ext&obj tighten seatbelts, page-3

Schnitzel, below is an earlier post on EXT from Zackman, very informative post:

As promised, here is my take on EXT, and some of the reasons why I’m invested in this stock. I consider Ext as one of the very few “UNCLAIMED” prizes on the ASX today.

To understand its value, we must identify Ext’s value drivers and look at them in the context of the current global investment boom in the very two commodities (Gold & Uranium) Ext is concerned with, and be able to predict the longevity of the current cycle. We can be relatively confident that we are closer to the beginning of the cycle than the end; the reasons are well known to us all.

I think the simplest way to understand EXT’s value proposition is to make some basic comparatives to PDN’s beginnings 2 years ago. Let’s see:

PALADIN (PDN)
• Share price (Sept 20, 2003) 1.4 cents (yes just 1.4cents)
• Current shares on issue approx 410m
• Current share price (Sept 20, 2005) $2.45 market cap $990million
• Paladin selected Namibia because of the favorable uranium mining policy there.
• Completed feasibility study recently
• Commenced mine construction recently.

EXTRACT RESOURCES (EXT)
• Share price (Sept 20, 2005) 2.7 cents
• Current shares on issue Approx 540m
• Current market cap $15 million
• Completed feasibility and commissioned a JV gold mine in under 2 years (record time)
• Gold production in Burnakura NOA 2 commencing as i write this note.
• Secured a 51% ownership in the Namibian Uranium JV.(subject to s/h approval – considered a formality)
• Approved exploration licenses on tenements smack bang in between (RIO and PDN)
• Further “U” applications to ministry of mines pending (100% Ext)
• Namibia is quoted as the 4th largest U producer in the world- all known resources are in the same area as Rio, Pdn and Ext.
• Key capital infrastructure already in place (power, roads, port facilities, communications, cheap local labor and access to experienced “U” engineering support resources/services in the area).
• RIO’s adjacent mine has been operating for 30 years, lots of experience to leverage from.
• Ext’s strategic location makes it a natural takeover target.
• Management fantastic business credentials and lots of mining experience (Burnakura is a great resume and an excellent reference point).

Now, let me stop here for a moment. Gold is not the “unclaimed” prize for EXT, it is only the “means” to achieve the big prize (Uranium Mining). This will be achieved well before Australia gets its act together on new mines (public opinion, legislation, regulations etc..)

The way I see it, Ext will be well and truly mining yellowcake on two fronts, while Australia will still be struggling with the idea. I will be investing in Australian junior “U” mining when the Govt here passes the necessary legislation. Until then its EXT and SBM

Let me summarize with a question?: Can any one show me another mining company which is mining gold and producing cash flows, owns tenements with vast uranium resources, with a well defined “U” mining strategy, and is currently trading at 2.7cents. (Market cap $15m).

So… what is it worth??? (Basic economics)

GOLD mining valuation estimate

2005/6 forecast 50,000 oz
Current gold price is AUD $605
Cash production & operating costs $400 (conservative)
EXT’s share of net profit $ 5,125,000 (25,000oz x $205)
@ P/E of 10 sp = $0.10cents
@ P/E of 15 sp = $0.15cents

URANIUM valuation estimate

Check the above and the PDN story and figure this one out for your self. (how long is a piece of string - Pdn could be a good yardstick)

Cheers
Zackman