Cobar (CCU)

Ouch. Hope it wasn't too painful. Anyone who was around in 2008-09 got singed somewhere. Gold and silver stocks were "a steal". It was really quite depressing until late 2010 for silver. You learn pretty quickly that from the gutters of hotcopper to the cuff-linked expensive investomercial e-business, the same principal applies - the fox and the crow. It's your money. Treat it like gold.

 

It hurt.

 

Hi guys, how have all of you been? It's been a while since I've been here on this thread as I have been more active on Hotcopper after getting heavily invested into CCU, SLR, NCM and KCN. Especially CCU.

I understand that existing CCU shareholders will be in pain, as I am experiencing it too. But I am never one to give up without a fight. I have been leading a retail shareholders group to campaign for the re-listing of CCU on ASX. I hope some of you here can join us with this fight too.

In my view, CCU as a silver producer is in prime position to capitalize on any rebound in silver price. It has gotten past its exploration and development stage and is full fledge silver producer capable of running at nameplate capacity of 200,000 oz / month. In 2004 Q2 it even demonstrated that it has reduced cash cost from AUD$28/oz to AUD$22.8/oz.. and was on its way to AUD$19/oz until this mishap happened. (50-Days EMA silver price is AUD$23.0 / oz as I type this)

The AUD$10 mil debt with CBA that had a very short repayment period was its undoing. Had CCU run its capital raising much earlier back last December rather than in March to tackle this short term debt, things would have turned out differently. What ultimately caught CCU out was that they unwisely did not anticipate that CBA would not renegotiate payment terms in February, which led them to requiring to raise $8m within 1 month. They reached out to existing shareholders and got $3m+, but unfortunately there was insufficient time to cap raise more via prospective shareholders before they went into voluntary administration.

That was the past. But let's talk about right now.

The reality is that we are looking at a company who has gone into voluntary administration to sort out its creditor issues. But this is no ordinary company. It's a full fledged silver producer that has demonstrated the ability to overcome initial ore quality issues and other production teething issues to drive production rate from 20,000 oz / month to 200,000 oz / month, at the same time, drive the cash cost from AUD$40+ / oz down to AUD$22.8 / oz. (More info here : http://ccrlimited.com.au/wp-content/uploads/2014/03/20140305-Investor-Presentation.pdf)

It's also a company whose Administrator has been supportive of shareholders. Our campaign group has been in communication with the Administrator, and just yesterday he informed us the following:

-- Stephen Longley, PPB Advisory, CCU Adminstrator

For existing shareholders - The possible cap raise and debt refinancing outcome means there is still a chance to get CCU re-listed with your shares marginally diluted, but with CCU's debt issues relieved.
For prospective shareholders - The possible cap raise and debt refinancing outcome means that there is a chance to get into a silver miner PRODUCER who has been improving production rates and production costs over the past year at a very attractive price.

Whether you are an existing CCU shareholder, prospective CCU shareholder, or an ex-CCU-shareholder looking to get back in: IF you believe in CCU's (and Price of Silver) ability to rebound after a debt refinancing and become a successful Australian Silver Producer - I would encourage you to sign up to our growing "Re-listing CCU" private campaign forum at this link : http://re-listing-ccu.forumotion.com/. From there, sign up to the forum and reply to the main petition thread indicate genuine interest to support any possible capital raising to re-list CCU.

We plan to pass the result of this petition to the administrator to provide an indication the support CCU still has from us retail investors --- so that it will add more weight to support the administrator going down the path of capital raising and refinancing of existing debt for CCU - in order for CCU to be re-listed on the ASX. Please support us !!

p.s. @Bullion Baron: It was your post on your blog that drew my attention to CCU in the first place many years ago, I understand you have been out of CCU for a while, but I did see your post saying that you were looking to get back in. Hope you will join our cause to petition to get CCU re-listed!

 

The problem here is that you're assuming that silver will go up soon. It is speculation that got you into CCU and now you want to speculate your way out? As far as I can tell we are still in a downward rebound from the 2011 high and silver is only finding it's historical mean footings again. Silver could very well hold this sideways position for the next 5 years plus.

Competing with 3rd world extraction costs is becoming an impossibility for management and they can see it. Couple this with CCU's principle element of Ag which is majority a secondary product for almost all other silver producers in the world is the reason why I didn't invest in CCU or any silver miner for myself.

It would be very bad if they floated the stock now, you will only see mass sell offs. This would be very unlikely event. Administrators function like insurance companies, they work off factual information and will not speculate on future silver prices...

 

BigS, even if the price of silver holds a sideway movement for the next 5 years, if CCU manages to continue to drive production costs lower to $19 and below wouldn't it still be a viable business at $10m nett profit per annum?

I have every reason to believe CCU is capable of doing that as they have demonstrated over the past year the ability of driving down production costs while ramping up production rates.

If POS goes up and stays from here it will only be a bonus, and it's not something I am expecting to be a certainty.

 

Last financial year CCU was -30mil cash flow not including -60m capex, which explains the lowering extraction costs. Don't know how you get +10mil projected for CCU.

 

+$9.6mil (approx.~$10m) nett profit comes from when the price of silver is assumed to be averaging at AUD$23 /oz and CCU is able to hit an average of 200,000 oz nameplate production level per month over a period of 12 months, at a cash cost of AUD$19/oz.

 

They must be far from that 200k monthly target then. Cash doesn't lie. Neg 30mil after capex in one year on a 26 mil cap company. They tried their best with all the capital expenditure but has obviously failed. At least they admitted it and didn't run the stock into the ground with repeated cap raising.

 

Very wise words IMHO.
Interesting that while we condemn the use of leveraged derivatives, we condone the use of leveraged speculation via shares married to the spot price. Go figure?

 

The value is in the resource, not the company. From a speculative view it would be far better to sell the resource at a bargain basement price to another producer that is in a far better financial position rather than have it held by a small struggling miner that is in debt up to its eyeballs and is diluting the stock continually to keep afloat. From an investors view, cop the capital loss, watch the silver price, hope for greater falls, monitor the outcome of the resource sale and reinvest with some borrowed money into the company that buys the resource....that is if you are very confident that the resource is what you believe it to be.
Your capital gains will far exceed whatever your losses.

 

Silver that you cant get out of the ground at a profit is worth nothing - regardless of who, where what or why

 

All true. If there's one lesson learned here, it's to not speculate on miners while the underlying market is still in a bear trend. Wait for silver/gold to show a clear reversal and then go for the tiny cap gamble, your odds of success will be in your favour.

 

ouch cobar looks to be done

 

CCU announces cessation of operations

https://content.markitcdn.com/CommS...NOFRISDciLCJmaWQiOm51bGwsImR0IjpudWxsfQ==.pdf

Will be interesting to see who buys Wonawinata. Hopefully someone that can weather the storm a while longer without going under

 

Looks like the stock may have been delisted.

 

Well if anyone still fancies taking a punt on Cobar, it's for sale;

http://www.graysonline.com/sale/5010740/mining-quarries/for-sale-wonawinta-silver-mine-cobar-nsw

 

Group buy fo sho

 

Should have spent that 20K on booze and (expensive) women.

 

For anyone who held CCU shares when the company went into administration, the liquidators (PPB Advisory) have issued a declaration stating:

It's my understanding that this letter can be used as the basis for writing off any CCU shareholding and claiming a CGT loss in your 2014-15 tax return.

PPB Advisory page for CCU

 

For those who feel the need to live the terrifying lows, dizzying highs and creamy middles all over again, Southern Cross Goldfields (SXG) bought the Wonawinta silver project from Cobar's liquidators and intend on resuming operations in December.

http://www.abnnewswire.net/press/en..._Acquisition_of_Wonawinta_Silver_Project.html