dear prow,

****** Prow: “Book value -- Check the AusIMM “Valmin 94 Symposium”, Bruce, Clarke and Bucknell: “book value is not used by companies determining value”. No self respecting valuer would use it. ******

That’s right. The final value should in fact be larger than Book value – not determined by it. The book value in this instance should have acted like a “floor”

The fact that the IER concluded a price less than half of book-value surprised me also – “no self respecting valuer” would have let this happen. Amongst other things, no reasonable “expert” would base the value of Bowen’s entire portfolio of coal projects, on one single acquisition done several years ago which was not at arms length

Thank goodness there are real experts out there who spotted this and formally complained to both ASIC and the Panel, or shareholders would be much worse off
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******Prow: “Subscription Agreement. This would have been useful if it had happened.” ******

This was actually rejected due to a shareholder threatening legal action – it wasn’t rejected because Bhushan wanted out – or it would have happened. You may want to note that while it subsequently did not purchase stock under this agreement, Bhushan did acquire BWN stock at 32c, and saw this as fair value at the time. They also exercised options (this costs 20c, a 43% premium to their takeover offer)
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****** Prow: “Multipliers in the hands of different experts lead to widely varying values by their very nature.” ******

All the more reason to get a second opinion, don’t you think?
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****** Prow: ”Put Option. Unfortunately this option is not protected for inflation and after 5 years at 7%, which is probably the minimum time to drill a Resource out to Indicated status, it is only worth 70c/t, not $1. Consider the scenario where Bowen drills to Inferred Resource status but then decides there are better projects to develop via JVs with other companies. The effect on the share price will probably be quite negative as the shareholders get nothing until maybe 10 or 15 years later when or if the drilling is ever completed. By this time the coal might be worth $150/t or more but the shareholders will get 50c or less for their 10-15% interest. If you allow for the opportunity cost lost in the put and call option it might almost be considered a liability rather than an asset. “ ******

You’re absolutely right. This isn’t the best deal going around, and no one is disputing THAT.

But it still represents value to Bowen. No one can change the fact that it’s been signed. All we can do is take into account its value (no matter how big or how little that is) – THE FACT THAT THE I.E.R FAILED TO TAKE INTO ACCOUNT ANY PART OF THE JV, ESSENTIALLY SUGGESTED THAT BOWEN SOLD A SUBSTANTIAL INTEREST IN THESE PROJECTS FOR NOTHING –

Bowen is FREE-CARRIED to production in these projects– money will be pumped in – millions of dollars will be spent on exploration and millions again on feasibility, by Bhushan – Given that the total fair value was concluded to be around the 3-5c mark, I think you can appreciate that this amount of money will have a SIGNIFICANT impact on the overall valuation (no matter how great or poor you think the quality of the deal is, this you cannot deny)
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****** Prow:”Bowen shares are purely speculative and to believe that a valuer’s figure at this stage is going to change or reflect the long term future is unrealistic.” ******

I trust your shares have found their way into the hands of someone who has a more optimistic outlook for Bowen Energy

I would suggest that by virtue of the involvement of both the Takeover Panel and ASIC, that a lot of the speculation has essentially been dissolved and the current price range represents rock-bottom prices compared to the value that will soon be revealed (and unlocked) by the release of the new IER.

Good luck with your future investments