New Mine Central West NSW

Hi forumites.
Golden Cross Resources is doing a feasibility study about 10km out of the small Central West town of Molong, NSW.

www.cabonne.nsw.gov.au/news/pages/6837.html

Most locals seem to be aware of this - Molong houses are fairly expensive.
What i'm after, are some opinions of investing in the Larger, but more 'bogan-esque' town of Wellington (about 50km from the proposed mine) - where houses around 50k are pretty easy to come by!
A new gaol has also been built at Wellington (though it may have a revolving door for half the local populous...)
Another question is; would the shares at $0.019 be a reasonable risk?

Look forward to some opinions!! :cool:
 
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sounds like there's a LOT of variables that could go wrong...

high pog, strong aud, water supply, being able to mine grades high enough at a reasonable cost.
 
I wrote this for another thread and will add a couple of extra notes at the bottom for you.

Even one has differing risk levels.
There is probably nothing wrong with buying in a mining town as a portion of your portfolio to offset risk.

At the end of the day you need to understand the underlying commodity price and future supply / demand to work out if you believe the town is to thrive against that of the project(s) at hand.

If it's a new one horse town (single company) that has kicked off a project with marginal profits, in an environment with rising operating costs and volatile price swings be careful.

If there are plenty of diversified minerals and companies with the largest employer running a highly profitable operation (low production cash costs) then you're fine. Price volatility won't impact low cash cost producers to the same extent.

Just think about why the town is prospering now and ensure it can in the future. The deal is more than just initial purchase & rental yield.

__________________________________________________________

Further, IMO, the actual sp means nothing in the larger picture.
You need to also look at how many shares are on offer to gauge the market cap (rough size of the company)
1) Firstly, i would keep in mind a dfs will probably take about a year at best, probably more, maybe less if they are half way through.
2) The drill results appear to place this as a marginal producer
3) It's a miner, therefore will have quarterly reports.
Have a look at how much cash they have and how quickly they are burning it.
4) Understand backwards their type of business and review similar.
5) Diversity of employers and minerals handy for risk mitigation.

Become the expert and let me know how you go.
L
 
Wellington benefit from the mine? If so, how?

If you wanted to take a less risky approach, what about Orange?

Orange already has a mine 15km out of town. Cadia mines employ around 2k people directly, so i'd be suprised if a much smaller mine would have a huge effect! Rents are tight - very difficult to even find a place to rent! Wellington is a similar distance to the proposed site as Orange.

I might throw a couple of k into their shares for the next 8 months just to see what happens.

It's a bit early to buy in Wellington imo, it may even be possible to wait eight months until the mine is sure (or not) to go ahead!
 
Locko,
The only further info that you might find helpful is this.
Plenty of punters don't connect the dots and forget about the underlying driver.
We picked up a place in a town called ravensthorpe.
The big driver was nickel and BHP was the one horse town.
We doubled our money in three years with capital appreciation and bailed when the nickel price tanked because i thought they would start laying people off.
As it turned out the nickel price stayed low and BHP closed shop completely.
Small town really and BHP employed directly about 2000 people.
The silver lining for people who looked at raw rent yields etc and forgot why the town was there is this.
The nickel price came off yet it took about a year or so for BHP to shut the doors. This delay is gold, because the writing is on the wall but most won't read it!
If you buy into a mining town, look at what they are producing, how much they are making, the underlying commodity price and you'll be able to exit with low risk and achieve a better sale price before many competing homes come onto the market.
L
L
 
Orange already has a mine 15km out of town. Cadia mines employ around 2k people directly, so i'd be suprised if a much smaller mine would have a huge effect! Rents are tight - very difficult to even find a place to rent! Wellington is a similar distance to the proposed site as Orange.

I might throw a couple of k into their shares for the next 8 months just to see what happens.

It's a bit early to buy in Wellington imo, it may even be possible to wait eight months until the mine is sure (or not) to go ahead!

Buying in Orange should not just be about the Newcrest mine.

You have an expanding university and medical sectors that show no sign of stopping.

Agriculture has always been string and will continue to do so.

The town is active and looking at ways at managing growth.

Locko, has the council released the new LEP yet?
 
We doubled our money in three years with capital appreciation and bailed when the nickel price tanked

That would be the more ideal plan with Wellington, not much else to recommend it.

Buying in Orange should not just be about the Newcrest mine.

You have an expanding university and medical sectors that show no sign of stopping.

Agriculture has always been string and will continue to do so.

The town is active and looking at ways at managing growth.

Locko, has the council released the new LEP yet?

Hi Chilli

I don't think they've released the new LEP. A draft i think. What sort of info would you look at in one?
Council seems to have plans to release a lot more land in the near future, which may effect the cg rate?!?
 
I know that the DPI are trying to redevelop their land down south as low residential with a possible retail component as well as few other changes up North.
 
New Mine Central NSW

Another place we're considering right now is Cobar. It already has several mines close by, Lead, Gold and Aluminum and has feared pretty well thorough the down time. Rental prices are starting to return. Increases of $40/$50 per week when leases are renewed. Not much in the way of vacancies and there's a new Gold mine about to open around Christmas. Check out "The Cobar Age" for more info.

Having a small piece of the mining industry in our portfolio seems to be the right mix for us at present.

Bullfrog
 
Wellington benefit from the mine? If so, how?

If you wanted to take a less risky approach, what about Orange?

Wellington is cheaper than Orange. Waaay cheaper. The crappiest house in the housing commission pockets of Orange could be snapped up for $120k. Wellington houses (the dilapidated ones) are on the market for around $50k.

So, less cash outlaid = less risk. :)
 
Hi forumites.
Golden Cross Resources is doing a feasibility study about 10km out of the small Central West town of Molong, NSW.

www.cabonne.nsw.gov.au/news/pages/6837.html

Most locals seem to be aware of this - Molong houses are fairly expensive.
What i'm after, are some opinions of investing in the Larger, but more 'bogan-esque' town of Wellington (about 50km from the proposed mine) - where houses around 50k are pretty easy to come by!
A new gaol has also been built at Wellington (though it may have a revolving door for half the local populous...)
Another question is; would the shares at $0.019 be a reasonable risk?

Look forward to some opinions!! :cool:

Proposed gold mine near Kattaning WA, might be another area worth doing some DD on?
 
Buying in Orange should not just be about the Newcrest mine.
I was out that way last week to visit a mate and while there may be other things happening it seemed to me that its the mine that is driving everything around town. Every second person seem to have some link to the mine either by direct employment or through families working there.

You have an expanding university and medical sectors that show no sign of stopping. Agriculture has always been string and will continue to do so.
Agree

The town is active and looking at ways at managing growth.
Large % of this growth directly due to the mine. The once closed Hotel Canobolas which is a massive place in the middle of the CBD has been revamped and open again with someone telling me that there a waiting list of of many years for a room thanks to the DIDO miners.

My mates teenage nephew who is off the land at molong thanks to the $100K+ job at the mine is paying $200pw for 1 bed sitter in orange.

Its wasn't the same story at molong as the main street had many closed shop etc however come friday night the pubs were packed with guess what??? yes full of blokes that work at the mines.

Seem newcrest is around for the long haul and this employment boost and need for accomodation will keep going for years.
 
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My mates teenage nephew who is off the land at molong thanks to the $100K+ job at the mine is paying $200pw for 1 bed sitter in orange.

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Seem newcrest is around for the long haul and this employment boost and need for accomodation will keep going for years.

Your mate's nephew would have to have some reasonable qualifications to be on 100k out at Cadia. It's one of the lowest paying mines in Aus due to it's location ie. close to a decent town. The bedsit must also be furnished to rent for that much!

Newcrest also have recently built their distribution centre for the whole of Aus in Orange. Their is also a Newcrest training centre, a lab, and a few other Newcrest sites around the place.
 
Your mate's nephew would have to have some reasonable qualifications to be on 100k out at Cadia. It's one of the lowest paying mines in Aus due to it's location ie. close to a decent town. The bedsit must also be furnished to rent for that much!.

There are decent one bedroom furnished apartments with parking that come on the market for $140pw.

At $200pw, he would be well worth buying one of those for $90K rather than leasing.
 
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