FYI | Jan 17 2007
Does anyone still remember CuDeCo Ltd (CDU)?
In early July last year the company then known as Australian Mining Investments (AUM) became the centre of attention from investors, media and bourse authorities when its share price spiked at $10, catapulting what used to be one of many shallow minerals explorers into the ranks of the $1bn-plus market cap companies on the Australian Stock Exchange.
The hype was that AUM may well be sitting on top of the most important copper discovery in more than two decades. It all seemed a bit too good to be true and after all the dust had settled, including scathing reviews and attacks in the mainstream media, some people had made a lot of money, and others had paid for it.
On July 12, I wrote: “Looking upon the events of the past few weeks, investors and speculators have either become victim of the rather clumsy PR mechanics of a few old school mining veterans (somewhat excusable from a miner’s view) or they have fallen into the trap of a smart investment ploy.”
Commentators elsewhere went much further stating they were willing to bet their own savings the company would never become a copper producer – or something along those lines.
My impression at the time, which was reflected in my editorial in July, was that the miners involved, including the company’s colourful chairman, had simply been too eager in cashing in on their prospects. And maybe some old “friends” needed rewarded as well.
As common greed was certain to kick in, I predicted “management will have its desired stock options soon, probably next month”. As it happened, ASIC intervened and management had to wait a little longer, but the miners did get their options.
Why I am writing all this?
Two reasons. In the months following the main events I received indications from people within the industry that –even though it remains far too early for any conclusive statements or predictions- CuDeCo management may well have a future mine under its tenements.
However, views whether Xstrata would be interested in buying the assets remain divided.
I have never followed up my initial –negative- assessments with this information. I’d like to think that I have corrected this today.
For those interested in what has happened with CuDeCo over the past six months: the company has gathered (and shared) much more information, any attention from the media has completely disappeared and the share price has been moving sideways around the $4 mark.
Resource projects, be they highly promising or rather mediocre, don’t become an operational production unit overnight – it takes time, a long time. And there be many challenges and risks along the way.
The second reason why I opened this week’s editorial with a flashback on CuDeCo is because the Tech Wizard called me last weekend, saying some chatrooms were buzzing about –wait for it!- the “next CuDeCo”.
Wouldn’t that be the ultimate punters’ dream?
The company in the centre of current chatroom speculations is Conquest Mining Ltd (CQT), owner of some very prospective, highly promising exploration leases in North Queensland.
Conquest is currently undertaking what management has dubbed an “aggressive drilling program” – some new results should be released anytime soon to the stock exchange. Rumour has it management is convinced they are sitting on a “winner”.
Managing Director John Terpu has been very active in increasing his stake in the company over the past few weeks buying, among other transactions, more than 900,000 shares off-market for a total consideration of $445,410. No doubt, some of the punters in the market are thinking: that’s a lot of money from someone who’s closest to all the latest information.
Other directors have been adding more stock to their ownership as well. And so has South African based Gold Fields Ltd who is now the owner of nearly 26m shares in the company.
Conquest raised $3.7m in August last year and its list of top 20 shareholders now contains names such as Westpac Custodians Nominees Ltd, Merrill Lynch (Australia) Nominees Pty Ltd and HSBC Custody Nominees (Australia) Ltd.
The company made quite some significant progress last year, increasing its resource base to 6.7m tonnes -containing 18m ounces of silver, 300,000 ounces of gold and 25,000 tonnes of copper- mainly through the discovery of a new gold-silver-copper deposit at its Silver Hill prospect.
Conquest’s main operations are in the Central North Queensland Goldfields, historically a highly productive area for gold and other metals. This adds to the appeal. Another noteworthy historical footnote is that Conquest bought its main Mt Carlton tenements from MIM subsidiary Carpentaria Gold Pty Ltd in November 2003 – for $10,000.
The company shares a key feature with CuDeCo in that its Silver Hill project has already been dubbed “one of the most exciting mineral discoveries in recent times”. Drilling at Silver Hill has so far suggested the prospect consists of unusually thick zones (+40m) of high grade gold and silver and to a lesser extent copper and probably zinc too. And it would seem that the zones become larger with each additional drilling result.
One of the few brokers who has already cast its eye over the company, Perth based State One Stockbroking (the recent raising went through BBY) forecast in August last year “a continuing rise in CQT’s share price on the back of ongoing step-out exploration drilling and infill diamond drilling. […] news flow should be fairly consistent going forward with drilling results announced at least monthly.”
That was when the share price was at $0.390. On Wednesday the share price went up by $0.095, 14.39%, to $0.755. No doubt, investor interest followed on from the many director share ownership changes that were lodged this week.
Till next week!
Your I will be watching Conquest shares closely over the next few weeks editor,
Rudi Filapek-Vandyck
(as always supported by the Magnificent Three: Terry, Chris and Greg)