The price is spiking on the back of Parker Range, with io prices...

The price is spiking on the back of Parker Range, with io prices showing a recovery. Forget the cobalt. Unfortunately, CLA's scoping study was a punch in the balls to CAZ's nearology. Can't help bad luck.

See below, details of the original bid for Parker Range in 2011 from the SE Asian consortium. $100m and up to $80m of royalties.

https://www.theaustralian.com.au/bu...r/news-story/f1331e1c45ab1ffd08ad0939b011ef4c

This was contingent on port access, which was never secured.

CAZ seem to think Esperance port appears to be a realistic option now.

Cliffs mothballed their Koolynobbing iron ore project in the South. MinRes (and the state government!) came to the rescue, with various subsidies.

https://www.miningemployment.com.au/mineral-resources-adds-koolynobbing

Iron ore now shipping, once again.

https://www.abc.net.au/news/rural/2...on-ore-train-rolls-into-wa-community/10478392

CAZ now revising their DFS to account for current structural conditions and in discussions with the Souther Port Authority.

https://hotcopper.com.au/threads/ann-parker-range-iron-ore-project-update.4618161/#.XHn7hag7Z-E

CAZ mention Esperance has shipped up to 13mtpa in the past. I've seen 11.5mtpa from other sources. Either way, based on MIN's 6mpta target, it should give scope for CAZ to hit their 4mtpa nameplate, as per DFS.

Main risk with Esperance could be that MIN have more or less guaranteed operations for the next 5-6 years but not more. Although they could operate for many years to come, how does this impact the security of the port from a LOM perspective for a smaller potential operator, like CAZ? Would a CAZ standalone operation suffice in keeping things rolling at the port? Worth remembering there's significant scope to expand CAZ's JORC. This was one of the original takeover terms; that CAZ would utilise their regional expertise to contimue managing the mining operations, including exploration. There's also likely to be significant pressure on any incumbant government to preserve the hundreds of associated port and rail jobs. This, despite the opposition's attack that the McGowan government's assistance package to MIN was too generous.

So the DFS will clearly have a lower LT price assumption for iron ore, higher base inputs, lower capex, and more favourable exchange rate, versus the old DFS. The NPV will be lower. Given CAZ is trading similar to shell value, I think it's an asymmetric payoff here. If the DFS is poor and they fail to attract any suitors again, the company is priced close to a shell already. It falls back a bit on low volume. If the DFS looks appealing and we get some more commentary on port options and any interest in the project, there should be some form of re-rate. If they received a bid - even half the previous one - obviously there'd be a significant re-rating.

The company has nearly $10m of accumulated losses. Any sale, should it eventuate, and you'd be thinking in terms of utilising these losses and a decent special dividend paid out. Thinking WPG style, if anyone remembers it. This scenario makes sense for a BoD that have big skin in the game.

CAZ have 233m SOI, so you can do the maths to see what sort of partially franked dividend any sale would be worth on a per share basis.

This is all pie-in-the-sky discussion! I'm not saying I think it will or is even likely to happen; just that the asymmetry of an investment in CAZ right now is quite appealing. You don't need to hold-out for a sale. If the market even thinks there's half a chance for one to proceed, there should be a handy re-rate to derisk into. The revisions shoukdn't be too far away, so the lead time to price triggers also keeps our opportunity cost at a happy level, given specs are firing of late.