A while back I did some calculations on ERA to try and work out what EXT might be worth if and when it went into production.
According to ERA's Annual Statement of Reserves & Resources in January 09, Ranger had Reserves of 88Mlbs and an additional Resources of 230Mlbs, while Jabiluka had Reserves of 135Mlbs and an additional Resource of 148Mlbs. Giving a total Resource and Reserves of ~600Mlbs.
ERA are currently only mining at Ranger, Jabiluka is under environmental care and maintain.
According to ERA's Half-Year Results 2009, Ranger produced ~5.4Mlbs during the 6mths to June 09 for an EBIT profit of A$176 million (based on U308 sale price of US$48lb). A similar production rate was expected for the second half of 2009, which would make a total annual production of ~11Mlbs and a EBIT of ~$A350 million.
The above profit is being achieved with an average sale price of only US$48/lb, due to old long term price contracts. Current long term contract pricing is ~$US60-65/lb.
Also I would expect EXT's final production cost to be much lower than ERA's, which would increase profits even further.
ERA's current market cap is ~ A$4.45 Billion.
EXT's recently released Scoping Study had an estimated production rate of 14.8Mlbs per annum based on a resource of ~300Mlbs.
If we can speculate that EXT will have a resource of at least 600Mlbs, with the possibility of up to 1Blbs. This could increase the production rate to well over 30Mlbs per annum.
With EXT's current market cap of ~A$1.87 Billion, it looks very clear to me there is still much greater upside potential!
Regards
Steve
EXT Price at posting:
$7.77 Sentiment: LT Buy Disclosure: Held
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