$us800m mine - free carry - what's it worth

Nkwe and Xstrata are currently in the process of finalising a Bankable Feasibility Study (“BFS”) over the Bushveld Properties and have already delineated a significant resource base of around 70 million PGM ounces, with an independently assessed target mineralisation base of approximately 100 million PGM ounces.

The five farm properties comprising the Project have the potential to achieve an annualised production of one million PGM ounces with a mine life of in excess of 75 years.

On exercise of the Option, Xstrata will acquire a 50% participation interest in the Properties and Nkwe will own the remaining 50%.

The joint venture will develop the Properties, and will undertake a further feasibility study into downstream processing in order to develop an integrated mine to market business.

Following the exercise of the Option, Xstrata will completely fund the total development costs of the Properties from mining through to concentrating.

From start up to steady state production the costs associated with the mine development are expected to be around $US800,000,000.

Theoretically, and setting aside any market consideration in determining the MCAP of Nkwe based on the PGM resource it controls, what is the value that should be reflected in the company's share price for the free carry associated with the development and "joint ownership" of such significant mining infrastructure on the property when the Option is exercised?


Stagman