Australian (ASX) Stock Market Forum

CAZ - BHP deal?

25 August 2004
Was hoping for a quick trade on this one towards close yesterday.. then got caught in the halt... unbelievable rise the last few days.. Things hotting up for the RIO/CAZ dispute


Interests associated with Andrew Forrest are rumoured to have grabbed a major stake in Cazaly Resources as the iron ore hopeful stitched up a deal with BHP Billiton over the disputed Shovelanna project.

Cazaly is expected to announce as early as today a deal that will see BHP Billiton buy any iron ore produced from Shovelanna, which Cazaly pegged in August when BHP Billiton's Pilbara arch rival Rio Tinto forgot to renew a tenement licence in time.

Cazaly shares raced 44 ¢ higher to $1.50 yesterday amid a flurry of buying before the company called a trading halt ahead of the planned BHP Billiton deal announcement.

Market insiders said the Sydney office of Perth broking firm Patersons Securities had bought close to six million shares, or about 14 per cent of Cazaly in aggressive trading in the past two weeks.

Market speculation centred on Andrew Forrest's Fortescue Metals Group or interests associated with the company as having built a stake in the lead-up to launching a possible takeover.

It is also understood Fortescue has threatened legal action against Cazaly over the ownership of the Shovelanna project.

But Fortescue operations director Graeme Rowley said the company had taken no action "at this stage" against Cazaly in relation to Shovelanna.

Cazaly managing director Nathan McMahon refused to comment yesterday but a BHP Billiton spokesman confirmed plans to negotiate a memorandum of understanding with Cazaly.

The spokesman said it was a logical step given Shovelanna was next door to BHP Billiton's operating Orebody 18 mine, but any deal would be conditional on the granting of the mining lease and technical and legal due diligence.

Cazaly is now expected to use the BHP Billiton alliance to argue against Rio Tinto's pitch to the State Government that it was not in the public interest for a junior company to get the project.

Last week Cazaly signed a letter of intent with big London investment bank Investec to arrange development finance on completion of a bankable feasibility study.

The deal with BHP Billiton and the backing of Investec adds further weight to Cazaly's argument that the project was capable of being developed in the junior's hands and was potentially lucrative for WA.

Cazaly pegged the Shovelanna leases in late August after Rio Tinto failed to renew its licences by the required deadline.

Since being caught out Rio has formally lobbied State Development Minister Alan Carpenter to reject Cazaly's application for the leases. Rio said the Minister had wide discretion ary powers and it was not in the public interest to strip it of the project.

However, Cazaly argues the mining giant has sat on the Shovelanna leases for 16 years and in that time has not drilled a single exploration hole.

Cazaly and its exploration partner, Echelon Resources, plan to spend $6 million on exploration at Shovelanna and have already finished a preliminary scoping study that has confirmed the viability of three separate development options.
13 September 2005
I hold made over 50% in two days..
bought back in at 1.44 now its blue skys or the tar! :)
but quietly confident

people on other forums are saying it will open anywhere between 1.50 or $3.oo once it starts trading.

Frankly, according to the Australian on the weekend.... Rio doesnt stand a chance.
25 August 2004
Yeah looks like a winner to me.. knew nothing when i got in but after researching things a bit i'd say where looking at a huge week! unless theirs some unexpected nasty surprises..

Lots of great press in the papers over the weekend.. I think most punters will be familiar with this one now.. Shares very tightly held.. Not sure about the target prices that are being passed around but I sure as hell don't want to sell to early,,

A few other ironore plays are hot atm.. The CAZ attention is certaintly going to help.. also the AQD letter of intent with RIO.. IOH going to new highs and will likely attract more attention this week. looks like a great week ahead..

Cazaly pegs Rio out to dry
Robin Bromby
November 26, 2005

IF Rio Tinto thinks it has a chance of getting the Shovelanna iron ore tenement back, it's just whistling Dixie.

The global miner has been embarrassed by a small mining tenement management firm in Perth that, like others in the business, watches every tenement in Western Australia, waiting to see what is surrendered voluntarily, but also ready to pounce on someone's carelessness - in this case, Rio's.

Industry figures can recall only one case in Western Australia in which a company that let a tenement lapse ended up getting it back. That was in 1979, when a prospector named Bill Beiberg from Kalgoorlie realised that Pancontinental Mining had unknowingly let lapse a licence that covered the spot where the company was planning to dig the pit for what became the Paddington gold mine. He was out the next day putting in his pegs.

Even under mining law at the time, the general opinion was that the tenement was fair game once the licence had expired. Somehow, political pressure was brought to bear and the late Mr Beiberg was stripped of the licence, allowing Pancontinental to develop its mine.

That was then. This is now. No West Australian minister today is going to do anything other than what the Mining Act says.

The issue was in the news this week when Cazaly Resources - the company that pegged a Pilbara tenement after Rio's application for renewal was delayed in transit - said it was forging a deal with BHP Billiton to explore and develop the prospect.

If the industry types are right, then State Development Minister Alan Carpenter will have little choice but to award Cazaly Resources the Pilbara tenement it picked up because Rio failed to get its renewal paperwork and cheque in on time - even though Rio has lobbied him to use discretionary powers to dislodge Cazaly. Rio should have known that every tenement expiry is watched by dozens of eyes - and those watchers are ready to pounce. Within minutes, someone will have an application lodged for the land and a pegging contractor on the way to knock pegs into the tenement.

That is just what happened with Rio and Cazaly on August 26 - and it was the brother of Cazaly Resources managing director Nathan McMahon who spotted Rio's failure.

By the opening of the next business day, Cazaly had lodged its application for E46/678, a 40sqkm block next to BHP's huge Ore Body 18 and located over what the geology maps show to be Brockman-type iron ore.

Shannon McMahon, who runs McMahon Mining Title Services, is in the business of looking after his client's tenements so they don't end up making the same mistake as Rio - but also looking for clients of others who do let matters slip.

"It's the most exciting time in a mining tenement manager's life when a tenement expires," he said.

Six expired in August, but the one containing what Cazaly has named Shovelanna was the only one he thought worth grabbing.

Shannon saw the Rio title lapse on the Friday afternoon, consulted his brother over the weekend and was ready to pounce first thing on Monday with a cheque for $2729 and a filled-in application form. Rio's paperwork and cheque, meanwhile, was apparently not moved promptly by a courier company and arrived two days later.

Mr McMahon said letting a licence expire accidentally was a tenement manager's worst nightmare.

Much of his business involves finding land next to or close by clients' projects.

According to Mr McMahon, holding on to land requires constant vigilance. After the third year of an exploration licence, the holder must surrender 50 per cent of the area; in the fourth year, 50 per cent of what remains (all intended to stop people sitting on tenements forever). Companies can apply for exemptions.

He said forgetting to apply for these exemptions, allowing licences to expire and failing to pay the rent to the government were equally common.

The McMahons should know their business: their father and mother, Terry and Gail, have been in the mining title management business since the 1970s.

One of their coups was to acquire the ground on which the 2 million ounce Thunderbox gold discovery was later made.

No one knew for sure what was there, but Dalrymple Resources wanted the land.

The tenement was released by the Department of Minerals and Energy at 8.30am on February 1, 1994. Twenty-one seconds later Mining Titles, the McMahon parents' company, lodged the application for E36/256.

Mining Titles, aware that the release was pending, was monitoring the Leonora office of the department where the release was to occur. The senior McMahons also pegged the Yeelirrie resource for former WMC Resources. It is one of the larger unmined uranium deposits in Australia.

It's usually carelessness that leads to the loss of titles.

Forty years ago, a geologist who knew that the paperwork at the then North Broken Hill was sloppy was waiting for a licence to expire on one of that company's tenements at Silver City. He pegged it at midnight on the day of expiry and was waiting the next morning when NBH geologists came to tap in their renewal pegs. Barrier Exploration was floated on the coup.

Legendary mining figure Ron Manners recalls when he and business partner John Elkington were pegging in the Forrestania region during the 1970s nickel boom. This area is now the home of the Emily Ann, Maggie Hays and Flying Fox nickel mines.

In those days you had to put in pegs, then attach mining application papers covered in plastic to state your claim.

Just to their south, geologists for Belgium's Union Miniere were also pegging land. But that crew knocked off at 5.30pm without attaching the papers to the pegs. That evening, Manners and Elkington put their paperwork on the Belgian's pegs - and the prospect was theirs.

"We thought it was Christmas," Manners recalled yesterday.

Another Perth-based tenement manager, Shane Nicholson of Mineral Tenement Services, said he learned his lesson 10 years ago when a courier lost a renewal application.

That case, and Rio's more recent predicament, taught him to track every application and make sure it arrived at the mining office.

"If it doesn't arrive on time, the title dies."

And Mr Nicholson's view on Nathan McMahon's chances of fighting off Rio at Shovelanna?

"I think he's got them done like a dinner."

One of the more bullish articles... :)


E/W Learner
3 September 2005
In The West Australian today...
Cazaly could end in costly tears...
Resources minister Carpenter warns that the decision may not go their way, and investors should be careful...

mmmm.... I wonder just what he is saying


PlanYourTrade > TradeYourPlan
18 June 2004
Kauri said:
In The West Australian today...
Cazaly could end in costly tears...
Resources minister Carpenter warns that the decision may not go their way, and investors should be careful...

mmmm.... I wonder just what he is saying
If he said that it wouldn't be a surprise as we all know how big RIO is and how much influence they have out there...but then again this issue is out in the open and whatever happens it could be a scandal, might do a deal of some sort....great article btw on the tenements.
25 August 2004
Well this hasn't been the best trade for me made a profit (slipped in at 1.50 before TH) but watched alot of it slip away, few good trades on the way down but was out late yesterday when i saw all the negative press coming out on google..

The comments by the ministers have really spooked punters as well as cazaly relaxed view on things if they don't bump out RIO.. I still believe CAZ is odds on to retain the tenement but the decision is a while yet.. will let the dust settle.. should be plenty of trading oportunities in the lead up to the decision though..

Always take your profits i guess when thiers huge rumours and facts.. watched them slip away as i was expecting a bounce after it came out of the halt at 2.40... makes sense really... got alittle starry eyed i'm afraid.. lessons learned