life after bmg., page-4

Another long post:

So far, life after BMG has been a bit painful shareprice wise but a massive releif as we can now look forward with some clarity. It was the breakup we had to have due to the unethical behaviour of BMG's major share holder.

Admittedly, I did not expect us back at below 30c.

I have been a shareholder of CAP since 4th October 2010 and the reasons why I have invested in CAP have not changed, they have only strengthened. IMO, CAP is a great investment because:

* Hawsons: NPV of $3.2 billion, based on a resource of 1.4 billion tonnes (BT) and an iron ore price of $88 per tonne. We have further scope to increase the resource from 1.4BT to between 6-11BT and iron ore is not currently priced at $88 per tonne. Calculate the potential value one or two years down the track of a 6 BT resource and an iron ore price of $120 per tonne and above. CAP controls 60% of this with a market cap of $30 million???

* The CAPEX of $2.9 billion is a big number and puts some people off but management continue to improve the economics of the project and if the resource can be expanded, accompanied by the security of a 50 year PLUS mine life, along with iron ore priced above $120 per tonne, the IRR should increase above an already impresive 23%.

* Top 20 shareholder list is stable with some respectable indiviuals / companies appearing on that list.

* Management underpromise and over deliver. How often do you see that in a speccie stock?

* Hawsons location: Does not require a fly in / fly out workforce, the town of Broken Hill wants the project to proceed and great access to infastructure.

* Ample Source International (ASI): I can not see ASI accepting a loss of $13 million in their investment in BMG when they only got involved for Hawsons. Surely, they must be talking with CAP.

* Less than 100 million shares on issue. I don't see the shareholders of CAP being heavily diluted over the last 24 months, like shareholders of GXY, RMS, AYN, CCC, etc have.

* Lastly, I have phoned CAP on 5 occasions over the last 12 months. On each occasion, Nick or Chris has always taken my call or called me back and answered my questions to the best of their ability. I have never experinced such treatment from other companies that I am a shareholder in.

SO, one door has closed, let's see what Nick and the team at CAP have behind door number 2.

IMO, Atlas Iron (AGO) will not be invloved in the next stage. AGO has been quite clear in the past that they wish to offload their Ridley magentite deposit. The Ridley PFS concluded a 2BT resource, suitable to a large conventional truck-and-shovel open pit operation and mining approximately 48Mtpa of magnetite ore, producing 15Mtpa of concentrate for export. The CAPEX to get Ridley going was $2.9B, inclusive of a contingency of $250 million. The average annual real operating cost has been estimated at $36.22/tonne of concentrate.

BUT to highlight the strength of Hawsons, compare the CAPEX, grades, tonnage and cost per tonne with what AGO publsihed for Ridley.

I for one am upbeat about the future of CAP.