Thread: Strong Buy CAF.V - Canaf Group
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Old 09-05-2014, 01:27 PM   Nav to Top 
JonnyR512
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CAF Q3 Results. Ended July 31, 2014

Symbol: CAF.V
Price: $0.07
Common Shares: 47,426,195
Insider Holdings: 13,140,321 (27.7%) As per www.sedi.ca

Assets:
Cash: $1,162,321
Receivables: $1,999,222
Inventories: $313,287
Prepaid Expenses: $33,767
PPE: $626,515
Total Assets: $4,135,113

Liabilities:
Payables: $2,233,989
Deferred Tax: $56,070
Total Liabilities: $2,290,059

After 9 Months:
Total Sales: $9,175,307
Net income after tax: $330,239


Here is a recap of the last 19 positive quarters CAF has had. Every year the company assets are either holding or growing but the liabilities are also being taken down. The
net income is obviously helping the company to grow, albeit very slowly. But I see it as
constant and safe. Still trading a very low price based on years of positive results.


2010
Q1 - $148,000
Q2 - $453,000
Q3 - $285,000
Q4/Year End - $1,380,000(audited) = $0.029c eps
Assets - $3,734,633 and Liabilities - $$3,006,923

2011
Q1 - $25,000
Q2 - $208,000
Q3 - $460,000
Q4/Year End - $998,426(audited) = $0.021c eps
Assets - $3,704,897 and Liabilities - $2,673,936

2012
Q1 - $375,000
Q2 - $229,000
Q3 - $133,505
Q4/Year End - $621,000(audited) = $0.013c eps
Assets - $4,029,063 and Liabilities - $2,871,933

2013
Q1 - $172,000
Q2 - $163,000
Q3 - $180,000
Q4/Year End - $838,000(audited) = 0.017c eps
Assets - $4,141,224 and Liabilities - $2,426,297

2014
Q1 - $161,000
Q2 - $68,000 (due to plant being shut down for a while, now back up and running)
Q3 - $102,000
Assets - $4,135,113 and Liabilities - $2,290,059(After 9 months)



MD&A Highlights

OVERALL PERFORMANCE AND OUTLOOK
Net profit for the 3-month period reflects an increase of 53% to $102,051, in comparison to the previous quarter; revenue also increased by 38% to $3,428,792. Revenue for the quarter continues to run behind last year due to the negative impact of a scheduled shutdown from the Company’s main customer, however the Company can confirm the return of orders from this customer from October 2014, and into the next fiscal year.

During the quarter, the Company agreed new 12-month sale prices with both of its two main customers and is now finalizing a further 5-year lease with Glencore for its facility.
ArcelorMittal’s scheduled shutdown of its Newcastle facility experienced delays of approximately 30 days, however orders for the Company’s products did recommence in September 2014 and the Company is optimistic for increased orders into the future.
The Company continues to work with potential new customers and remains focused on expanding it current business. The Company is also working closely with engineering companies with the prospect of introducing a new, more efficient calcining plant into the business; this would increase capacity and reduce operating costs

Claim against contractor for failure of new burner tube
During the quarter, the Company invested approximately $45,000 by appointing a contractor to replace a section of a stainless steel burner tube for one of its kilns. After installation, the burner tube failed in the new section and caused significant losses and damages, which the company has recorded as expenses in this quarter. After investigations, legal advice, and consultations with the contractor, Quantum is now claiming loss of earnings and damages, as well as a full refund, amounting to $220,000. The claim has now been passed on to the contractor’s insurers. Should the insurers not agree to a settlement, the Company will formally issue a summons in the High
Court of South Africa and serve same on the contractor in an attempt to recover the damages suffered. The Company believes that there is significant evidence and subsequently a strong case of negligence to be proven against the contractor and will follow due process to obtain the legal relief sought. The claim at this stage is only an
estimate and will be fully quantified as the case progresses. The contractor has now referred the matter to their insurers. Shortly after the failure of the tube, Quantum instructed for a new tube to be constructed from an alternative specialist contractor, which has already been fabricated and delivered to the Company’s facility

Update on Ugandan Case against Kilembe Mines Limited
In August 2006, Canaf, then known as Uganda Gold Mining, announced the termination of any further investment into its Kilembe Copper-Cobalt Project in Uganda. Since 2007, the Company has been involved in a legal dispute with Kilembe Mines Limited, (“KML”), and in April 2009, successfully won an injunction preventing the sale and
privatisation of the Kilembe Copper-Cobalt Project by the Government of Uganda. In January 2013, the high court of Uganda referred the case back to arbitration for settlement.On May 29, 2013, a preliminary meeting was held between the Company, KML and the arbitrator. The Company can confirm that further meetings were scheduled for August 2013, after filings of amended statements of defense and claims had been submitted. Since the initial meeting however, and the recent award of a deal to a Chinese
Consortium to manage and operate KML, the Company’s appointed Ugandan advocates are now seeking though the High Court of Uganda, for KML to ensure that assets and funds, sufficient to settle the Company’s claim against KML, are set aside before the disposal of KML; this is not to say that Canaf has settled with KML but is merely to
ensure that sufficient funds and assets are set aside by KML to settle with Canaf, should the arbitration be awarded in favor of the Company. During the year, the Company appointed SRK Consultants to prepare a brief document to quantify the ‘lost opportunity’ value of the termination of the Kilembe Project. During the next financial year the Company will utilize this document to assist in the submission of a revised claim against KML. The Company has received no new information since the last quarter and the Company remains unable to give an indication of either the quantum or any likely date by which a settlement will or will not be reached. The original claim, before costs, is for a money sum of US$10,370,368 as at the 24th January 2007.As much as a favorable award in arbitration would significantly benefit the Company, the Company continues to
plan for expansion based on its cash generating operation in South Africa alone.
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