I will share some of my thoughts with you. When Goldcorp finalised the offer with Canplats in Dec 09, gold price was lower than what it is now. Nevertheless, if the whole Cerro mine is worth $277m, CJO will only get approx. 65% of that--$180m. But do not despair. CJO will not be worth only 29cps when it has $180m in its bank. The reason why CJO price is low now is due to the cloud hanging over the financing to build the mine. Personally, I think the financing is not a problem at all. The financier is waiting for the feasibility report. With that kind of cash in the bank, we could build 2 projects of Cerro size without financing. The other factor investors look at is the potential projects CJO has in its portfolio. We have only being focussing on the gold rich zone. As the presentation reminded us, the Cerro mine actually contains 4.5m oz of gold, 202m oz of silver and 1.4m lb of copper. No doubt the grade is not fantastic, but some miner may find it workable to develop the whole mine in the light of current metal prices. You can easily work out the inground value of the minerals. Next, we have the Mt Phil iron ore deposit to factor in. Assuming it has 5Mt of iron ore and the profit is 50% of the current iron ore price of $150/T, we are looking at raking in $375m over the mining life. Let's not forget Kalman. The molybdenum price has recovered to about $15/lb which is half of the peak price. With rhenium thrown in, it may be attractive to someone seeking a jv. I would not be surprise to see another miner farming in to develop and mine Mt Phil. I can go on and on. But the share price will definitely have the potential to go way beyond 40cps.
CJO Price at posting:
17.0¢ Sentiment: Buy Disclosure: Held
