Hatleys latest 60c, page-8

Hi Plext,

They have a NAV of 54c and a price target of 60c. I guess what that means is that they do a DCF on a set of commodity price assumptions and work out a theoretical value. That is 54c. Then they dream up a price they think the stock will be in 12 months. That could include such variables as: some best guess at what sort of exploration success might also get factored into the price; some guess at how quickly the market will recognise the inherent value in the stock; some fudge factor for how the SP of other stocks in the sector are related to their DCF valuations. To say that it's more art than science is being very generous.

For me the interesting calculation is that using a fairly rigorous process of defined resources being mined according to a certain mine plan with a certain grade under certain assumptions about costs and commodity prices, and then performing the same calculations using the same assumptions but with spot prices for commodities instead of Hartley's forecasted commodity prices that the value of the company improves by 50%. I guess as an investor you have to decide whether you think spot prices are a better guess at the future commodity price or Hartley's forecasts.

Cheers,
Tim.