buy recommendation issued. target $0.07, page-40

Hi Maddoc,

The price I mentioned is their assumption of price for medium grade. I think the blended price Vertias uses for revenue forecasts is higher.

A few more interesting things of note from the report:

1. For Namekara, 59% of the deposit is comprised of +2.00mm diameter crystals (which Veritas defines as the cut-off for premium grades).

2. The report assumed 18ktpa of vermiculite by Dec 2011 (which effectively got delayed till the current quarter as mentioned in the last quarterly).

Vertias does mention the possibility of an increase in production to 30ktpa by June 2011, but has not incorporated this assumption in its forecast (the last quarterly suggests this increase will come through). Veritas' production forecasts (in ktpa) are:

2011e 15.4
2012e 39.4
2013e 63.4
2014e 87.0
2015e 110.5

Vertias assumes a full capacity of 115ktpa by 2014. The November presentation suggests production will be 130k by 2013.

3. While the numbers above suggest Vertias is relatively conservative with regards to production capacity, the report does not incorporate the increase in shares after October (when the report was published). So that will obviously have a downward impact on EPS and possibly the Target Price.

Asjad