REPOST
Per numerous requests, with his permission, I am reposting pesquero's post that gives excellent insight on the current CWRN's project situation from the standpoint of someone who lives and works in close proximity to the production site as well as has some actual mining industry expertise.
Originally posted on Nov. 20th by user pesquero (edited to comply with iHub's TOS)
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This IHUB Board certainly represents the best (if not only) forum even remotely worth browsing through occasionally.
However, it is PAINFULLY obvious that great many here have absolutely no idea what it takes to either build or run a company, much MUCH less a company in the mining business, which is by its very nature a complicated business.
The BOTTOM LINE is that (since my earlier posts) CWRN is MUCH closer to success and creating Positive Cash Flow. Indeed, I would say only weeks away. Bob deserves a lot of credit for successfully navigating the (not minor) barriers he has been confronted with while scrupulously adhering to the law. If you think that may be difficult in Mexico, try the US or Canada sometime.
Assuming the imminent delivery of the Magnetic Separator from Valley occurs shortly (as I do, since Bob has already taken delivery of $3-4 Million of mining/crushing equipment over the past few months) he will be able to separate the crushed inventory and transport it to Ensenada using any of the 100`s of independent truckers (with brand new or nearly new Peterbilt trucks built in a Mexican factory 150 miles from Ensenada) dying to get a contract from CWRN, and over perfectly paved roads I might add, for those of you who are "confused".
CWRN has a couple of alternatives for locations within the Port of Ensenada where the ore can be both stockpiled and shipped, both of which are PRESENTLY being dredged to accomodate Panamax vessels (60-90,000 Tons). My company is involved in the dredging, so don`t start questioning that now.
CWRN doesn`t even NEED to actually load the ore aboard ship to create cash flow. Once it is in the Port, has the documents certifying the Fe content, which can be issued by any one of the several globally known inspection services (SGS etc. and who are all happy to serve Ensenada) he can recieve up to 70-80% of its market value from any one of DOZENS of Iron Ore buyers, with the balance on an FOB (Freight On Board)basis. This is common practice in the industry.
Any miner needs time to adjust the mining/crushing/separating process to reach optimum recoveries. But make no mistake about it. What I have seen and held in my hand, once beneficiated (separated) will be perfectly saleable Iron Ore. Sulfur contamination (a problem which has caused CWRN grief in the past along with many other miners worldwide) is not a problem in this geographical area. In fact, even the high Sulfur ore from Michoacan that neither CWRN nor anyone else could sell years ago, is now bought by China, albeit at a stiff discount due to the lack of facilities to reprocess it.
CWRN is hoping to ship ore at a minimum of 63% Fe, but even 60% Fe would sell like hotcakes. Figure a 2% discount per Ton per 1% Fe. Hell, China buys 52% FE from India all day long, and the AVERAGE grade of ore leaving Australia is <58%, and falling annually as they run out of High Grade deposits!!
There has undoubtedly been some dilution occur over the past year. What would you expect? Do you think money just falls out of the sky to get a new business off the ground?
Furthermore, dilution is not much of an issue at this stage of any infant company`s Pink Sheet share price. At this point CWRN trades on pure "anticipation" of success or the lack thereof. Worry about dilution once profitability has been established and the market (the real market, not sub penny day traders) has valued the PPS based on a multiple of earnings.
I would wager that there are precious few of you who own more CWRN shares than I do, and my position is "Tell someone who gives a damn". If that`s what it took to get the project up and running, so be it. If it doesn`t fly, what have I got? I have never SOLD a share, and actually added several Million yesterday.
I would logically assume that these significant advances in the project have been funded through a combination of taking in minority partners by TRANSFERRING Cotton family held shares to them at a very low price(some of which were then bled into the market) and some outright investment or advances by certain Chinese Iron Buyers, who are as thick as thieves in Mexico. I SERIOUSLY doubt CWRN has any significant conventional debt. Who would have loaned the money? No bank that I know of.
For the past couple of years(and probably for many years to come) mining HIGH GRADE Iron Ore (like what is found in Baja, and which is among the best in the world) is the most profitable business in the world, aside from perhaps Loansharking. Do the math!!
Actually, I`ll give you a hint....
Once fully up and running with all kinks worked out (probably 6-9 months), and with their ore having been "through the system and actually used to make acceptable steel" which will then allow CWRN to command the best pricing going forward, CWRN should enjoy Net Margins approaching $100 Ton. Even during this startup phase, CWRN will almost undoubtedly Net $50-$75 Ton. Now do the math!!
So forget about near term BUYBACKS and the like. At what price would you expect to be bought back? If I were Cotton, I`d concentrate on shipping good quality ore.
On the other hand, a BUYOUT is a potential scenario, although I wouldn`t expect to see that happen for at least a year or two after many, many successful shipments, and a certified estimate of actual reserves based on a quite expensive drilling program.
God Bless Bob if he RETIRES Authorized Shares NOW, which would offset any negative market sentiment about any prior dilution and almost certainly support a rise in the PPS. A R/S is a much less desirable option until CWRN has a much wider (and more importantly, stronger) stockholder base with a Buy and Hold strategy.
So those of you with the stomach (and investable cash)you should concentrate on accumulating shares at these hilariously low levels. Though you may get a spectacular return (ROI in percentage terms) over the next few weeks or months, the REAL money will be made by holding until the market values CWRN based on earnings over the next few years.
Look, I understand that fully understanding a subject like Iron Ore mining is not to be expected from everyone, and I`m not trying to be condescending. In fact, I`m trying to help give everyone here some small insight so you`re better informed. Many of the long-term shareholders, who are to be commended for realizing the potential, had (and still have)a truly rare opportunity to "get in on the ground floor" with pitiably small investments in a real, very profitable BASIC business. If you have to sell, sell! But sell other useless pinks in your portfolio first.
And I highly recommend that any of you who doubt your Long position travel to Ensenada to do your own Due Diligence. For Christ's Sake, its only 3 Hours by car from San Diego to Guadalupe!!
I (obviously) predict that a Buy and Hold strategy will be very rewarding, while there is an extremely high degree of risk that a piece of news could be released (as an example, over a weekend) that could decimate anyone caught short.
On the other hand, the San Andreas Fault could massively rupture and Baja California could slip beneath the waves, taking CWRN stock with it..........
I can`t believe I spent the time to write this, but I hope it helps everyone on this board to concentrate on the facts.
