how low will it go, page-6

LHG is sitting on a huge gold resource, second only to NCM in terms of Australian gold companies. In addition the company is a high cost producer. These are the two main ingredients for share price leverage in a rising gold price environment. For ardent gold bulls with no risk aversion, LHG could be viewed as an attractive option on the gold price. For everyone else we downgrade our recommendation to sell. Based largely on the published proven and probable reserve, we derive an NPV valuation for LHG of US$0.39ps or A$0.55ps.