Southern Cross Exploration ("SCX")

[steve fleming]

Bizzare....the thread i started earlier this year on SCX has disappeared....even had it linked to from another thread (ALE) and the link no longer works http://www.sharetrader.co.nz/topic.aspTOPIC_ID=22733&SearchTerms=scx

anyway, luckily, thanks to TerryA there was a copy of it on SS as follows:

Following recently posted by Stephen Fleming on ShareTrader;
----------------------
shaping up to be a nice little asset value play....

current market cap =approx $4 mil

recently announced that they expect to recover from a fijian property company over $4mil in receivables ( which essentially pays for the company SCX itself)

In addition...

1) expects a $2 mil profit on the property transaction (in addition to the $4 mil above)

2) will retain a $ 1 mil shareholding in the property company

3) has a portfolio of ASX listed securities with MV approx $1.5 mil

4) has a 5% stake in NT Bigrlyi uranium JV with Energy Metals ("EME") and RSG, based on EME value SCX's stake may be valued at between $1.5 -$3mil

5) 20% interest in Phillipines gold mining project

6) 10% interest in dolomite/magnesite exploration licenses in Iran

7) investment in diamond exploration company which holds licences in Queensland and Western Australia

So about $10 -$15 million of assets (assuming Fijian property transaction is settled) currently valued at about $4mil.

THe partly paid's represent good value as are trading at about a 3 cent discount to the fully paids, yet max call is only 2 cents...

[steve fleming]

Now heres the update:

SCX's key asset is an investment in the Bigrlyi Uranium JV:

The Bigrlyi project comprises 10 granted exploration retention licences located approximately 390 km northwest of Alice Springs. The project, which is a joint venture with Energy Metals Limited (EME) (53.3%) Paladin Resources subsidiary Valhalla Uranium (41.7%) and Southern Cross Exploration (5%), was subject to significant exploration activity in the period 1974 to 1982



Currently drilling some 50 holes (approximately 6,250m of RC and
3,250m of diamond core) with holes drilled to a maximum vertical depth of 350m. It is expected that once all assays from this program have been returned the resource model will be updated. Currently Bigrylyi is the 5th largest JORC proven uranium resource in Australia with 2450 tonnes of U308




So Market Cap of EME (fully diluted) of approx $80million.

Say $70 milllion attributable to Bigrlyi NT (ie less cash and other tenements)

if a 53% interest in Bigrlyi is worth $70 m, then SCX's 5% interest should be worth approximately $7mil currently...(with upside as resource is increased)...and probably a question of not if but when, SCX's stake gets taken out by Paladin or EME

However SCX's current market cap is $2mil (or $4 mil fully diluted)

IMO, SCX's investments and other assets (see post above) are worth SCX's market cap many times over...downside is you have to put up with some pretty questionable management (Boris Janke!)

PS:thanks to Amberton's post on SS y/day for some of these numbers.

[TerryA]

Steve,

Thanks for the update which confirms some of my rough figuring.

I continue to hold, and recently added some more pp's. Will take more if the price is right but SCX has to be one of the most illiquid shares on the ASX.

Don't know enough to comment on the management ethics but the lack of news/updates on the company's business is a concern. Whatever is happening in Fiji, leaving the good Commodore out of the question.

Best wishes,

Terry

[steve fleming]

quote:Originally posted by TerryA

Steve,

Thanks for the update which confirms some of my rough figuring.

I continue to hold, and recently added some more pp's. Will take more if the price is right but SCX has to be one of the most illiquid shares on the ASX.

Don't know enough to comment on the management ethics but the lack of news/updates on the company's business is a concern. Whatever is happening in Fiji, leaving the good Commodore out of the question.

Best wishes,

Terry


Hi Terry,

A bit more liquidity today - almost 1.5 millions shares traded (+ 310K in the pps)!!...most active trading day for almost 2 years!

Closed up 26% for the day (down from its highs of 40%)

Should just be a matter of time before this is appropriately re-rated!

Cheers!

[Flying Goat]

quote:Originally posted by steve fleming


quote:Originally posted by TerryA

Steve,

Thanks for the update which confirms some of my rough figuring.

I continue to hold, and recently added some more pp's. Will take more if the price is right but SCX has to be one of the most illiquid shares on the ASX.

Don't know enough to comment on the management ethics but the lack of news/updates on the company's business is a concern. Whatever is happening in Fiji, leaving the good Commodore out of the question.

Best wishes,

Terry


Hi Terry,

A bit more liquidity today - almost 1.5 millions shares traded (+ 310K in the pps)!!...most active trading day for almost 2 years!

Closed up 26% for the day (down from its highs of 40%)

Should just be a matter of time before this is appropriately re-rated!

Cheers!



Hi Steve

Thanks mate, looks interesting. I do enjoy value plays like this because they are usually just a matter of sitting and waiting :)

Just had a quick question. When was your original post made? You stated the market cap was 4 million at the time, but today even after the 25% jump market cap only appears to be 2.5 million (40 millions shares on issue) or am I missing something, namely options / pref shares...??


Cheers
Flying Goat

[steve fleming]

Hi FG

yep...this is a nice low risk value play....just have to be a little patient and not be concerned about the somewhat lack of liquidity.

To answer your question, in addition to the fully paid shares on issue, there are also 60 mil partly paids, with a 2 cent call outstanding...theoretically these should trade at a 2 cent discount to the fully paids, therefore at 3.2 cents, represent pretty good value at the moment!

Cheers!

[Flying Goat]

quote:Originally posted by steve fleming

Hi FG

yep...this is a nice low risk value play....just have to be a little patient and not be concerned about the somewhat lack of liquidity.

To answer your question, in addition to the fully paid shares on issue, there are also 60 mil partly paids, with a 2 cent call outstanding...theoretically these should trade at a 2 cent discount to the fully paids, therefore at 3.2 cents, represent pretty good value at the moment!

Cheers!



Thanks for clearing that up Steve...!!

Will be looking into it for sure. Only thing is with super low liquidity is that sometimes you need to be patient just to ENTER the stock (at the best price) as well as to wait for its value to be realised!!!

Cheers
FG

[steve fleming]

Over 6 million shares traded today....most active trading day for about 10 years, i think!

Reached 8.5 in heavy morning trade.

Also interesting to note 135 trades today....there were only about 600 shareholders per last annual report....looks like some traders are now in, so bit more liquidity in the next few months

[steve fleming]

quote:Originally posted by steve fleming


Should just be a matter of time before this is appropriately re-rated!




Pretty easy, low risk, 2 bagger on the partly paids over the last few months...just required some patience.

Fully paids today finished up 27% and pp's 36%.

Volumes up substantially and looking good.

[TerryA]

Steve & FG,

There does not seem to be much interest left in SCX but you may like to take a look at the EME thread on Sharescene. I have also posted in the SCX thread there but am a quorum of 1.

Best wishes,

Terry (still holding SCX and SCXCA)

[steve fleming]

quote:Originally posted by TerryA

Steve & FG,

There does not seem to be much interest left in SCX but you may like to take a look at the EME thread on Sharescene. I have also posted in the SCX thread there but am a quorum of 1.

Best wishes,

Terry (still holding SCX and SCXCA)


"Directors of Southern Cross Exploration N L advise that the company has received a serious approach in
respect of the possible purchase of the company’s interest in the Bigrlyi uranium joint venture project.

Under the recent renewed drilling and exploration programme, the resource has been assessed at 14,300,000
lbs of U3O8 (uranium oxide) and 16,300,000 lbs of V2O5 (vanadium).

In the Annual Accounts of Southern Cross for 31 December 2006 released on 30 March 2007, the
company’s 5% interest in the Bigrlyi uranium joint venture was revalued to $7,500,000.

From the early discussions held, Directors would expect any formal offer to exceed the current book value."

Hi Terry,

It was always going to happen, but nice to see SCX come home with the goods.

SCXCA up a nice 50% today.

Cheers

[steve fleming]

http://www.smh.com.au/news/business/gankes-southern-cross-may-sell-its-5-of-uranium-deposit/2007/04/23/1177180568497.html

Ganke's Southern Cross may sell its 5% of uranium deposit

CONTROL of the Bigrlyi uranium project in the Northern Territory could be up for grabs after two of the three joint venture partners said they have been approached for their respective stakes.

Canada's Denison Mines, which has a stake in one of the joint venture partners, has been deemed the most likely suitor.

Cash-starved Sydney explorer Southern Cross Exploration, which owns 5 per cent of the 6500 tonne deposit, yesterday said it had received a "serious approach". Its shares soared 3.7c to close at 13c.

Managing director Boris Ganke said the approach was from a party familiar with the project. Several sources pointed to Denison as the front-runner, since Paladin Resources has denied involvement.

West Perth company Energy Metals, the deposit's majority owner and operator, yesterday reiterated it had also received approaches from "a number of major uranium companies" for its 53.3 per cent stake.

Paladin owns 41.7 per cent of the project. But managing director John Borshoff said his company was not behind the approach to Southern Cross and did not plan to make an offer due to the stake's small size.

He said Paladin had not received an approach for its share of the deposit.

Mr Borshoff said he thought Paladin and Energy Metals held pre-emptive rights over the Southern Cross stake. Energy Metals could not be reached for comment but Mr Ganke said the pre-emptive rights situation was not clear.

Mr Borshoff said Denison, which owns 12 per cent of Energy Metals, might be interested in increasing its exposure to Bigrlyi. Under a strategic alliance deal, Denison has first right of refusal over Energy Metals' stake in Bigrlyi.

Denison last week dropped its $170 million bid for OmegaCorp when AIM-listed Central African Mining & Exploration swooped in with a higher offer.

Jindalee Resources, which owns 38 per cent of Energy Metals, has indicated its stake could be up for sale.

Southern Cross said it might begin a sales process by inviting expressions of interest. The stake has a book value of $7.5 million but Mr Ganke implied the company expected to receive more than $10 million for its holding.

Far East Capital analyst Warwick Grigor said "dozens of companies" could be interested in the Bigrlyi deposit, which has an average grade of 0.21 per cent.

Referring to its size, he said: "It would certainly be useful to own but it's not something necessarily that big multinational companies would want."

[steve fleming]

quote:Originally posted by steve fleming



However SCX's current market cap is $2mil (or $4 mil fully diluted)IMO, SCX's investments and other assets (see post above) are worth SCX's market cap many times over...downside is you have to put up with some pretty questionable management (Boris Janke!)




AFR is picking SCX will pick up to $20 mil for their Bigrlyi stake...a bit more than the $2/4 mil market cap when this thread was started.

After all these years, Boris Ganke finally has something to smile about!

[steve fleming]

quote:Originally posted by steve fleming


quote:Originally posted by steve fleming



However SCX's current market cap is $2mil (or $4 mil fully diluted)IMO, SCX's investments and other assets (see post above) are worth SCX's market cap many times over...downside is you have to put up with some pretty questionable management (Boris Janke!)




AFR is picking SCX will pick up to $20 mil for their Bigrlyi stake...a bit more than the $2/4 mil market cap when this thread was started.

After all these years, Boris Ganke finally has something to smile about!



OK lets just do a very quick updated NTA calc for SCX:

Shares on issue (inc partly paids)50m + 66m = 116m
Fully diluted market cap @12c = $13.5m

Assets:
5% of NT Bigrlyi uranium JV $15m - $20m (per pg 16 of y'day AFR)
listed/unlisted shares $2m (per audited accounts 31/12/06)
mortgage investment $5m (per audited accounts 31/12/06)

Liabilities:
Lets be conservative and say $1m (as sub. to b/d some liabilities have been converted to equity)

NTA Position:

High = $26m
Low = $21m

Obviously, by definition this EXCLUDES ANY VALUE attributable to SCX's other exploration interests.

So based on the above, even allowing for SCX's stellar rise during the week, she is still trading at a 30% to 50% discount to NTA

[Lizard]

Looks like SCX has taken a bit longer than some other U stocks Steve, but finally paying off for you. EME/JRL have been my only U plays, so am also interested in how Bigryli plays out.

(Just mentioning this so you don't feel like you are talking to yourself!)

[steve fleming]

quote:Originally posted by Lizard

Looks like SCX has taken a bit longer than some other U stocks Steve, but finally paying off for you. EME/JRL have been my only U plays, so am also interested in how Bigryli plays out.

(Just mentioning this so you don't feel like you are talking to yourself!)


Thanks Liz

On HC there is a copy of an article on Uranium published by the extremely respectable Eureka Report.http://www.eurekareport.com.au/

EME is one of the 5 U Stocks that they consider stand out in terms of asset quality:

Energy Metals, which started a major drilling program at its highly rated, and 53.3%-owned, Bigrlyi project in the Northern Territory last week.

Others that they like are AGS,CMR,PDN & WHE

PS

I don't actually mind talking to myself - i find that by jotting down my thoughts and bits and pieces, it really assists me in making up my mind on my own investment decision!So at least someone is benefitting!

Having said that, i hope others managed to hop on SCX as they would have done very very well out of this very low risk asset play.