set for move past 4.50

Broker Reports Below;
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I still think people should consider this company cheap below $5, it has huge potential...i guess being outside of australia, there is that remote sovereign risk, but if anyone looks into it Zambia really is stable and has been for a long long time.

Im holding for the long term and i have tended to trade more in the past.

EQN agin $4.30 key level-Report inside read now

There have been some positive recent announcements:

Investors & Traders are beginning to see potential

-Ndola West 26/6 High grade copper intercepts
-29/6 Appointment experienced Non-ExecChairman P.Tomsett- Excellent Management
-2/7 US $45 MFund facility approved
-12/6 New discovery @ kanga Copper & Uranium
Positive broker/research reports they have a massive amount of copper #16 mine in the world with possibly further deposits and uranium finds.
Cost is low, yes some sovereign risk though zambia is stable, potential PER are so low, that if things fall into plac in the next year share price could go up 4-5 fold easily. Im conservative and $6.50 within 12 mths :)
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Credit Suisse, BBY and GSJBW have target prices for EQN of $5+ dollars, with CSF noting that if the forward curve for copper is employed in valuations, $6.10. There is still significant upside if one assumes a uranium circuit (BFS is curently underway). Lumwana also is an extraordinary asset with a life over 37 years and simple metallurgy. There's upside just from optimising what's already been found.

EQN is developing the 100% owned Lumwana project in the Zambian Copperbelt. Lumwana is one of the world’s largest undeveloped copper deposits. Resources include 6.3Mt of copper and 21.9Mlbs of uranium worth over A$60bn in-ground at spot prices. Lumwana should produce an average of 120,000tpa of copper over a 37 year mine life with a higher average of 169,000tpa in the first six years from mid 2008. EQN is a high risk/high return copper play with development and exploration upside. Liquidity, construction and commodity price risk require consideration. Sovereign risk is tangible.
Event
02-Apr-2007

The recently released 2006 annual report shows construction at Lumwana is hitting its straps. Trucks and shovels have arrived for on site assembly with mining to begin in April. Crusher and mill foundations advance with key components either in transit or delivered. EQN says construction is on schedule and budget. First copper is expected mid 2008, just over a year from now. The equity component of project finance was completed in March 2007 with A$232m raised from the issue of 105.6m shares priced at A$2.20ps. The shares include 26.4m free attaching warrants exercisable at approximately A$2.65 a share. Diluted capital increases by 28% to 602.7m. EQN will have a busy 2007 exploration season with US$5m budgeted. Half will be spent on near mine prospects with the remainder on greenfields opportunities. Extending the high grade Malundwe deposit is top priority.

Business Impact: Issue of new shares and options below our previous $2.70 valuation has a negative impact of 9c. This is more than offset by increasing our uranium valuation from 8c a share to 21c a share or A$130m. Our valuation rises 5c to $2.75 a share. Long term assumptions of US$1.75/lb copper, an A$/US$ exchange rate of 0.76 and a 13% discount rate for sovereign and development risk remain. We continue to conservatively assume no value will be captured from by-product credits and ignore potential for throughput rates to increase by 10%. Incremental production would be low cost. No value is included for exploration upside.

Forecast Impact: --

Recommendation Impact: We maintain our Speculative Buy recommendation. As a large prospective open cut miner, EQN is highly leveraged to copper. Prospective low single digit forward multiples attract. Leveraged mining investments are not suitable for conservative investors and Zambia carries sovereign risk. Upping our discount rate to 15% would lower the valuation to $2.40 a share.
Event Analysis

A picture tells a thousand words. The recently released 2006 annual report shows construction at Lumwana is hitting its straps. Trucks and shovels have arrived for on site assembly with mining to begin in April. Crusher and mill foundations advance with key components either in transit or delivered. EQN says construction is on schedule and budget. First copper is expected mid 2008, just over a year from now. The equity component of project finance was completed in March 2007 with A$232m raised from the issue of 105.6m shares priced at A$2.20ps. The shares include 26.4m free attaching warrants exercisable at approximately A$2.65 a share. Diluted capital increases by 28% to 602.7m. Issue of new shares and options below our previous $2.70 valuation has a negative impact of 9c. This is more than offset by increasing our uranium valuation from 8c a share to 21c a share or A$130m. Our valuation rises 5c to $2.75 a share. Long term assumptions of US$1.75/lb copper, an A$/US$ exchange rate of 0.76 and a 13% discount rate for sovereign and development risk remain. We continue to conservatively assume no value will be captured from by-product credits and ignore potential for throughput rates to increase by 10%. Incremental production would be low cost. No value is included for exploration upside. EQN will have a busy 2007 with US$5m budgeted. Half will be spent on near mine prospects with the remainder on greenfields opportunities. Extending the high grade Malundwe deposit is top priority. We maintain our Speculative Buy recommendation. As a large prospective open cut miner, EQN is highly leveraged to copper. Prospective low single digit forward multiples attract. Leveraged mining investments are not suitable for conservative investors and Zambia carries sovereign risk. Upping our discount rate to 15% would lower the valuation to $2.40 a share. Cash costs should be close to the October technical report estimate of US$0.78/lb for the first six years. A number of mining companies have said cost pressures are easing. Oil has been reasonably well behaved in the last six months and a number of key costs like electricity are under long term contract. Smelter charges have moved well in favour of the miners. Our current copper forecasts are approximately 13% below the futures curve. Adopting the futures curve would up our valuation 15% to $3.15. With debt drawdown set for June/July, hedging will need to finalise soon. Current copper strength provides an opportunity to hedge at favourable prices. As our forecasts are below the futures curve, hedging may marginally add to our valuation. Another debt pre-requisite is smelter offtake. The Chambishi copper smelter has committed to take approximately 55% of the first five year’s output. Political risk insurance for the various loans is either in place or will be prior to drawdown. EQN kicked off a uranium bankable feasibility study last week. A 2003 study found economics were marginal but prices have since skyrocketed and a significantly better outcome is expected this time. Completion is set for year end. We previously attributed a nominal $50m for uranium. Our new $130m uranium valuation is based on a discounted cash flow model of 1.5Mlbs a year for 12 years from 2009. Assumptions of US$75m for capex, US$30/lb cash operating costs, US$75/lb uranium, an A$/US$ exchange rate of 0.76 and a 13% discount rate yield $260m. We apply a 50% risk weighting. Market valuations for uranium companies are significantly higher. Management is exploring the possibility of releasing this value including a possible spin out. The main cloud on the horizon is political risk. The Zambian government is making noises for a larger slice of the pie through higher corporate taxes, royalties and potentially a withholding tax. EQN is confident its stability agreement, which sets the terms for the first 10 years at Lumwana, is legally binding. The deal secures royalties of 0.6% and a 25% corporate tax rate. The government would like to lift these rates to 3% and 30% respectively. We already assume a 3% royalty. Increasing the corporate tax rate to 30% would reduce our valuation 7% to $2.55 a share. Foreign investment would be significantly dented if a withholding tax was implemented. Investment is crucial. The unemployment rate in Zambia is 50%! Note: The Author personally holds shares in EQN
Sensitivities (+/-10%) FY08 EPS FY09 EPS Valuation
Copper Price +/- 6.3c +/- 12.3c +/- 57.1cps
A$:US$ Exchange Rate -/+ 3.0c -/+ 7.3c -/+ 27.8cps
Discount Rate (+/- 1.3%) n/a n/a -/+ 25.8cps