Ann: Investor Presentation , page-53

There is one key question each investor must convince him/herself of: "Does the dissolution of the JV agreement and removal of Wise make the the company more or less appealing for corporate investment?" WILL PLV SECURE VITAL FUNDING FOR STAGE 5?
Pros -
* Wise have been a hostile JV partner. It turns out they have not paid their share of JV costs to the tune of $19M. They are not prepared to take on debt.
* Wise have applied continued pressure to PLV to take presales. nb Presale value take approx $10/T off market rate. Avg profit / Tonne is $40 so this is 25% profit reduction.
* Wise have a remarkably favourable marketing agreement of 3% off the top. In perspective - Stage 4 2.4Mt assume avg price $115/T = $8.28M.
* The Australian corporate world is suspicious and cautious with Chinese partnerships - Who is Wise anyway? Many Chinese partners tend to operate under a different set of corporate rules and want to screw their JV partners to gain advantage. This separation should open more opportunity for funding.
* Stage 4 is ready to go. Resources are being qualified with drilling and so far these are excellent.
* This capital raise is fully underwritten
* Shareholders have the opportunity to participate at rock-bottom level and minimise dilution
* Once Wise is removed from the board, PLV can make sound business decisions without influence of their rogue JV partner.
* The board could have said "too hard" and folded the company, but they continue find ways of survival. (I wish they were feeling the financial pain that we are at the moment though!)
* Wise always had to go - it was just how much pain this would cause. They were a hostile JV partner and disruptive to mining progress at many levels.

Cons -
* PLV management has lost a lot of credibility with investors. 1. They got Irvine ore prediction wrong (sp hammered) 2. They got screwed by initial JV partner at 11th hour (sp hammered) 3. They tried to extricate Wise in Dec 2012 but were defeated on legal grounds (sp frozen then hammered) 4. Wise suddenly "owe" $19M wtf! 5. Cash balance so precarious that Wise able to negotiate an improbably favourable outcome and investors have carried the burden of "underwriting" the JV risk (you guessed it - sp hammered).
* Can PLV easily take over the marketing role that Wise was doing previously? (I think this is a no-brainer as Wise have clearly exhibited their self-concerns in the JV)
* Will the corporate world want to invest in PLV with management that could be perceived to have rolled over like a labrador when they needed to be a rottweiler?
* There is no white knight announced to provide long term funding. If the sp does not move in 180days how many short term options will be taken up with further pocket-searching from investors? Where would that leave PLV?

Here are some rough value calculations (happy to be corrected on any of these) -
Stage 4 resources = 1.4MT 68% or 2.4Mt 62% diluted. Assume IO price $115 and costs $75 to dock. Net profit $40/T (with Presales take off $10/T or 25% off profit)

Previously Marketing fee to Wise = 3% = $3.45perT to Wise = Total on 2.4MT = $8.28M. Management fee $5 per T (or $2.50 per T from Wise - I think) - NEVER PAID so I will ignore. 2.4M x 40 = $96,000,000 of total profit from stage 4 - Wise get $8.28M + $43.86M = $52.14M PLV get $43.86M. For every tonne of presale this profit is reduced by 25%per Tonne.

So assume Wise advocate 50 % of sales as presales (as they want to do). Profits as follows Wise ($4.14 + 75% of 4.14) + (21.93 + 75% of 21.93) = $7.245 + $38.3775M = $45.6225M. PLV get $38.3775M. Loss on 50% presales ~ $5.4825M

Same calculation without Wise: no marketing fees or JV management fee and ability to pay off presales. 2.4M x 40 = $96,000,000 of profit from stage 4. Potential improved profit = $52.14M (compared to JV sales without presales) OR $57.6225M (compared to JV sales with 50% presales)

Wise buyout cost = 19M(debt) + 21M - SP 2.44M = 37.56M. Therefore provided PLV can fund production we are financially around $15M - $20M better off.

So what would i like to see to give me long term confidence?
1. Long term substantial funding (absolute key)
2. Strong production of ore
3. Get rid of Wise asap (to cease marketing agreement)
4. Commit to long term systematic buy-back scheme of shares (rather than paying dividends)
5. I would like to be absolutely certain there is no other way to dismiss Wise without taking the company down also (eg legal action)

Tyremen