re: Ann: Prominent Hill Reserves and Resource... HT – I agree...

re: Ann: Prominent Hill Reserves and Resource... HT – I agree that OZL have some key challenges with Big C looking too big for their current market cap, but agree with some on this thread that the market has well overstated the severity of the current situation for OZL…..especially considering they have a strong balance sheet with no debt (i.e. no short term financing risk).

The key positive out of today are that the predicted 2014 cash cost is down markedly (averaging 1.15 to 1.25) so if their predictions are correct, strong cash flows should return in H2 2014. The open pit is only half way through with the more profitable (or should I say higher cash flow) portion in front of us. The remaining life of mine strip ratio is 2.3 to give some perspective as to extent of the heavy lifting that has been completed.

I think we can assume no dividend for the next two periods as they obviously have a short term cash flow problem.

The PFS for Big C is due at the end of 2014 H1. To proceed with the project, OZL will need to construct an exploration decline which will require a significant (say 150-200M) investment. They really have no choice but to proceed with this as they will need to progress the project to “value add” and keep their JV and financing options open.

First and foremost OZL need to meet or exceed guidance to restore some credibility with the market.