scoping study due in june some fundamentals

GBE
56.4 Mt multi-commodity JORC resource (1,500ppm Nb2O5 cut-off), approximately 25%, 14.1 Mt, is high-grade (3,000ppm Nb2O5 cut-off), the majority of which is at or near surface.

Metal (Mlbs) Metal(tonnes) Grade(ppm) Metal(Mlbs) Metal(tonnes) Grade(ppm)
Nb2O5... 320.7 .... 145,500..... 2,600...... 115.7........ 52,500............ 3,700

Nb2O5 current price US $10 -$12 lb

Grade of Concentrate Total Metal Recovered
Nb2O5 23.90% 72.2%


Resource Stocks Magazine said this month: "David Sumich said there was potential for a 20-year mine life with a throughput of 1.5 million tonnes a year for the first 10 years with annual niobium production of 9.2 million pounds at metal recovery of about 75%".

Revenue at US$10lb = $92M annually.

I have guessed costs of 0.37% grade = $3 lb based on:

(a)Open-cut copper at 1% usually costs around $1 lb.

(b) Underground Nb2O5 mine at 6,600ppm near GBE had cost of $2 lb in 2007. Open cut is cheaper albeit GBE grounds lower.

Gross margin on $10lb = $7 lb. Gross margin on $12lb = $9 lb. EBITDA = $64M to $83M. Interest = $4M Depreciation = $4M

NPAT = $38M to $50M.

I phoned GBE who said CAPEX is not overly complex. I have guessed $80M for 1.5M tonnes of ore a year. For example, CUO spent $80M for around 2.2M tonnes of ore a year at grade 0.84%.

50% financing requires 50M more shares @ 80 cents a share.
Current shares and options 70M . Total shares when producing could be 120M.

EPS = 32 cents to 42 cents EPS. On PE ratio of 8 equals $2.56 to $3.40 share price value.

Plus GBE have found uranium and are looking to prove up more uranium.

GBE advised me by phone BFS should be starting by 2nd quarter 2009 and hopefully production in 2nd quarter 2010.

That is two years away for mine commissioning.

Current price is 40 cents. Multibagger over two years.

If scoping study matches my guesses, could run to 60 cents+ in June.

I bought yesterday at 37 cents.