india nre delayed, page-9

Multi

The reasons why the India NRE listing should affect GUJ is simple: If India lists at say; 50, 60, or 70 cents .... it will clearly show GUJ as being a bargain! Then why would anyone buy 10k of INR for say $6000 when thy can buy 10k of GUJ for nearly HALF the price & get basically the same intrinsic value!!!!!

Why is that? ... Well I have copied some analysis below that comes courtesy of an earlier post by T4P:
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"Collectively, our (GUJ's) new combined project (Avondale-Elouera) sits on some 125mt of proved and probable reserves (27mt-Elouera + 98mt-Avondale), with significant inferred upside and immediate production capacity of 1mtpa from Elouera (future capacity of 2.5mtpa?) and the bringing forward of the Avondale project plans for a 1.5mtpa operation.

This suggests a total production capacity in just 2-3 years of some 4mtpa, with current capacity of 1mpta.

This provides a very favorable comparison to several of their peers, namely the recently listed WHC and of course the parent company's current IPO for the NRE No.1 Colliery (INR)

WHC listed on Friday, so provides a very current comparison...
Current market cap = $550m
Reserves = 113mt (proved & probable)
Resource = 512mt (inferred)
Current production = 1.5mtpa
Projected production = 6.9mtps (by 2010)

The NRE No.1 Colliery IPO (INR)
Current market cap = $250m (at listing value of 50 cents)
Reserves = 35mt (proved & probable)
Resource = 324mt (inferred)
Current production = 0.5mtpa
Projected production = 3mtpa (by 2010)

GUJ...
Current market cap (35.5c) = $135m (fully diluted)
Reserves = 125mt (proved & probable)
Resource = 241mt (inferred)
Current production = 1mtpa
Projected production = 4mtpa (by 2009?)

GUJ seems to be a little smaller than WHC, but perhaps not far behind, whilst clearly larger than the new IPO...which should put the GUJ market cap somewhere between $250m - $550m.

The halfway mark is $400m

Lets not forget however GUJ also has a fairly decent resources portfolio, including precious and base metals, iron and of course more coal in Tasmania...perhaps worthy of supporting at least $30m of value on their own?

So...it would seem at a fair assessment that GUJ, once it gets over the current seeding approach, to carry a market cap close to $420m

Current shares on issue = 380m (fully diluted) The above market cap would give us at least $1.10 per share.

Assuming as a worse case scenario that the parent company issues itself shares to cover the Elouera purchase, say 140m shares @ 35c, we still get a fully diluted share price of some 80c per share.

Alternatively, if they encourage early options conversion with a subsequent $34m injection of funds, they might only need to issue themselves some 40m shares, which would result in a fully diluted share price of some $1 per share.

Assuming however they need to add a sweetener to get options converted, say a 1 for 3 free additional option with say a 50c exercise price, then we get a fully diluted share price of some 88c.

So, from worst case to best case scenario, we get the following potential CURRENT share values as referenced from their peers...

$0.80
$0.88
$1.00
$1.10

Of course, the drilling of Cethana, if successful, would be capable of these sorts of numbers on its own...but I guess that's the upside?"

So do the math .... GUJ is undervalued, has few shares on offer, and soon will have an identical twin-sister company trading next to her to offer direct investment comparisons. It will be very interesting indeed.

As has been mentioned, what is holder her back are some unanswered questions on funds to make the Elouera purchase ...

cheers