Amazing Resource Potential, page-30

A few thoughts on TAM...

* I find it interesting that TAM's controlling shareholder APAC Resources has been acquiring Northern Star shares (in addition to TAM's own 500,000 holding). On 23 April 20 they acquired a further 300,000 NST shares at $13.31 giving them a total 815,000 shares worth around $10.6 million. I don't believe they would make this sort of investment if they thought the CTP was not likely to proceed.

* If NST announced a CTP re-commencement it would add an additional 10-11% to their annual gold production (112,500oz) on a base case of 150,000 oz pa. Given NST's high PE ratio this could be worth between $1.50 to $2.00 to its share price. Given APAC's significant investment in NST, perhaps there is a chance that they would accept a scrip offer for their 46% TAM holding.

* As TAM's CTP resource calculation was made in 2010 and would have been based on a Aus$ gold price around $1,200 lower than current levels. If the resource was to be re-estimated for the current gold environment it would certainly have a lower cut-off grade and hence establish a larger resource. This could potentially increase the CTP resource by say 10% to over 4 million ounces.

* From an operational perspective, the almost 5 year delay in mining has worked in TAM's favour in that mining re-commencement will likely to provide significantly higher cash flow margins of around $400-$500 higher per ounce. Also from an asset perspective, TAM's 25% of the CTP's in ground gold continues to substantially increase in value, although to-date is not being reflected in TAM's SP.

* From my perspective, TAM provides a relatively low risk and heavily discounted alternative to holding cash and gold in a bank plus lots of operational upside.

DYOR