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%).