56c valuation by gmp securities, page-2

Some interesting remarks.

* The study suggests an initial capex of US$219m of which US$60m can be saved by using existing infrastructure and
US$107m for underground development is to be incurred after one year of operation.

* We have included the DCF valuation for the project in our model assuming the start of open cast mining in FY/15 and underground mining in FY/17.

* Our assumptions accounts for a 15% increase in operating costs from current forecasts and we also assume a 15% capex overrun.

* Taking a 12% discount rate (as very early stage) our valuation for the project stands at A$229m and we apply a further risk discount of 75% on this to arrive to our final value of A$57m for the project.

- but sum of parts valuation of 47M(or 9c/share) as per report.

My comments.

GMP has ALWAYS been lowball in their valuations.

This report is no different!

To apply a 75% discount(then another 12%), say that the project is 4 years away and then apply further operating cost increases due to the delay in start-up,does anyone else get the feeling these guys dont want the sp going anywhere?

Just reinforces my opinion of brokers.

d.