laughable.., page-3

The 4 mill oz was a 'pretend' number. They drilled here and there and used some crazy non-JORC model. If you read my previous posts you will see what the big holders and management were trying to do.

They were trying to get someong to buy them out based on these 'kind of' numbers. So they only poked around for years. Then the lead guy died and the company did not much for a year.

Then they pretty much fired the lot of directors and started from scratch. The new dude McKinstry said up front, the 4 mill was a MYTH. One time he called it a TARGET. So they pretty much started for scratch, but knowing there is something there.

So one year of infill drilling and a million real oz declared. My guess is they will end up with HALF the myth/target - or 2 million resouces. Then I 'guess' 1 mill reserves.

But John McKinstry is very conservative, so they have not explored or proved up more... just did reserves mainly to design pits. So their target now is 5 years of open pits at 50k a year.

If you read and listen to all CRK has put out recently, you will see they are going to do this:

Sell the ore to a nearby plant. Plant keeps 1/3 of gold for processing. CRK is credited with 2/3. Costs will be 1000 to 1100 oz. They will also contract to mine the open pits. So they are very much just a few admin people and a few geologists - no millers and no miners. Ha ha. An odd company. But there are NIL capital costs. NIL.

Now if you do all the numbers (at 1600 AUD an oz) I think CRK will cash flow about 16 mill a year on the gold. If you look at their recent quarterlies, they spend about 10 mill year to run the company and prove up reserves and declare more resoureces. So, I can just assume they will go along like that.

So, by my numbers, I see net cash flow of 16mill year, less 10 mill for finding MORE, yielding profit, I guess, of 6 mill a year. They are market cap (less cash) of about 40 mill. So you are talking of a PE of 6 or so.

Since they have just started (for real) I really do think they will end up 2 mill resources and 1 mill mineable reserves. So at 50k a year, you have a 20 year operation. If the price of gold increases at all, of course, the 6 mill year profit will rise and the PE will fall.

I do not see any downside currently - at these prices. I only see upside.

The main problem with CRK is they are BORING. The operation I describe is BORING. But they will pay dividends. Since they do not need capital costs, they have stated they assuume they will pay dividends.

To me they are a no brainer. You just put a little money with them and then sit back for years. You cannot trade them much as volume is so low. Top holders I think are over 80%. So there are not many shares around.

And given their operation is no cap costs they can be very nimble. And I like they are open pit and low grade, but lots. So if the price increases of gold, they easily ramp up.

But they are boring!