gold gold gold, page-19

Hi t4p...

Thanks for your posts. You ask the question re whether the company can really be worth $600m.

There have been a few discussion threads previously re value. They are starting to dry up with the excitement of the moment, but it is worth recapping.

Fergus has been one of the more rigorous (but copping flack from some quarters at times for not having enough vision!!). I've tried to add a bit, along with a few other armchair techheads.

Corridor Sands is probably the main play on everyone's minds at the minute. The WMC feasibility design had a plant starting at around 300,000t/a, increasing to 1Mt/a by Year 12. It is obviously a big deposit. BHP is saying that "developments" over the past year have meant that they now intend to focus on Corridor Sands. Considering the relationship between APG and BHP Titanium over the same time period, many of us read "developments" to include APG technology.

If we only look at Corridor Sands (though there are plenty of other components of value in the APG suite!), and assume a 15:1 P/E ratio, BHP need only save at least $40-50m per year over alternative processes to support that sort of share price. The metallized iron alone that they get from the process as a bypoduct gets to that sort of value. The iron oxide would otherwise be discarded.

It is hard for us to calculate a reasonable SP from BHP's perspective with rigor, not having all of their cost structures. However IMO, $1 SP is not an unreasonable ultimate ballpark should they wish to use it for Corridor Sands.