abn morning monitor

Extract from ABN Morning Monitor posts BUY Rating for IRN

Indophil Resources (IRN, $0.465) Buy
IRN's interest in the Tampakan copper-gold project is valued at A$1.41 per share. It is trading at this
discount because of the complicated joint venture with partner Xstrata plc. The question is, "how much
value can IRN extract from Tampakan?" Sagittarius Mines holds the FTAA covering Tampakan – a
resource of 12.8Mt of copper and 15.2Moz of gold – on Mindanao, the Philippines. Xstrata plc, a major
diversified mining group, holds a 62.5% interest in Sagittarius. Indophil holds 34.23% and is acquiring
the balance of 3.27% from the Alsons Group, an affiliate of the Alcantara and Dominguez families, both
with strong commercial interests in Mindanao, and an IRN shareholder. Xstrata offered A$1.00/IRN
share in May 2008. In June a competing offer of A$1.28 was made by a consortium including the Alsons
Group. Subsequently Xstrata raised its bid to A$1.28, but this bid lapsed. Soon after Xstrata moved to a
19.9% holding, which prevented the competing bid reaching its minimum acceptance level (90%). In
November, shareholders voted overwhelmingly to give the IRN board the right to sell its interest in
Sagittarius. Xstrata claims to hold the marketing rights for Tampakan’s output, while IRN claims the right
to market its share of concentrate. This is a critical value point for any potential acquirer of IRN, or its
holding in Sagittarius. It remains untested in the courts.