anyone follow?, page-23

re: anyone follow? sally will & dnatron Hi Dnatron & Sally Will

Check out the Anacondas web site: www.anaconda.com.au

See also www.aer.com.au/asp/login.asp - you will need to log in. An interesting read. Aegis provides research to institutional investors and most brokers.
Aegis has a ‘hold’ rating on Anaconda.

Clearly the institutions have been waiting for a resolution to the Takeovers Panel decisions before having a punt on ANL, if only for exposure to the nickel price and some upside in relation to Phase 2 of the Fluor Daniel arbitration which is due to commence in Septmber. Given previous court cases it is estimated the settlement to be in the order of A$100m or so, worth around 8c per share..

Both Euroz and Aegis have applied a heavy production risk discount to their valuations (which is understandable given the historic performance of the Murrin Murrin plant). The key point to make about Anaconda is that the Company is now focused solely on Murrin Murrin, and is financially sound.

The capital program is the key to unlocking the value of Murrin Murrin, and restoring much-needed credibility into the nickel laterite industry.

Yes, Heron has large tenement holdings, as do a number of other juniors, and they all have one thing in common. Only one possible buyer for their laterite ore is Anaconda.

However, Anaconda has sufficient high grade ore in its own reserves to continue operating on its own for many, many years. The talk of Anaconda doing a deal to acquire ore is by those who have a vested interest in seeing it happen.

When talking about laterite ore, the difference between high grade and low grade ore is marginal to the process employed at Murrin Murrin, as most laterite ore is low grade by its very nature.

The extinguishment of most of the debt following the successful rights issue has dramatically improved Anaconda’s gearing.

While Anaconda’s operations have improved and the balance sheet is now stronger, there are still some questions remaining causing investors to exercise caution. Many of these questions are in the process of being addressed through the capital program and the fix ups.

GMR values the share price at 10c. The risk factor of 6c applied by the stock market is appropriate at this stage, but could quickly reduce when operations improve.

Anaconda is acutely aware of the reputation it has acquired for "over-promising & under-delivering" in the past. In counteraction it is probable that the CEO, Peter Johnson, has been conditioning the market to expect a modest outcome from the repair work at Murrin Murrin, leaving room for him to deliver an upside surprise”

The plant needs 30,000 tonnes annual through put to break even. It is expected the plant will be running at a capacity of 40,000 tonnes early 2004. However, with the present through put the price of nickel is delivering a stronger cash flow than expected.

Profits are expected to turn positive in the coming year and again higher in 2004/2005 mostly as a result of plant capacity improving and unit costs falling.

Buy: speculative – expect price to improve with increase in production.

Caveat: do your own research!

Regards for now

Drafthorse