Celtic Resources - Mining The Mountain

Jeffian

I have been following this CER saga for a little while. I have tried to read up as much as I can. My main conclusion is that there is great potential here. However, key concerns still prevent me from taking a position. These are...

While the 'Standard' loan appears to be a 'done deal'. The blocking point (or my understanding of it) is that it has not yet been accepted and signed off, by the provincial government of Yakutia. This is I believe, a real worry and I do not think that CER have very much influence over this situation. The worry is, that the Russians are delaying while they consider their options. One option is clearly to displace CER from the JV company. Unfortunately, as the gold price rises, the temptation will also grow. The russians will of course still need funds, but presumably these will become more available as gold strengthens. Against this, is the probabilty that production delays will only increase, if CER are displaced, but that may be the only card that CER are holding. Note: This may seem a rather pesimistic view, but I believe it is supported by CER's own business behaviour this year.

There has been some criticism of CER, for not developing Nez more quickly. Indeed, they seem to have made a point of investing elsewhere, to keep their interests diversified. It has been pointed out by others, that there seems little 'shareholder-value' sense in doing this, as opposed to developing what they already have at Nez. After all, while the original business plan, did look to income streams from oil and gold production to help fund the company, the main target for those funds was always going to be Nez. So, to raise funds from AIM, but then spend some in Kazakistan does seems a little odd.

Unless the issue now, is more about not having too many eggs in one basket. That gives rise to the suspiciuon that CER may have been worried about the politics of Nez for some time. People have accused KF of being duplicous about CER's prospects. I do not subscribe to that view nor believe there is any real evidence to support it. However, I am equally sure that KF is nowhere near as in control of current events, as he would like to be (hence the lack of calming newsflow). It seems to me, that while further development of Kazakistan may turn out a prudent decision, it may also be the best sign you have got, that Nez is ultimately going to dissappoint.

Of course, if the uncertainty about Nez is suddenly removed with a positive result (ie. Standard loan completed), then it would be an excellect share to have held from the day (hour/minute) before. Bearing in mind that the news will certainly leak, so the share price will move first. Which at this juncture, it clearly has not done.