citi research

Oxiana Ltd (OXR.AX)
Martabe Sale and Prominent Hill on Track
 10% Martabe Sold — Oxiana has sold 10% of the Martabe gold project, which
is still in construction, to Indonesian company Antam for US$66.5m. Antam
has an option to acquire a further 10% at US$66.5m (subject to gold and cost
adjustments) and additional 5% at market value if expanded to >300koz
(currently approved to 250koz).
 Higher than our Valuation — Our NPV of Martabe is US$250m using a LT gold
price of US$700/oz and a 10 year mine life. Increasing our NPV to the implied
price paid by Antam lifts our Oxiana NPV by ~10¢ to A$2.30/share. Gold asset
premiums are diluted within a diversified/base metal structure and Martabe
could be spun-out once production has started (late 2009/early 2010)
 Indonesia — Included in the MOU is a cooperation agreement for exploration
and development of precious, base and bulk commodity projects in Indonesia.
A strong local partner is a definitive advantage in Indonesia and Antam is 65%
owned by the Government and has a US$3.3b market capitalisation.
 Prominent Hill on Track — Prominent Hill is on track and on budget for
commissioning in 4Q08 with the SAG mill now at the port in SA. Exploration has
continued to additional mineralization close to the open pit that could underpin
life extensions and/or expansions.
 Buy Maintained — Oxiana is Buy (1H) rated with a A$3.40/share target price.
We believe the recent merger and equity market volatility related weakness is
an ideal entry point to the strong balance sheet and production growth.