In order to model this “back of the envelope” study the...

In order to model this “back of the envelope” study the financials of Northam Platinum were utilized. Northam are South Africa’s 4th biggest and the deepest Platimum miner operating on the same Merensky reef where AIM have their proposed Mooiplats development.

Northam’s operation is on the Western part of the reef and AIM’s is on the Eastern reef , however both mines have similar profiles and resources with reserves residing around 1500-1700m below the surface.

Shareholder Comparison:

Northam have 230m shares representing 55% of the company/mines ownership.

AIM have 250m shares representing 76.84% of the Mooiplats/mines ownership.

Northam share price : R10 (Approx. AU$2 per share)

Hypothetical scenario: If AIM sold 50% of their interest to a developer such as Northam then when full production got underway the SP for AIM for this development could be worth in the region of $1.20 a share.

REALITY CHECK: The purpose of this exercise was to try and put a dollar figure on the AIM SP if this project was to get underway (and be successful) and to put into perspective what 10-25 million ounces of Platinum could be worth. There are many assumptions being made in this scenario that could knock the calculations for six… such as not getting a “development partner” on board under the speculated scenario, the resource estimates being incorrect, problems in the extraction process such as fragmentation and a whole host of others like land ownership issues etc… To repeat...the scenario was developed as a "best case scenario" to provide an indication of potential returns.

More downside: It took Northam seven years from when it sunk it’s first shaft until the mine went operational … obviously there were many delays that may not be relevant to the AIM scenario and additional ones that may occur … but the bottom line is that this can only be seen as a long term investment and not a “get rich overnight” scheme.

Conclusions:

For those building superannuation portfolios and not interested in immediate returns, then should AIM proceed with the agreement due to expire on the 2nd of June 2004 this could be a nice earner over the long term. This is a relatively high risk investment as there is a long way to go and many hurdles to be crossed before the mine would become a going concern.

In the short term I would see the SP spiking on news of agreements being signed, partners taken on board and problems with the mines development, all of which could present short term trading opportunities.

The hypothetical scenario painted an extremely optimistic set of events and the “target” SP return of AU$1:20 per share should be seen as an optimal return once (and should) a mine get operational.


*** This was a study to determine what recent announcements of multi million ounces of platinum actually meant to an Australian minerals company in the Bushveld Igneous complex and may have absolutely no bearing on future developments ***


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