do you think todays announcement will, page-2

Hi Rebel,

The announcement was a good one, well timed, and will hopefully serve to remind people that inspite of all the turmoil over the past many months with OZL's share price, the company has been quietly getting on with business. Perhaps too quietly, I'll grant you, but getting on with it nonetheless.

Avebury delivered on time and now actually producing, and Prominent Hill also still on time and on budget. All this will certainly help stabilize the share price from further downward pressure from "internal" forces such as perceived company mismanagement, and rumours of delays and costs blow-outs. Of course downward pressure from "external" forces such as metals prices, shorting, margin calls, and the general parlour state of the world's markets at present, are all out of the control of the OZL board.

Whether you are a fan of the OXR-ZFX merger or not, and whether you want to somehow blame OH and AM solely for the recent sustained slide of the combined entity's share price, I think it is important to keep in mind that all the various resources of the new combined entity haven't mysteriously been disappearing over the past three months causing the share price to fall. The resources are all still in the ground where they have always been, and the company is still going to dig them all up, and sell them to people for a profit, and will do for many years to come. Nothing has changed there at all.

The price the company gets for those resources over the years will vary as metals prices move up and down, and this will of course affect the share price of the company, but other external forces will at times also affect the share price more - some times for the good, and some times for the bad. The market is afterall more often than not a very irrational beast, and at present we are in a period when the market has irrationally been selling the share price of OZL (and many other quality stocks) down.

The key is to always have a sense of what the "rational" price of the share should be based on actual resources and current/historical/future metals prices and earnings. This is what Grant Samuel & Assoc has done for the company as part of the merger deal, and numerous retail brokers have done for the average punter, and even our very own KennethGalbraith has done for us here on HC (thanks Ken, great work!). These valuations come in anywhere from around $2.20 per share to well over $4.40 per share, depending on who you want to listen to or what valuation method you want to utilise. I see no one - no one - who can put a "rational" valuation of $1.41 per share on the OZL share price.

Eventually the irrationality of the market will abate and the share price will move back towards its rational value, and experience shows that it will typically over-shoot its rational value, because remember the market is an irrational beast. If the market did not behave in such an irrational way, charts would look pretty flat and uninteresting, and TA would be a pretty boring pursuit. So at current prices, if you have the money and the time to stay in the market, now is a tremendous time to buy OZL.

MissionX raises a fair point in one of his recent posts that it is perhaps spurious to suggest that OZL is "worth" $4.00 a share (or whatever one's rational valuation might be), when you can buy the shares on market today for about $1.40 a share. I would counter this by saying that you could in fact only buy about 30 to 40 million shares on market today at about $1.40 a share from the "irrational" holders. However, if you tried to buy all 3.1 billion shares of the company on the market today the price per share would very quickly move from $1.40 per share up to the $4.00 per share figure and beyond as "rational" holders looked to realise true value for their shares.

And finally in regard to the DRP/ESP buyback, as per my post last night, Monday's volume spike up to 74 million and today's return to the recent average daily volume of about 36 million, I think suggests that the buyback was done Monday when the company announced their intention to buyback the shares. We won't know of course until they put an announcement out once the shares have cleared into the company account.

Regards, GJC.