Ann: Legacy Joint Venture to Develop Mt Bevan Iro, page-47

re: Ann: LCY: Legacy Joint Venture to Develop... Hi Pied Piper-Fair question.

Firstly,we are definitely talking about current in-ground value.

I have used a figure of A$2.00 per tonne based on the valuation of all Jupiter`s resources completed by Snowden in May 2010 and published on their website in late July.

They set out in detail their range of in-ground IO values (A$0.16-A$4.90) and from the foot of p.25 'Jupiter`s Mt.Mason tenement covers only 3 sq.km.but forms the principal iron target within the CYIP...'
give a detailed rationale for the values that they ascribe to all of Jupiter`s IO tenements.

As a comparable for Mt.Mason they use the Mt.Richardson/Windarling transaction which had an implied value of A$0.86 per tonne and they then go on to say (second bullet at top of p.36) 'Snowden considers the Mt.Mason project represents slightly higher value than that ascribed in the Mt.Richardson/Windarling transaction based on it having a defined Mineral Resource,albeit at an inferred classification,predominantly comprising haematite mineralisation.'

It is worth noting that:

Mt.Richardson/Windarling is an historic transaction that took place at a time of much lower IO prices and I don`t think that it had any formal resource classification.

I was not the only one to think it a bad deal for the sellers and posted urging HAW management not to deal on the same basis.

Note that Snowden apply only 'slightly' higher value to the predominantly haematite mineralisation.Snowden used the same comparable when last valuing Jupiter`s assets and from memory only they put a premium of 30% on the haematite (A$1.10 as opposed to A$0.86.I give this % premium without responsibility but it can be checked by the diligent)

Mt.Bevan is contiguous with Mt.Mason and while I would in no way suggest that it is predominantly haematite it is very much more similar in nature to Mt.Mason-certainly in immediate proximity-and undoubtedly contains significant haematite.

This was a back-of-the envelope exercise and I used a downgrade of likely tonnage to try and make it conservative.Based on the above I hope that all would agree that the absolute floor is A$0.86 and the likelihood considerably more.

Repeating the exercise with a very conservative figure of A$0.86 cents (which takes no account of the increased IO price,the continuity of the tenements,what will be a defined resource or the significant haematite and which personally I think much too low) and retaining the figure of 400m tonnes (again arrived at on a hopefully conservative basis) we still get a value to HAW of A$137.60m or nearly 14x current market cap.I think this an unrealistically-low value but I accept that it is better to look at worst-case rather than blue sky.Prefer my initial stab all the same.

And yes,Legacy have got a good deal here but one can only assume that JMS were offering worse.This is the sort of scale of reward expected when significant long term commitment and expenditure are involved.I don`t think that HAW have been scalped here-far from it-and only hope that the deal proceeds swiftly to completion.