Greetings, one and all!

I have just posted most of the following on Wilbs' SCR thread. I feel, however, that one the old one we might not be able to see the wood for the trees in the light of the recent developments at SCR, so I have started this thread in the hopes of drawing a bit more attention to the stock and getting a good discussion going.


Master RSI kindly pointed out on the TRAD thread that SCR is ticking up (SCR Bid: 3.5p Offer: 4p Change: 0.5, 2.5 mil traded). Could this be the start of a new era for SCR after its fall from highs of around 28p a little over a year ago?






My reason for taking a fresh look at SCR after the disaster that was Danfeng is that the Zhunuo project is estimated, on the basis of prelim drilling plus, to contain the following:

China Resource Category Copper Silver
333 (Inferred) 346,200 tonnes 131 tonnes
334 (Predicted) 948,500 tonnes 267 tonnes
Total 333 + 334 1,294,700 tonnes 398 tonnes


Just taking 346,000t of Cu inferred resource, that's a value of $1.73bn at a conservative long-term Cu price of $5,000/t, of which 53% accrues to SCR, or $917m/458m. If you put an value that at 1% for the exploration potential, that gives you an NPV of 4.5 million. This doesn't sound like much, but the directors (see below) reckon there could be at least ten times the amount of copper over the whole of the licence, which makes 45 million.

These resources have to be proved by drilling but, unlike the moly at Danfeng, if copper is there to be found, at least it won't disappear.

Why does molybdenum disappear? According to proactiveinvestors, moly can be very difficult to get at, as it is friable and "escapes" from drill cores when sampling.

Read full article

Sounds like a bit of a b*lls-up, and no mistake. Danfeng has now been relinquished by SCR.

But that leaves Zhunuo, which is hopefully a different case altogether.

The directors point out that sampling at Zhunuo has taken place across only a small area of the license:

"ZHUNUO PROJECT POTENTIAL

"The Directors' estimate set out above is based on areas of drilling which
measures 700m x 800m. The Directors have noted that the area of surface
mineralisation extends to 4km x 3km and believe that if drilling results in this
larger area follow the results of the area already drilled, the Project has the
potential to host a significant resource of between 3 and 5 million tonnes of
contained copper metal with credits of molybdenum, gold and silver."

3 million t Cu = $15bn or 7.5 bn, NPV 1% = 75 million. Multiply this by 0.53 to account for SCR's 53% interest, and you arrive at an NPV of 39.75 million, which is around 7 times the current market cap (at 11th Jun 2007: 3.5p to buy gives a mkt cap of around 6 mil)

At year-end 2006, the co had 3.3 mil cash, no debt and HY losses of 900K, implying that they could trade until mid-2008 without needing to raise further funds.


I'm not saying anybody should buy this stock right now - that's up to each individual investor (although arguably it must be somewhere near the bottom, cos if it gets any cheaper, the SP will barely cover the cash in the bank).

I would, however, like to persuade people to revisit this stock, give their views and contribute to the debate. The stock could clearly be worth a huge amount more if drilling confirms that the copper resources are worthwhile. Could this be your next ten-bagger?

PDYOR. Brickbats and suggestions are all welcome.

Morning all!

Nobull, thanks for your feedback re the calculations. You are right about the 53% and I have edited this in the earlier posts.

It's a strange case, this company. Is it capable of staging a comeback the way RPT did?

soul traders: re making a comeback, there was a big difference between RPT and this stock. With RPT I believe Timis massively increased his stake, and an Italian director did a massive CFD (I am told it was mentioned in the accounts), after which RPT duly 4 or 5 timesed? With SCR, I calculate our CEO has spent 190,000 pounds to acquire a holding of 10m shares (i.e. he's in at an average cost of 1.9p a share). A 190,000 pounds is not a massive amount (I think my holding of 270k cost about 16,000 pounds, and is now worth half that at the bid price). The accounts by Noire that Andy has referred to are dreadful, so I would give this stock a miss. The CEO needs to put in some serious money before I will be convinced he has confidence in the future of this company. The Zhunuo finance ought to be straightforward, but as the company is not revealing the Snowden report to us, one doesn't really know if Zhunuo is as good as it is suggested. The sight of stocks like AFR (slowly re-rating by the day, notwithstanding kidnapping problems of offshore oil workers around Nigeria) is almost enough to make me think I'm mad staying in SCR. I can't see this as a bargain - the liquidity risk rises daily, and if Noire's account is true, we need boardroom changes quickly. The lack of openness is also a worry (management not confident of its decisions or the cock-ups are so bad they can't be revealed?).

Thanks Andy for the references to Noire's posts.

I have read those posts too, and some others on ADVFN.

In particular, one poster seems to be hinting that someone will mine Danfeng, but not SCR!!!

I wonder why he thinks that?, and if there is any basis to his suspicion?

Nobull, the trend is certainly not one's friend in this stock, so I'm not surprised you'r questioning your investment.

Haven't examined Afren for quite a while, but the SP is certainly heading in the right direction, although clearly not for the queasy as it's a bit of a rollercoaster ride.

Share Trader, there's no mystery to the point you raise about Danfeng: If I remember correctly, SCR has relinquished the licence as it didn't fit the company's idea of a worthwhile prospect. Could be good for somebody, though, according to Proactive's analysis.

Sorry boys, I bought in this morning and caused an 18.18% jump in sp. Imagine if buying got really serious, how quick this could move.

Evolution Securities buys 12% of SCR, over 21 million shares. Yesterday you couldn't buy 10,000 on line. Thats only 150's worth.

Something big going down.

CEO resigns, the only way is up from here. Good luck to all holders.

Having done a little more research, Evolution bought J P Morgans holding and as an MM, are in a good position to off load them, whilst giving the impression that everything is honky dory. They have already off loaded about half of them. When they get rid of the rest I think this stock may return to its former lower levels.

this looks like another of those spiffing stocks which, having rushed off in a blaze of glory, has tumbled back to a level reflecting its proper value ..... what is it about some investors that, having taken a pasting, they will not bite the bullet and allow wild optimism to overrule reality?

Coal is the new black gold!