nowhere near overvalued, page-5

Also forgot to post this data from Westpac...

CBH Resources Limited (CBH)

Valuation and earnings updated

Recommendation 18/12/2007: Buy

Investment Rating
CBH owns the Endeavor zinc/lead mine near Cobar in NSW with annual capacity of 65kt of zinc and 35kt of lead in concentrates. Reserves support over 15 years, with potential for life extensions. The Panorama opencut in WA is set to start in FY10 with 20ktpa of copper and 50ktpa of zinc for at least seven years. Output of 30ktpa of zinc and 25ktpa of lead is expected from the Rasp mine in Broken Hill from mid 2008. Management aims to mould CBH into a mid tier miner via acquisitions and organic growth. The balance sheet is sound with over $200m net cash - excluding convertible notes, sufficient to fund growth. CBH is a relatively high cost producer so an understanding of commodity price risk is needed.


Event

We update our valuation and earnings for short term commodity forecast changes. Assumptions are as per the table. Please see the Commodities Special for full details.

Full Event Analysis

Impact

Our valuation rises 3% to $0.74 a share benefiting from higher silver and gold prices.

Forecast FY08 NPAT falls 12% to $28.5m with short term softness in zinc prices. Our FY09 NPAT forecast 9% to $55.0m benefiting from increased gold and silver prices.

Date Description Price Recommendation
18/12/2007 Valuation and earnings updated $ 0.52 Buy
26/11/2007 Potential for corporate action? $ 0.56 Buy
08/10/2007 Commodity Prices Upgraded $ 0.52 Speculative Buy
30/08/2007 Disappointing FY07 $ 0.54 Accumulate
09/07/2007 Upgrade after commodity price review $ 0.59 Buy
28/06/2007 Upgrade due to price change. $ 0.55 Buy
18/06/2007 Downgrade due to price change. $ 0.62 Accumulate
01/06/2007 Upgrade to Buy $ 0.56 Buy