Cdnx CEC.V Thread

[cdnxtracker]

CEC.v could be a producer by 2010 and they are waiting
fro the BC hydro to make it's decission on hook up at Princeton
property very soon.
The Raven project will also get finialized by May 31. Options for
insiders set at .40cts so they will want them in the money. Honourable
guys setting .40ct options (Nov. 2007) when the stock was .15cts at
the time.

[Naamplao]

Hmmmm....first of all as I have said before I do like coal stocks. So getting in on a cheap coal play is interesting. So I did my Due Diligence which I will share with you.

This is a brief description of the company from their website at Company Profile, Compliance Energy Corporation

Compliance Energy Corporation ("Compliance") is a Canadian power company engaged in the development of a 56 megawatt green power project located near Princeton, British Columbia, Canada. The Company also has extensive coal resources that it is exploring on Vancouver Island.

I looked further and looked at their last Financial posting which was Nov 18 2007...admittedly it is old but that is all that is available from their site.

MANAGEMENT'S DISCUSSION & ANALYSIS ("MD&A") OF FINANCIAL
CONDITION & THE RESULTS OF OPERATIONS FOR THE THREE MONTHS
ENDED SEPTEMBER 30, 2007
November 18, 2007

The entire document can be found on their website at http://www.complianceenergy.com/fina...s/FS070930.pdf

I will quote some passages from the document....the bolding is my own to point out some things of interest.

Overall Performance

The Company recorded net income of $1,590,949 or $0.03 per share for the nine months ended September 30, 2007, as compared to a loss of $426,798 or $0.01 per share for the nine months ended September 30, 2006. In order to better understand Compliance Energy's financial results for the nine months ended in 2007, it is important to gain an understanding of the stage of development of the Company's main assets: (1) the wood waste power plant project located near the Company's Basin Coal Mine that was awarded a 30 year take or pay Electricity Purchase Agreement from BC Hydro. (2) The Vancouver Island Coal Deposits which recently released a national instrument 43-101 resource estimate and preliminary economic assessment reports; and (3) the Basin Coal Mine of which Compliance holds a 100% interest.

Lets look at these assets

Princeton Power Project
As a result of the province changing its direction on the acceptability of coal as a fuel for electricity production in BC, the Company has continued to have discussions with the BC Government and BC Hydro regarding switching the project to be fueled entirely with wood. The Company hired the Timberline Natural Resource Group ("Timberline") to complete a wood fuel study for the Princeton region and Timberline's study indicates that sufficient forest residuals and dead mountain pine beetle killed wood are forecasted to be available in the Princeton region to fuel the plant over its lifetime. Conversion to wood would enable the Project to meet Provincial objectives regarding greenhouse gas emissions and could make the output of the plant eligible to be classified as BC Clean Electricity under BC Government guidelines. The Company will continue to defer all costs associated with this project until discussions between BC Hydro, the BC Government, and the Company have concluded. A total of $136,053 was spent on the Princeton Power Project during the quarter, all of which was deferred.

Hmmmm....not a done deal yet I see and switching from a coal powered project to waste wood?.....This project is nearby the Basin Coal Mine...how has this affected the operation of the mine???

Basin Coal Mine
The Company continues to operate the Basin Coal Mine on a care and maintenance basis and anticipate no mining or processing activity for the balance of 2007. The Company sold a majority, of its mobile mining equipment to Copper Mountain Mining Corporation for $568,500 in cash consideration. The valuation for the major pieces of mining, equipment transferred was determined by an independent third party, while the remaining minor pieces of equipment were transferred at negotiated prices. In addition, the Company transferred $523,359 in lease obligations to Copper Mountain Mining as Copper Mountain Mining assumed the lease obligations of the Company's D8 Dozer and a 773 Haul Truck. The Company deferred a gain on the disposition of this equipment totaling $259,742. The Company sold its remaining clean coal inventory of approximately 4,563 tonnes to a leading cement producer. Daily coal shipments began in early June and concluded on September 13, 2007. In addition, the company sold most of its remaining stoker coal inventory between July 25, and September 24, 2007. 'total coal revenue in the quarter was $190,123, all of which was treated as a reduction in deferred costs for the project.

Obviously this change in policy by the BC Government and BC Hydro has hurt this mine....err...used to be mine. They have sold off a lot of machinery, got rid of their inventory and mothballed the site.

Raven Metallurgical Coal Project
The Company has completed a 43-101 technical report on the property. The 43-101 technical report incorporates data contained in historical reports supplemented by recent drilling and seismic surveys carried out by Compliance Energy under the supervision of Owen R. Cullingham, P. Geo., ("ORC") who is the Qualified Person for reporting purposes on this exploration program. In-place resources within the Raven property cover an area of approximately 3100 hectares and ORC has identified 39,093,000 tonnes of measured and indicated and 59,004,000 tonnes of inferred underground coal. The coal is classified as high volatile A Bituminous and is suitable for targeting the metallurgical coal market as a blend product or the thermal coal market. On September 5, 2007, Associated Geosciences Ltd, completed a 43-101 preliminary assessment of underground mining oil the property. Peter Cain Ph.D., P.Eng. ; and Alan Craven, P.Eng. are the Qualified Persons who prepared the report. The report indicates that the Raven Property warrants additional exploration and a feasibility study to form the basis of a production decision. The Company is currently looking for a partner to assist in developing the property and plans on completing an environmental assessment and a mining feasibility study in 2008 with the objective of opening a mine capable of producing between 800,000 and 1,400,000 clean tonnes of coal per year by the end of 2010. Reclamation of the drill holes from the 2006 exploration program was completed during the quarter. A total of $87,476 of expenditures on the property was deferred in the quarter.

Well this does have potential I suppose....but this is not a mine yet. In fairness since that report there has been an announcement that they have found such a partner in Feb 1,2008.

http://www.complianceenergy.com/news...EC_release.pdf

I won't reproduce this document but suffice it to say that this project is not necessarily a "go" yet....the Memorandum of Understanding (MOU)provides for a DUE DILIGENCE period to May 31, 2008 on the part of their new partner, ITOCHU Corporation. Then if it is a go then the environmental assessment will start....no one spends $3.0 million on this and the feasibility study until the DD has been completed.

Technical Analysis

A look at the SharpChart is interesting:

CEC.V - SharpCharts from StockCharts.com

Interesting....the share price spiked at the announcement of the MOU with ITOCHU corporation. that is understandable. The share has risen sharply again starting April 1 and spiking on the 17th.

Look at the Accum/dist chart for the past 2 days....there is a huge sell-off/profit taking here.....curiously timed to this announcement of a great play.

The RSI is overbought so the share price is due to fall when I see it combined with the Accum/dist. The rest of the chart does not look bad.

The P&F chart is as follows



You can see that this does have possibilities. But the stock is butt up against a resistance line at $0.35....It has to move beyond this point before one can say it is a go...

So there you have it ..... my DD on this stock.

For me, I think there is at least a pullback involved here at the least. Personally I would wait for the May 31,2008 acceptance of the DD done by the Japanese company. Even then...having a producing mine in 2010 is optimistic at best...the environmental assessment takes a few months to a year alone.

But that is my take....I would rather wait and see, personally...you may feel otherwise

[cdnxtracker]

The May 31st deadline has attracted many speculative investors, waiting for the anticipated run-up with the Raven coal project announcement - for which some think could exceed $1.00 per share (?).

The Basin mine could be re-opened due to the recent increased price of coal.

The BC government could grant the decision on the Princeton Power Project - releasing phase one bioenergy power call details.

The approx $5 million worth of shares of Copper Mountain Mining held by CEC could appreciate ? - Both the 50 and 200 day Moving Averages are well below present share value. Copper Mountain indicates a new high grade zone of mineralization + an agressive exploration and development plan for the coming year.
Copper Mountain Mining | Chart
2.130
0.000
0.00%
Vol: -
Last Trade: Apr 30, 2008 15:57:25 EDT




The LOW risk vs. HIGH reward for CEC is compelling, as compared to other market investment choices.

[Naamplao]

The interest in this stock has certainly driven up the price. Perhaps I was wrong in my initial assessment. It is probably due to expectations of a favourable announcement on the Raven Coal Project at the end of May.

Looking at the sharpChart we see the Accum/Dist has sharply reversed its selloff and the share price is rising nicely for the time being.

CEC.V - SharpCharts from StockCharts.com

Here is the P&F chart



We passed the $0.34 resistance and now have closed slightly above the resistance at $0.48

I would think looking at the chart that the price may continue up but there is no new news releases so I presume this is all speculation leading to the May 31 deadline. For long term I'd wait for that decision...but that is me...

[cdnxtracker]

Yup. This has been a very impressive run and I would suspect that
we may even see this gap back up to .54cts tomorrow on open or
above. The Raven property JV deal looks like a sure bet now judging
by the volume and buying of late. I still think that if we see this deal
close we get $1.00+ in short order.

[ProStar]

I really like CEC; once they get their Raven Coal property going they are going to see higher highs... I also like two of these coal stocks too Jet Gold JAU-X and Cline Resources CMK-T; juniors breaking through their resistence and moving up as of speak...

[cdnxtracker]

Time will tell if this Raven property gets it's nod
from the much larger players. I took some off of
the table just because it is very speculative and
we are nearing closer to the May 31 deadline. I
was hoping that we would have heard something
before then but they may wait until the last minute
to make the announcement. To scary for me, so I will
sit with my free shares and buy more after if the deal closes.