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Tagged with: CSM

Feb 2003 - Cons Minerals

Consolidated Minerals Ltd (CSM) – Extending its Life Beyond 10 Years at Higher Rates of Production

  • CSM has already established an ore reserves/resource life of 10 years at Woodie Woodie Manganese and is extending Coobina Chrome’s life towards 10 years. In the current exploration programme, CSM is aiming to extend the lives of both operations beyond 10 years and enable Coobina to consider doubling its chrome production to 500,000tpa (our modelling factors in an increase to 350,000tpa).
  • CSM’s annualised manganese production appears to be capable of increasing closer to 580,000tpa of lump and fines, of which the lump component could be >380,000tpa based on the progress that has been achieved in the 6 months to December 2002, and the new reporting disclosure.
  • CSM appears to be fairly valued, however, its products are in a poorly understood “area” of the market in which product sales and prices realised are not easily identified (like precious or base metals). Consequently, CSM’s share price appears likely to rerate according to its profit results and resulting P/E ratios, Price/cashflow ratios, and relatively high dividend yields (currently of about 8%).

Aug 2005 - Cons Minerals

Consolidated Minerals Ltd (CSM) –Becoming a Mid-Tier Diversified Mining Company

  • Consolidated Minerals’ operations are based in WA where it has established an ore reserve/resource life of more than 10 years at Woodie Woodie and a position in the market of consistently producing one of the highest quality manganese ores in the world, currently at 1mtpa. CSM has also been producing 250,000tpa chrome from Coobina, and is now enhancing its product range with nickel production from Reliance’s Beta-Hunt mine, followed by future copper production from Jabiru.
  • CSM’s annualised manganese production has risen to 1.0mtpa and appears capable of reaching at least 1.2mtpa or so. When Coobina runs out of ore (in possibly 5 years’ time), it is expected to move the Coobina plant to Woodie Woodie South and increase production to at least 1.5mtpa of manganese.
  • Production from Reliance’s Beta-Hunt mine is expected to double when East Alpha starts in MQ 2006 and builds up to 4,000tpa to 5,000tpa Ni by December 2006, increasing total mine output to a credible 9,000tpa to 10,000tpa Ni. CSM has a long-term target of producing 15,000tpa to 20,000tpa Ni which appears to be attainable, particularly when it has its own concentrator.
  • CSM is able to have its own concentrator treating nickel ore from old WMC nickel mines because Reliance obtained the nickel rights from Gold Fields, and is hence capable of reaping the benefits like Jubilee (JBM). It should also receive the gold credits from its orebodies, & expects to treat orebodies such as TIR’s Armstrong.
  • The market has upgraded CSM as it achieves higher profits and dividend distributions. This trend has resulted in CSM’s share price increasing by almost 7 times in the past two years from 62c to its current price of $4.00, and is expected to continue, especially as its nickel production strategy unfolds.

Jun 2006 - Cons Minerals

Consolidated Minerals Ltd (CSM) –Establishing One of WA’s Lowest Cost Long Life Nickel Producers at >10,000tpa Nickel

  • With the early success from East Alpha’s Hangingwall Reef, potential in Beta West and Beta South, extensions to Beta Contact, mining of Beta Hangingwall (above both the 20 and 40 surfaces), and initial results from the ore sorter, CSM appears to be creating a Nickel Division that has the potential to produce >10,000t Ni pa for at least 10 years at possibly one of WA’s lowest cash costs of nickel.
  • On 4 May 2006, CSM’s Board announced approval for a new $14m ventilation shaft to be sunk at Beta Hunt as part of its visionary 2-phase twin-decline underground nickel exploration and development initiative. Phase 1 targets 90,000t of nickel mineralisation over 1-2km of lava channels south-east on strike from Beta and East Alpha, and Phase 2 targets another 150,000t of nickel, further SE on strike.
  • The completion of the new ventilation shaft enables movement of up to 1mtpa to occur up the decline, potentially comprising 400,000tpa of Nickel ore, 300,000tpa of Gold ore and up to 300,000tpa of waste (depending on the future installation of an underground ore-sorter to remove the waste for use as backfill).
  • The initial results from the A$1.5m CSM-Ultrasort developed ore sorter have been unprecedented, upgrading unsaleable 0.5%Ni low grade waste into a ~3%Ni to 4%Ni very saleable product. This product can be used as a sweetener to increase the average ore grade delivered to the old WMC concentrator, resulting in lower costs, higher recoveries and potentially greater profitability.
  • The discovery of the hidden mega orebody at Greensnake and potential hidden look-alikes at Camp East and Mike East, all infer that Woodie Woodie Manganese has the potential to have a life >20 years at a production rate >1.0mtpa.

Aug 2007 - DnD - SMY, AVO, CSM

Buy SMY & AVO; CSM worth >$5

  • If we had to pick two stocks, they would be our last two reports : SMY & Avoca
  • Preferred buying order for the nickels: 1. Sally Malay, 2. Indep Group, 3. Mincor
  • IGO could produce 1,000tNi above expected or ~10,000tNi in 07/08. Tropicana expect > 20moz (range is 20moz to 50moz over the 350km strike length).
  • MCR’s 50% increase to 900,000tpa treated by 08/09 appears to be >1.0mtpa.
  • CSM’s Gillet worth well above the ~$4m in the IGR (A$70m to A$95m?), Beta Hunt now improving with Vent #, New Ni concentrator at Widgie appears likely.
  • This Comment started out based on the visits we (ERA) took during this years’ Diggers and Dealers August 2007 Conference. However, it has been extended following the recent decimation in share prices due to trading on money that did not exist, and requests for our nickel and gold favourites.
  • Our (ERA) current favourites are :
  • Sally Malay : Recent August 1 report, rose ~10% on report release, plenty of upside potential, Deacon : HUGE, maiden dividend, debt-free, hedging basically gone (actually lost $112m in hedging in 06/07 & still made ~$90m NPAT (cashflow would be even higher)).
  • Avoca : Recent August 2 report, rose ~5% on report release, market unfazed by negligible production this year, new Wills supergene discovery, potential new Chalice discovery.
  • Independence Group : Steady production from Long/Victor at probably closer to 10,000tpa Ni (quoted as 9,000tNi for conservatism). Tropicana 20moz to 50moz, other new gold areas.
  • Mincor : Significant increase in production coming and plenty of exploration upside. Thinks it should recoup its Otter Juan acquisition within one year with ~$6m cashflow just for July 07.
  • As for CSM : Wait until the last possible day before accepting, the ideal scenario is that neither offers win as in ERA’s opinion, it should not have embarked on this course of action and could have traded closer to $5/share (due to the manganese market upside). If Pallinghurst looks likely to win, then SELL : if TTY looks likely to win, then BUY.
  • There were numerous visits to choose from at Diggers, from which we visited IGO’s Long/Victor Mine; MCR’s Otter Juan, Carnilya & Miitel; and CSM’s new Gillet discovery and new open-cut mining at Armstrong & 132N. Our comment on IGO includes the presentations made by IGO and AGG mainly on Tropicana at the conference, where estimates ranged up to 20moz and beyond.