Ann: PFS reveals Australia's largest undevelo, page-10

re: Ann: PFS reveals Australia's largest ... Very simple maths...

About 195m shares currently on issue (fully diluted ignoring the $3 options)...

Some $65m in the bank (after options ex)...I expect this will see them through the pre-development spend...

About $900m needed for cap-ex and contingency/working cap...

Assume they debt-fund $400m...

Assume they issue $500m at 80c (625m shares)...

With hard work, effort and some luck they will end up with about $270m pre-tax income, some 820m shares on issue and $400m of debt to service.

With interest, the debt will take 2 years to pay-down (so lets assume no diviends in this period for a quick pay-out)...so first dividends expected 2018.

After royalties and the tax mans cut, the dividend is looking about 22cps from 2018 (820m shares). Some tax credits in there will increase this in the initial years.

Given tthe longevity of the project (15 years), we can assume the market may apply a PE of 15...so expect a share price of $3.30 in 6 years time, based on long-term dividends (again, may be higher in initial years due to tax credits).

Apply a 10% DCF to $3.30 in 6 years time...and it is worth about $1.86 today.

Apply risk (I suggest 25% for project, 25% for time this far out from production - but really, pick a number?) and current levels look about right...perhaps with some room to move slightly to the upside pre funding argy-bargy.

There are a million ways you could skin this cat...no debt, more debt, upscale, downscale, JV, reduce to free-carry...or sell.

Fewer headaches and stress if you simply sell...but you would have to leave a lot for the next guy in such a scenario.

If they could somehow put away the money around $1, the financial dynamics improve somewhat...but they have a big job ahead of them.

I really hope they manage to get this one up...it would be a nice project, and good for the state. I also hope shareholders get to enjoy some rewards from it all.

Cheers!