valuation discussion thread, page-3

Valuation and risks ABN Amro.
93c $1 target.

Our total risked valuation is A$0.93 per AGM share using our revised exchange rates
and commodity prices, dominated by a long-term nickel price projection of
US$6.00/lb. Using a consensus long-term nickel price of US$7.75/lb generates a
value of A$1.13 per AGM share. The processing plant is yet to be completed, and
there remains potential for cost overruns and a delay in commissioning. As always,
there is risk in operating an underground mine in terms of both production rates
(tonnage and grade) and costs per tonne for capital development and production.
Risk also attaches to commodity prices and exchange rates.
We have revised our target price to A$1.00 per AGM share, in line with the Zinifex bid
price. Key risks to our target price stem from mill construction and commissioning
not proceeding as expected, unexpected capital cost increases, and the operation of
an underground mine in terms of fluctuations in production rates (tonnage and
grade) and costs per tonne of production. There is also upside/downside risk from
fluctuations in commodity prices.