Share Name Share Symbol Market Type Share ISIN Share Description
South China Resources LSE:SCR London Ordinary Share GB00B0704D34 ORD 1P
  Price Change % Change Share Price Bid Price Offer Price High Price Low Price Open Price Shares Traded Last Trade
  +0.00p +0.00% 2.48p 0.00p 0.00p - - - 0 06:30:09
Industry Sector Turnover (m) Profit (m) EPS - Basic PE Ratio Market Cap (m)
Support Services 0.0 -0.4 -0.3 - 0.00

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Date Time Title Posts
20/12/200906:07South China Resources9,722
06/9/200717:40Only worth 1.5p on fundamentals3
30/5/200708:20SECURICOR is ....TOO Cheap to ignore106
06/2/200710:27SOUTH CHINA RESOURCES - the mid term appreciation club41
07/3/200622:28ZRL - New Uranium Discovery!!-

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robward: Another interesting Announcement...havnt got a clue how it will affect the share price when it comes back from suspension, I guess it all depends on how many more shares they issue to pay for Vlakplaats.....quite alot of shares if its going to codt £25 million. Time will tell
wolstencroft: Anyone care to guess when SCR's share price will exceed GGGs? All rather sad in the juinior sector; I think it will teach many a lesson.
nobull: Sagem, I think it is fair to say that investors' expectations have not been well managed by the Board and there is a perception they have not controlled costs as well as they might have. On the other hand, some of the Board are in charge of another company, BMN (Bannerman Resources), which has a pleasing share price trajectory, but of course any sophisticated investor knows that share price performance in the short term is not necessarily a reflection of the competence of the Board. I don't know what the rules are about delisting from AIM if you haven't got a project (there is time limit a company can be listed as a cash shell?). I think I've seen you on the AIMR thread: I'd have thought that was a better place to put money, especially at a share price below 6p: there maybe one more dilutive placing before Perkoa comes on stream (zinc price has fallen so even if it was fully funded before to production it perhaps might not be now). The row with the major shareholder seems to me typical of someone who was screwed in the last placing. (Perkoa will get into production? Nothing to worry about?). I don't know whether SCR will come good or not. It is valued at twice cash? In relation to the stocks I'm interested in and have tipped above, you should do your own research. There are of course stacks of interesting stocks outside the natural resource sector that are starting to look good now that we have been in a bear market since last April/May. Bombed out retailers, housebuilders, staff recruitment agencies, leisure stocks, etc. Within about 9 to 18 months they should all turn (if you pick ones that don't have excessive borrowings and operational leverage). We will be in the depths of a recession then. All IMO. DYOR.
figure6: I see your position nobull but can you risk selling out now at the bottom when you know that any positive news will double the SCR share price in no time leaving you kicking yourself.Its a gamble I know but ask yourself if you think the next rns will likely be good or bad news.If you think there will be a positive update then hold but if you think the next news will be negative sell.I am not as informed on fundamentals as most on here so maybe someone else would like to post a list of both good and bad possible rns and their feelings on the likelihood of them appearing.We have already had two lots of bad news recently ie director leaving and Danfeng dropped which has adversley affected the share price so what next.Good news director?......good drilling results from Zhunuo/Xi'an?......notice mining to commence soon at Zhunuo/Xi'an.....JV with another miner.....takeover bid.Bad news, Zhunuo or Xi'an dropped or both dropped.....lose another director....I await your more informed comments on the likelihood in your opinions on what scenario is likely.(I freely admit to knowing less than most of you lot do on SCRs fundamentals so I am hoping for some constructive comments).
simon54: strow - I'm a dreamer too! I've changed horses (dreams) in midstream here, though. The old dream was of high grade near-term realisation at Danfeng, at a level which might have had a very pleasing effect upon the share price The new dream is of Zhunuo being secured and realised. It will take some time, but that's ok by me. I agree with Wendy in her view of the Z potential. I don't really agree with her assessment of what one sees if one 'goes back to the beginning'. The Competent Person's conclusion, from the Admission Document, was: The Danfeng Project represents a base metal project characterised in a world context by exceptionally high-grade Mo mineralisation and variable, but significant Cu, Fe, Au and Ag mineralisation. If future exploration and evaluation programs are undertaken in a systematic fashion and the results of those programs is consistent with previous work undertaken on the Project, then it is probable that the Project will have the potential to be a significant Mo producer. Ah well, that was the story then. Some of us still suspect that Mo credits may turn out to be significant. We have a clear statement, though, that it will not be a bulk Mo producer. That's ok, looking at it from here (and at this price)- there are other irons in the fire, and the current share price does not give much value to them. EDIT: I should have added that I am fairly well convinced the share price will multi-bag from here. Even the most measly valuation of Zhunuo suggests that - and we may have the prospect of Danfeng coming in well before that. It remains possible, of course, that all of that could go wrong, but I don't think so and therefore intend to hold through all these minor share price fluctuations!
figure6: phew,I wouldnt like a 26 cent drop in the SCR share price ...(SCR would be worth -2p!)
jm barrie100: I have to confess that I am the gloomiest that I have been this morning about SCR, the timing of the JPM disposal is awful, I agree that it is not a hell of an amount (1.5m shares), but if anything signals a loss of confidence, this does in my book. Also I don't believe that JPM have not been contacted by AC in the recent past. Shareholder with 20+% holding and the possibility of fund raising coming up – you definitely check the mood of your biggest investor. If a placing is not on the cards, what other options do SCR have? Looking at the 2005/6 prelims (still waiting to see a published complete set of accounts on the website, we currently only have the prelims). The following statement in the 2005/6 prelims is no doubt creating a few anxious moments at SCR HO: "Outstanding Share price appreciation since listing in April 2005 at 5p/share." Combine with the following: ".... in February of 2006 the Company successfully enhanced its cash at bank position to the tune of £5.535 million via a placement to institutions of 40 million shares in South China Resources PLC at a price of 13.5 pence per share. This represents a significant premium over the initial public offering in April of 2005 of 5 pence per share." (And we may have a few disappointed shareholders. Even if one bought at 5p in April 2005, a current bid price of 8.25p in January 2007 is hardly an 'outstanding' return over 21 months for a high risk investment.) Good news on cash from the prelims: "With over £4 million currently in treasury the Company maintains a strong cash position going forward and at current rates of expenditure the Company is unlikely to require further cash prior to an investment decision being made at Danfeng, the Company's flag ship Copper Molybdenum project located 180 kilometres east-south-east of the city of Xi'an." (Note that at 30 June 2006 SCR had cash of £5.3m, so the burn rate was approximately £1.3m for the last six months of 2006, the prelims having been issued in the middle of December 2006.) We also have the following from the January 2007 announcement that SCR has signed an agreement with Qinghia Province Geermu Zangge Kalium Fertiliser Company Limited ('Zangge') to acquire a 53% interest in the Zhunuo Copper Project in Tibet, China. "Under the terms of the Agreement, South China Resources will pay RMB 53 million (equating to approximately US$8m) to Zangge to be satisfied by the payment of RMB 30 million within 5 days of the JVC obtaining a business licence and the balance within 5 days after the completion of the transfer of the exploration license and associated rights by Brigade 2 to the JVC." I have no idea of the exact timing of these payments (question for the AGM) but SCR will need to put the funding in place weeks/months before the payment is due. There are no details per the 2005/6 prelims of bank facilities, one can only assume that the company currently has no borrowing facilities at the current time. Recapping: Shares in issue – 159.5m Current share price – 8.5p Market cap - £13.6m There are approximately 7.3m share options 'in the money' but they will generate minimal cash, plus they don't have to be exercised in the next few months. I would guess that the existing £4m of cash is earmarked for Danfeng, so SCR needs to fund $8m (£4m) for the Zhunuo project from new sources. It will be interesting to see the size of the new funding, it will give some guide to the timeline on when SCR actually starts generating income from Danfeng. Pure guess: I would expect SCR to raise $10m at least, say £5m. At this stage, it is extremely unlikely that anyone will provide SCR with cash through a debt issue, it is not done in the mining sector unless there is a BFS in place, and even then, the shareholders usually fund the first 50% of the capex required. There were a few mutterings over the last few months about whether the most recently appointed non-exec, Bruce Stewart, would be able to assist on raising cash. At the time of Mr Stewart's appointment AC said: "Bruce's contacts and experience in the spheres of the Global Equity Markets, Hedge Funds, Portfolio Management and Mutual Funds in the United States, Europe, Australia and the Far East will be extremely useful to our Company as we grow and develop our business in China." Later in 2006 Mr Stewart was granted 1.0m share options, strike prices 35p & 40p. Perhaps Mr Stewart will be able to assist, and no doubt he has an impressive list of contacts. There has been some talk in the past that SCR would be able to generate funds from forward selling copper/moly but the timeline continues to get pushed out, I see this option for generating cash as unlikely. So what options do SCR have? Everything points towards the new money being equity. There is an outside chance that a convertible could be issued, but with no assets to speak off in the balance sheet, I also see this as unlikely, plus convertibles are not common, as far as I am aware, in the mining world. The last placing, already mentioned above, took place on 3 February 2006: SCR "today announces that it has completed the Placing of 41,000,000 new ordinary shares of 0.1 pence each in the Company with institutional and other investors at a price of 13.5 pence per share. The Placing was fully subscribed and raised approximately £5.535 million before expenses." The closing share price on the day prior to the placing (looking at the share price graph on SCR's website) would appear to have been 15.5p. So the placing was at a 12.5% (approximately) discount to the closing price of the previous day. AC commented as follows: "We are delighted with the exceptional institutional demand we have experienced whilst undertaking this Placing as we were heavily oversubscribed. The Company views this as a strong vote of confidence in the project and the development team we have assembled in China. With cash reserves approaching £7.0m it appears unlikely that, under the current development budget and processing scenario, the Company will need to issue further equity prior to commencing mining and processing operations at Danfeng." I doubt if the majority of the investors who bought in at 13.25p, and are still holding, are particularly happy with the performance of SCR in the last six months. The Achilles Heal of the company remains the lack of confidence third parties have with regard to SCR's timelines, couple this with the moly problems, and shareholders have a right to feel frustrated. Danfeng project updates: 22 September 2006, AC comments as follows: "'Company rigs continue to show excellent productivity and whilst the size of the area to be drilled keeps increasing with these new discoveries we remain committed to our original plan of using all means at our disposal to try to bring a commercial mining operation to Danfeng in the shortest possible timeframe." 1 November 2006: AC comments as follows: "'we are very pleased with the consistency with which the company geologists are reporting an increasing abundance of copper and molybdenum sulphide minerals in drill core. We are continuing to work on the challenges associated with providing accurate and representative molybdenum assay data to shareholders and we look forward to releasing the results of this study as soon as all data has been evaluated.'' 15 December 2006, the company comments as follows: "Molybdenite, the ore mineral of molybdenum, is a very soft flaky material that most commonly occurs at Danfeng as veins and blebs in much harder granite porphyry and skarn. This creates special issues for complete recovery of molybdenite from drill core, and during core processing for assay, that are common to exploration of molybdenite deposits worldwide. Company geologists have obtained evidence that significant amounts of this soft molybdenite may be lost during drilling, and through core handling, transport, and cutting of core by diamond saw for assay. The company has therefore engaged an independent, international consultancy practice to investigate possible loss of molybdenite during exploration, and to audit the drilling, core handling and sampling procedures of the Company, and the sample preparation and assay procedures of the SGS laboratories used by the Company. The results of investigations are expected to be reported by the end of the month. Any recommendations made by the consultant to improve recovery of molybdenite will be instituted so as to provide an accurate measure and assessment of molybdenum mineralisation at Danfeng, and it's economic potential." As a result of Friday 15 December 2006 announcement, the share price fell from 10p to 8.25p. Much angst over the fact that the issue about moly recovery must have been a problem that the company was aware of for most of 2006, only at the end of 2006 is SCR considering bringing in external help. What does it do for the timeline for the Danfeng project? Talking of timelines, the company goes on record to say that "the results of investigations are expected to be reported by the end of the month." As a wise investor says, "reported to whom?" Three days later, SCR changes the timeline for the reporting of the results of the investigation. As part of the prelims issued on 18 December 2006, SCR comments on the moly problem: "Of particular note have been the challenges associated with the recovery via diamond drilling of molybdenum mineralisation at the [Danfeng] Project. The Company outlined the nature of these challenges in September of 2006 and has put in place a chain of steps to provide shareholders with a better understanding of the nature and tenor of molybdenum mineralisation at the project. Check assaying and a range of other verification steps have already been completed and currently SRK Geological Consultants are undertaking an independent review of all aspects of drilling, sample preparation and assaying. The definitive results of this process are expected in late 2006 or early 2007 and this should then provide a clear indication of the geological and economic implications of molybdenum mineralisation encountered in underground developments and in diamond drilling thus far." So within three days we go from "end of the month [December]" to "late 2006 or early 2007". Terrible PR. 11 January 2007, the company comments as follows: "The Company is awaiting the results of studies by independent, international industry consultancy practice, SRK Exploration Services Ltd, into issues of possible loss of molybdenite during the exploration and audit of the drilling, core handling and sampling procedures of the Company, and the sample preparation and assay procedures of the SGS laboratories used by the Company. Any recommendations made by the consultant to improve recovery of molybdenite will be instituted so as to provide an accurate measure and assessment of molybdenum mineralisation at Danfeng and its economic potential." Re-reading this paragraph, the impression is gained that SCR is as far away from production as it was 12 months ago. Cutting and pasting from smitb's excellent June 2006 post: • SCR have always had an ambitious plan. In their original presentation they proposed: May 2005 Appointment of Mr Steve Liethhead and Mr Nathan McMahon to Board. June 2005 Finalisation and execution of full JV agreement with Chinese Partners and approval of Chinese Business Licence June 2005 Commencement of drilling at Danfeng Jan 2006 Completion of all drilling and metallurgical testwork on Danfeng with associated JORC resource and mine plan. March 2006 Completion of feasibility study and project financing. April 2006 Mining and development begins at Danfeng • At AGM on 25 January 2006 they presented an updated plan: Q2 2006 Completion of all drilling and metallurgical test work on Danfeng with associated JORC resource and mine plan. Q3 2006 Completion of feasibility study and project financing. Q4 2006 Mining and development begins at Danfeng At the end of January 2007, I have no idea when the following will happen: - Feasibility study (and what form it will take). - Project financing. - Mining and development Clearly THE question for the AGM – please can we have realistic dates for the mining and development timeline for Danfeng. From the outside, it would appear that the Zhunuo project could not have come at a worse time, this is because of Danfeng, no sign of mining likely to commence in the near or medium future, so zip in the way of income in the foreseeable future. As a result the share price has tanked over the last six months. It is not good news to see that the largest shareholder in SCR, (by far if the directors are ignored), has decided to reduce its holding at a time when the share price is at a 12 month low. JP Morgan has reduced its holding from 23.5m shares (holding as at 27 July 2006) to 22.0m. SCR are likely to require further funds to kick-start Zhunuo. As and when the funds are required, is the second key question for the 2007 AGM (assuming that we don't get a press release in the meantime). The further out the better for SCR although this "hope" is contradicted by 9 January 2007 RNS announcement: "Given the size and scope of the transaction it is envisaged that additional funds will be raised in the coming quarter to satisfy the Company's expanded project portfolio and additional staff required for the effective management of the business. The Company will advise of the conditions of this capital raising in the coming weeks." Recapping: - Current share price at a 12 month low, 8.25-8.5p. - Largest shareholder has reduced its shareholding (marginally) in the recent past. - Shareholders still await news on the moly problem. - Shareholders still have no guidance on timelines with regard to mining at Danfeng. - Funds required "in the coming weeks" to provide capital for the Zhunuo project. We have no idea of the quantum or the form that the funds will take. I have made a guess, and it is a guess, that the funds required will be of the order of £5m, the current market cap of £13.6m. Traditionally placings are at a discount, 12.5% is typical. This leads to an expectation of a 7p share price placing, which equates to 71.5m new ordinary shares. Currently there are 159.5m ordinary shares in issue. 71.5m as a percentage of the existing shares is 44%, this percentage is usually far too high for a 'straight' placing. (SCR will have obtained exemption from pre-emption rights at last year's AGM, does anyone have details of that resolution?). So if a placing is not possible, this introduces the possibility of a rights issues but that brings its own problems, not least the Leithead, McMahon and Clayton own 46.2m shares between them. If the rights issue equates to one new share for every two existing shares held at a price of 7p, will Leithead, McMahon and Clayton be able to raise in total £1.6m? I doubt it. So both a 'straight' placing and a rights issue are out of the question, what next? I expect at the time of the AGM, SCR will announce a significant placing to be approved at a forthcoming EGM. A European roadshow would make sense, SCR needs new investors. Of course this is not the only alternative, SCR may need to consider a placing with a large mining company, approval to be given at a forthcoming EGM. Perhaps I am completely wrong; at the minute I am finding it difficult to understand why SCR have signed the Zhunuo agreement, the timing with regard to raising additional cash is awful. Will SCR finally produce an RNS announcement in the very near future that resolves all the moly problems, that is a possibility, it has to be a possibility. Will such an RNS announcement produce an upsurge in the SP; possibly although shareholders are now naturally wary. Not only are investors looking for a solution to the moly problem, but they are also looking to see firm dates etched in granite with regard to mining and development. Doing the sums and given where the current share price is, SCR does seem to be in a difficult situation. It is likely that any placing will be at a discount to 8p, result - lots of new shares need to be issued. Even if there is an appetite, and that is questionable given it is unlikely that existing shareholders will be looking to increase their exposure, there is a question mark over whether the board has the authority to place new shares, which in total equate to 44% of the existing shares in issue. A rights issue looks tricky because the directors hold over 30% of the shares in issue, I don't think they have the funds to take part in a rights issue. We are then left with a placing authorised at an Extraordinary General Meeting. I guess the new lenders will be able to negotiate very good terms, unless AC and the boys are able to produce a rabbit out of the hat very soon. Of course I could be completely wrong, and here comes either a much smaller placing (but storing up trouble for a later date? or a less than onerous bank facility.
rosco46: Hi im not a holder of scr but I am following them found this article and thought it may be of some use to you all. This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors and if in doubt an investor should seek advice from a qualified investment adviser. While I have recently been following a momentum theme - companies with strong commercial momentum where the shares are not on a demanding price-earnings ratio - I have been keeping an open mind. It is impossible to find a share that meets specific criteria every week, and it is worth having an aspect of diversification in your general approach besides sectors and specific companies. This can help to defend your portfolio against any sudden change in the markets. In particular, I acknowledge the long-term super-cycle theory of commodities, assuming Chinese growth remains intact, and I remain alert for interesting stories. The share price plunge at Oxus Gold (OXS) is an example of how you need to pay attention to ownership issues and the difficulties of operating in certain developing countries where miners are often based. I became wary of the former Soviet Union after bad experience with Ramco Energy (ROS) in the 1990s and avoided Oxus specifically on the grounds that however good its projects there was a lingering worry whether legal title would be upheld in Uzbekistan. Regal Petroleum (RPT) is another classic example of risks in the former Soviet Union. However, it is interesting how Griffin Mining (GFM) in China has performed very well in operational and share price terms over the last two years, and looks well placed. It appears that China is eager to harness Western mining technology given the strong demand for commodities to fuel its economic growth. A less well-known company is South China Resources (SCR) - listed on AIM like Griffin - which is exploring and developing resources in the mineral-rich region of Shaanxi in central China. The current focus is copper - an interesting long-term commodity play given its essential requirement for wiring in homes, appliances and cars as China rapidly urbanises. At you can read the company's spring 2005 prospectus when it listed on AIM and raised £3 million via a share placing at 5p. The main project to date is a high-grade copper-molybdenum deposit known as Danfeng, initiated by the Chinese and now being progressed by SCR, which has a 70% interest in a joint venture. The sceptic in me wonders why countries cede control of assets like this (which may be a precursor to demanding better contract terms, as we have seen with Asia Energy in Bangladesh), but the Chinese appear honourable in enough projects to date and cynicism can mean missing the boat as an investor. There should be genuine motivation to make this joint venture flourish, harnessing Western technology in a highly prospective setting. As it progresses towards a feasibility study, Danfeng remains a speculative project; however, the risk/reward is interesting for an enterprising investor given attractive ore grades achieved. I do suggest looking at the Regulatory News Service announcements. SCR cites potential for mining other metals of economic interest, with evidence of gold and silver. This helped the shares run up to 28p last April, for a capitalisation of about £50 million, also anticipating that further projects will flow from the joint venture agreement. SCR is trying to distinguish itself from other resources shares by saying the next phase of 'the China-led commodities story' will be driven by those operating in China as opposed to those leveraged off selling to China. One broker's estimate is for annual revenue of US$100 million for the joint venture, equating to about £40 million for SCR, with a 10-year mine life. On this very rough sense of the financials (before properly considering costs, although Chinese labour costs should lend a comparative advantage to other copper mines) it is unsurprising SCR's market value has drifted back to about £31 million at 20p per share when, after all, the operation is still at a pre-feasibility stage. Furthermore, SCR was able to secure its 70% interest in the joint venture for US $1 million and agree to pay $1 million for another 10%, so the current market value assumes plenty. Obviously, the project will consume funds for exploration and development and to this end SCR raised £5.5 million via a share placing at 13.5p last February. With about £6 million cash the company should be adequately financed for about two years and there is no debt. Note that 'issue of equity' announcements since February relate to share options being exercised at prices from 1p to 5p, and there are already founder investors in SCR sitting on large profits and this may account for a degree of selling. At least the two-way trading and a normal market size of 15,000 shares means SCR's liquidity should be adequate for the needs of most individuals with diversified portfolios. Liquidity can be a major issue for smaller resources shares: if it is too tight the price can plunge on the kind of modest bad news that is part of the rough and tumble of the mining industry; yet if no shares come onto the market to feed buyers they are likely to look elsewhere. Another likely reason for SCR's price drift has been a general shift in sentiment away from speculative shares (from May onwards), and less by way of the 5 April landmark agreement with the Chinese that triggered a near doubling in the shares from 15p. Speculators and market makers are likely to bear this in mind in relation to SCR's future news. The story is in its early stages, but is well worth following. I felt the same about Griffin and was too cautious to switch my portfolio (albeit from other resources that have since done well), yet its shares have proved a fine long-term play with capitalisation now about £150 million. Buying any smaller resources shares depends, to a large extent, on your risk/reward appetite and portfolio balance. Remember the mining industry is fundamentally high risk. Neither SCR nor its advisers have been able to comment on whether the shares qualify for Business Asset Taper Relief (capital gains tax at an effective rate of 20% after one year and 10% after two years' holding), which is a key issue for investing in any AIM share. However, the company looks to have an operational/trading bias which is the key criterion. Long-term investors should still satisfy themselves on this issue before assuming anything for a capital gains tax return. Regards R
simon54: Yes, I wonder if wols had opened his spreadbet again ;-) In fact, the whole movement in the SCR share price is simply a matter of how many millions of shares he happens to fancy at any time ;-) I'm still struggling with Idioterna's Swedish (?)- something about Frenchmen.... well yes, I., given that I am in France, I guess you could say it has a keen French following - er, me!
tonystringy: I quite liked that article too- "Something Brewing in South China By Stephen Clayson 06 Feb 2006 at 02:00 PM EST LONDON ( -- After seeing a near doubling of its share price since before Christmas, South China Resources [AIM:SCR] has availed itself of capital of GBP5.35 million in a placing of new equity, a move which should give the company the funds to continue and accelerate the fast tracking to production of its Danfeng copper-molybdenum project in China's Shaanxi Province. What this could mean is that the recent gains enjoyed by shareholders are only the beginning. Since the placing was finalised, SCR's share price has moved ahead of the 13.5 pence placing price to close trading last week at just under 16 pence. According to the SCR's Executive Chairman Alastair Clayton, the placing was not deliberately enacted at a discount to the market price; the company simply did not anticipate further advances in its share price quite so soon. Anyway, the key thing for investors to consider is that SCR now has the cash to significantly further its operations in China. Since its listing back in spring of last year, it has been SCR's intention to drill up to JORC standards an area of previously known mineralisation on the Danfeng property, with the objective of outlining sufficient resources to back the bringing on stream of a producing operation that would then fund fuller exploration of the concession. Clayton reports that this objective still stands, and that attaining early cash flow remains the company's priority, a statement which will be sweet music to many ears in the market. The main Danfeng deposit was drilled some time ago by Chinese government crews to a depth of around 200 metres, but SCR has not stopped there, its deepest hole so far reaching around 410 metres. The planned drilling programme is about half completed by Clayton's estimate, with most of the deeper, and hence more difficult, holes out of the way. Once this programme is completed, which Clayton expects before the first half of this year is out at the latest, the company will be in a position to concoct a JORC compliant resource statement for the project. Then, serious mine planning and construction can begin. Clayton believes that from SCR's newly enriched financial position, it will be able to reach a point where substantial components of a mining operation are in place before needing to raise any more funds, a point which Clayton anticipates the company reaching around the end of the year. SCR intends to install a processing plant capable of making all of the multiple metals found at Danfeng economically significant to some extent. These metals include lead, zinc, iron and silver as well as copper and molybdenum, the latter two being the mainstays of the project. SCR's geological conception of the main Danfeng deposit figures a core of mostly iron-copper-molybdenum mineralisation, surrounded by an outer realm of largely molybdenum-lead-zinc material. In addition to this sits Copper Ridge, an area of primarily copper mineralisation recently identified some way from the main deposit, although thought in actuality to be an extension of this. SCR intends to devote some funds from the recent placing to a more thorough exploration of this area, which should reveal more about its potential. There are also a number of other geological anomalies on SCR's 10 square kilometres Danfeng licence area, and these could be investigated later once an initial mining operation is up and running. One of the most significant aspects of the Danfeng project is that it is only around 40 kilometres from one of the world's most sizable molybdenum smelters. SCR has been in preliminary contact with the smelter, which has detailed three geologists to work on the Danfeng project. With this in mind, it would be a surprise if the smelter did not agree in time to purchase a substantial portion of the Danfeng mine's output, and there is maybe the additional possibility of a more intimate relationship being struck up. SCR is not averse to the longer term possibility of procuring a further project, and Clayton says that if SCR were to go down this route it would most likely seek a new project close by to Danfeng so as to tie the two together and reap some synergies. The local area is exceptionally rich in molybdenum, making this option perhaps a highly feasible one. Furthermore, as probably the most significant Western run, base metals focused mining company currently active in China, SCR may find tempting opportunities being made accessible to it by other parties on account of this. Investment Outlook Early investors in SCR will already have made a very decent profit, the company's shares having tripled in value since the time of its listing. But looking forward, the increasingly voracious appetite of China for metals of almost all kinds means that a mine at Danfeng would be well placed to sate this appetite without the extra costs entailed by the transport of its product from some far flung location to points of demand within China, and the upshot of this is that a producing mine at Danfeng has the potential to be a lucrative asset indeed. Therefore, all things being equal, SCR shares should be rerated upwards the closer the company gets to having such an operation on stream, even without account being taken of the good longer term prospects for SCR to move onto Chinese base metals projects beyond Danfeng."
South China Resources share price data is direct from the London Stock Exchange
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