Lindsay Robertson, executive board member, Sallies
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» Reasonable fluorspar growth seen - Sallies CEO Izak Marais
» Sallies battles Honeywell in International Chamber of Commerce - CEO Izak Marais
» A bright 2007 for battered Sallies
» Wiese Sallies forth
» How Robertson saved Sallies

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Sallies makeover pays dividends
Marc Hasenfuss
Posted: Mon, 28 Aug 2006

[miningmx.com] -- FLUORSPAR mine Sallies looks a worthwhile punt despite a recent surge in its share price. Some punters may feel the easy money has already been made on Sallies. The share has traded as low as 29c on a 12-month basis, when the group was still hamstrung by the onerous Honeywell contract (now being dismantled, hopefully sans serious legal implications).

But Sallies - now with its Buffalo mine acquisition confirmed - still looks an attractive proposition at prices under 100c. It's a share with exciting medium-term prospects and one that can be tucked away in the bottom drawer.

Freed of the Honeywell contract (which set delivery prices at well below market rates), Sallies can take advantage of rising fluorspar prices with a new client book. Reduced Chinese export supplies (due to internal demand) should ensure firm prices for the foreseeable future.

With Buffalo adding to production, it seems reasonable to assume that Sallies' production will double, with a commensurate increase in profits, by the 2008 financial year. Production at the existing Witkop facility has already been tweaked up.
...can take advantage of rising fluorspar prices with new client book
Basically, fluorspar is used mainly in the chemical industry to make fluorochemicals, which are used as a cooling element in fridges and air-conditioners as well as numerous other applications, ranging from industrial to medical. Miningmx sister publication, Finweek, was recently told that Toyota Japan had expressed interest in the possible use of Sallies' fluorspar in hybrid car production.

While Buffalo brings fluorspar production benefits, the new acquisition also offers Sallies access to other minerals, such as rare earths, aluminium oxide and silica.

Exactly how much value the additional elements and minerals bring to Sallies is currently difficult to quantify, but these non-core commodities should perhaps not be entirely overlooked.

Sallies also boasts strong shareholders: Christo Wiese (who underwrote the recent rights issue), turnaround experts FRM as well as institutions such as Peregrine, Investec and RMB. Executive management - comprising former Gold Fields golden boy Izak Marais as well as the FRM team (Messrs Flack, Moffat and Robertson) - also has a good pedigree.

To take a look at the Sallies share price, or view the stock's historical performance in graph format, please click on the share price name in the box (top right) or click here.

*The writer holds (a nominal number of) shares in Sallies.