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.

Below is the full text of the RNS of SCR's comments on Zhunuo, dated 09Jan2007:

South China Res PLC - Joint Venture Update
RNS Number:1859P
South China Resources PLC
09 January 2007

9 January 2007


South China Resources PLC
('South China Resources' or 'the Company')

COOPERATIVE JOINT VENUTRE - ZHUNUO COPPER PROJECT


South China Resources PLC (AIM: SCR) is pleased to announce it has entered into
a binding Exploration and Mining Right Cooperation and Sale Agreement ('the
Agreement') with Qinghia Province Geermu Zangge Kalium Fertiliser Company
Limited ('Zangge') to acquire a 53% interest in the Zhunuo Copper Project ('the
Project') in Tibet, China.

Zangge will retain a 2% interest in the Project with Tibet Bureau of Geology and
Mineral Resource ('TBGMR') Brigade 2 ('Brigade 2') holding the remaining 45%
interest. South China Resources, Zangge and Brigade 2 will form a cooperative
joint venture company ('JVC') in the People's Republic of China and the
exploration license and associated rights will be transferred from Brigade 2 to
the JVC. Under the Agreement, South China Resources will be obliged to fund
ongoing exploration work based on agreed budgets and provide technical
management support and technology to the JVC.

Under the terms of the Agreement, South China Resources will pay RMB 53 million
(equating to approximately US$8m) to Zangge to be satisfied by the payment of
RMB 30 million within 5 days of the JVC obtaining a business licence and the
balance within 5 days after the completion of the transfer of the exploration
license and associated rights by Brigade 2 to the JVC.

GEOLOGY

Zhunuo is a porphyry copper project at an early stage of drill and adit
exploration. Results of exploration by Brigade 2 to date indicate it is a
moderate to high grade porphyry copper resource with the potential to become a
significant deposit in the Gangdese metallogenic belt of Tibet, and a core asset
for South China Resources.

THE GANGDESE PORPHYRY BELT OF TIBET

The Gangdese Belt contains a number of significant copper +/- molybdenum +/-
gold +/- silver mineralised porphyry systems that are distributed over an
east-west distance of 600 km and centred on the provincial capital of Lhasa.
These include the large Ju Long copper-molybdenum project east of Lhasa that is
currently being explored by Chinese interests, and the Xietongmen copper-gold
porphyry west of Lhasa being explored by Continental Minerals Corp.

The Gangdese belt porphyry systems of Tibet formed above the zone of subduction
where the Indian Plate plunges beneath the China Plate to the north. This
tectonic setting is the same as in other mountain belts such as the Andes of
South America, the Cordillera of the western USA, and the Central Ranges of West
Papua in Indonesia, all of which host major porphyry deposits that are the
source of a significant proportion of the world's copper.

ZHUNUO PORPHYRY COPPER PROJECT

Zhunuo is located 350 km west of Lhasa, at altitudes of 4,600-5,800 metres. The
project is being explored by Brigade No. 2 of the TBGMR. All data presented
here has been provided by the bureau.

Geological personnel of South China Resources visited the site in September
2006, verifying the extensive area of alteration, and viewed copper-molybdenum
mineralised core to a depth of about 300 metres from drill hole, ZK-003. The
Company was also provided with current geological data, including a geological
report, the results of geological and alteration mapping, geophysical surveying
(induced polarisation), assay results for drill holes ZK 001, 002, and 003 (to
164m depth, with drilling in progress), and assays from one adit and three
trenches. Since September 2006, exploration has been continuing, with six drill
holes now completed on the Zhunuo project and a seventh in progress.

Copper-molybdenum mineralisation is hosted by granitoid porphyry in the core of
a 3 x 4 km sized polyphasal intrusive complex. Extensive and spectacular red
oxidation of sulphides outlines a large alteration system at surface. A
mineralised zone 1.2 x 1.8 km in size has been outlined by Chinese mapping.

The following significant intersections have been reported by the TBGMR:

Description Copper Mineralisation Intercept
Adit PD-1 0.81% Copper over 284 metres
Drill hole SZ-001 0.53% Copper over 146 metres
Drill hole SZ-003 0.94% Copper over 123 metres
Trench TC-73 0.87% Copper over 30 metres
Trench TC-75 0.57% Copper over 138 metres
Trench TC-81 1.57% Copper over 62 metres

Whilst there are no resource estimates for the Project which have been
calculated in accordance with any standard recommended by the AIM Guidance Note
for Mining, Oil and Gas Companies, the TBGMR has calculated a resource in
accordance with the current Chinese Resource Classification Scheme. This is
based on intersections in Adit PD-01 and drill holes ZK-001 and 003 which all
lie in the same NW-SE planar drill section, and constrained perpendicular to the
section at surface by trenches TC-73, 75 and 81. The resulting V-shaped volume
is calculated to have the following metal resources:


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


Chinese resource category code 333 is equivalent to JORC Inferred or
Unclassified Resource. Chinese resource category code 334 is equivalent to a
JORC Unclassified or Exploration Potential resource.

Each digit in Chinese resource category codes is derived from an assessment of a
particular characteristic of a project. The first is a measure of economic
evaluation, the second a measure of feasibility evaluation and the third a
measure of geological evaluation. For the first digit, 3 is defined as
Intrinsically Economic, i.e. a resource based solely on geology with no
feasibility or pre-feasibility conducted. For the second digit, 3 indicates that
the Project is at the Geological Study stage, i.e. an initial evaluation of
economic viability has been carried out, with the objective of defining an
investment opportunity. For the third digit, 3 defines the resource as Inferred,
i.e. there is an early stage recognition and understanding of geological
characteristics such as structure, style and grade of the ore deposit, but
information and data used to estimate the resources are limited, with many
factors uncertain, including the continuity of the orebody; 4 defines the
resource as Predicted, i.e. the Project is at the reconnaissance stage only, in
an area defined as having mineral potential.

For comparison, on the basis of calculations by personnel of South China
Resources using TBGMR data the Directors believe that there are potentially 120
million tonnes grading 0.88% Cu and 2.77 g/t Ag, for in-ground contained metal
of 1,056,000 tonnes copper or approximately 2.33 billion pounds of copper
together with 10.6 million ounces (300 tonnes) of silver. The potential quantity
and grade is conceptual in nature, as there has been insufficient exploration to
define a Mineral Resource (as defined in the JORC Code) and it is uncertain if
further exploration will result in the determination of a Mineral Resource.

This estimate is based upon the Company's analysis of existing drilling, its
visual inspection of the mineralised system, and the knowledge and experience of
the Directors and the Company's advisers of copper porphyry deposits.

Additional credits are molybdenum (observed visually), and gold, assaying
0.2-0.4g/t Au in reconnaissance sampling.

Drilling since September 2006 has proceeded up to 800 metres west and to the
northwest of the section containing drill holes ZK-001 and 003, and Adit PD-01.
Brigade 2 geologists reported copper mineralisation in new drill holes ZK-701,
703, 1501 and 1503, with assay results pending. Ore grade mineralisation in
these drill holes, if verified, would enlarge the copper resource, and upgrade
the category of the resource.

All data provided by the TBGMR and summarised here requires validation to
international standards, with re-sampling of drill core and trenches, and
analysis in certified laboratories. This will be done via technical due
diligence, when all historic and recent data on geology and mineral exploration
will be supplied to the Company, and drill core will be made available for
sampling by Company personnel under established QA/QC procedures.

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.

Continuing exploration will determine the ultimate size of the Zhunuo project
resource. However, given the extent of the alteration, mineralisation identified
in early exploration and the presence of other altered porphyries on the project
exploration license the Company has a view that the project has clear upside
potential.

Whilst further exploration work needs to be performed on the project it is
evident that any future development of the Zhunuo project will be aided by the
geometry of the mineralised body defined to date. The Zhunuo project
mineralisation is situated in a mountain that rises approximately 500 metres
above a valley floor. Intersected copper mineralisation in drill holes commences
at depths of between 23-40 metres below natural surface in that mountain and
then continues to depth. Given the extent of the mountain and the geometry of
the mineralised body, the deposit would lend very well to large scale open pit
mining with potentially very low strip ratio.

IMPACT OF ZHUNUO PROJECT ON SOUTH CHINA RESOURCES

The Zhunuo project is potentially a world class copper deposit located in one of
the last mineral exploration frontiers of the world. The Gangdese Metallogenic
Belt of China has all the makings of a significant porphyry copper province
rivalling other well known porphyry copper provinces of South America, North

America and Papua New Guinea-Irian Jaya.

Early exploration on the Zhunuo project is focussed on establishing the broad
extent of copper +/- molybdenum +/- gold +/- silver mineralisation. This work
will allow an order of magnitude scale resource to be determined for the Zhunuo
deposit.

The Zhunuo project could have a significant impact on South China Resources and
has the potential to elevate the Company into significant producer status.

During the last 6 months, the Company has focussed on developing strong
relationships in Tibet. That relationship building process is now paying
dividends to the Company and its shareholders. The Company hopes to build on its
relationships in the province and further expand its project portfolio in this
exciting and emerging world class porphyry copper province.

Given the size and scope of the transaction it is envisaged that additional
funds will be raised in the coming quarter to satisfy the Company's expanded
project portfolio and additional staff required for the effective management of
the business. The Company will advise of the conditions of this capital raising
in the coming weeks.

Upon signing the Agreement in Beijing, Managing Director, Mr Steve Leithead
stated 'the Zhunuo project agreement is a significant transaction for the
Company and its shareholders. This project has the clear hallmarks of a world
class porphyry copper project. The full extent of credit molybdenum, gold and
silver mineralisation is yet to be fully understood but all have the potential
to add to the attractiveness of a project that is already the highest grade
porphyry copper project yet identified in the Gangdese Belt of Tibet.

'The impact on the Company of such a project investment could be significant.
The Directors believe that the possible value proposition presented by this
mineral project investment is compelling. South China Resources now has a
foothold in one of the most exciting and yet under-explored porphyry copper
provinces in the world.

'The Company commends its partners in this project for working cooperatively
with South China Resources to achieve an outcome that satisfies the needs of all
parties involved. South China Resource's choice of partners in the Zhunuo
Project is significant as both the Zangge and Brigade 2 have substantial
operating experience in Tibet. Moreover, Zangge and its sister company have a
controlling interest in the Ju Long Copper Project. Ju Long is the largest
undeveloped copper porphyry in China and located east of Lhasa.'

Alastair Clayton, Chairman of South China Resources commented from London 'we
are delighted to be participating in this exciting project with our Cooperative
Joint Venture partners; the Qinghia Province Geermu Zangge Kalium Fertiliser
Company Limited and Tibet Bureau of Geology and Mineral Resources. We believe
that through this Cooperative Joint Venture the partners can work to create a
technologically advanced, environmentally sustainable development that could
provide important employment opportunities for the people of Tibet and
potentially supply a significant amount of copper product to the ever-expanding
Chinese economy.

'This project, whilst at an early stage of exploration, exhibits outstanding
characteristics and has the potential to be a world class asset should an
eventual resource compare favourably to early exploration results. If proven,
this is a long-lead project which will require significant investment and time
to bring to a production scenario, however any such development would have a
correspondingly large and long lived revenue stream to the benefit of all the
stakeholders. Commensurate with the size and scope of the Project, the Company
will be addressing all aspects of staffing, treasury, finance and administration
to ensure the effective management of the Zhunuo Project and the continued
exploration and development of the Danfeng Project.

'This project represents nearly 6 months intensive work by our Project
development team in Lhasa. The Board believes this represents a terrific value
proposition to the Company and is precisely the type and magnitude of project
that our shareholders would wish their Company to participate in.'

Qualified Person

Steven Leithead - MSc. Mineral Econ., BSc. App. Sc. (Geol) MAICD, MAusIMM has
reviewed the information contained in this announcement. Steven holds a Bachelor
of Applied Science (Geology) and a Masters degree in Mineral and Energy
Economics. Steven is the Managing Director of South China Resources PLC.


Enquiries:


South China Resources PLC Nabarro Wells Parkgreen Communications
Alastair Clayton Hugh Oram Cathy Malins
+44 (0)20 7 493 7671 +44 (0)20 7710 7400 +44 (0)20 7851 7480


www.southchinaresources.com

From the Interim Report, 21st March 2007:

Zhunuo Copper Project

The Zhunuo Copper Project in Tibet, China, is a porphyry copper project at an
early stage of drill and adit exploration. Results of exploration to date
indicate it is a moderate to high grade porphyry copper resource with the
potential to become a significant deposit in the Gangdese metallogenic belt of
Tibet. The Company expects this Project to have a significant impact on its
business should all contractual matters be executed according to the current
Binding Joint Venture arrangement.

Soul Trader, 4 points:
1. Your 3m tonne copper resource calculation that generates a 75m NPV perhaps needs multiplying by 0.53 (53% ownership)?
2. No guarantees the attractive sample compositions on the surface at Zhunuo are going to be repeated at depth.
3. We don't have the money to buy Zhunuo.
4. The company does not have a reputation for openness.
I am long on this stock, but unless the directors come out with an RNS within 2 weeks stating what their plans are for the future, I will start to think this company is finished. The 26% held by directors means nothing if at 3.25p they have already 10 timesed their money on the pre-ipo price they paid? The one good bull point about this stock is that everyone has been selling on the basis the management has cocked up Danfeng, has been less than honest about what has gone wrong, and that they cannot learn from their mistakes. The first two may be true, but the latter requires our CEO to be brain dead? Continuing to hold on the basis the latter item is false.

I attended the recent AGM, and came aay less than impressed.

I didn't think AC came across convincingly, and subsequent news has confirmed that my initial feeling was correct.

The AGM itself was shambolic, with around 30 people crammed into a boardroom meant for about 6!

I am very surprised anyone can get enthusiastic about SCR now, AC's credibility is nil (IMO), Zhunno is an inhospitable place miles from civilization and infrastructure, and is years and millions of $ away from production, and I doubt SCR could raise the funds anyway!

I fear this parrrot has ceased to exist.

duplicate

Yes, I was there too. I asked if they could put Danfeng into production within 30 months. However, AC must be a fool if he has thrown away 90,000 buying 1.8m SCR shares at between 5p and 6p only a few months ago. The announcement that Midwest Solutions Inc. had increased its stake by 1.8m shares was a purchase by him. Midwest Solutions Inc. is apparently mentioned in the prospectus as being his company. So maybe the company is not finished yet. If Zhunuo is any good, you would think the funding would be relatively easy to arrange, albeit conditional on suitable personnel being in charge of the project.

Well it does make you wonder why he bought the shares when he must have already had an idea there were serious problems at Danfeng.

My mind goes back to a post mjade by noir, on proactiveinvestors.com, and some recent posts on ADVFN.

If you read the noir posts, you would know what I mean.

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!