Ann: Havilah-BHP Kalkaroo Work Program Update, page-37

hers a version of what I posted on RXM it tends to apply equally.

With extreme uncertainty on the direction of the economy from Chinese weakness and level of global debt.
I'm prepared to make some comments on my expectation for the Cu price:

• The long-term bond yield (say 10 year government bonds) is a very good indication of inflation indication. At 4.26% p.a. and rising it bodes well for the Cu price.
• A falling $A versus the $US and TWI is inflationary.
• The Cu price should follow the inflation rate. Stong linkages are inputs into Cu production being wages and the Oil price.
• That being the case it's also very likely we will get the element of the deal that applies sot the higher Cu price greater than USD$10,000/t or $4.545/lb (not inflation indexed).

As I read it, there is no time limit on the mining of the CU ore above that price just that ore comes out of the mine and the price is above that. Now say the mine is built in four years' time. It's pretty likely some time in the next 10-15 years after that the Cu price will exceed $4.54/ lb in future dollars. I.e. US$3.55/lb in current dollars if inflation is 2.5% p.a. compound for the next 10 years.* Note too the cutoff grade and total mine life is likely to increase in that time.

Finally, all my experiences and knowledge, lead me to believe that due to the link to inflation Cu (and commodities in general) will be a key element in investment for financial security and retirement planning. There's no question that an investment in a company like HAV which is not yet a producer is speculative. However, it can readily form a key element in a well-diversified portfolio for financial security and retirement. The latter two are my goals.


All IMVHO.
* or US$3.72 at 2% p.a. for 10 years in current dollars.