prow - please challenge this, page-2

Samgribbles challenge.
Rating valuation methods
If you look at values given to all the better established coal companies, eg Baralaba, Emerald, Yamala and New Saraji, to mention just a few of the very many, they are all based on cash paid to get a share of the action. Behind these values the buyers will have done their PEMs and FEMs and NPVs where applicable, and I expect this is the case when Bowen purchased EPC1045 and 930 but it is the cash paid that is the ultimate determination of value.

The real estate method is similar in that it uses the cash value of a nearby tenement but it is less accurate as it makes assumptions on continuity of coal seams that may prove to be quite wrong.

Similarly, and no more accurate than the real estate method, is using multiples of exploration expenditure. Again, this introduces the subjective element. What is relevant past expenditure? How to you sort wasted effort from genuine useful work to get a figure and then how do you rate this with a PEM factor? For example, did the $2.5M spent on EPC 1045 add value or not. The ITE considered that the work had largely written off much of the tenement but there was one hot spot which was in the process of evaluation.

My own personal view is that there has not been enough value added to any of the project areas for a valuation to be of much encouragement. It is too early. Once the seam analysis has been completed and correlations determined, which surely can’t be far away as the preliminary drilling is nearly complete, then the situation can change dramatically. If the results are positive, then metrics can be used based on a possible Resources being found and the share price can respond accordingly, no new valuation required.