30th june 2010, page-4

I'm not sure I'd call myself bullish....not quite enough confidence for that.

But I do think there is a reasonable probability that AAM is worth more than the current 12.5-13 cents.

My estimate of worth is in the low twenty cents assuming the cash costs are in the $700 range and they produce 30,000 oz per year eg they never upgrade to the higher targeted production. Of course the usual caveats relating to POG and the AUD.

Of course, though, I'm using my own DCF model which I read today is not appropriate for valuing this type of company. None-the-less, I find it useful for understanding the worth of a company if it can do the things that it says it can do. Just about any type of valuation has to make assumptions about what is going to happen in the future and I have yet to meet anyone who actually knows.

For example, I can see that if cash costs are not $700, but $800, then 12.5-13 cents becomes a more reasonable SP estimate. I think that's good to know, even if I use a DCF to get there. If they can increase production to their stated 75k ozpa, then the low 20s is an underestimate. That is also good to know.

I don't think anyone knows what the equilibrium cash costs will be or the POG or AUD over the next 5 years or what production will be - so in that aspect a DCF is probably just as good a guess as anything else.

I think a well presented quarterly will help inform our guess, but I suspect it will be a few more quarters before we have a reliable estimate of cash costs.