eqn ebit, page-2

Hi Lash

I like the EQN Lumwana project. The only negative about it is its size, if that can be a negative. It just makes the whole feasibility-finance-construct timeline that much longer and more expensive....

EQN have been very open with their project economics.
An ASX announcement 16 Oct 2003 showed annual EBIT will be US$105 million per annum at a copper price of 0.85c/lb. What would it be at current spot price? I dont know, a helluva lot more.

At this stage uranium is a long way off, I wouldnt even count it.... getting the copper project over the line is a big enough ask for a small company and they would be best not to get distracted by side plays which will only suck more money and time from their resources.

The key number IMO is the project NPV which the above same announcement put at US$236 Million. So compare that project value against the current EQN market cap - simply ridiculous. (that makes a lot of upside!)

I would be watching the chart for a change in trend (see latest trading, is it happening already? too early to tell) and would be happy jumping in when there is a solid uptrend in place. Thats my approach anyway.

Timeline for project financing is now crucial - they are saying it should be in place by the end of the year.
They have to raise US$290 million so not a small amount, but they say they are on track.....

I think getting the financing in place and start of construction will the stimulant that will start the share price heading north sharply. Institutions will buy this stock very quickly due to the size of the project and robust economics.

Be careful about using current copper prices for these types of calcs. Current long term forecasts for copper are still only US$0.90/lb. Nice to play with the spot price numbers but analysts dont bother with spot prices as they dont see them as sustainable.

One good thing is that they already have a offtake agreement in place for the concentrate. Smelters world wide are up to their eyeballs in concentrate and new producers are having a tough time finding anyone with spare capacity to treat their ore without paying a ridiculous price.

EQN seem vey professional at company level. I was shocked recently when I found out how low their market cap was. Perhaps this indicates that they are not very good at marketing to investors/instos?

I dont hold, maybe one day I will.

acturtle