A TESTING time is coming up for members of Perth’s Caruso family, best known for their earthmoving abilities, but also as the major shareholders in Mineral Commodities, a small explorer with its foot on a potentially valuable titanium minerals project in South Africa.
Over the past few weeks the share price of Mineral Commodities has moved sharply higher, from around 15.5 cents in late May to 25.5 cents, a 64 per cent gain without a whisper of news in the daily media, or any reports to the stock exchange.
Driving the stock higher is a belief that the company is close to winning a green light for development of the Xolobeni project that sits close to the coast south of Durban.
In theory, the mine could produce about $110 million worth of ilmenite and other minerals a year, and generate fat profits.
The trick will be in converting theory into reality. On paper the project looks good. It is located in a depressed area of the country, and government is keen to see jobs created. Environmentalists, however, like the undeveloped nature of the location, which is also called the Wild Coast. They see eco-tourism as the best hope for the region.
Briefcase, if it was into taking a punt, would put its money on a win for the project proceeding. And that is after allowing for the problems of the Caruso-style rubbing a few people on both sides of the Indian Ocean the wrong way.
Which comes down to the decision required.
Should Mineral Commodities charge ahead, try to win approval, try to raise the $300 million in capital required, try to get sales contracts with the major buyers of titanium minerals and try to convince South Africans that another little Aussie battler can show them how to run a mine – a much hated topic in a country that dislikes Australians at the best of times, both on and off the rugby pitch.
Development, even with government backing, is a risk. Disposal to a big player in the titanium minerals game could yield around $80 million, based on recent sales of similar projects, and equivalent to about $2 per Mineral Commodities share.
It is with this background that the Carusos sit down to contemplate the future of Mineral Commodities – perhaps with an appropriate musical background being Kenny Rogers singing "you got to know when to hold ‘em, know when to fold ‘em".
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