earnings, divs and sp

Earnings & SP

I have done a few calcs and come up with an approx yearly income of US$630M => A$677M (0.93 rate)

Net Values based on quarter figures and current prices..
Copper 30000*4*4800 = 576M
Gold 22000*4*500= 44M
Silver 230000*4*10= 9.2M

Not sure on OZL cost price for gold and silver but have guessed...

Current capitalisation 3,855M.
That is a PE of 5.7

Now this is purely shares*price. Not taking debt ot cash into account. To be simplistic if you take the cash in the bank out (was A$975M, now A$840M) Approx. 27c per share
3885 - 840 = 3045M / 677 = 4.5 P/E
(i.e. pretend the share price based on earnings is $1.23 - 27c)

Now a well respected resource company can get PEs of late tens into the 20s.
In OZL case until more heads role and the US cash is resolved i believe the market won't give them that.

However, the bottom line (unless i have stuffed the figures up) is we are well overdue for a re-rating.
In fact, according to me the price could double and we would still have a PE of around 10.
=> A fair question to OZL is what is fair value for the stock and why do you think we are trading at a discount?

Dividends

I know many of you don't see dividends as being important. I do for the following reasons.
1. Companies paying divs are well supported and have less price volatility (that is because as long as you think the price will come right, you tend to hold on because it pays something)
2. It allows the company to be considered more conservative and part of more funds allocation
3. It also helps when you are using the Banks money (as in my case) to cover interest
4. Also not all holders want capital gains, some want earnings.
5. Why not be geting a return? The directors are rain or shine and the company can afford it.
6. If you looked at this in the worse case view, a comapny with a mine life of 10 years say, you potentially could be buying something and years later its value declines, so why would you not want earnings?

With OZL there is the added dimension that i don't believe the directors are adding value at this point. US libor on money. In fact the FX losses per shareholder is the equivalent of a 4.4c div.

Something to think about.

Cheers

NB: I am no accountant