Circle Property Share Discussion Threads

[wassapper] 03/3/2006 12:14

On Congo violence - I was a holder of Adastra who are also in the south east of the country so have experienced the effects of such reports. There is no problem in that area. I think there was a bit of a gun fight 18 months ago.

Reports of DRC violence are normally related to the East of the country around the Rwanda area, and sometimes a little north of that. However, DRC related stocks all seem to drop 5-10% on reports. generally just for a few days. If we get a report, my advice is to establish where it is geographically, know where you company asset is, and then make your assessment. If the violence is an inch away from your location on a DRC country map on your monitor, remember it is hundreds of miles away! This is a massive country and most people just want peace and to get on with their lives.

Such drops are great buying opportunities if you feel brave.

We have the elections coming up mid-year. There could of course be violence related to this, but the UN mission in the DRC is one of the largest in the world and doing a good job. A good election will be very positive for the DRC and for investors in that country. Worth looking at others like Banro and Moto (due to list on AIM end of March and San Jonah (our Chairman) is also Chairman of Moto).

[ltinvestor] 03/3/2006 09:45

This seller has been around for several months and will eventually go.The political climate of the Congo is something you have to accept but overall it is improving with US companies now investing in this region.

[e-boffin] 03/3/2006 09:32

After the sharp rise I expected, and in fact wanted, a small retracement. However, this has certainly gone far enough and I would be hoping for us to start moving forward again soon.

Looking for the bottom in order to buy more.

[nikesh2] 03/3/2006 09:28

ITINVESTOR, i dont think we have seen many sells recently, maybe a few 100k chunks but they were bought buy an institution
the share price fell when there were more buys than sells, so maybe you are right

[adam] 03/3/2006 09:23

ltinvestor - thanks. Do you think related to the recent Congo violence?

[ltinvestor] 03/3/2006 08:57

My information is that there is a major seller in the market and I too expect the share price to drift down over the next couple of weeks .

[wassapper] 02/3/2006 19:28

I think a little more of a drop, even if not tomorrow, later next week. It is the way of this stock. Remember it is still off the radar and some pre-IPO chappies may wish to get ris and see the share price drifting and theink well this is better than 40p and out. Be patient. Don't worry.

[pinhead3] 02/3/2006 18:35

Copper up 2.5% today 3mnth price $4,951 tonne or $2.25/lb.

'Strike action at two of Grupo Mexico's copper mines pushed the three-month copper price up $90 to $4,965 a tonne in London.'

[bigbobjoylove] 02/3/2006 16:54

prob add some more tomorrow.This drop helps the chart.

[e-boffin] 02/3/2006 16:49

I know I said the other day that I would be happy with a small drop. I think this has now gone far enough.

Up day tomorrow.. Please.

[jimtad] 02/3/2006 16:47

WHO DE MAN BUY T TRADE 25,000 X 2?

[mr. t] 02/3/2006 14:05

SteMiS,

I hold Toledo too and you are right, the potential upside in Toledo is huge. For me personally, as someone who is newish to mining investment, I like the lower risk of imminent production at low cost that comes with CRC.

My experience in large projects is that they can often be far more expensive and lengthy than you envisage. And when you build them the benefits aren't what you would have liked (ie. teething problems with the plant, lower commodity prices). Not to mention political issues, e.g. the State of Emergency in the Philippines. Given that Berong may take a few years to come on line there has to be a possibility of things going wrong politically, technically or commercially.

Presumably, the market feels the same way about junior miners, otherwise they would be trading closer to their NPVs. The question is - Is the market discounting too much? CRCs discount is large and Toledo's discount is phenomenal. Obviously I think they're wrong on both counts, but I feel far more confident with CRC as their capital cost is so small and the plant will be online in 18 months (hopefully!).

In my mind, Toledo has a small chance of massive rewards, somewhat underpinned by a good chance of Direct Shipping, whereas CRC has a good chance of large rewards.

[stemis] 02/3/2006 13:35

As a comparison, take the Berong project of Toledo Mining (I know it's a different metal, but it's a simple comparison). They may start Direct Shipping soon, but that is only going to pay for the Bankable Feasibility Study.

Different investment siutations completely

CRC's Kinsenda mine has potentially 1.9bn lb copper. Current market value = $4bn (at $2.2/lb)

TMC's Berong project has potentially 7.9bn lb Nickel. Current market value = $53bn (at $6.7/lb)

The sheer scale of Berong is staggering. Both are excellent investment opportunities in my opinion (I do hold both) but with different risk rewards.

[mr. t] 02/3/2006 12:49

johnwall,
Thanks, I must admit I missed all the details on your previous post - having read it again I understand your calculation better now.

On another note, the thing that attracts me most to CRC and the NPV of Kisenda is the extraordinarily low capex required - only $38m. This reduces the risk to us shareholders.

As a comparison, take the Berong project of Toledo Mining (I know it's a different metal, but it's a simple comparison). They may start Direct Shipping soon, but that is only going to pay for the Bankable Feasibility Study.

The next stage for them would be to either build an HPAL or Smelter to process the Ore. Further down the road, in Coral Bay, they have built an HPAL plant for $180m in 2.5 years. If Toledo have to do something similar it is going to take a long, long time before production starts, have a high risk and a high cost.

In comparison we have to wait 1.5 years and pay only $38m.

Are there negatives we've missed? Can any bears give downside arguments? I guess there are technical risks, although as the mine was used before you would think they were low. The main risk I can see is political. Either the government could steal the mine off us or a war could break out. Any comments on the likelihood of those?

I would like someone to post some negatives, as everytime I look at CRC I feel the story is so good that I should buy some more!

[nikesh2] 02/3/2006 12:41

big buyer is back!!!!!!again

[jimtad] 02/3/2006 09:46

Excerpts from the interview with George Forrest published in l'Echo on 7 June 2004 :

« Forrest, the man who can't be uprooted, continues to invest in Congo »

« I continue to invest regardless of events and crises. I am an economic operator and respected as such by the business world, by the leaders and politicians of the country. When one works correctly, one has nothing to fear. The best proof is that the population has always supported and protected us in difficult times. The people are our best asset.
Our future investments are focused on a rehabilitation project of an old mine, which was operated by the Japanese in the past and which is located at approximately 100 kilometres from Lubumbashi (Kinsenda and Musoshi). In each phase, 40 million USD will be invested in this project so that the site will produce 50,000 tonnes of copper at cruising speed.
A second project is the Kamoto area, a series of open pit and underground mines, in partnership with the Canadian company Kinross. This will amount to an investment of 317 million USD and a forecast production of 200,000 tonnes of copper and 5,000 tonnes of cobalt, 5 years after start-up of the operation.

There's also a third project, which consists of the construction of a new factory to locally treat concentrate and to turn it into products with high added value: produce copper cathodes at 99.3% and cobalt salt. The investment is estimated at 60 million USD.
These 3 projects will generate direct and indirect employment for approximately 7,000 workers.»

« Great progress have been achieved in Congo. I am thinking for instance of the publication of the new mining and investment codes as well as of the return of international fund providers, and consequently of credit lines and investors. The country is back on a positive track but you can't ask it to put everything back in order in a matter of days.
In the interest of the country but also in my interest I really hope that other investors will come to Congo. In order to get a place, you need to come with an extremely persevering state of mind and very competitive products. The higher the number of serious companies that will come to work in Congo, the more the formal economy will grow to the detriment of the informal. I would however advise them to come with a more African mentality, i.e. a more humanitarian approach and to include social activities in their programme - an educational and healthcare programme - as is the case with my group, which employs approximately 10,000 workers. »

[johnwall] 02/3/2006 09:24

Mr. T, pinhead3,

As I posted yesterday, the CRC NPV calculation is post witholding tax at 10%.

With regard to the price received, have a look at the Anvil results if you haven't already done so. Their "Payable pounds of copper in concentrate delivered" figure is 91% of the "Copper produced" figure. I have no idea whether the factor will be the same for Kinsenda - but in the absence of any other information it's my best guess at the moment!

[stemis] 02/3/2006 08:40

Fair points Mr T

[mr. t] 02/3/2006 08:35

Pinhead,
Thanks for your comments. Point 1 would would explain a difference between SteMiS's NPV calculation and CRC's as SteMiS didn't include any taxes (unless cash costs include tax).

On point 2, I know copper prices are higher than $1.25, my point was that CRC will not receive the spot copper price as they are only producing it in a 45% concentrate. I really don't know much about the copper refining process, but I would imagine that the buyer of the concentrate would want a discount as it would need further refining.

Say that discount is 10%, then at a copper price of $1.25 CRC would only receive $1.125 and at a copper price of $2 then CRC would receive $1.80.

Again, maybe this is all accounted for in the cash costs of operation (I have no idea). All I was trying to do was look for reasons why CRC had a lower NPV for the DRC mine than the calculations provided on this thread.

[nikesh2] 01/3/2006 19:09

stakeadder, i agree, an institution has bought all the sold shares and more thus fewer shares in the free market. MMs will mark this up significantly 2mrow
look at the last rise early in 2006!!
fingers crossed

[pinhead3] 01/3/2006 18:50

'Mr. T - 1 Mar'06 - 13:42 - 27 of 41

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!'

Mr T
1. A NPV calculations take into account all cashflows in & out so would take account of all taxes, royalties, capex, fees,etc

2. The $1.25/lb is the long term predicted price for copper that they will receive. The 1998 survey on Hinoba-an had a copper price of $1.00/lb in that NPV calculation so I'm comfortable that they will not only receive $1.25/lb but a lot more.

I believe that when we get the Hinoba-an bankable survey at the end of 2006 the price will be well in excess of £2.