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It looks as though we are in a "quiet mode".I geuss it's better than the SP dropping any more than it already has.I'm glad we recieved an update on the manganese project.It shows a bit of commitment on their part.we did get hit hard and the market frowns upon losing almost the entire BOD.anyway,still holding strong and hoping for the best.gla!
mansf7720-I cannot reply to to your private message as my subscription will not allow it.I, too have quite a bit on my plate right now and I cannot help at this time.However,I will leave you with the hotcopper site.You can find out alot of info on this site and possibly post some for the I-BOX.Sorry I couldn't do more GL
http://www.hotcopper.com.au/search_do.asp?fid=1&symbol=3746
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
CORPORATE INFORMATION
Directors
Douglas Daws (Chairman)
Lloyd Jones (Non-executive Director)
David Ryan (Non-executive Director)
Maurice Catina (Non-executive Director)
Company Secretary
Maurice Catina
Registered Office
Suite 1, 346 Barker Road
Subiaco WA 6008
Telephone: +61 8 9481 4000
Facsimile: +61 8 9481 4088
Solicitor
Steinepreis Paganin
Level 4, The Read Buildings
16 Milligan Street
Perth WA 6000
Telephone: +61 8 9321 4000
Bankers
Westpac Banking Corporation Limited
109 St George’s Terrace
Perth WA 6000
Share Register
Computershare Investor Services Pty Ltd
Level 2, RBA Building
45 St George’s Terrace
Perth WA 6000
Telephone: +61 8 9323 2000
Auditors
BDO Audit (WA) Pty Ltd
38 Station Street
Subiaco WA 6008
Telephone: +61 8 6382 4600
Stock Exchange Listing
The Company is listed on the Australian Stock Exchange Limited
ASX Code: GOT
Website
www.grooteresources.com.au
2
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
CONTENTS
Directors’ Report.............................................................................................................................3
Auditor’s Independence Declaration to the Directors of Groote Resources Limited ..................7
Statement of Comprehensive Income .............................................................................................8
Statement of Financial Position ......................................................................................................9
Statement of Cash Flows .............................................................................................................. 10
Statement of Changes in Equity ................................................................................................... 11
Notes to the Financial Report
Note 1 Basis of Preparation and Accounting Policies .................................................................. 12
Note 2 Exploration and Evaluation Expenditure .......................................................................... 12
Note 3 Issued Capital ................................................................................................................. 13
Note 4 Segment Reporting ......................................................................................................... 14
Note 5 Dividends ........................................................................................................................ 14
Note 6 Cash and Cash Equivalents ............................................................................................ 14
Note 7 Trade and Other Receivables .......................................................................................... 14
Note 8 Share Subscriptions in Advance ...................................................................................... 15
Note 9 Commitments and Contingencies .................................................................................... 15
Note 10 Related Party Transactions ............................................................................................. 15
Note 11 Events After Balance Date .............................................................................................. 15
Directors’ Declaration ................................................................................................................... 16
Independent Review Report .......................................................................................................... 17
3
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
DIRECTORS’ REPORT
Your directors submit their report of Groote Resources Limited (“Groote Resources” or the “Company”)
for the half-year ended 31 December 2010 (“Balance Date”) and review report thereon.
DIRECTORS
The names of the directors of the Company in office during the half-year and until the date of this report
are as below. Directors were in office for this entire period unless otherwise stated.
Douglas Daws Executive Chairman
Lloyd Jones Non-executive Director
David Ryan Non-executive Director
Maurice Catina Non-executive Director
Simon Alexander Noon Executive Director (Resigned)
Barrie Bolton Non-executive Director (Resigned)
Stuart John Hall Non-executive Director (Resigned)
Alexander Robert Harry Hewlett Non-executive Chairman (Resigned)
REVIEW AND RESULTS OF OPERATIONS
The principal activities of the Company throughout the half-year have comprised of the following:
- Developing its Groote Eylant Project;
- Investing cash assets in interest bearing bank accounts; and
- The general administration of the Company.
The Company realised a net loss for the half-year of $755,221 (2009: $233,359).
4
GROOTE RESOURCES LIMITED ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
DIRECTORS’ REPORT (CONTINUED)
REVIEW AND RESULTS OF OPERATIONS (CONTINUED)
Projects
Groote Eylandt Manganese Project
Exploration Licences Granted
On 30 July 2010, the Company announced it had been granted three exploration license applications
(EL27523, EL27550, EL27551) and one Authorisation under Section 178 (27605), which cover an area of
1665 km² of highly prospective, shallow marine terrain near Groote Eylandt in the Northern Territory (see
Figure 1).
Figure 1: Location map of Groote Eylandt tenements. Granted tenements (green), tenement applications (blue).
The Exploration Licences cover interpreted along strike and down-dip extensions of the Groote Eylandt
manganese deposit. The Groote Eylandt deposit has been mined continuously since 1966 and is owned by
Groote Eylandt Mining Company Pty Limited (“GEMCO”) which is jointly owned by BHP Billiton Pty Ltd
(60%) and the Anglo American Corporation (40%).
GEMCO’s 2009 resource of 150Mt @ 45.5% Mn is the world’s third largest manganese deposit producing
more than 3 million tonnes of manganese ore annually, accounting for more than 15% of the world’s highgrade
manganese ore supply. Due to the high-grade, proximity to port and Asian markets, this low impurity
and low strip ratio operation is Australia’s ninth most profitable mine and one of the lowest operating cost
manganese mines in the world.
5
GROOTE RESOURCES LIMITED ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
DIRECTORS’ REPORT (CONTINUED)
REVIEW AND RESULTS OF OPERATIONS (CONTINUED)
Mt Alexander & Granites Bore Uranium Projects
On 23 November 2010 GOT announced it had entered into an agreement with public unlisted company
Heguy Resources Ltd for the farm out of Exploration Lease Application (E08/1987) known as the Mt
Alexander Project, located approximately 120km south of Onslow in Western Australia.
Under the terms of the agreement Heguy will enter into a farm in and joint venture agreement with Groote
that could see Heguy earn a 70% interest in the Project by spending A$1.8 million on exploration.
Under the terms of the agreement Heguy could earn a 60% interest in the Project by expending A$1M on
exploration within a period up to a maximum of two years.
Upon earning that 60% interest, Heguy and Groote will be deemed to have formed an unincorporated joint
venture, with Groote holding 40%.
Heguy would be the manager of the joint venture. Heguy could elect to earn a further 10% venture interest
by committing to spend within 18 months a further A$800,000 of joint venture costs with Groote’s 30%
retained interest ‘free carried’ until a ‘decision to mine’ is made.
The Board believes the farm out agreement for the Mount Alexander Project will allow Groote Resources
Limited to focus its efforts on the Groote Eylandt Manganese Project while maintaining shareholders’
interests.
CORPORATE
On 29 November 2010 Groote signed a non-binding Memorandum of Intent with Korea Resources
Corporation (KORES) to establish a framework of cooperation to provide a basis for entering into a
commercial relationship regarding the Groote Eylandt Manganese Project.
KORES is the Korean Government’s investment vehicle to further Korea's access to strategically important
mineral resources. KORES invests in overseas exploration, development and production of strategically
important mineral resources.
Subject to successful completion of a review of the Groote Eylandt Manganese Project by KORES the
parties anticipate entering into a formal commercial relationship after April 2011.
At the Balance Date the Company had received share subscriptions totalling $200,000 pursuant to the
options exercised.
6
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
DIRECTORS’ REPORT (CONTINUED)
SUBSEQUENT EVENTS
During the period from the Balance Date to the date of this report the Company received $1,301,000
pursuant to the exercise of 6,505,000 unlisted $0.20 options.
On 6 January 2011 the Company announced the appointment of Mr. Doug Daws as Non-Executive
Chairman, replacing Mr Alexander Hewlett whom had resigned.
On the 14 February 2011 the company announcement the appointment of Mr Lloyd Jones, Mr David Ryan
& Mr Maurice Catina as Non-Executive Directors. Mr Stuart Hall and Mr Barrie Bolton had resigned from
their roles as Non-Executive Directors. Mr Simon Noon, Executive Director announced he will also resign
on or before 11 March 2011.
On the 21 February, Mr Doug Daws was appointed in the role as executive chairman.
Signed in accordance with a resolution of the directors and on behalf of the Directors by:.
Douglas Daws
Director
Perth, Western Australia
Dated this 8th day of March 2011
7
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
8th March 2011
Groote Resources Limited
The Board of Directors
Suite 4, 38 Colin Street
WEST PERTH, WA 6005
Dear Sirs,
DECLARATION OF INDEPENDENCE BY BRAD MCVEIGH TO THE DIRECTORS OF
GROOTE RESOURCES LIMITED
As lead auditor of Groote Resources Limited for the half - year ended 31 December 2010, I declare
that, to the best of my knowledge and belief, there have been no contraventions of:
• the auditor independence requirements of the Corporations Act 2001 in relation to the review;
and
• any applicable code of professional conduct in relation to the review.
This declaration is in respect of Groote Resources Limited and the entity it controlled during the
period.
Brad McVeigh
Director
BDO Audit (WA) Pty Ltd
Perth, Western Australia
8
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
Note
31 DEC 2010 31 DEC 2009
$ $
Interest income 122,028 17,637
ASX listing fees (30,529) (8,176)
Audit expenses (22,289) (8,525)
Company Secretarial & Accounting fees (37,215) (18,000)
Consultants fees (4,163) (47,658)
Insurance expenses (3,641) (6,629)
Office accommodation expenses (29,112) (5,093)
Investor relations expenses (74,354) (3,000)
Travel and accommodation (157,508) (8,174)
Depreciation expense (3,462) (1,187)
Director’s fees (54,000) (66,000)
Employment expense (130,254) (14,579)
Exploration expenditure expense (254,729) (31,448)
Other expenses (75,993) (32,527)
Loss before income tax (755,221) (233,359)
Income tax expense - -
Loss for the half-year after income tax (755,221) (233,359)
Other comprehensive income - -
TOTAL COMPREHENSIVE INCOME FOR THE HALF
YEAR ATTRIBUTABLE TO THE MEMBERS OF
GROOTE RESOURCES LIMITED (755,221) (233,359)
Loss per share (cents per share)
- basic (loss) per share for the half-year (0.91) (1.56)
The Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.
9
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2010
Note
31 DEC 2010 30 JUN 2010
$ $
ASSETS
Current Assets
Cash and cash equivalents 6 4,811,704 4,366,465
Trade and other receivables 7 63,041 88,880
Total Current Assets 4,875,645 4,455,345
Non-current Assets
Exploration and evaluation expenditure 2 6,300,000 6,300,000
Property, plant and equipment 21,790 20,170
Total Non-current Assets 6,321,790 6,320,170
TOTAL ASSETS 11,197,435 10,775,515
LIABILITIES
Current Liabilities
Trade and other payables 81,891 61,248
Provisions
Share subscriptions in advance 8
47,522
200,000
13,893
2,148,630
Total Current Liabilities 311,414 2,223,771
TOTAL LIABILITIES 311,414 2,223,771
NET ASSETS 10,868,021 8,551,744
EQUITY
Contributed equity 3(a) 10,783,239 7,711,740
Reserves 4,665,277 4,665,277
Accumulated losses (4,580,495) (3,825,273)
TOTAL EQUITY 10,868,021 8,551,744
The Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.
10
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
Note
31 DEC 2010 31 DEC 2009
$ $
Cash flows used in operating activities
Payments to suppliers and employees (783,862) (288,713)
Interest received 111,314 17,610
Net cash outflows used in operating activities (672,547) (271,103)
Cash flows from investing activities
Deposit - Reflective Minerals Pty Ltd - (200,000)
Payments for property, plant and equipment (5,082) (14,503)
Net cash outflows used in investing activities (5,082) (214,503)
Cash flows from financing activities
Proceeds from the issue of share capital 1,122,869 830,000
Net cash inflows from financing activities 1,122,869 830,000
Net increase in cash and cash equivalents 445,239 344,394
Cash and cash equivalents at beginning of half-year 4,366,465 1,056,325
Cash and cash equivalents at end of half-year 6 4,811,704 1,400,719
The Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.
11
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2009 HALF-YEAR FINANCIAL REPORT
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
Issued
Capital
$
Option
Reserve
$
Accumulated
Losses
$
Total
$
At 1 July 2010 7,711,740 4,665,277 (3,825,273) 8,551,744
Loss for the half-year - - (755,221) (755,221)
Total comprehensive income for the half-year - - (755,221) (755,221)
Transactions with owners in their capacity as
owners
Share issues:
- Costs of share issue, net of transaction costs 3,071,499 - - 3,071,499
At 31 December 2010 10,783,239 4,665,277 (4,580,495) 10,868,021
FOR THE HALF-YEAR ENDED 31 DECEMBER 2009
Issued
Capital
$
Option
Reserve
$
Accumulated
Losses
$
Total
$
At 1 July 2009 2,704,058 455,240 (2,142,518) 1,016,780
Loss for the half-year - - (233,359) (233,359)
Total comprehensive income for the half-year - - (233,359) (233,359)
At 31 December 2009 2,704,058 455,240 (2,375,877) 783,421
The Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.
12
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
NOTES TO THE CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
1 BASIS OF PREPARATION AND ACCOUNTING POLICIES
(a) Basis of Preparation
These general purpose financial statements for the half-year ended 31 December 2010 have been
prepared in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.
These half-year financial statements do not include all notes of the type normally included within the
annual financial statement and should be read in conjunction with the most recent annual financial
statements and public announcements made by Groote Resources Limited during the interim period in
accordance with continuous disclosure requirements of the Corporations Act 2001.
The half-year financial statements were approved by the Board of Directors on 8th March 2011.
(b) Changes in accounting policies
The accounting policies adopted are consistent with those of the previous financial year
Certain new accounting standards and interpretations have been published that are no mandatory for
31 December 2010 reporting periods and have not been applied in these financial statements. The
company’s assessment of the impact of these new standards and interpretations is set out below.
AASB 9 Financial Instruments
In November 2009, The AASB issued AASB9 Financial Instruments which addresses the classification
and measurement of financial assets and liabilities. The standard may affect the Group’s accounting
for its financial assets and liabilities. This standard is not applicable until 1 January 2013 and the
Group is continuing to assess its full impact.
2 EXPLORATION AND EVALUATION EXPENDITURE
Costs carried forward in respect of areas of interest in the following phase:
31 DEC 2010 30 JUNE 2010
$ $
Exploration and evaluation phase – at cost
Balance at beginning of the half-year 6,300,000 6,300,000
Expenditure incurred 254,729 31,192
Impairment of deferred exploration expenditure (254,729) (31,192)
Balance at end of half-year 6,300,000 6,300,00
13
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
NOTES TO THE CONSOLIDATED HALF-YEAR FINANCIAL STATEMENTS
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
3 ISSUED CAPITAL
31 DEC 2010
Shares
31 DEC 2010
$
(a) Ordinary shares
Opening Balance 1 July 2010 73,189,371 8,160,257
7 Jul 2010 Options Exercised 9,967,937 2,298,597
10 Nov 2010 Options Exercised 1,000,000 200,000
31 Dec 2010 Options Exercised 2,902,500 580,500
Share Issue Costs (456,115)
Issued and fully paid shares carrying one
vote per share and dividend rights 87,059,808 10,783,239
31 DEC 2009
Shares
31 DEC 2009
$
(b) Ordinary shares
Opening Balance 1 July 2009 15,006,668 2,704,058
- -
Issued and fully paid shares carrying one
vote per share and dividend rights 15,006,668 10,783,239
At the Balance Date the Company had received share subscriptions totalling $200,000.
No options were issued during the half-year ended 31 December 2010 (2009: Nil).
14
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
NOTES TO THE CONSOLILDATED HALF-YEAR FINANCIAL STATEMENTS (CONT.)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
4 SEGMENT REPORTING
Directors have determined the Company has one reportable segment, being mineral exploration in
Western Australia. As the Company is focused on mineral exploration, the Board monitors the Company
based on actual versus budgeted exploration expenditure incurred by area of interest. This internal
reporting framework is the most relevant to assist the Board with making decisions regarding the
Company and its ongoing exploration activities, while also taking into consideration the results of
exploration work that has been performed to date.
31 DEC 2010 31 DEC 2010
$ $
Revenue from external sources - -
Reportable segment loss (254,729) (218,655)
Reportable segment assets 6,300,000 6,300,000
Reconciliation of reportable segment profit
or loss
Reportable segment loss (254,729) (218,655)
Interest income 122,028 49401
Unallocated:
- Corporate expenses (622,520) (1,513,501)
Loss before income tax (755,221) (1,682,755)
5 DIVIDENDS
No dividends were paid or declared by the Company during the half-year.
6 CASH AND CASH EQUIVALENTS
For the purposes of the Statement of Cash Flows, cash and cash equivalents comprise the following at 31
December:
31 DEC 2010 30 JUN 2010
$ $
Cash at bank and in hand 694,855 1,853,610
Term deposits 4,116,849 2,512,855
Commercial bills - -
4,811,704 4,366,465
7 TRADE AND OTHER RECEIVABLES
31 DEC 2010 30 JUN 2010
$ $
Accrued interest on deposits 10,714 -
Refunds receivable - -
GST receivable 20,881 85,239
Prepayments 32,046 3,641
63,041 88,880
15
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
NOTES TO THE CONSOLILDATED HALF-YEAR FINANCIAL STATEMENTS (CONT.)
FOR THE HALF-YEAR ENDED 31 DECEMBER 2010
8 SHARE SUBSCRIPTIONS IN ADVANCE
31 DEC 2010 30 JUN 2010
$ $
Share subscriptions received in advance 200,000 2,148,630
200,000 2,148,630
9 COMMITMENTS & CONTINGENCIES
The Company has no contingent assets or liabilities. There were no changes in commitments and
contingencies to those disclosed in the most recent financial report at 30 June 2010.
10 RELATED PARTY TRANSACTIONS
(a) Transactions with key management personnel
Transactions with key management personnel receive fees, compensation in the form of short term
employment benefits, post employment benefits and share based payment awards. Key management
personnel received total compensation of $143,140 (2009: $84,000). This includes fees paid to members
of key management who were appointed to the board during the 6 months ending 31 December 2010.
11 EVENTS AFTER THE BALANCE SHEET DATE
During the period from the Balance Date to the date of this report the Company received $1,301,000
pursuant to the exercise of 6,505,000 unlisted $0.20 options.
On 6 January 2011 the Company announced the appointment of Mr. Doug Daws as Non-Executive
Chairman, replacing Mr Alexander Hewlett whom had resigned.
On the 14 February 2011 the company announcement the appointment of Mr Lloyd Jones, Mr David Ryan
& Mr Maurice Catina as Non-Executive Directors. Mr Stuart Hall and Mr Barrie Bolton had resigned from
their roles as Non-Executive Directors. Mr Simon Noon, Executive Director announced he will also resign
on or before 11 March 2011.
On the 21 February 2011, Mr Doug Daws was appointed in the role as executive chairman.
16
GROOTE RESOURCES LIMITED
ABN 24 119 494 772
31 DECEMBER 2010 HALF-YEAR FINANCIAL REPORT
DIRECTORS’ DECLARATION
In the opinion of the directors:
(a) the financial statements and notes as set out on pages 8 to 15 are in accordance with the
Corporations Act 2001, including:
(i) give a true and fair view of the Group’s financial position as at 31 December 2010 and of its
performance for the half-year ended on that date; and
(ii) comply with Australian Accounting Standard AASB 134 “Interim Financial Reporting”, the
Corporations Regulations 2001 and other mandatory professional requirements; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when
they become due and payable.
This declaration is made in accordance with a resolution of the Board of Directors and is signed for and
on behalf of the Directors:
Douglas Daws
Director
Perth, Western Australia
Dated this 8th day of March 2011
17
38 Station Street
Subiaco, WA 6008
PO Box 700 West Perth WA 6872
Australia
Tel: +8 6382 4600
Fax: +8 6382 4601
www.bdo.com.au
BDO Audit (WA) Pty Ltd ABN 79 112 284 787 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050
110 275, an Australian company limited by guarantee. BDO Audit (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited
by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards
Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.
INDEPENDENT AUDITOR’S REVIEW REPORT
TO THE MEMBERS OF GROOTE RESOURCES LIMITED
Report on the Half-Year Financial Report
We have reviewed the accompanying half-year financial report of Groote Resources Limited, which
comprises the statement of financial position as at 31 December 2010, and the statement of
comprehensive income, statement of changes in equity and statement of cash flows for the halfyear
ended on that date, notes comprising a statement of accounting policies and other explanatory
information, and the directors’ declaration of the consolidated entity comprising the disclosing
entity and the entity it controlled during the half-year.
Directors’ Responsibility for the Half-Year Financial Report
The directors of the disclosing entity are responsible for the preparation of the half-year financial
report that gives a true and fair view in accordance with Australian Accounting Standards and the
Corporations Act 2001 and for such control as the directors determine is necessary to enable the
preparation of the half-year financial report that is free from material misstatement, whether due
to fraud or error.
Auditor’s Responsibility
Our responsibility is to express a conclusion on the half-year financial report based on our review.
We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state
whether, on the basis of the procedures described, we have become aware of any matter that
makes us believe that the financial report is not in accordance with the Corporations Act 2001
including: giving a true and fair view of the consolidated entity’s financial position as at 31
December 2010 and its performance for the half-year ended on that date; and complying with
Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.
As the auditor of Groote Resources Limited, ASRE 2410 requires that we comply with the ethical
requirements relevant to the audit of the annual financial report.
A review of a half-year financial report consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit conducted in accordance with
Australian Auditing Standards and consequently does not enable us to obtain assurance that we
would become aware of all significant matters that might be identified in an audit. Accordingly, we
do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the
Corporations Act 2001. We confirm that the independence declaration required by the Corporations
Act 2001, which has been given to the directors of Groote Resources Limited, would be in the same
terms if given to the directors as at the time of this auditor’s report.
18
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us
believe that the half-year financial report of Groote Resources Limited is not in accordance with
the Corporations Act 2001 including:
(a) giving a true and fair view of the consolidated entity’s financial position as at 31 December
2010 and of its performance for the half-year ended on that date; and
(b) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations
Regulations 2001.
BDO Audit (WA) Pty Ltd
Brad McVeigh
Director
Perth, Western Australia
Dated this 8th day of March 2011
can you copy and paste for everyone?
Recent announcement from GROOTE
http://www.hotcopper.com.au/asx_announcements.asp?id=278829
recent announcement from GROOTE:
ASX ANNOUNCEMENT
ASX: GOT
21 February 2011
GROOTE RESOURCES MARKET UPDATE
The board of manganese explorer Groote Resources Limited (ASX:GOT) (“Groote” or “the Company”)
is pleased to advise that Chairman Doug Daws has been appointed to Executive Chairman.
The Board has initiated a number of changes to reflect the direction required to ensure the
development of the Groote Eylandt Manganese Project.
The appointment of Mr Daws as Executive Chairman will bring his experience and full attention to
the company as we progress into the next phase of the project.
Mr Daws will, as one of his first roles as Executive Chairman, travel to Groote this week to attend a
meeting with the Traditional Owners (TO’) and to enter into discussions at the request of the TO’s
and Anindilyakwa Land Council (ALC) over the application by the Company of Exploration Licence
Applications 27521 and 27522.
Mr Daws said “It became apparent to me that Groote, as a Board, had not given due focus and
respect when dealing with the Traditional Owners on whose land our explorations licence
applications are over. I am very keen to listen to the traditional owners and hear their concerns and
aspirations. Together I hope we can reach agreement that all parties are comfortable with.”
The Company recognises the importance of a local presence in the Northern Territory and has
commenced moves to relocate its head office to Darwin in the near future to progress its Groote
Eylandt Manganese Project.
Personally,I would be tempted to put more cash in and average down,except my cash is in other securities and i only put a certain amount in speculative plays.Besides this could go lower(i hope not too much lower).I like there game plan and the resources they have available,so i hope the new crew sticks to that plan.I e-mailed the company but for some reason it did not deliver.I was going to ask them about the current situation.So if anyone here would like to give it a try that would be great.
Agree 100%...but the thing that we as current shareholders need to think about...is this a good time to average our cost basis down before a PR comes out and before the stock rises...I don't know the answer to the question, I'm leaning towards averaging down a bit...but I'm curious about your thoughts and others.
agee,However i would like a PR to clarify things for shareholders.I believe shareholders of the company overreacted when they sold on this news,although i don't blame them as this could go lower and noone likes to lose cash.I see i made sticky note status(lol)thanks,Anyway lets hope for the best.GLA
Good find...I tend to agree with them...the old board was not getting things done and lets hope that the new guys will be able to...it seems on paper they should have no problem getting it done...but we all just want results with no excuses...
This is one message i took from the site:
charlie123,
to answer your question about the new board
Lets start with
Doug Daws
has 40plus yr in the mining industry
been on many co. boards
knows a thing or two about gov. dept and highly experience in how to engage the local community.
knows how to run a mining co.
LLoyd jones
Land Manager at Croesus Mining NL
responsible for Native Title Land Access
Senior Regional Officer at Kimberley Development Commission .
Derby WA. Delivering socio economic programs to the Kimberley. Working with diverse Aboriginal Corporations to establish sustainable job creation and employment opportunities in an area where the population is predominantly traditional.
Tenement Consultant at L F Jones & Co and WTS
MMG Century Limited
Mining & Metals industry
January 2003 ? Present (8 years 2 months)
Community and Stakeholder Relations
Staff of eight responsible for the delivery of the spirit and intent of the agreement to the four Native Title Groups and Indigenous people of the Lower Gulf and broader Stakeholder engagement
David Ryan
20plus yrs in the mining game at management level
so i think the 3 of them know a thing or two about native tile and how to get a project up and running
look i am sorry to hear that simon noon, barry bolton and stuart hall lost their positions but it's clear to me they were not getting the job done.
to say the past board was making progress with the TO's you are dreaming,they were being stone walled!
to start the process again YES PLEASE!
what environmentalist groups are you talking about??
to say ,"I thought the previous board had weathered a pretty big enviromental storm" yes they did but they are still going to the doctors to get the pineapples removed.
i hope this answers your question about the new board, knowing a thing or two about native title and aboriginal politics superseds everything else for the time being.
any comments?
HotCopper is an australian stock forum.Groote is topic.Many there seem to think the board change is a "new beginning"
http://www.hotcopper.com.au/post_single.asp?fid=1&tid=1382931&msgid=7828140
Yeah I saw that yesterday as well but have been searching for something that tells us "why" they quit before I posted it...does seem kind of weird, we'll have to dig into it further to see if we can find a rational etc.
yes,this is not good at all.what bothers me most is they had no explanation for their departure.But i geuss you have to expect that when you deal with penny stocks.I don't hold a ton of this but will probably sell soon if no news.GLA
Yes i saw that and i was going to buy some shares today until i saw the news letter! Thank i'm sitting this one OUT!
GUYS...entire board of the company quit...2 days ago
you need to keep up with news if you are going to invest money....
http://www.perthnow.com.au/business/groote-down-on-board-exodus/story-e6frg2s3-1226005851257
This is not good.
Curzio works for stansberry and associates and is the one who reccomended GROOTE to his subscribers.There is a pretty hefty price tag for his research(3,000 bucks-discounted-)It was a little too pricey for me.fortunately,I subscribe to STOCKGUMSHOE for a mere 49.95/yr. and got the info. from them.It's a great service for the money.They basically find out which stocks newsletters pitch for subscription fees.Travis,the guy that runs STOCKGUMSHOE found out which stock Curzio was pitching.
http://stockgumshoe.com/2010/12/which-tiny-70-company-found-the-supernova-gold-mother-lode.html
http://ih.advfn.com/p.php?pid=trades&symbol=GRUTF
There sure is alot of sells today.I hope the buying starts up soon.Some of these trades could be a stop-loss that was hit.If memory serves i believe curzio told his subscribers to put a 50% stop-loss in place,that would be around .35.GLA
I'm not very good at reading the short data either, but from being involved in other boards, the myth about putting a limit sell order on your shares at some higher price only holds true if you have a margin account. If you have a margin account, there was also talk about writing a letter to your brokerage firm and telling them that you do not want them to be borrowing your shares. I'll try and dig up the other posts, but it's hard to search with a free account.
As of late,it appears many have gone short.to keep them from borrowing your shares put a high price sell order in.Don't know too much about short sales so anyone with more knowledge please help with this subject.GLA
http://www.otcmarkets.com/stock/GRUTF/short-sales
Great price point!
Thanks, i'm looking to picking up some grutf shares today!
Hmmmm...don't know...there is no news anywhere that I can find...could just be people sick of waiting or could be the MM's playing games...
I will try and work on the ibox this weekend to hopefully get some more attention etc.
Agreed...I have been checking out that trading as well...just to see what it looks like. There has not been a big swing either way in the PPS, which could be a good thing depending on how you look at it. I'd love to free up a bit more cash and invest some more here as it seems like this is at or near the bottom.
It has only been a couple of months since the MOI was signed with KORES so I have not expected to hear anything just yet. If you check out the following link, you will see that the preliminary stuff was going to be done January-March and a formal agreement (pending the prelim results) should be done in April. So therefore, I think we will have a few more months of some low PPS, but if the news is good in April/May then I could see this thing with a nice little pop. What are your thoughts?
http://www.grooteresources.com.au/images/stories/Groote_signs_with_Koreas.pdf
looks like she's holding pretty steady lately.been watching late night trading on got.ax to get an idea on how its trading also.
http://finance.yahoo.com/q?s=GOT.AX
hopefully we'll get an update soon on their venture with kores.
GLA
Thanks and will do.
Great to see you guys both here! In the next couple of weeks, I plan to work on this MB a bit and get some more information posted. Feel free to keep posting and to hopefully gather some more excitement around here. Also, if you have any other reliable DD that I have not posted, please post it!
hello,
I was lucky enough to get in at .59,could have waited and got in a bit lower but that is how these stocks work.Plan on holding for awhile anyways.I really like the fact that this metal is not in abundance,and that their licenses are in place.GLA
Hi,
I am in @$0.68!!!
Good to see there is finally an MB on this company.I think there will soon be more than just the three of us on this board,Another place to find out more is their website.
http://www.westernuranium.com.au/
GLA!!
I see thank you man! I plan to be also buying some of this also!
I picked up 250 shares for now. A starter package is different for everyone depends on their risk tolerance, available cash to invest etc. But unusually when someone says a starter package they mean that they picked up some shares (nothing too small but nothing too big) and they plan to watch the stock and potentially look for a couple places where they might want to re-up their shares.
So you got a starter package? How many shares?
Absolutely, good to hear from you! Feel free to post any DD that you find out there on this company. Welcome to the board!
This sounds like a good gig! Will for sure keep my eyes on this one!
This article literally gives me goose bumps when I read it...I think it clearly defines the potential that is here as well as the risk that is involved. This could easily go belly up in the near future, but I think that there is a better chance that it will sky rocket in 2011....more information on their operational plans should be coming out then.
This stock is on the Australian exchange as GOT.AX but you can trade it via GRUTF here in the US!
AMAZING DD!!!
Supernova Gold’
How this mysterious metal from outer space
could make you 3,000% or more
It involves a tiny island off the coast of Australia. Few people know this island exists… and most who
do, live on it.
The native language on this island is called “Anindilyakwa.” Reports suggest less than 3,000 people in
the world speak it.
This island is located about 30 miles off the coast of Australia. .
The place I’m talking about is called “Groote Eylandt.”
Groote Eylandt is known for two things: It’s home to some of the best sport fishing in the world. But
more important for us… It has one of the largest and richest deposits of a metal we call “Supernova
Gold”… which makes it one of the most valuable pieces of land in the world (on a per-acre basis).
“Supernova Gold” is a metaphor for the little-known element manganese. Scientists believe the element
is synthesized in the cores of large stars before they experience supernova explosions. It’s also believed that
meteorites containing manganese slammed into Earth millions of years ago… and scattered deposits of
manganese to a handful of hot spots around the world.
Groote Eylandt is one of those hot spots.
Manganese has similar qualities to gold. It’s a “transition metal” – meaning it easily combines with other
elements. In modern times, it was also used as currency. This is why we’ve nicknamed it “Supernova Gold.”
Mining titans BHP Billiton and Anglo American are raking in billions of dollars each year from mining
the manganese on Groote Eylandt. The ores there are incredibly rich… And its location near China makes
it easy to export to the world’s most voracious manganese consumer. Under a joint venture called GEMCO,
BHP, and Anglo have been the exclusive companies to mine manganese around Groote Eylandt for the past
40 years. It’s been a license to print money.
But in a move that went unnoticed by even the mining press, a tiny company has staked a claim to
the huge resource on Groote Eylandt. Its licenses are located immediately next to BHP and Anglo’s
1
‘Supernova Gold’
How this mysterious metal from outer space
could make you 3,000% or more
December 2010
Phase 1 Investor Vol. 5, Issue 2 5, October 2010
huge producing mines.
As you’ll see in just a moment, this company has pulled a fast one on two of the largest and most powerful
companies in the world… which could hand us a 3,000% gain in the coming years. Here’s the story…
The Greatest Pile of ‘Supernova Gold’ in the World
This month’s Phase 1 recommendation is a penny stock called Groote Resources (GOT.AX). The
stock trades on the Australian Stock Exchange.
Four months ago, this small company was granted four exploration licenses covering more than 1,000
miles of shallow marine tenements. As I mentioned, these licenses are located immediately next to BHP and
Anglo’s mines.
I know what you are thinking… Not another story about a penny stock buying up properties right next to
huge producing areas owned by an ExxonMobil or Chevron. In the end, many of these companies turn out to
be pure hype. I’ve seen a thousand of them. But Groote’s story is different…
After Groote Resources received these licenses, BHP and Anglo did a remarkable thing. They bought
up the thousands of miles of the surrounding areas of Groote Eylandt… Less than 24 hours after Groote
Resources received its licenses.
This situation is going to result in a tremendous stock gain for Groote. A 3,000% gain here is possible.
But before we get into the risks and rewards, it’s important to cover the basics of the manganese market. It’s
the only reason why Groote Resources has such enormous upside.
How Manganese Became One of the World’s Most Valuable Resources
Few people have heard of manganese. Its cousins – iron, aluminum, and copper – get all the headlines.
However, this metal is essential to myriad industries.
Chances are, you come into indirect contact with the metal every day. You’ll find manganese in things
like stainless steel, batteries, aluminum cans, and even some fertilizers.
The critical moment for manganese happened back in the 1850s, when English engineer Henry
Bessemer was perfecting his famous steelmaking process. After patenting his method, Bessemer began
Vol. 5, Issue 5, October 2010 3 Phase 1 Imvestor
licensing the technology to steelmakers. However,
the steel still had too much oxygen in it, causing itto crack when the steelmakers tried to work with it.
It took another Brit named Robert Mushet to
fix the problem. He figured out adding manganese
at the end of the process removed the
pesky oxygen. This made steel “workable.” His discovery
launched the commercial steelmaking industry,
creating instant demand for the metal.
Today, around 90% of all manganese mined ends
up being used by the steel market. No substitute has
been found for it in the steel-making process.
The second-biggest market for manganese was
born around the same time. In 1866, a French engineer
named Georges Leclanché patented a new kind
of battery that included manganese dioxide.
Leclanché’s batteries powered the telegraph industry
for decades.
Battery technology is entering a new era. Today,
dozens of different types of batteries combine lithium, zinc, nickel, and other elements. For example, cars
use lead-acid batteries because they’re cheap and reliable.
But more than a century after first appearing in batteries, manganese is still used in the most efficient
rechargeable batteries. One of the most common types is lithium-ion. (There’s a good chance you’ve bought
or used these.)
We’re on the verge of seeing more uses for high-tech batteries than ever before…
Electric cars made by companies like GM and Tesla are using lithium-ion batteries. According to an
article published by the Massachusetts Institute of Technology, manganese can be manipulated to help create
batteries that could last 50 years or more.
“Imagine a cell phone battery that recharges in a few seconds and that you would never have to
replace,” writes Prachi Patel-Predd, a Princeton-educated engineer and tech writer.
It’s no wonder BHP Billiton and Anglo American snatched up the remaining tenements surrounding
Groote Eylandt. But they missed a huge one…
How Groote Eylandt Produces Billions of Dollars in Profits
BHP Billiton is the world’s largest producer of manganese. It employs thousands of workers spread
across five key areas in Australia and South Africa. By far, Groote Eylandt is its most profitable manganese
operation.
Since 1965, GEMCO (a BHP and Anglo joint venture) mined more than 50 million tons of manganese
from Groote Eylandt. That’s enough to supply the entire planet for the next five years.
Beyond Steel
Today, steel production and batteries make
up the bulk of current demand for manganese.
However, scientists are experimenting with the
mineral in a variety of futuristic applications…
and the potential is amazing.
MIT scientists have blended manganese and
silicone to create a water-repelling substance that
could be a huge advance in the technology of
cleaning oil spills. And researchers at a Florida
university are using manganese to create a super
computer chip that retains data, even when the
computer is turned off.
For now, these high-tech applications only
represent a small fraction of the market for manganese.
But long-term, they underscore the
remarkable potential of the metal.
Phase 1 Investor Vol. 5, Issue 4 5, October 2010
Accordingto studies, Groote Eylandt holds at least 60 million more tons of manganese in reserve. Based
on these numbers, more than 25% of the world’s production of manganese will be produced on Groote Eylandt.
Not only does the island hold huge reserves of a metal that’s in short supply, but its ore is incredibly
high grade. For example, Australia has four major manganese mines. The average grade of the ore is less than
30%. On Groote Eylandt, ore grades average between 40% and 60%, according to Groote Resources.
To put this in perspective, BHP’s profits totaled $1.1 billion in 2009 from mining only 2.3 million
tons of manganese on Groote Eylandt. Based on these numbers, this area is more than seven times as
profitable (per-ton) as any of BHP’s iron ore mines.
Looking at the
data, I can’t tell you
why BHP or Anglo
did not secure the
areas around some of
their most profitable
mines. I believe it’s a
corporate oversight.
Groote’s management
agrees with me. After
all, studies show the
shallow waters also
have high concentrations
of manganese.
To get a better
understating of the
tenement licenses
secured by Groote
Resources, look at
this map.
• The red area west of the Groote Eylandt is where BHP and Anglo have been mining manganese for
40 years.
• The green area is the 1,000-plus square miles of licenses Groote Resources secured on July 30.
• The light purple areas are the licenses BHP and Anglo filed for – less than 24 hours after Groote
Resources received its licenses.
The map highlights a couple other key points. The first is how close the largest manganese mines in
the world (in red) are to Groote Resources’ properties (in green). BHP and Groote’s properties nearly touch
each other at the southern most point.
Another takeaway is how the largest mining company in the world with a market cap of more than
$230 billion completely dropped the ball. After all, BHP could have used just a fraction of its $12 billion
cash hoard to secure the areas surrounding one of its most profitable minesBHP’s carelessness is our gain.
Vol. 5, Issue 5, October 2010 5 Phase 1 Imvestor
Over the next 30 days, Groote Resources will conduct a scoping study of exploration licenses. The
study will evaluate mining, processing, and shipping options for the project. It will include environmental
impacts since the mining will be in shallow water.
More important, the study will determine capital and operating expenses for mining more than 3 million
tons per year for more than 15 years. Then, the company will determine where the infrastructure and
plants will be built.
Groote will have a one of the best manganese experts in the world helping with the analysis. His name
is Barrie Bolton.
In August, Barrie was appointed to the board of directors for Groote Resources. This was big news for
the company. Barrie’s been studying manganese for more than 30 years. In fact, he was BHP’s top manganese
expert for 18 years. Of those 18, he specifically advised and managed BHP’s exploration program
on Groote Eylandt for 10 years. Now, he’s on Groote Resources’ team. It’s as if Bill Gates joined the
board of some little $100 million tech firm.
Following the scoping study, Groote Resources laid out an intense six-month drilling program – which
will commence early 2011. This will include geological mapping, surveys, sampling, and drilling. During
this process, the company may look to take on a partner to lower costs in the early stages of development.
High Risk… Sky High Reward
Groote Resources is a tiny company. Its market cap is around $40 million. This is less than 1% of the
size of BHP. The company has $5 million in cash to fund its growth initiatives. It has no debt.
If this were a gold or silver company, $5 million wouldn’t amount to much. Gold and silver are expensive
to mine. However, the cost to mine manganese on Groote Eylandt is less than $50 a ton. The current
market price for high-quality manganese is well over $500 a ton.
Groote Resources (GOT.AX)
Market Cap $38M Cash $5M
Enterprise Value $32.2M Debt zero
Shares Outs 83M 52-week low $0.38
Avg Vol 275k 52-week high $1.20
The reason why it’s so cheap to mine compared to every other metal can be explained in the pictures
that follow…
The black stuff you see lying on the
shore is manganese. In many places, it sits
right at the surface.
Even offshore, the mining process is
simple and inexpensive. Groote Resources
plans to mine the manganese by first using
a cutter/suction dredge (pictured at right).
That’s a device commonly used for scraping
and sucking the seabed in shallow waters.
Phase 1 Investor Vol. 5, Issue 6 5, October 2010
Vol. 5, Issue 5, October 2010 7 Phase 1 Imvestor
The dredging will take place in water between five and 10 meters deep.
The loosely cemented manganese will be extracted on a jack-up platform where it will then be loaded
onto a barge. The harder manganese will be broken up using a large jackhammer before loading. The barge
will transport the unprocessed manganese to the mainland for crushing, screening, and washing. Finally, the
product will be shipped to market.
When you combine the ease of mining with the incredibly high grade of Groote Eylandt, you can
understand why BHP’s failure to lock up the surrounding areas may be one of the biggest blunders in the
mining industry.
Turning to fundamentals, Groote Resources is in the earliest stages of development. It’s almost as if you
discovered oil under your house. Sure, the payoff will be huge. But the time it would take you to extract the
stuff and put cash in your pocket could be three to five years.
The best way to put numbers behind Groote Resources’ licenses is by comparing its properties to
GEMCO’s. As I mentioned earlier, GEMCO generated more than $1 billion in profits in 12 months, mining
just 2.3 million tons of manganese…
Groote projects it could mine more than 3 million tons a year. At grading between 35% and 50%, management
said it could generate between $1 billion and $1.5 billion in revenue. These are lofty expectations.
My analysis paints a different picture. Mining in shallow water will cost the company more than $50 a
ton. Also, environmental permitting, infrastructure, and drilling could be costly.
Let’s assume the company can mine 750,000 tons of manganese a year, or 75% less than the company
forecasts. Let’s also assume Groote sells the manganese on the open market for $250 a ton (50% discount to
the market). That would generate roughly $187 million in revenue.
As you can see from the chart below, I provided these figures on the top line under “conservative case.”
I also added an average case scenario and the company’s projections.
Annual Production Price per
(Mn /tons) Grade ton (Mn) Revenue
Conserv. Case 750K 45% to 60% $250 $187M
Average Case 1.5M 45% to 60% $300 $450M
Company Proj. 3M 45% to 60% $400 $1.2B
The average mining company trades at roughly four times sales, according to financial database Capital
IQ. Using this multiple and our conservative case, Groote Resources would have a market cap of $720
million. That’s more than 20 times the company’s current market cap using conservative numbers.
These numbers don’t include hedges, future debt, or dilution of shares if Groote raises money on the
open market. They do not include any partnerships. Again, the company is in its earliest stages of production.
We will get a clearer picture on production and costs in January, after the scoping study is completed.
However, based on the company’s enormous upside potential, you can see why I am so excited about
Groote Resources. That’s the only reason I would suggest buying a company trading on the Australian
Exchange. I know many investors are leery of buying foreign stocks.
Phase 1 Investor Vol. 5, Issue 8 5, October 2010
However, before you buy this stock, there are some
risks you need to know about…
Groote Resources may never be allowed to drill on its
properties despite holding licenses. On November 17, the
Groote Eylandt health minister said the marine environment in
the area was “far too precious” for undersea mining operations.
Groote Resources fell 20% on the news.
The company responded by saying its plans would have
almost no physical impact on the shallow-water environment.
Also, the health minister does not have the authority to stop the
company from drilling. These licenses were obtained legally and
are in “good standing” with the Northern Territory government.
If Groote Resources is not allowed to drill on these lands,
the company could fall to less than 5¢ a share – less than the
company’s cash balance. That would be a substantial loss. But
management is nearly 100% certain the government will allow
drilling to commence.
The project is in its earliest stages. It could take up to three
years to get infrastructure in place. During this time, manganese
prices could collapse. Also, the company could have difficulty
raising capital to support its long-term growth plans. If
this is the case, shares could fall substantially.
Groote Resources is currently not generating profits. In
fact, it’s relying solely on its new licenses to make money for its
shareholders. In other words, mining on its licenses just off of
Groote Eylandt is an “all or nothing” scenario.
It’s important you understand this as an investor. The
reward could be in the thousands of percent. But to achieve
such gains, we are taking on two key risks. The first is, the government
won’t interfere in the company’s plans. The second is
Groote Resources will have success mining the manganese in
shallow water.
Another risk could be possible dilution. Groote has $5 million
in cash but may need more to fund its drilling program.
Since it generates no revenue, the company may have to tap the
equity market for cash. In doing so, the company will issue
more shares diluting existing shareholders.
Finally, the company is competing with some of the heavyweights
of the mining industry. These giants are on great terms
with the government of the Northern Territory – since they
employ a lot of people and generate money for the island.
Buying Australian Stocks
Groote Resources trades on the
Australian Stock Exchange (ASX). The
ASX ranks in the 10 largest exchanges
in the world. It’s a safe, highly liquid
exchange that hosts some of the
biggest mining stocks, including BHP
Billiton and Rio Tinto.
The difficulty with buying stocks
on the ASX is many discount brokerages
don’t provide access to this source
of high-growth stocks. E*Trade, TD
Ameritrade, and Scottrade cannot
complete orders for stocks that trade
only on the ASX.
I realize this means some subscribers
may have difficulty buying a stock on
the ASX. Understand, I’m recommending
Groote because the stock offers the
biggest potential upside of any stock I’ve
seen in my 15 years of investing.
Our mission at Phase 1 is to bring
our readers the best stocks that we
find. I traveled to Asia to find companies
with huge upside no one is talking
about. Groote was head-andshoulders
above the rest.
The easiest way to buy shares of
Groote Resources is through a fullservice
broker. A good broker will
have access to stocks on the Australian
Stock Exchange and should be able to
handle a basic buy order.
For readers who are considering
using a full-service broker, many of our
subscribers have successfully worked
with the three companies in the past:
• Jeff Winn at International Assets
Advisory (800-432-4402;
www.iaac.com)
Continued on page 9...
Vol. 5, Issue 7, December 2010 9 Phase 1 Imvestor
When push comes to shove, the government could make life
difficult for Groote Resources if the company becomes a threat
to BHP’s operations there.
Sure, the risks are huge. Seldom do you see a stock with
more than 1,000% upside that does not carry such a high
degree of risk. But I believe the reward is well worth it.
If Groote Resources is able to successfully mine the surrounding
areas of Groote Eylandt, the stock will skyrocket.
Shares could swell to more than $5 a share if my conservative
revenue targets are met.
Longer-term, the sky’s the limit. Based on reserves,
Groote Resources could be the No. 1 supplier of manganese
in the world.
Action to take: Buy Groote Resources (GOT.AX) up to
A$0.70 a share. As I write this in mid-December, the price is
trading around this price. Don't worry about missing out on
this stock if it's slightly above A$0.70. It's an incredibly
volatile security. Its price can move 10% to 20% in a single
day. Be patient. It will move under the buy-up-to price. After
your purchase, put a 50% trailing stop loss. Expect to hold the
stock for more than a year… And expect to make a lot of
money on the position.‘
I bought a starter investment in this company last week, I think there is huge potential here!!!
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