Brenden,The timing of the Wesizwe deal must be good for NKP. The...

Brenden,

The timing of the Wesizwe deal must be good for NKP. The deal values Wesizwe as is at $450 million and we know NKP has much more resource in the ground.

Xstrata will certainly play its strong hand in order to get the lowest possible acquisition price but I think Wesizwe have dealt them a bad hand and they will have to pay top dollar to get this.

Just a thought on potential value here (conservative). Lonmin produce 700,000 oz per annum and have a market cap of above 3 billion (approx USD 4.3 billion).

NKP have 30% more resource and probably at a lower cost so could argue a market cap of minimum USD 5.6 billion at full production in 2016. From there take off US$ 1.5 billion for total construction costs leaving at least $4.1 billion. Discount that back 6 years at 12% cost of capital and we are still looking at value generation of $2.6 billion.

The question is then how this $2.6 billion is split between NKP and the likes of Xstrata. Being sensible I do not see that NKP could get more than 30% of the beenfit for funding zero of the construction, that leaves USD 780 milliion for its shareholders or A$930 million. Today we have a market cap of A$ 326 million so we can up to 3 times current market price is within reason for me and yes it comes with a high risk warning.

BR
Max