HGO - Hillgrove Resources - Free Assets

[underDOG]

I am a recent buyer at 38c
and bought more today at 36c

After SXP, I needed to find another "anomoly" in the market and have found Hillgrove.


Here are the basics...
They have an approx 23% holding in ESG (Eastern Star Gas) - CSG and Power Plant/ farm in agreement with Sapex etc

current value $145m

minor holding value also in ITT (currently trying to takeover) their 29% is worth about $4.5m so very minor compared to ESG holding value


heres the bargain
HGO market cap is only $112m at 36cps

so a NEGATIVE value has been given to Hillgroves good tenement base and a near producing copper/ gold / garnet mine near Adelaide (about 40km)/ with
the railway line running right next to it.

see this ANN/ presentation for the rundown and DYOR on the Hillgrove asset value.
http://www.asx.com.au/asxpdf/20080602/pdf/319fhhcp2bcg8v.pdf


so $38m of investments assets free and all HGOs own assets free
gotta be a target.
Have to love the CSG exposure too!


another ODN on a larger scale imo

very limited downside

[underDOG]

write up....


Hillgrove conundrum Font Size: Decrease Increase Print Page: Print Kevin Andrusiak | June 04, 2008
DO you want to know the dumbest thing in the world?

Well, perhaps not the entire world, but at least in the small contained atmosphere that is the Australian sharemarket, which itself is sometimes prone to bouts of lunacy.

How is it at all possible that Hillgrove Resources can have a share price of just 39.5 cents, when the shares it holds in both Eastern Star Gas and Intermet Resources are actually worth more than that?

Let's go through the sums, with numbers that are current at time of writing. All the data has been provided to us through people associated with Hillgrove.

The company built a 22.6 per cent stake in Eastern Star Gas (verified by resource intelligence company Intierra) after it swapped its 32.5 per cent interest in the Gunnedah Gas Project for a 19.9 per cent stake in Eastern Star.

At a share price of 80c for Eastern Star, Hillgrove has a stake worth $142.62 million, or 43.3c per Hillgrove share, given that it has 323 million shares on issue.

Hillgrove's stake in Intermet Resources is worth $1.86 million at an Intermet share price of 29c and given Hillgrove has a 29.1 per cent stake in the company.

That equates to 0.6c per Hillgrove share.

Add that 43.3c and the 0.6c together and you have a tangible value for Hillgrove stock - based on its shareholdings in both Intermet and Eastern Star - of 43.9c.

However, and this is where it gets interesting, the market has ascribed a value of just 40c for Hillgrove scrip, giving it a market capitalisation of $129.2 million.

Or, in other words, the value of its two stakes in Eastern Star and Intermet is worth about $12.6 million more than the market capitalisation of Hillgrove.

In a roundabout way, Hillgrove is actually paying investors to take a stake in the company, which actually happens to have quite a decent copper project on its books.

Hillgrove's Kanmantoo Copper Project in South Australia has a JORC resource of 34.44 million tonnes at 0.9 per cent copper and 0.2 grams per tonne of gold - in short, 290,000 tonnes of contained copper and almost 217,000 ounces of gold.

The company is in the throes of getting a Mining Lease approved for the project along with a $100 million facility to fund its development.

It is rare for a company to actually pay you to own its asset.

It would be even rarer if someone out there doesn't find fault somewhere with Daily Assay's calculations.

But then again, we're pretty sure we have crossed the t's and dotted the i's.

[underDOG]

so as an update on article math...


at 36c HGO = $112m
investments alone = $150m (approx) !!


you are being paid to buy all Hillgroves assets/ tenements and near producing mine.

[shasta]

so as an update on article math...


at 36c HGO = $112m
investments alone = $150m (approx) !!


you are being paid to buy all Hillgroves assets/ tenements and near producing mine.

YUP the copper comes for free next year :D

[Corporate]

The chart doesn't look so good. Maybe someone with more experience in charting could do some detailed analysis.

I love these kind of plays! HGO was damn cheap at 18c!

[underDOG]

The chart doesn't look so good. Maybe someone with more experience in charting could do some detailed analysis.

I love these kind of plays! HGO was damn cheap at 18c!


but at 18c, ESG was worth $50m -------NOW close to $150m:D



I expect 35c will provide good support looking at the chart, its in a new uptrend and if it respects 35, I feel given the underlying VALUE, it is on and up over the next 12 months.

1. HGO producing copper and gold 2009 (resource value around $2.5b in ground) and they believe 50% more to come.
2. ESG to prove up around 600PJ over next 12 months

[Phaedrus]

HGO has been in a "medium-term" uptrend for some months now. When Shephejame says "the chart doesn't look so good" he must be focussing on the current short-term downtrend. Take a closer look at this downtrend though. See how volume was rising (blue dotted line) as the April/May uptrend progressed? This was confirming the uptrend. Now look at how over these 4 consecutive down days volume has been steadily falling. This downtrend is NOT confirmed by volume. (Green volume bars are Up days, red volume bars are down days). Price action is still well above the tentative trendline marked in green and there appears to be good support at 30 cents.

HGO broke above its confirmed trendline on 23/4/08 giving an entry at 26 cents.

The Slow Stochastic Oscillator period of 86 days was selected such that the price peaks of November and March just failed to trigger buy signals. This oscillator gave a Buy signal on 29/4/08.

The On Balance Volume indicator fired off a Buy signal on 30/4/08 when it broke above its trendline.

Technically, we should not be too surprised at HGO's turnaround from its 10 month downtrend - see how the OBV was more or less flat while the shareprice halved? HGO was being accumulated.

Click here (http://www.asx.com.au/asxpdf/20080602/pdf/319fhhcp2bcg8v.pdf )to view the very positive presentation Hillgrove gave on 2/6/08.

http://h1.ripway.com/Phaedrus/HGO613.gif

[underDOG]

HGO has been in a "medium-term" uptrend for some months now. When Shephejame says "the chart doesn't look so good" he must be focussing on the current short-term downtrend. Take a closer look at this downtrend though. See how volume was rising (blue dotted line) as the April/May uptrend progressed? This was confirming the uptrend. Now look at how over these 4 consecutive down days volume has been steadily falling. This downtrend is NOT confirmed by volume. (Green volume bars are Up days, red volume bars are down days). Price action is still well above the tentative trendline marked in green and there appears to be good support at 30 cents.

HGO broke above its confirmed trendline on 23/4/08 giving an entry at 26 cents.

The Slow Stochastic Oscillator period of 86 days was selected such that the price peaks of November and March just failed to trigger buy signals. This oscillator gave a Buy signal on 29/4/08.

The On Balance Volume indicator fired off a Buy signal on 30/4/08 when it broke above its trendline.

Technically, we should not be too surprised at HGO's turnaround from its 10 month downtrend - see how the OBV was more or less flat while the shareprice halved? HGO was being accumulated.

Click here (http://www.asx.com.au/asxpdf/20080602/pdf/319fhhcp2bcg8v.pdf )to view the very positive presentation Hillgrove gave on 2/6/08.

http://h1.ripway.com/Phaedrus/HGO613.gif


thanks for the chart

well, what a trading day for HGO.
It looks like Ps 30c was a key level (35c didnt do much as I mentioned) as it bombed to 31c on very low volume there early.
Climbed back all day.

I bought 10k more at 33c on rise just after lunch


Average now 35.8c/ and it just traded at 36.5c so nice afternoon comeback.

[underDOG]

seems BNB caused the early panick in HGO, caused by the ESG selloff over MOU with BNB to supply 40PJ to BNBs proposed new power plant nth NSW.

both shares recovered very well, so more panic selling/ kneejerk than anything


I still feel 35c is a key HGO level now (closed 35.5)

[underDOG]

http://www.asx.com.au/asxpdf/20080226/pdf/317ns191wbtq06.pdf


see this ANN for Kanmantoo engineering


initial target of 17k T Copper and 8000oz Gold pa

I get a rough calc on that as $150m revenue pa
and a 12.8 year mine life minimum (based on Jorc 218T Cu)

and they expect to double this resource easily.




sml holding 30,000 now and growing.

[underDOG]

1. Sempra/ Royal Bank Scotland with 14.51% in HGO


"SAN DIEGO, April 1, 2008 – The Royal Bank of Scotland (LSE: RBS) and Sempra Energy (NYSE: SRE) today announced the completion of their transaction to form the commodities-marketing joint venture RBS Sempra Commodities.

Under the new joint venture, which was announced July 9, 2007, RBS Sempra Commodities LLP purchased Sempra Commodities. RBS Sempra Commodities becomes part of RBS’ Global Banking and Markets business.

RBS’ initial equity investment in RBS Sempra Commodities is $1.7 billion and Sempra Energy’s initial investment in the joint venture is $1.6 billion. RBS also provides any additional funding required for the ongoing operating expenses of the businesses.

RBS Sempra Commodities will trade on behalf of RBS, which, following a transition period, will act as principal to the market.

“Formal completion of this joint venture gives access to a major new asset class for our corporate and institutional client base, further complementing our already extensive range of financial and risk-management products" said Johnny Cameron, director of RBS. "Market conditions over the past number of months illustrate the importance of diversified income streams, with commodities providing additional resilience in today’s challenging markets.”

“This joint venture increases the capacity for the growth of the commodities business and expands its position in global markets,” said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy.

David A. Messer, formerly president of Sempra Commodities, is chief executive officer of RBS Sempra Commodities and Frank Gallipoli, senior vice president of Sempra Commodities, becomes president of the joint venture’s businesses. The company’s headquarters will remain in Stamford, Conn.

RBS is the leading project finance bank in the world and the leading lender to the renewable energy sector worldwide.

Sempra Commodities is an international marketing and trading company that combines financial risk management with physical expertise to provide innovative solutions for customers in natural gas, power, petroleum and base metals, as well as natural gas liquids, coal, emissions credits and ethanol.
Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2007 revenues of more than $11 billion. The Sempra Energy companies’ 14,000 employees serve more than 29 million consumers worldwide."



this gets even better because Sempra is a leading LNG trader/ infrastructure owner. I guess they like the large ESG stake very much.

http://www.sempralng.com/Pages/AboutUs/video0506.htm

[underDOG]

and this

"SAN DIEGO, May 15, 2008 – Sempra LNG, a subsidiary of Sempra Energy (NYSE: SRE), today announced that its Energía Costa Azul liquefied natural gas (LNG) receipt terminal in Baja California, Mexico, has successfully completed all performance testing and is ready for commercial operations.

Located 14 miles north of Ensenada, Energía Costa Azul is the first LNG receipt facility on the West Coast of North America.

Over the past month, a variety of start-up and commissioning activities have been under way at Energía Costa Azul, including receiving the facility’s first two LNG cargoes.

“Energía Costa Azul is the largest capital project in our company’s 10-year history thus far and part of our ongoing plan to develop critically needed natural gas infrastructure throughout North America,” said Donald E. Felsinger, chairman and chief executive officer of Sempra Energy.

“The start of operations at Energía Costa Azul represents the culmination of seven years of development activity involving the acquisition of permits and commercial contracts, construction, start-up and testing,” said Darcel L. Hulse, president and chief executive officer of Sempra LNG. “The journey from an idea to a whole new business has been both challenging and satisfying.”

Energía Costa Azul’s first cargo of imported natural gas arrived April 18 aboard the Al Safliya, a new, state-of-the-art LNG carrier from Qatar. A second LNG ship, the Bluesky, arrived at Energía Costa Azul May 6 with a cargo of LNG from Trinidad. The stringent performance testing is now complete and the terminal has successfully met all of its design criteria.

The terminal is fully contracted and capable of processing 1 billion cubic feet per day (Bcf/d) of natural gas, with room for expansion. While Sempra LNG owns 100 percent of the facility, the company is leasing half of Energía Costa Azul’s processing capacity to Shell International Gas Limited under a 20-year agreement. Sempra LNG’s half of the capacity at Energía Costa Azul will be supplied from a new liquefaction facility nearing completion at Tangguh, Indonesia. Shipments from the Indonesian facility should begin arriving in the second quarter of 2009.

The natural gas processed at Energía Costa Azul will be used in Baja California and the U.S. Southwest. Natural gas from the terminal will meet applicable Mexico and U.S. gas pipeline quality standards.

A second Sempra LNG receipt terminal, Cameron LNG, is under construction near Lake Charles, La. The project, capable of processing 1.5 Bcf/d, is slated for completion by the end of the year.

LNG is simply natural gas in liquid form. To reach a liquid state, natural gas must be cooled. The liquid gas is then transported aboard specially designed carriers for delivery to receipt terminals. These receipt terminals store LNG, return it to its gaseous state and dispatch it into pipelines for customer use. In LNG’s 45-year shipping history, LNG carriers have traveled more than 100 million miles without a major incident.

Sempra LNG develops and operates LNG receipt terminals serving North American markets. Sempra Energy, based in San Diego, is a Fortune 500 energy services holding company with 2007 revenues of more than $11 billion. The Sempra Energy companies’ 13,500 employees serve more than 29 million consumers worldwide. "


http://public.sempra.com/newsreleases/viewPR.cfm?PR_ID=2270&Co_Short_Nm=SE

[Corporate]

I'm liking the look of HGO, pity i know very little about cooper!

[Footsie]

i like this story

150m p.a you say?

[COLIN]

I'm in!
If its good enough for Royal Bank of Scotland to back a JV with a not insignificant interest in HGO then its good enough for me!
But I have done my own research, too.

[Corporate]

I guess when you assessing the risk on this one. It comes down to a question of do we think that ESG is overvalued or....will it continue to increase in value

[shasta]

I guess when you assessing the risk on this one. It comes down to a question of do we think that ESG is overvalued or....will it continue to increase in value

ESG has a market cap ~$600m @ 80c, however...

It has the following reserves:

1P - 21PJ
2P -185PJ*
3P - 1300PJ

2P reserves being a key target for valuations within the sector.

ESG have a large drill program during 2008 to shore up around 600PJ (2P)

ESG could easily double in SP should it achieve that target.

IMO, ESG is still undervalued as it seeks to convert 3P reserves into 2P

[Footsie]

esg a little overvalued relative to peers

[Footsie]

150m p.a.

when only worth 130m?
Hillgrove Resources' $130 million copper and gold mine in the Adelaide Hills was approved in December and is expected to start exports in the middle of next year.

[shasta]

150m p.a.

when only worth 130m?
Hillgrove Resources' $130 million copper and gold mine in the Adelaide Hills was approved in December and is expected to start exports in the middle of next year.

Chairman's address at the AGM...

http://www.stocknessmonster.com/news-item?S=HGO&E=ASX&N=509196

[underDOG]

I'm in!
If its good enough for Royal Bank of Scotland to back a JV with a not insignificant interest in HGO then its good enough for me!
But I have done my own research, too.

good luck Colin


I am backing up the truck (my small 2 wheeler)
Im now at 130,000 people
THIS CANT GO ON

another 130k on the bid at 31.5 just in case.

must be one of the best buying ops I have seen on ASX this year, do yourself a favour and RESEARCH the VALUE
gotta be 100% on offer here by end of year.



I think I am falling in love with this bargain, all extra funds go here from now

VERY confident.

have a read

[underDOG]

150m p.a.

when only worth 130m?
Hillgrove Resources' $130 million copper and gold mine in the Adelaide Hills was approved in December and is expected to start exports in the middle of next year.


and you can even forget the copper revenue

ESG is worth way more than TOTAL market cap even now after a breather




the COPPER, GOLD and GARNET is FREE

[Mysterybox]

thanks for this underDog, am watching.

[Corporate]

write up....

At a share price of 80c for Eastern Star, Hillgrove has a stake worth $142.62 million, or 43.3c per Hillgrove share, given that it has 323 million shares on issue. ..


Where are they getting there numbers from? 23% x (703,107,665 @ 80c) = $129m

Note ESG's SP has dropped since



Hillgrove's stake in Intermet Resources is worth $1.86 million at an Intermet share price of 29c and given Hillgrove has a 29.1 per cent stake in the company.


Likewise, 29.1% x (50,500,500 @ 29c) = $4.2m

Note ITT's SP has dropped since


Although this is purely academic. It looks like the market has missed this one. Today will be spent learning about HGO's free assets and I think I'll join you on this one come Monday.


Can anyone that has followed HGO shed some light on management or the so called "free assets"?

Cheers
James

[underDOG]

Hi James, and Misterybox

NOTE**The HGO holding in ESG also includes 24 million options at 15c!
- thats why they always refer to "fully diluted" stake

so at say ESG 80c,

HGO holds 153m heads
= $122.4m + options value $15.6m

total value net to Hillgrove = $138m

Hillgrove market cap at 32.5c = $103m!!!

(previous value was calced around ESG when it hit 90c.)




and remember, Hillgrove have a very nice share register.
I am expecting a decent rerating over the next 12 months.

100% minimum (obviously based on ESG still going well with 600PJ goal)



I just love plays like this.

[Corporate]

and remember, Hillgrove have a very nice share register.


Thanks for clearing that up underDog! Can you explain the comment above?

[underDOG]

Thanks for clearing that up underDog! Can you explain the comment above?

from latest presentation
Royal Bank of Scotland with 14.51% (w Sempra Commodities)
RBS say they are the largest project finance company in the world.

RMMI with 6.4% (UAE govt investment vehicle) www.rakminerals.com

Merrill Lynch 5.4%
Macquarie Bank 1.6%

+ ANZ Noms (for european shareholders) 11.6%
+ MD - D. Archer 5.6%
+ ASX - ARE 3.2%



Total 48.31% approx with top 7.
very nice top shareholder and MD with a good stake.

[underDOG]

yes, I think the article got the ITT value wrong


I get value at about $3.8m to HGO with ITT @ 25.5c

so a small bonus, in process of trying to takeover ITT offering 4 HGO for 5 ITT

still thats about 3.7% of HGO market cap alone.

and ESG = 134%:D:confused:;)

[shasta]

yes, I think the article got the ITT value wrong


I get value at about $3.8m to HGO with ITT @ 25.5c

so a small bonus, in process of trying to takeover ITT offering 4 HGO for 5 ITT

still thats about 3.7% of HGO market cap alone.

and ESG = 134%:D:confused:;)

Underdog

If you like these kind of plays, check out THX,IXR & JRL, maybe add in SRZ. (I started threads for THX & SRZ & have held).

[underDOG]

Underdog

If you like these kind of plays, check out THX,IXR & JRL, maybe add in SRZ. (I started threads for THX & SRZ & have held).

thanks Shasta, on the "anomoly" watchlist
I have started reading the THX and IXR threads with similar themes to HGO coming through.

[underDOG]

I wonder how this bonus is coming along

from Miningnews.net
"Tuesday, March 08, 2005 THE economics of Hillgrove Resources' copper-gold Kanmantoo project in South Australia have reportedly improved with the identification of a garnet deposit that can be mined simultaneously with the metals.The garnet mineralisation is 1km wide and 5km long, to a depth of 120m. The deposit could support production of about 100,000-200,000 tonnes per annum as a by-product to the copper-gold. Kanmantoo could become one of the three largest industrial garnet producers in the world, Hillgrove said. "We have always known it was there, but had a dawning awareness that it was really a world class deposit. What we thought might have been a local curiosity has real significance," Hillgrove managing director David Archer told MiningNews.netHe said it would cost $5 million to install a gravity and magnetic separation circuit at the beginning of the processing plant to remove the garnets first. The company has retained the services of Perth-based HBH Consultants to assist in the design and construction of the circuit.Being an industrial mineral, garnets require sales and marketing, and Archer said he was confident of settling an offtake partner.Industrial garnet is used for sand blasting and filtration and Hillgrove said it currently sells for $US496 per tonne. Hillgrove would now undertake test sampling of the deposit ahead of developing a pilot plant six months down the track.The company is about to start a bankable feasibility study on the copper-gold project and Archer has previously said it would cost between $30-40 million to bring on-line. Based on a 1-2Mtpa processing rate, the operation could produce between 15,000-30,000tpa contained copper. Hillgrove shares put on 5% to 20.5c in midday trade on the ASX."


have to see how much Garnet is selling for these days
but based on the article, lower production end of 100,000 tonnes x $500 pt

an extra $50m renenue pa?

pretty nice bonus

[underDOG]

I wonder how this bonus is coming along

from Miningnews.net
"Tuesday, March 08, 2005 THE economics of Hillgrove Resources' copper-gold Kanmantoo project in South Australia have reportedly improved with the identification of a garnet deposit that can be mined simultaneously with the metals.The garnet mineralisation is 1km wide and 5km long, to a depth of 120m. The deposit could support production of about 100,000-200,000 tonnes per annum as a by-product to the copper-gold. Kanmantoo could become one of the three largest industrial garnet producers in the world, Hillgrove said. "We have always known it was there, but had a dawning awareness that it was really a world class deposit. What we thought might have been a local curiosity has real significance," Hillgrove managing director David Archer told MiningNews.netHe said it would cost $5 million to install a gravity and magnetic separation circuit at the beginning of the processing plant to remove the garnets first. The company has retained the services of Perth-based HBH Consultants to assist in the design and construction of the circuit.Being an industrial mineral, garnets require sales and marketing, and Archer said he was confident of settling an offtake partner.Industrial garnet is used for sand blasting and filtration and Hillgrove said it currently sells for $US496 per tonne. Hillgrove would now undertake test sampling of the deposit ahead of developing a pilot plant six months down the track.The company is about to start a bankable feasibility study on the copper-gold project and Archer has previously said it would cost between $30-40 million to bring on-line. Based on a 1-2Mtpa processing rate, the operation could produce between 15,000-30,000tpa contained copper. Hillgrove shares put on 5% to 20.5c in midday trade on the ASX."


have to see how much Garnet is selling for these days
but based on the article, lower production end of 100,000 tonnes x $500 pt

an extra $50m renenue pa?

pretty nice bonus


ok woooup boy...found this.....
"It is possible that there may be some credits from garnet
production as well. This is worth about US$150/pt of
garnet. While Kanmantoo might produce 80-100,000
tpa, the world market is less than 800,000 tpa.
Transport and the availability of markets would be the
limiting factors here. Maybe it could find markets for
25-50,000 tpa"

so they might be lucky to even sell 20% pa, although I have read oil and gas exploration uses a fair bit to clean casings and demand is usually up when oil prices and exploration are up too.

so a bonus of say $5m pa is possible from the garnet.

[Huang Chung]

Grabbed this off the IDM website. IDM are looking to mine and produce a number of minerals in Oregon, primarily chromite sands. Its a bit dated, but may help.


Garnet
The majority of industrial garnet is used as a loose-grain abrasive because of its hardness, which ranges from 6.0 to 7.5 on the Mohs scale. Lower-quality industrial garnet is used as a filtration medium in water-purification systems because it is relatively inert and resists chemical degradation. High-quality, high-value garnet grain principally has been used for such applications as optical lens grinding and plate-glass grinding for more than a century; industrial diamond and fused aluminum oxide are competitors. In recent years, industrial garnet powders have been used for high-quality, scratch-free lapping of semiconductor materials and other metals. Other industrial applications include the manufacture of coated abrasives; hydrocutting; and the finishing of wood, leather, hard rubber, felt, and plastics. Garnet is replacing silica sand in the blast cleaning market. This market displacement is happening because of the health risks associated with the inhalation of airborne crystalline silica dust having curtailed its use in blasting (Harris, 2000).


Total world production of industrial garnet was estimated to be 440,000 tonnes in 2005. The garnet market is competitive; therefore, costs are usually minimized by developing deposits containing garnet and other mineral commodities.

Abrasive blast cleaning and water jet cutting are expected to show the most growth. However, annual world production of industrial garnet was estimated to be approximately 465,000 tonnes year end 2006 and exceeds demand.


The most significant producers outside the United States are Australia, China, and India, all of which have growing markets. Other producers include the Czech Republic, Pakistan, Russia, Turkey, and Ukraine, with most for their own domestic use. Australian exports of garnet are expected to continue to increase. China and India also have increased garnet output and are now the more significant sources of garnet for other countries.

There is general oversupply, with increased producer stocks being reported in India and Australia. Given the excess production capacity and possible future expansions, it is envisaged that overall prices for general industrial garnet will decrease at a rate of 3% to 5% per year until supply and demand come into balance.

The world’s reserves of industrial garnet are estimated to be at least 13.5 million tonnes and the reserve base is in excess of 72.0 million tonnes. Major reserves are found in the United States, Australia, India and China, with Australia currently being the major exporter of industrial garnet worldwide. (GMA)
Currently, the United States accounts for nearly 25% of the total world consumption of industrial garnet, Western Europe accounts for 18% of demand, followed by the Middle East with 12% and India with 10%.


Although the United States will remain a major garnet consumer, imports are expected to supply a larger share of the U.S. garnet market in future years. The substitution of silica sand by garnet in abrasive blasting markets will continue. Garnet producers in the United States will continue to be the dominant suppliers to the US domestic market in the coming decade. New mines (Oregon Resources) and the expansion of existing operations appear to be sufficient to meet anticipated increases in demand. Worldwide capacity expansion would significantly restrain price increases as well as meet anticipated market needs. Most of the new capacity growth is expected in Australia, India, and China.


If U.S. production capacity does not increase sufficiently in the next several years, growing domestic markets will be more import dependent, although domestic producers will ultimately have freight and logistics advantages in their regional (local) markets (Oregon Resources). Currently foreign producers appear to be attempting to buy market share in the US by lowering prices, this is not expected to be sustained for the longer term and ultimately, they will be forced to raise prices. This timing may be predicated on several factors such as fuel - transportation charges and exchange rates. Reliable consistent quality and product sizing are key values adds in the waterjet market. Oregon Resources garnet offers a tight sizing specification (a natural charactertistic of the mined product) which means very little co**** material and therefore it will not clog the waterjet nozzle. Operators will gravitate to using garnet which provides longer operating periods with less downtime even though the product may cost more, the cost/benefit will always support the higher quality product.

Prices
The wide price range of industrial garnet is based on the application, quality, quantity purchased, source, and type. There is no exchange or market price available and the price and terms are not published except for indications outlined in some trade journals. A premium quality product (Barton HPX#80) in a 50lb bag could sell upwards of $0.35 cents per lb while a Chinese or Indian lower quality at $0.09 - $0.011. The lower quality product can have wide price variances depending on the suppliers needs at a point in time. Currently the Asian producers appear to be desperately focused on moving volume so the advantage sits with the North American buyers.


The waterjet customer cannot take the risk of using lower quality product as most require consistent specification and performance, which naturally comes at a higher price.

Foreign Trade
Australia provided almost 37%, China about 35%, and India approximately 28% of industrial garnet imported into the United States for consumption. These countries continue to gain importance as garnet exporters. Excess production capacity combined with supplies that vary in quality, grain size, and mineral type will keep prices down. Garnet producers could benefit from the enforcement of existing regulations and tighter environmental and health controls on abrasive blasting. The implementation of U.S. clean water regulations and the improvement of potable water supplies in developing countries also will benefit garnet suppliers.


During recent years, the garnet industry has encountered higher production costs and tighter profit margins, which has resulted in the loss of noncompetitive producers. Because of the need to keep production costs at a minimum, the most competitive producers are those who produce garnet in combination with one or two other minerals, have reserves that can be mined at a low cost, and have the ability to react rapidly to changes in market demands. These factors all favour the US operations of Industrial Minerals Corporation.


Worldwide industrial garnet demand is expected to grow at a rate of 3% to 5% per year during the next 5 years. Markets for waterjet cutting and blasting media are expected to exhibit the highest growth. With recent worldwide increases in petroleum prices, there has been an increase in petroleum exploration. This exploration increase should provide opportunities for increased use of garnet blasting media for cleaning drill pipe. Increased defense spending in the United States could lead to increased garnet demand, since the aircraft manufacturing and shipbuilding industries use significant amounts for blast cleaning and finishing of metal surfaces.

Recent news on Waterjet industry developments:
European aerospace engineering got a much-welcomed boost recently with the unveiling of a state-of-the-art waterjet machining centre at the University of Nottingham. The technology centre was officially inaugurated on January the 24th, 2007 before a group of sixty stakeholders in the aerospace industry, and is expected to help Europe compete in the global aerospace technology market. The cutting-edge technology centre is the first of its kind in Europe and the first time waterjet machining will be applied to aerospace engineering outside the US. Waterjet is considered unparalleled technology in many respects; not only for its precision, but also for its environmentally friendly characteristics. Waterjets can perform tasks with a simple mixture of water and abrasive materials such as high quality garnet, replacing harmful chemicals that were used in the past. The new €1.6 million centre will give researchers the opportunity to explore novel solutions for aerospace applications. Waterjet technology is on the rise in all engineering fields and holds many advantages over existing technology. The new waterjet technology has six-axis capability able to precisely sculpt three-dimensional objects, a vast improvement over previously available machines which operated in only two-dimensions.

“It’s a method that’s particularly suited to aerospace engineering,” says Professor Ian Pashby, who heads the project. “The metals used within the industry are difficult to cut and machine using other methods. Waterjet technology is very precise and adaptable — it can even be used to cut food.”
The aerospace industry poses many unique engineering challenges requiring creative solutions. One technique specific to aerospace components consists of hollowing out ‘pockets’ within blocks of metal. Until now, this was done through the use of harsh chemicals, posing environmental concerns. The nature of waterjet machining eliminates such environmental dilemmas, potentially giving aerospace an added advantage.


http://imcl.com.au/images/garnet.jpg
<LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l1 level1 lfo1; tab-stops: list 36.0pt">“Waterjet manufacturing can be and has been used to reduce the cost and environmental impact of producing and refurbishing our components. It is suitable for many commodities in our supply chain as well as processing next generation materials and structures. The machine at The University of Nottingham now allows us and the aerospace industry to research and develop solutions to a range of manufacturing challenges,” says Stephen Burgess, Rolls-Royce Manufacturing Process and Technology Director. Rolls Royce and the University of Nottingham are jointly supporting technical development at the centre.

In Summary, Garnet is not a single mineral, but is the name of a group of six members having different mineralogical compositions but common order of crystallization, hardness, specific gravity etc. In general, they are silicates of aluminium with different proportions of iron, calcium, magnesium, chromium & manganese in the composition giving rise to different varieties. <LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l1 level1 lfo1; tab-stops: list 36.0pt">Almandine is the common garnet, also known as Abrasive Garnet because of its hardness and capacity to retain its crystal structure, a major deciding factor in abrasive blasting.
Garnet is found in free form associated with a few other heavy minerals and in high concentration in the beach sands. Varying magnetic properties and conductivity enable the separation of various constituent minerals in the beach sands in dry state.
INDUSTRIAL USES
<LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt">Garnet has no free silica and hence does not cause dust and silicosis in its industrial applications unlike silica sand or quartzite. <LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt">Garnet is non-toxic, inert and hence environment (eco) friendly. <LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt">Garnet's unique grain hardness / toughness guarantees efficiency in blasting and reduces the break-down percentage on impact. About 65% of garnet used for abrasive applications (not waterjet cutting) can be recovered and recycled. <LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt">Almandine garnet (sp.gr. 4.0-4.2) makes 3 or 4 times higher impact than quartz grains (sp.gr. 2.5-2.6) of the same size. <LI class=MsoNormal style="MARGIN: 0cm 0cm 12pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt">Garnet is well suited for abrasive blasting / surface cleaning in fields like shipyards, petrochemical industry, building industry, non-ferrous surfaces etc. <LI class=MsoNormal style="MARGIN: 0cm 0cm 0pt; mso-margin-top-alt: auto; mso-list: l0 level1 lfo2; tab-stops: list 36.0pt; mso-margin-bottom-alt: auto">Water (Abrasive) jet cutting is more prevalent in North America and Europe where fine grade garnet is injected in a stream of high velocity of water to cut marbles, granites, high strength steel, aero space & automotive glass.


Oregon Resources garnet is well suited for fine finishing of products made from wood to metal

[underDOG]

thank HC, was useful and looks like Aussie plays a good part in world exports.

but it will be just a small bonus to Hillgrove.



Ive had a big "readup" morning and am confident tomorrow may be a great buying opportunity

may hit 31c early on.



I did a quick cents per share value calc on HGOs holdings and get


ESG = 43.5cps @ 80c
ITT = 1.1cps @ 25.5c


so total investment value to HGO = 44.6cps VS HGO shareprice of 32.5c

a discount on investment value alone of 12.1cps/ or 27.1%

or look at it this way, from a buyers point of veiw at 32.5c, HGO would have to gain 37% from Fridays close to be ON PARITY with its investments in other ASX listed companies.



stock should be at least 60c to reflect stage of Kanmantoo mine.

[Corporate]

thank HC, was useful and looks like Aussie plays a good part in world exports.

but it will be just a small bonus to Hillgrove.



Ive had a big "readup" morning and am confident tomorrow may be a great buying opportunity

may hit 31c early on.



I did a quick cents per share value calc on HGOs holdings and get


ESG = 43.5cps @ 80c
ITT = 1.1cps @ 25.5c


so total investment value to HGO = 44.6cps VS HGO shareprice of 32.5c

a discount on investment value alone of 12.1cps/ or 27.1%

or look at it this way, from a buyers point of veiw at 32.5c, HGO would have to gain 37% from Fridays close to be ON PARITY with its investments in other ASX listed companies.



stock should be at least 60c to reflect stage of Kanmantoo mine.

It does seem very silly that the market values HGO less than the value of its investments. However, like ODN it is concievable and I guess it happens often. The part I don't understanding is that zero value attributed to the Kanmantoo project. Confusing.

I'm buying.

Also thinking about selling NZO to go LARGE on this one.

Do we know anything about ITT?

[Footsie]

Udog

do you know when the news is expected on Kanmantoo re financing for the project

is it end of June?


Looks like market is pricing in risk that esg is overvalued and that kanmantoo wont get finance

[underDOG]

Udog

do you know when the news is expected on Kanmantoo re financing for the project

is it end of June?


Looks like market is pricing in risk that esg is overvalued and that kanmantoo wont get finance


Its my basic understanding end of June was the goal, but I wouldn`t be surprised if it took another month given financial markets
As you probably know, one of their major shareholders, Merrill Lynch has the task of arranging it.
I am having a stab that RBS will be involved through subsidary Sempra Commodities having already a large stake of 14.51% and also advertising themselves as the worlds leading project funder.

Would make sense but who knows

must be soon as they need 12 months to get to production in mid-late 09.




Im really extra happy at the discount and the leveraged ride in CSG!

[underDOG]

It does seem very silly that the market values HGO less than the value of its investments. However, like ODN it is concievable and I guess it happens often. The part I don't understanding is that zero value attributed to the Kanmantoo project. Confusing.

I'm buying.

Also thinking about selling NZO to go LARGE on this one.

Do we know anything about ITT?

James, ITT are pretty small (MCap $12.5m), plenty to read on the website or through ASX ANNs - junior explorer
I saw they had some pretty good grades from up in Queensland with gold and iron - Paddys prospect was one of them I think

HGO have offered 4 shares for every 5 ITT held.




This will be a great stock over the next 12 months.

[shasta]

It does seem very silly that the market values HGO less than the value of its investments. However, like ODN it is concievable and I guess it happens often. The part I don't understanding is that zero value attributed to the Kanmantoo project. Confusing.

I'm buying.

Also thinking about selling NZO to go LARGE on this one.

Do we know anything about ITT?

Here's todays ann re ITT

http://www.stocknessmonster.com/news-item?S=ITT&E=ASX&N=166853

[underDOG]

who here is now holding?

James? Shasta?

[underDOG]

http://imagesignal.comsec.com.au/asxdata/20080625/pdf/00854173.pdf

re ITT takeover from Panel.

[Corporate]

who here is now holding?

James? Shasta?


Not yet - I'm still considering. I probably should, it may have to join VPEO and NZO on the rack.

Why - have you got some news?

[shasta]

who here is now holding?

James? Shasta?

Not me, my interest in HGO came from holding ESG...

I have around 50 targets (incl HGO) on close watch.

Am wanting exposure to silver & gold, rather than copper.

VPEO has better leverage than ESG for Coal Seam Gas IMO

[underDOG]

looks like a cheap entry into HGO might be through the ITT offer


some traded today in ITT at 22c, which effectively gives you an entry into HGO at 27.5c

quite a discount to the 32.5-33c trading in Hillgrove itself.

[underDOG]

Udog

do you know when the news is expected on Kanmantoo re financing for the project

is it end of June?


Looks like market is pricing in risk that esg is overvalued and that kanmantoo wont get finance


from the recent ITT bidders statement, looks like financing wont be announced until late 3rd quarter I expect now.

they have already ordered long lead time plant equipment




perhaps September now.

happy with the SP consolidation 30-33c.
some good volume today again supporting 32c.

[shasta]

from the recent ITT bidders statement, looks like financing wont be announced until late 3rd quarter I expect now.

they have already ordered long lead time plant equipment




perhaps September now.

happy with the SP consolidation 30-33c.
some good volume today again supporting 32c.

Kind of what we already knew, but interesting that HGO gets a mention...

http://www.news.com.au/dailytelegraph/money/story/0,26860,23976885-5015795,00.html

[underDOG]

Kind of what we already knew, but interesting that HGO gets a mention...

http://www.news.com.au/dailytelegraph/money/story/0,26860,23976885-5015795,00.html

thanks Shasta

Im down on HGO at 30c, and dont like it BUT I dont need much of a move to get ahead.

with the recent drop in ESG - HGOs per share value is 32.5c
so as the article says, even with ESG at 59c, a 10% discount on that holding alone

[shasta]

thanks Shasta

Im down on HGO at 30c, and dont like it BUT I dont need much of a move to get ahead.

with the recent drop in ESG - HGOs per share value is 32.5c
so as the article says, even with ESG at 59c, a 10% discount on that holding alone

Im still watching HGO, but i have so many targets on close watch it isnt funny, but even ignoring ITT for a minute, lets look at ESG...

HGO will track up as ESG shore up further 3P & 2P reserves, remembering ESG are drilling to increase there existing 185PJ (2P) to around 600PJ & they seem confident of doing this by year end.

Not sure i agree with ESG selling 35% of there Wilga Power Plant, but a few million $$ will drill some more holes...:confused:

Now wait 12 months & HGO will have its own Copper project in production!

I guess HGO is still seen as a LIC like LST/THX/SRZ/JRL/TAS to name a few, & these all look cheap when you calculate there EV's ;)

[underDOG]

my favourite undervalued share in the doldrums still
and Eastern Star jumped nearly 10% on the big red day and Hillgrove goes down further.

I think I might just dig myself a deeper hole at 25c if that intraday low happens again tomorrow

see what happens tonight.

[Taijon]

U-Dog, have you read the ITT response to HGO's takeover? In particular read the section on HGO's proposed mining and their need for funds. It seems the ability for HGO to secure financing for the future mining operations side of the business is very much in doubt. Their ESG stake has effectively been tied up as security for their most recent funding deal, limiting what they can do with that stake as well.

May not be the time to be getting in too deep.

[underDOG]

U-Dog, have you read the ITT response to HGO's takeover? In particular read the section on HGO's proposed mining and their need for funds. It seems the ability for HGO to secure financing for the future mining operations side of the business is very much in doubt. Their ESG stake has effectively been tied up as security for their most recent funding deal, limiting what they can do with that stake as well.

May not be the time to be getting in too deep.

Cheers, yes I have, and HGO did a very good job in replying to ITT. Note, things may be getting hostile with D Archer on the borad of ITT and also being HGOs MD.

as you know, they have just raised $30m USD using ESG as collaterial but they still have the resource to raise further funds. Half of that debt went to replacing the Macquarie facility (which also had ESG as collaterial) and also stopped a dilutionary effect from rolling over the debt past June 30.
....and remember Royal Bank of Scotland through Sempra Commodities are the biggest shareholders AND the biggest project finance lenders in the world + they have the recent large placement to the UAE govt investment vehicle RMMI.

ITT is a minnow for HGO, about a 10th of its size but with many "prospects" only.

as long as ESG is worth more than all of HGOs market cap which it still is by many millions, then in answer to your question, YES, its very undervalued


Copper, Gold and Silver....Garnet bonus.

[underDOG]

as an update

approx...

value of ESG investment = $104m

HGO market cap = $84m



debt net of cash approx $15m.
so she sure is what investors would call undervalued, on cold hard facts.



and I really really like the underlying investment in CSG.

[underDOG]

ESG going great guns this morning
HGO value at 70c ESG

= AUD$120m (vs US$30m loan)

they hold
1. 153m HEADS
2. 24m 15c options.

[SMan]

HGO have passed the 50% shareholding in ITT mark just before the deadline! Can now extend offer an additional 14 days, further tying ITT's hands in terms of cap raising/dilution. HGO now have a controling voting interest in ITT, should be interesting to see how this one pans out.

[underDOG]

HGO have passed the 50% shareholding in ITT mark just before the deadline! Can now extend offer an additional 14 days, further tying ITT's hands in terms of cap raising/dilution. HGO now have a controling voting interest in ITT, should be interesting to see how this one pans out.

up over 65% now with ITT
but oh dear, the SP is in tatters and so is my holding
down nearly 30%
Im in damage control mode, and bought more at 21c to average 28.5cps.

hope no one got into this on my enthusiam, if so sorry. It looked great buying but obviously has performed poorly!

[Corporate]

up over 65% now with ITT
but oh dear, the SP is in tatters and so is my holding
down nearly 30%
Im in damage control mode, and bought more at 21c to average 28.5cps.

hope no one got into this on my enthusiam, if so sorry. It looked great buying but obviously has performed poorly!


Yeah getting knocked down substantially! I didn't get in, but also getting smashed in VPEO. Down 30% also. Oh well, learning experience.

[underDOG]

HGO got 81.3% of ITT
another week and it would have been 90.


HGO $65m

ESG holding $75m
ITT holding $10m


still getting all Kanmantoo, all tenements and now 80% holding in ITT prospects free

Until finance is assured for the copper/gold/silver project, then I think this stocks fortunes will hinge on coal seam gas and Eastern Stars progress in the short term.

then hopefully the copper production upgrade kicks in 2009.


Im calling 20c the bottom, but watching ESG closely.
If you like the story, I think now is a great time to enter...but might be better to use TA and wait till a breakout. Probably needs consolidation in 20-22c range then buy on the breakout over 22c.


down 22.8% on todays open.

[Footsie]

this stock is on my watchlist...

I feel there is limited downside from here... but I will wait for a technical entry or news of Kanmantoo as I think resources in general will find the going tough in the next few eyras

[underDOG]

this stock is on my watchlist...

I feel there is limited downside from here... but I will wait for a technical entry or news of Kanmantoo as I think resources in general will find the going tough in the next few eyras

I hope thats just years Footsie and not eras:D


Yes, I wish I was in the position to START investing in HGO now.
Im doing the average down thang since its way under NTA

thought 30 would hold, so 20 looks like the new 30;)

[underDOG]

HGO will track up as ESG shore up further 3P & 2P reserves, remembering ESG are drilling to increase there existing 185PJ (2P) to around 600PJ & they seem confident of doing this by year end.





yes, had a look at 2 year chart of HGO overlaid with ESG - big correlation but not unexpected

[Corporate]

19c today :confused:

[shasta]

19c today :confused:

ESG are farming into OIP's 3 CSG permits in Northern NSW

http://www.stocknessmonster.com/news-item?S=OIP&E=ASX&N=517624

[underDOG]

19c today :confused:

and ESG alone worth around 27-8 cps:confused::confused:

[Corporate]

It seems like there is a bit of support around 20c. I may look to get in on the bounce!

[underDOG]

It seems like there is a bit of support around 20c. I may look to get in on the bounce!


yes 20c looks v good SJ, keep your eye on ESG (up again today) and you should do well.

If you like the CSG prospects, then HGO is surely a steal at this discount.

Currently ESG worth $92m to Hillgrove
Hillgrove MC = $68m (@20c)


still getting all other assets free and now 85% of ITT, even incl the $15m of debt.

[underDOG]

actually I think buying HGO at 20c will prove one of the best buys right now on the ASX.

BUT, you wouldn`t call it looking at the chart and I jumped in too early based on the first CSG explosion...however

we can perhaps expect HGO to trade in the 20-25c area for several months whilst it consolidates

the only things fire it up more than that are

1. action/ good news at ESG (highly likely)
2. confirmed funding package for Kanmantoo (not expected until at least Nov)
3rdly and less likely, very good drill results from ITT campaign.

meanwhile, Eastern Star underpins your investment with HGO nett assets much greater than whole market cap.

[underDOG]

http://www.asx.com.au/asxpdf/20080829/pdf/31c0qvddz247dc.pdf

over $100m in investments and $17.5m cash at end of quarter
debt $31m


up to 21c.

[Corporate]

Well resistence is out the window. I get back from work today and everythings down.

underDog, you still in?

[underDOG]

Well resistence is out the window. I get back from work today and everythings down.

underDog, you still in?

yes, still in the dogbox here SJ

really thought 20 would hold, its in no mans land now even though ESG is still doing ok in he 50s

ESG worth $80m to HGO still, fundamentals out the window in current market - (look at PPP back at 20c).

It will take a decent buyer, large private or fund now to get it back over 20c by year end.


woeful.

[underDOG]

market value update

ESG = 21cps vs HGO SP 17.5c

Net debt 4.4cps


all tenements, ITT still free.

someone just take it out ...pretty please:D

[Corporate]

market value update

ESG = 21cps vs HGO SP 17.5c

Net debt 4.4cps


all tenements, ITT still free.

someone just take it out ...pretty please:D

UD - I don't think you'd want HGO taken out, especially now that the share price is so low. It wouldn't take much to by them out.

[underDOG]

and v good info post from Webzone 10 on the other channel

"Tough raising debt in the current debt markets. But the key value driver for HGO at the moment is ESG.

One option to Kanmantoo over the line is to vend their stake in ESG. If they achieve the price QGC is paying for Sunshine then HGO's stake in ESG is worth in the order of $150m-$200m before any reserve upgrades. With major reserves upgrades planned for ESG - it seems HGO is already sitting on a gold mine called ESG.

The QGC takeover of Sunshine is pitched at 52c and 72c/GJ of 3P reserves.

The Arrow deal with shell equated to 67c-77c/GJ of 3P reserves.

The Santos/Petronas and Origin/Cononco deals equated to $1.18 to $1.32/GJ of 3P reserves.

ESG is currently trading at 25c/GJ of 3P reserves. Then consider the current exploration program targeting up to 3,675PJ."

[underDOG]

still holding this one:( and got more at 8.6c friday:) after a big gap in buying
just 30k average down and nearing 18c ave (ouch)

I am certainly learning a lesson on the market treatment of buying companies with large stakes in other listed cos

HGO and ODN both at significant discounts to nta

currently HGO investment in ESG stands at approx $55m vs HGO MC $35m

ESG has come back 70% from lows on good volumes

good news is..
HGO just got their mining application and things are starting to roll now
http://imagesignal.comsec.com.au/asxdata/20081014/pdf/00890120.pdf
Production gone out to 1st 1/4 2010



chart still no good, and would take a break of 14-15c

[underDOG]

still holding this one:( and got more at 8.6c friday:) after a big gap in buying
just 30k average down and nearing 18c ave (ouch)

I am certainly learning a lesson on the market treatment of buying companies with large stakes in other listed cos

HGO and ODN both at significant discounts to nta

currently HGO investment in ESG stands at approx $55m vs HGO MC $35m

ESG has come back 70% from lows on good volumes

good news is..
HGO just got their mining application and things are starting to roll now
http://imagesignal.comsec.com.au/asxdata/20081014/pdf/00890120.pdf
Production gone out to 1st 1/4 2010



chart still no good, and would take a break of 14-15c


starting to claw back, hit 14c today, up 27% on large volume for HGO


good buying at 10c

Ill buy more if that retrace happens.

[shasta]

starting to claw back, hit 14c today, up 27% on large volume for HGO


good buying at 10c

Ill buy more if that retrace happens.

HGO - Resource Upgrade :cool:

http://www.stocknessmonster.com/news-item?S=HGO&E=ASX&N=533047

[Corporate]

Dog are you still in HGO. Looking like a good buy just based on ESG at the moment

[Lizard]

Dog are you still in HGO. Looking like a good buy just based on ESG at the moment

Seems you weren't the only one to think so today - up 45%!

[COLIN]

A nice jump today (around 40%) no doubt based on the STO offer for 19.99% of ESG.
These have been a "sleeper" in my portfolio - only a small holding, which I have left undisturbed, but they still owe me a lot more.

[COLIN]

A nice jump today (around 40%) no doubt based on the STO offer for 19.99% of ESG.
These have been a "sleeper" in my portfolio - only a small holding, which I have left undisturbed, but they still owe me a lot more.
When I posted the above item, late last night, I hadn't realised that it was actually HGO's holding in ESG that Santos bought. HGO will also get a further payment if at any time over the next 18 months STO pays more than $1 for a controlling interest in ESG (current sp 87.5c).
Wonder what HGO will do with this money - $176m, being paid in cash on 20 July. Will it all go into Kanmantoo? Anyone else holding? Underdog?

[dragonz]

When I posted the above item, late last night, I hadn't realised that it was actually HGO's holding in ESG that Santos bought. HGO will also get a further payment if at any time over the next 18 months STO pays more than $1 for a controlling interest in ESG (current sp 87.5c).
Wonder what HGO will do with this money - $176m, being paid in cash on 20 July. Will it all go into Kanmantoo? Anyone else holding? Underdog?

Hi Colin

This is starting to look interesting. Is there any reason why the 17-23 cent price gap wont be filled.

[Rif-Raf]

Hi Colin

This is starting to look interesting. Is there any reason why the 17-23 cent price gap wont be filled.
They may have some tax to pay. Say it was $30m that would take out abut 7cps

[COLIN]

I see that the ESG sale has been settled and cash in hand equates to 32c per share, after repurchase and cancellation of the convertible bonds but before tax - which I calculate at about 5.5c per share. Therefore, at present sp of 23.5 c you are getting 26.5c cash plus their Kanmantoo interests plus their equipment etc. Seems an unnecessarily large discount to me - but, of course, the market is always right!

[Rif-Raf]

There's also a contingent asset if STO pay more than $1 for the rest of ESG, however the focus now is really on what's this free mine worth?

They've spent $45m so far. Only 1-2 years away before they start mining. Wonder what cash they need to get it to production from here? Also how much net cash 2.5mtpa will generate?

[dragonz]

It looks like the gap isnt in danger of being filled and the SP is holding up quite well so I made a small punt on HGO.

This week has been a get out of jail free card for me. Early last week all 5 stocks that I held where in negative territorry. This week all 5 are in profit. Sold 2 on thier highs (pry and HZN) and still hold CFE, IAU, and NPX.

cant wait for the next pull-back

[Rif-Raf]

Already the price of ESG has moved up to $1.10 which is 10% more than the price they sold. If Santos of another party someone makes a move in the next 18 months HGO may get a further windfall from this deal.

[COLIN]

Amidst all the doom and gloom that seems to be seeping into the market over recent days, its good to see further upward progress in this seemingly forgotten orphan. Happily I have remained faithful.

[COLIN]

Amidst all the doom and gloom that seems to be seeping into the market over recent days, its good to see further upward progress in this seemingly forgotten orphan. Happily I have remained faithful.

I'm quite happy to remain talking to myself, on this one. Up 70% since Christmas.
If people prefer a bit of masochism by sticking with their VPE's, WCU's, CUE's, etc., that's OK by me.

[scorp57]

I love being alerted to these compnies... this has been perhaps the hottest stock on the market over the last few weeks!

[Huang Chung]

Picked it for the comp, but would have been handy having a few in the back pocket as well :rolleyes:.

[PhaedrusFollower]

I have this in the comp also HC....you and I should be fighting it out at the top of the table come December!

I have been in and out of this share 3 times last year...and am just about to rejoin at 47c...there's a lot of liquidity and HGO seem to be proactive in there buying and selling strategy.

[COLIN]

Trading Halt. Got me excited, until I read that it is only a share placement - to "sophisticated investors". For the sake of all us other "unsophisticated investors" lets trust it is not at too much of a discount.

[Footsie]

why does a company with all this cash need to raise money?

[COLIN]

why does a company with all this cash need to raise money?

Looks like they are about to mount a raid - any ideas as to who might be the unsuspecting target?

[scorp57]

I am now the proud owner of some HGO. in @ 43.5c!

good luck to us all!

[COLIN]

I am now the proud owner of some HGO. in @ 43.5c!

good luck to us all!

Scorp: Welcome aboard, but it looks as though the company is going to need some of that luck if it is going to attract much interest in its SPP - 40c, as against last night's closing price of 39c.

[scorp57]

I think we should be OK!

The geologists tip HGO as the next big thing.

Lets get the correction out of the way and see where we are after that :)

[scorp57]

From Hillgrove?s Managing Director:
This has just been emailed to me, only part of it.
MR T-----------------------------------------------------------------------------------------------------------
A new year, and what a great way to start it, with the Kanmantoo
Copper/Gold Mine Project ramping up for a very exciting 12 months.
There will be a lot of activity on site now the project licensing is in place, with
the Tailings Dam design being completed to meet the final licensing
requirement, early ground works able to start shortly, infrastructure contracts
to put in place, and the dismantling of the Pillara Plant ready for
transportation and construction at the Kanmantoo Mine Project. And that?s
only the start of it.
But, what makes this year really exciting for me is that our faith in the
project?s potential, global demand for copper, and the potential to increase
the size of the deposit is all coming together after many years of preparation.
No project can proceed without all these factors falling into place, and it is
extremely gratifying to have achieved this much.
This year should see the world move truly out of recession and transition into
more favourable economic conditions, which means demand for refined metal
shows no signs of abating for the developing world and China in particular.
China remains copper?s star performer and as its prominence in the global
economy continues to grow so too will its thirst for copper. Demand growth
will continue at pace in 2010 supported by robust growth particularly around
new roads, housing and construction. This is supported by growth in other
end use markets such as car production, air conditioners, laptops, and mobile
phones.
There is also expected to be a strengthening of metal demand in the rest of
the world which will see a tightening of industrial metals balances and a
continuing strengthening of the copper price throughout 2010 and into 2011.
With little additional refined production due on stream given the dearth of
projects, the Kanmantoo Project is in an excellent position for this period of
development and then production in 2011.
David Archer, Managing Director
David Archer

[COLIN]

It looks as though the company is going to need some of that luck if it is going to attract much interest in its SPP - 40c, as against last night's closing price of 39c.

Sp still below the SPP price. Company must be (rightly) worried about the (unlikely) success of the raising - I had a phone call from someone from there, yesterday, asking if I was going to take up the offer - gave her the obvious answer. One assumes there must be some uninformed holders who are oblivious to the fact that if they wanted to increase their holding they could buy them cheaper on the market, otherwise why resort to tele-marketing?

[Corporate]

Does anyone still follow/hold HGO. I was interested just after the bottom of the GFC but didn't end up buying. I haven't really followed since, however, I'm aware copper production is ramping up. Although cash flow is seemingly tight.

I'd be interested in others views. Will do some more research soon.