another look at harleys valuation

Certainly an operational update from the company is probably overdue.

Last time we heard anything from the company was a Sept website presentation which discussed reserves and full year 2007 zinc production....rather than what is happening right now.

Just having a quick look at those figures and current LME prices......compared to Hartleys earnings estimates.

In full year 2007....Hartleys say after tax profits of $105 million on 54.8 tonnes of zinc and 31.5 tonnes of silver. Prices they used were zinc US$1.40 per lb and lead US$0.45 per lb.

CBH say in that Sept report...zinc concentrates for 2007 will be 125,000 tonnes, or in actual fact much closer to 63,000 tonnes of payablle metal.( Remember this excludes Sulphur Springs and Broken Hill.)

Lets however just use Hartleys production figures at current LME prices. This would mean profits would increase to about of $150 million from Endeavour Mine alone in 2007.

Here are the calculations:

Increase in zinc price (above Hartleys figures)is A$0.45 per lb and lead 30 cents per lb.

At 2007 production of 55,000 tonnes zinc....CBH will derive extra revenues of $55 million from zinc and $20 million from lead. (or an extra $50million nett profit.

Puts the company on a PE of 3.....but as I say excludes the forecast Endeavour Mine production increase and a doubling of revenues from copper/zinc and lead at Sulphur Springs and Broken Hill (in 2008).

Hartley say a shareprice of $2.39 at zinc of about US$1.45....it now US$1.72.

Other mining companies are starting to run hard.....CBH was 59 cents in May.....so its still well off its highs. I think we can get to 57 cents this week.....ill come back next weekend under this treat to see how close to 57 cents it goes.