After reading the Breakaway piece on VML and reading the Fat...

After reading the Breakaway piece on VML and reading the Fat Prophet piece on CNQ (which was basically restating the company's numbers) we can start to get a feel of the value in CNQ even if the price is discounted for risk.

VML number are 3mtpa and 10 year mine life.

NPV $153m IRR 27% Payback period 3 years based on APT Sale $US375 MTU, Capex $150m and Cost $262 MTU. AUD/USD 85c VML only have 70% of project so NPV $107m

Breakaway say that only 30% should be allowed given the current state of the project.This gives a value of VML Watershed project of $32m or 13c (report says 16c allowing for 2c gold project and 1c cash)

Current market cap VML $11m on shares of 241m

If we look at CNQ we find the following numbers

3mtpa 10 year mine life. NPV $161m IRR 60% Payback period 1.5 years on APT sale of $US290, Capex $55m and Cost $137 MTU. AUD/USD $1(?) CNQ 100%.

If we allow a higher risk allowance for CNQ of 50% given it has been minedbefore, existing infrastructure and an offtaker who has proven the project (Mits due diligence and has been using the product). Then based on the above figure we get $80m and a share price of 27c plus some cash.

And we haven't allowed for a lower currency, a 30% increase in product and greater likely reserves.

The back of the envelope looks Ok (and allows for a reasonable margin of error).

Any thoughts