fair value, page-11

I lifted this comparison from a recent ROX preso. data is as per April 6th. The chart shows how many $$ per tonne the Australian market values different zinc plays at. Obviously you get extra points for being a producer. On this basis ROX was well undervalued but of course on the 6th April there was still the issue of the ongoing fees payable to RIO. That fee is now a non issue but we have had 8% dilution to achieve that outcome.

So....on 6th April RXL traded between 2 - 2.2c for a 2.9 $$/tonne value.

diluting 8% for the RIO stake (using 2c) 2 x 100/108 = 1.85c.

now with the RIO issue put to bed RXL is free to rise to a comparible value to it's peers. The chart below notes that 8.9 $$/tonne is the average of the 5 lowest valued peers. If RXL could reach that then :

1.85 x 8.9/2.9 = (close enough to) 5.7c and given RXL had a top price of 2.2c on april 6 then I can make a case that RXL currently deserves a trading range of 5.7 to 6.2c.....and I use the term "deserves" very loosely. This current market is a very hard marker indeed. Three years ago a stock at this stage may be valued at more like $1/share .....but that is the current market for you and the market is never wrong.

Still the positives are :

* RXL has room to easily double from current levels without doing anything.
* improved market conditions down the track could lead to greatly improved assessment of value by the market
* The biggest point is the massive exploration upside potential. Not only would finding a high grade mother load add value via the 8.9 formula but then the RXL asset would become highly sort after by big players thus attracting a premium as per the more highly valued peers on the chart.

So lets say RXL increased their Jorc by 2.5 fold and on that basis the market revalued it to, lets say, a Prairie downs equivalent then

5.7 x 2.5 x 25.6/8.9 = 41c .....maybe closer to 80c if it got a argonaut type rerating. Of course all this has not allowed for further capital raisings.....but it may still provide us with some guidlines for future SP appreciation.