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CUL 0.1¢

cul- green alert

  1. Cullen on New Year’s eve had an incredible move with $18million traded on a half a day trading, the move started at about 11.30am when earlier in the morning it was just trading at about 4.2c. At its close it traded as high as 5.8c. Only a few weeks ago it was trading at under 3.5c although it has been strengthening to the 4c level in recent past. It could be the strenthening gold price in the last few weeks but that has been reflected on many of the smaller spekkies which made me consider if Cul is being fueled by not just the increse in the gold price but also its own projects and what could be announced on them. Having looked at this morning volumes, which indicates still a lot of interest but with the obvious drop in the price, probably because of the ASX query and Cul indicated nothing to report for today, I decided to do some preliminary research- it has been always at the back of my mind to do some reading on Cul but never got around to it until this big vol going thru.

    I do not believe that with such big vol and spike in price in a half a day trading that it amounts to nothing!. There has to be something substantial in the new year. I must say that, having done preliminary research this morning I am impressed with what Cul has got and been doing in the last few months.

    Firstly, on the cashfront, Cul has quite a reasonable amount of cash, more than $2million which resulted I believe from the sale of the overseas gold tenement (could be in Russia, I think) and also the company received some shares in a gold company listed o the London AIM (Cul still have some exposure to that). On the management side, it seems that the company manages well and has entered into various joint ventures- I like this part, as ususlly the majors are not willing to throw their monies in spekkies companies and tenements. Cul has WMC, Barrick and SIPA on their joint venture exploration projects. Cul also has 100% ownership on some of their properties. This looks like they have hedged their bets well and at the same keep their cashflows out to a minimum but with reasonable exposure. I have seen some of their conditions on their jvs agreement and Cul has retained options to improve their exposure where necessary. All these is pointing towards good management and cashflow management, and at the same time exposure to potential upsides on a find.

    On their properties, Cul seems to concentrate on Western Australia goldfieds. The one that seems a great potential where they already have encouraging results and currently still working on is the Gunbarreel project. They have had some good results from these as recebt as early Dec so we can expect more coming from this project. Indication is early this year for more results and confirmation of more drillings. Particularly the Southern propect where in their last quarterly Cul indicated that significant gold mineralisation has been intercepted in certain parts.

    The other exciting possibility is the Gunbarrel Nickel project which WMC being a partner can earn 75% of interest in nickel. WMC has identified as high priority target at AK47 meaning a substantial resource may be there. Not sure exactly when , as a top priority this will be looked at but the indication as a top priority was in October so whether work has been done or not, we need to wait and see.

    The jv with Barrick will see more action towards the middle of the year. But aprt from that mentioned above, there are also other projects going on at the moment which can provide good results. So in summary, I think the move and interest is possibly due to some exploration results coming in perhaps as early as the next few weeks. Another possibility is another joint venture with another major, which seems to be cul’s stlye of management. Together it provides the reasons for moving forward so even though it has moved from about 4 to 5c in the last couple of days, with the new year, good gold price, potential good exploration results and perhaps majors coming in, we can see Cul to do a bit more than what we saw on New years eve. It is certainly green alert but a green alert target is obviously difficult to address as we talking about a spekkie with no long term revenue here.

    Research yourself and see if you agree.

    Bigprofit


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