agm worth 1.09

Source: ABN AMRO Morgans forecasts
Valuation and risks

Our valuation for the development of the reserves accessed from the Viking Decline
Avebury project is A$334.1m, equivalent to A$0.47/share. Our model assumes a conversion of existing resources to
reserves, and we have risked discovery of further resources accessible from the
Viking Decline to add a further A$128.7m, or A$0.18/share. We have assigned a
value of A$0.32/share, to the potential for East Avebury to develop as a separate
mining centre, and for exploration acreage in the region. While relatively high, it
reflects the discoveries to date and the prospectivity of the Avebury belt. Our total
risked valuation and target price is A$1.09 per AGM share.

Finance risk has been eliminated following the latest Jinchaun placement and given
the cash position of the company and the status of the development. There remains
potential for capital cost increases, and there is risk in operating an underground
mine in terms of both production rates (tonnage and grade) and costs per tonne for
capital development and production. Risk also attaches to commodity prices.

Table 2 : Valuation
snapshot
Fair value* A$1.09
Target price A$1.09
Current price A$0.98
Upside/downside 11%
* Methodology DCF
Assumptions
WACC 9.43%
Beta 1.3
Equity risk premium 4.5%
Risk-free rate 5.75%

East Avebury potential future discoveries ARE included in the $1.09 valuation.