in all fairness, page-24

Supermapes

Mine is different accept that I get to at EV.

Mine is built on a year basis :

year zero being this year and Net profit only being Aus at $6.8m.

I then built one plant in USA next year and as its larger it threw out net profit @ 24.75 this meant that in year 1 we generated net profit of $25.36 (I kept exchange rates out of it parity is assumed) - My discount rate was 25%. Interest rates in USA was set @ 5% and borrowings are $25m and $25m is equity sold @ 1.25 so you had total equity set at ye of 150m with a PE of 20 given that you could see a lot of future development so it created an EV of $500m and a sp of around $3.30 to which I added the 50c for the rest.

The yearly profit was the debt so I assumed that debt had a life of 12 months.

The next year I built plant number two and gave it 35% discount rate. This dropped a net profit of $41.28 and I dropped the PE to 17.5 for an EV of $722m. This plant now allowed you to borrow $30 and only had to issue $20m in equity @ issue price of $3 per share. This gave you a sp of of $4.61 to which I again added this 50c to create a total sp of $5.11

In year 3 I actually used Europe as a place and added a bigger income which I was not sure if it was 1 or two smaller plants. The plant generated $34.6m but the interest rate was 7.5% and again I used a discount rate of 35%. I thought of using a higher one but if it worked I couldnt see the justification of doing so and what was freaking me out was the fact that these are highly profitable so debt got repaid far quicker than a normal investment. I used 65% debt and issued $30m equity @$5 per share to have issued shares of 162.667m The net profit was $63.79 and I used a PE of 15 to generate an EV of $956m or a sp of $5.88 to which I again added the 50c for total sp of $6.38.

When I tried to model it for issuing more shares and getting the profit growth quicker it made it difficult to grow the sp and pointed out to me the impact of share issues upon the model as the profitability is so good that its almost better to wait for one to fund the next with debt.

The big factor that has been in my mind but cannot model it is the impact of a JV pressure on the profitability in that its likely that these guys will want direct equity in the plant. That reduces the profitability but thought that that can be managed as the discount rate helps. Depending on the growth potential for these plants you would have a declining PE over time.

The big crux of this investment for me was the upgraded plant which I get the impression is a done deal. The Sodium issue has a few solutions by the look of it.

So in a nutshell:

EV year 1 $507m PE 20 sp inc 50c $3.88 - number of shares 150m

EV year 2 $722m PE 17.5 sp inc 50c $5.11 - number of shares 156.67m

EV year 3 $956m PE 15 sp inc 50c $5.88 - number of shares 162.67m

discount rates: 0% for Aus, 25% for plant 1 in USA and 35% for plant 2 in USA as well as 35% for Europe which I assumed was the next year.

Please this is not a ramp everything is fluid its a calculated basis for trying to establish a value in a very complicated set of circumstances rather than just leaving it. I like models - I also think that this could be considered conservative as well the wild card buy a ticket to the first space flight model was so big I could believe it.