laf is probably appropriately priced

These are the issues as I see them:-

Risks:-
• Highly Unstable Political environment
• Lack of broad community support for any mining in the Philippines
• Strong Anti-Foreign ownership feeling
• Corruption at almost very level of government
• LAF management has lost creditability for not employing a politically connected local business identity before the spill occurred to ensure that should any hiccups occur did not generate a life of there own – Not saying the current problem was avoidable but obviously it could have been handled better in the first 60days
• The existing facility has never operated at name plate capacity and therefore operational risks still exists
• The whole mining industry has experience cost escalation over the last 6months and PNA will not be immune and therefore a new cash cost projection will need to be provided to shareholders once the mine is operational
• One of the biggest single risks is the short dated hedge book, with a market experience strong backwardation
• Zinc market is showing some initial signs of weakness due to Chinese exports
• I believe the hedge covers more than 50% of the production and should the plant not achieve 80%+ of nameplate production there might be initial cash flow problems
• Further Capital raisings

Positives:-

• Strong market for zinc, copper and gold
• Top class plant and machinery
• The successful recommencement of mining operations at Rapu Rapu is a political and economic imperative for the Philippine government and economy but don't rule out an irrational decision
• Once the hedge book and initial uncertainty is reduced over the next 12months the stock should look comparatively cheap at these levels

Short term catalysts:-

• Official approval to recommence mining operations
• At least one quarter of productions at 85%+ of nameplate capacity
• No additional balance sheet surprises in the 30 June 06 accounts
• Details on cash cost and free cash flow projections from management
• Reduction in Hedge book through delivery of product

What does all the above mean, I own LAF stock (9.9cents) and I believe that at these prices there is some value but HIGH risk as there are very significant risks that remain and the share price may not rally in the short term when the final approval to recommence operations is given.

I personally believe PNA @30cents is probably a better bet (I also own PNA stock).

What say you?

The above lists are not exhaustive and you should conduct your own research and seek professional advise before purchasing any of these stocks.