Ann: Khnaiguiyah Zinc Project - Project Update-AUQ.AX, page-55

Just a note on that (optimistic?) technical target around 5c.


5 months ago, Foster stockbroking put out a research report on RVR comparing it's EV/tonne valuation to ATE, implying it was worth 45c on a peer basis. The EV/tonne figure it used for ATE was $107.

While this figure sounded ambitious to me, i noted in the report that from a table of 10 zinc companies, it came up with an average EV/tonne of $45 (which actually works out to lower than RVR's own shareprice)

Apply that to AUQ, and on the existing 25Mt@4% you already have an implied EV of $45m for the project. Alara's share is 70%, for a $34m EV.

A $34m EV obviously brings the options in the money, so for a basic valuation, adding the $5m and 250m shares from the options, we have a $39m MC and a shareprice of 5.2c


So it seems to me that 5c isn't such an optimistic short term price target, given that it only values the proven resource at Khnaiguiyah (which is known to be open along strike) and ignores the more advanced Oman project, with its simplified EV/NPV 30% valuation of 2.6c


The situation i see here now is that Bayan will lodge the ML application immediately but the market will do it's best not to get ahead of itself during the 30 day approval window. If no other news were to be released in the next 30 days, we would probably expect to see a slow increase from 2c to 5-7c.

But there is at minimum, a (final?) Board of Grievance update due this/next week, a JORC upgrade for Oman, and potentially a financing update on Oman all likely before the ML for Khnaiguiyah gets approved.

As things progress, the numbers start to become more spectacular. The benchmark right now would be TZN, with an EV/tonne of $118. Translated to Alara, this is like a 16c shareprice for Khnaiguiyah alone.

Knowing that there is a solid basis for up to 20c shareprice just on the acquisition of the ML and the advancement of Oman, the market is destined to want to start speculating over the coming weeks.


Not sure if this all makes sense, but i'm pretty sure that a couple of our major holders have been processing all of this information, and i would expect that month by month that T20 will get bigger and tighter until the freefloat has no direction left to go but upwards and at a rate of knots.


This will be a benchmark year for longs, i feel. It's taken a few years, but the payoff should be worth it.