SAG)with process control as an alternative comminution circuit, which would have the benefit of simplifying the processing circuit and reducing the capital expenditure as well as operating costs. CRC and MMK are currently reviewing these possibilities to reduce project cost and increase efficiency.

I also note that in the original announcement about the acquisition of MMK, CRC said:-

In the interim, CRC will produce 4,000 tonnes per annum of copper matte (95% copper content) in the Musoshi arc furnace, which is currently in operation.

Based on current copper price of $2/lb and assuming operating costs are the same as in the feasibility study, then that could generate maybe $7M ($5M to CRC) in cashflow to help with funding.

Silver credits:-

None taken in the feasibility study, but we know Anvil Mining obtain $0.38/lb in their Dikulushi mine in DRC so here's hoping!

[stemis] 01/3/2006 17:29

I think the market likes to see the colour of the money first.

CRC haven't yet made a cent on operating Kinsenda. There are plenty of things that could go wrong, in paticular execution risk. Many a slip 'tween cup and lip, as it were. It could cost more to bring into production, the operating cost could be higher and they may not get 54,000 tonnes of copper out a year.

As an example, if capex was $10M more, operating costs were $0.10/lb more and production was 20% less than 54,000 tonnes, the $143M drops to about $60M.

There is risk attached to the share, which is why I would never over-commit to situations such as this.

Personally however I think there is a big upside and that the risk reward balance is attractive. Others however may prefer to wait to see the execution risk reduced, even if it means giving up some of the reward.

[drewz] 01/3/2006 16:45

It can only be the political risk of operating in a place like DRC which gives this stock such a large discount factor.

Or more likely, the wider market hasn't quite cottoned on to the potential yet.

[stemis] 01/3/2006 16:34

seabass,

It's worse than that. My calculations show it will bring in >$300M to CRC over the life of the mine ($143M is the only the value discounted back to the present day at 10% per annum).

[seabass] 01/3/2006 16:23

Working on NPV of $143m over 13 years i est will bring in £6.3m pa. on this project alone? tell me its too good to be true

[seabass] 01/3/2006 16:14

drewz - thanks for that, I nearly had it correct!! now i see why there is ambiguity re valuation based on copper price $1.25lb; nearly half market price.. any ideas

[drewz] 01/3/2006 16:06

IRR = Internal Rate of Return
NPV = Net Present Value

For a detailed explanation:

[bigbobjoylove] 01/3/2006 16:01

classic shake this,get some stock at low 80s to pass on.No cash to buy more :-(

[seabass] 01/3/2006 16:01

been following crc for a few days but am in the dark regarding some of the jargon. Could someone please explain what IRR & NPV means, as I don't want to guess b4 investing.

[e-boffin] 01/3/2006 15:54

Well, I read that wrong. I thought the next move would be up. The 100,000 T trade earlier, and probably others in the background, seemed to mean more upside. I suppose there are a lot of people out there who have seen this rise and are profit taking.

[nikesh2] 01/3/2006 13:49

Mr.T
i think we will see movement north 2mrow closing above 100p this week!!
the ride will begin this week

[mr. t] 01/3/2006 13:42

Dear all,

I've recently become a CRC shareholder and want to thank you all for your excellent efforts in valuing the company.

I can't offer much else, but here may be couple of reasons as to why SteMiS' NPV calculation is a lot higher than CRC's:

1. Could CRC's numbers be post tax? There may be royalties to the DRC government on each lb of copper mined plus income tax to pay on any profits.

2. CRC may not be able to get $1.25/lb for their copper as it's only in 45% concentrate. A buyer of the copper would need to do further refining and would want remunerating for that.

I do think the company almost looks too good to be true based on the numbers they've provided. Either this is going to be a fantastic investment or we're being taken for a big ride!

[stemis] 01/3/2006 12:27

Thx johnwall

[nikesh2] 01/3/2006 10:41

another 100k t-trade
institution building a significant stake of the remaining free shares

[bigbobjoylove] 01/3/2006 10:38

added a few more after seeing these t trades!!

u really need to buy nowcos this will suddenly get a big mark up if u want to be in the fun.

[johnwall] 01/3/2006 10:30

pinhead3, SteMis, et al

Just to confirm that you were correct about the $143m figure being CRC's 75% share of the NPV - I emailed the company and got a response within the hour - how's that for shareholder relations! The figure is also post a 10% witholding tax apparently, and there are no silver credits included for Kinsenda (c.f. Dikulushi).

[nikesh2] 01/3/2006 10:23

2 50k buys at good prices
somebody def accumulating here

[nikesh2] 01/3/2006 09:31

buy order still there
can buy 10k, sell 25k
2v3

[stemis] 01/3/2006 08:08

johnwall,

Thanks for the comments.

For anyone else interested, the Anvil Mining Prelims can be found at



If I use you model but adjust for the NPV at $143M (rather than 75% of $143M) then I get total cash costs of $0.97/lb copper (as opposed to $0.68/lb operating costs). Interestingly Anvil show total cash costs of $0.88, although this is after silver credits amounting to approximately $0.32/lb copper produced. CRC do not mention silver credits so I assume none are taken in the figures quoted by them.

Ultimately whether you use my NPV or your NPV the numbers for cash profit are the same (as you would expect as they both work back from the same NPV). Thus my comments on sensitivity to copper price, annual cash profit and payback still stand.

Cheer,

[pinhead3] 01/3/2006 07:53

It's also worth checking out the HHPI 1998 study on Hinoba-an, although the IRR is lower the actual project NPV is a massive $243m.
The revised report giving a bankable schedule is due at end 2006 which will dwarf Kinsenda, already the mangement are showing a 10% higher grade copper.