900mil usd, page-32

S, S & J,

Hi guys, a few thoughts after reading your posts....

Firstly, I think it is useful to get our figures right at this stage of proceedings, so we can properly evaluate whatever revised offer MM come up with. Their first takeover offer was originally valued at AU$3.9B, not AU$3.2B or AU$3.5B mentioned on this thread. The AU$3.9B figure comprises 3.15B shares @ AU$0.825 each = AU$2.6B, plus OZL's debt as at Feb 2009 of AU$1.2B, plus AU$0.1B for OZL's convertible notes, equals AU$3.9B total cost to MM.

I think it is further fair to say that they would have allowed at least another AU$0.1B to cover additional interest charges on the debt roll-over from Feb through to the completion of the takeover scheme. So you could say that MM had planned to shell out at least AU$4.0B for the total takeover of the entire OZL company.

Secondly, I think the easiest way to get your head around the original AU$0.825 per share takeover offer for all of OZL's assets and debt, and how we might determine how the anticipated revised offer for "all bar three" of our assets stacks up, is as follows.

MM would have gone over all of OZL's assets (Prominent Hill, Century, Sepon, Golden Grove, Avebury, Rosebery, Martabe, Toro, etc, etc) and put a value on each of them and totaled it all up. Clearly they got a total around AU$4.0B, as this was the total they were expecting to pay for the entire company as outlined above. They then would have taken away from this figure the amount of debt that they expected they would need to repay as part of the deal (about AU$1.4B, as outlined above), giving a net equity total of AU$2.6B for the company. They then divided this figure by the 3.15B shares on issue, to come up with the AU$0.825 per share takeover offer we were original presented with.

So, to try and determine what MM should put to us for their expected revised offer for buying "all bar three" of OZL's assets, we simply need to deduct the value of the three assets we're not selling (Prominent Hill, Martabe and Toro, etc) from the original AU$4.0B takeover bid figure.

Our Toro shares are pretty easy to value (about AU$25M), and MM have already revealed that they valued Martabe plus Golden Grove at AU$425M, so let's say AU$225M for Martabe. As for Prominent Hill, well that's a bit harder to value, but undoubtedly it's our best asset. It cost us about AU$1.3B to build, and I think AU$2B is probably about right, or put another way, it comprised 50% of the original bid.

That gives a total value of about AU$2.25B for the three assets we are keeping, which means MM should be offering in the vicinity of AU$1.75B (AU$4.0B - AU$2.25B) for all the other assets they are getting. Anything less than AU$1.75B is a poor result in my book, whereas anything more is great, all based on the original takeover bid.

If we get AU$1.75B, we can retire our AU$1.3B debt, leaving AU$450M in cash, which equates to about AU$0.14 per share. Add on the AU$2.25B valuation for the three assets we keep (as outlined above), which equates to about AU$0.71 per share, and we get a total value per share of about AU$0.85 after this revised deal.

That's better than the original AU$0.825 per share takeover offer, and of course we have the scope to grow the business and improve value as metals prices improve.

Oh, and I agree totally that BC, AM and their cohorts need to go as we move forward.

Regards, GJC.