Ann: Corporate Presentation - Swiss Mining Institute, page-52

I hope the following makes sense.

6 moths ago WGX SP was $1.63 and POG was about $A2,910.

Now POG is $A3,505 or almost $600 higher.

If WGX production is 250,000 Oz pa the higher POG generates additional revenue of $150m which flows right through to the profit line all other thinks being the same. Assuming costs remain the same (they were projected to fall) and ignoring the short term flooding issue, this is an additional profit of $0.317 per share. Applying a PE of 5 to that additional profit is a SP of $1.59 or at a PE of 10 is $3.17. Add that to the SP 6 months ago and if WGX was at the same value relative to the POG the SP would now be $3.22 at the PE of 5 or a SP of $4.80 at a PE of 10. The latter figure is a more appropriate valuation in my view.

This simple illustration demonstrates that even at $2.77 relative to the POG WGX is more undervalued than it was 6 months ago so at a SP of $2.35 it is very undervalued WGX is highly leveraged to increases in POG.

Or the other way to look at WGX is that it was way over valued at $1.63 six months ago and is now fairly valued. I doubt that is the case. The same applies to almost all other gold stocks ie relative to the POG gold stocks seem to be more undervalued than 6 months ago when the POG was about $600 lower.