Epic : CDN

Web Site : http://www.caledonresources.com

Broker Note 1st Aug 2007 : http://www.caledonresources.com/Images/FileManager/192.pdf


About Caledon: Caledon is quoted on the London AIM market (Ticker: CDN). In 2006, the Company acquired two Australian coal projects; the Cook mine and the Minyango coal project, both situated in the Bowen Basin, Queensland. The Cook mine is host to a mineable reserve of 17 Mt of coking and thermal coal with a 10 year mine plan. On 21 March 2007, Caledon announced commencement of production at the Cook mine with targeted output to reach a 100,000 tonnes per month rate by the end of 2007 and 1.5 million tonnes per annum in 2008. On 14 March 2007, the neighbouring Minyango project resource was brought to a JORC standard of 240 million tonnes which was an increase of 17% on original estimates. Caledons aim is to develop the Minyango project to potentially increase the Companys production in the near-term to accompany its already producing Cook mine project.

**********************************

Caledon Resources PLC Interview With:
Mark Trevan Managing Director

Dated September 20, 2007

http://www.wallstreetreporter.com/page.php?page=featured&id=26736

Errrr pump and dump stocks tend to be smal illiquid shares with no current real business. Certain people buy into them, and then ramp them like mad, and with the stock being illiquid, the SP will suddenly jump massively to which they sell out. A pump and dump cycle is a couple of weeks, no more.

However, Caledon has a business plan, it has an ongoing business, its now producing and selling coking coal, and if their expansion plans come out fine, then in a short period of time the production output will make the present market cap look undervalued imv.

PP i agree with you on the business plan, they are believe to be testing the new equipment at present, which should push up tonnage quite considerably. And of
course theirs a question of reserves which have been increased of late to the Cook
Project and we await drilling results form Minyango, which could be a real ice topping?
cyril

Papal,

Sorry old boy but all aim stocks are as you describe small illiquid thats why they are there.
Caledon is a perfect example of a pump and dump exercise.
If the new reserves were as they say why does the SP not reflect it?
Reason - Australia is floating on coal (100 years of reserves) so its hardly surprising they have found more - on the other hand its a dying fuel and has no long term future.

Sorry but investors stay clear - if im wrong I will eat my hat.

IMHO

transco,
CDN are producing Coking Coal for which their is a world shortage along with a growing demand and will be in the growing future.
How would you like your hat seasoned?
cyril

Exactly cyril, the demand for coking coal is far outstripping supply.

I respect your opinion but as I say Australia has no shortage of coking coal.
The continent is floating on it - 100 years of reserves.
Its the cost of extraction thats key and there are other more well managed companies quoted on the Ausy market that are a much better bet.
Caledon is a very very small player with little future.

IMHO

transco, you have hit the nail on the head.

Thats what Caledon are all about, reduced cost of extraction makes previous uneconomic mines, once again very profitable.

Have you noted the history of Cook ?

Prices have gone up - I accept.
However there are other huge players in the field and Caledon are small fry.
Its just not worth the risk investing in a company that recently mined for gold in China.
I mean.... you can not be serious!!

Small fry, well, they have the sales agreement in place with Xastra.......what makes them small fry ?

It matters not about what they were, markets are forward looking, not historical, and the future looks like good coking coal production at around 100K tonnes per month.

Thats around 9.6m US dollars a month sales revenue, on line by around year end.

Not bad is it.

3M X trade.

Might be the seller now clear, and the overhang gone ???

ok lots of coal in Australia - tell us something we dont know!!

Could be an interesting week coming up, with CDN holding presentations in
London?
cyril

I still dont see any upside!!

The big question remains over the Nov 15th Minyango final payment, given we have not see the Feasibility study, then as per the announcement it looks like a 3 month delay will come in, pushing this back to Feb 15th 08 - which would be good as it allows production and cash flow to grow.

This would also be good when you consider the smaller payment due for the loan notes in December, as it takes the pressure off there too.

A number of people have sold out and potentially taken short positions thinking a placing is coming very soon and they can get a low buy in price. Well, that remains to be seen..............a 3M X trade today clearing perhaps the overhang, might sugggest that a placing is not going to happen soon. Who knows.

With 100K production a month planned for year end, and the cash that generates, imv, CDN is undervalued by some margin.

Good news, coking coal spot prices now at 125$ per tonne, and the outlook is for further rises throughout the rest of this year and 2008 :)


http://www.telegraphindia.com/1071008/asp/business/story_8408562.asp


Hike in coke prices bugs steel makers

Mumbai, Oct. 7: Coking coal and metallurgical coke (metcoke) prices have started rising over the past few months, putting pressure on steel makers in

India and China even as they prepare to start negotiations on fresh supply contracts.

The price rise has been triggered by a supply shortage and strong demand emerging from China and India.

Metcoke is derived from coking coal and is primarily used by steel makers who use the blast furnace route.

Coking coal prices were soft for around two years but have started hardening in the past few months.

The price of good quality metallurgical coke rose from $150 per tonne in June 2006 to $260 in August. It is now ruling at $290 per tonne.

The landed cost has jumped to $320 per tonne because of rising freight costs.

The spot price of coking coal is now at $125 per tonne. Last year, annual contracts for coking coal were struck at $100 per tonne.

Industry circles say prices will continue to rise during the rest of the year and further harden next year.

This is the time when global steel mills start negotiating annual contracts with coking coal suppliers for the next year.

Sources here said the negotiations had already started between certain suppliers and Japanese steel mills.

Reports state that the prices that are being negotiated are around 5 to 10 per cent higher than last years level.

Industry circles say Indian steel makers such as Ispat Industries, Steel Authority of India Ltd and Tata Steel import coking coal and metcoke. Although companies such as Tata Steel have started buying into overseas mining assets, a large part of the industrys coking coal or metcoke requirements are still met through imports.

In August, Tata Steel became a strategic investor in Riverdales Mozambique Coal Project by acquiring a 35 per cent stake for A$100 million.

The hard coking coal derived from the project will be supplied to Corus facilities in the UK and Europe.

A lack of captive raw material source for coal and iron ore is a major weakness in the operations of Corus.

In 2006, Corus imported about 11 million tonnes of coal to feed its 19-million-tonne production capacity across plants in Europe. The coal, converted into coke for direct injection into blast furnaces, comes from Australia, Canada and the US.

It will also be used to meet Tata Steels own increased requirements in India.

The surge in prices is good news for companies such as Gujarat NRE Coke, which is the largest independent producer of metcoke in India.

The companys total coal resources are estimated at over 580 million tonnes.

Gujarat NRE Coke, which had posted losses in the first quarter of last fiscal, saw a sharp turnaround in its performance. The operating profit for the first quarter ended June 30 rose to Rs 62.68 crore compared with Rs 10.57 crore in the same period of the previous year.

Net profit jumped to nearly Rs 43 crore. The rise in coking coal prices has ignited the companys stock, which has jumped to over Rs 90 from just under Rs 30 a couple of months ago.

http://www.metalprices.com/metalNews.asp?id=60040&svc=ODJ&type=1

Metal News
09 Oct 2007 12:50:00 AM

.......................For 2008, UBS has raised its copper forecast by 8% to US$3.25 per pound,nickel by 15% to US$13.25 per pound, gold by 17% to US$7.60 per pound, iron ore fines by 8% to US$109 per long ton unit, and hard coking coal by 13% to US$130 per metric ton, but cut uranium by 52% to US$95 per pound. UBS said its iron ore forecast now represents a 35% increase in the benchmark contract price, from a previous forecast of a 25% rise......................

I personaly think this one is way undervalued by the market.

Of course the green lobby wont agree but in business its usually getting a supply of what is the cheapest form of fuel for future progress.

Make no doubt about it coal is going to play a big part in the energy markets going forward.

You are a busy ramper!!

IMHO this stock is way overvalued and has been touted up by people who should know better.The SP is an indication of this!!

Another big X trade, this time 1.5m at 36p (higher price than the 3m X trade on the 11th).

More overhang cleared up then.............