Good morning

"UPS" (Added by Master RSI on Sun 22 Apr 10:05 pm)

SCR - Mid 6.75p
Reason - Rumours of news soon as volume has been good last week, and share price has been risng from lows lately. On the Chart an Inverted Head and Shoulders has developed and now on the BREAKOUT. Metal prices at record levels at the moment

Well, Master, it didn't quite come right after your prediction of 23rd April. Could today's price rise (upon which you kindly commented in your "UPS" post on today's TRAD thread) be a different kettle of fish?

SCR Bid: 3.5p Offer: 4p Change: 0.5, 2.5 mil traded.

My point being that the Zhunuo project is estimated, on the basis of prelim drilling plus contains 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, 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, which is 12 times the current market cap.


Currently the market cap of SCR is a mere 6 million. At year-end 2006, they 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.

3 million t Cu = $15bn or 7.5 bn, NPV 1% = 75 million, which is 12 times the current market cap.

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.