fair value

i'm just posting this as RIO settling for a an 8.5% stake in the company as opposed to the multi-million dollar fee that would of been payable had the agreement stayed in it's original form has perplexed me & i know Rio Tinto are not a stupid.

Once you take a better look into the Myrtle Projects resource and the prospective land holdings that have not even seen a drill bit the story becomes clearer & the move looks far from stupid.

I think a share price of somewhere between 25 & 50c is quite a realistic fair value for RXL at the present time giving the company a market cap of somewhere between $50-100M and still representing just 1-2% of the PROVEN resources in-situ value when taking the following into account -

the way the facts stand -

*** JORC 2,193,000 tonnes combined insitu zinc and lead metal OR 4.2 Billion pounds

*** based on current prices of A$1pd - represents A$4.2 billion

*** Current resource has been the result of only drilling the periphery of the main mineralized system & remains open to the north and west.

*** a Robust & convincing exploration model for the high grade targets has been developed and is ready to go.

*** Initial metallurgical testwork was encouraging with recoveries of 90% zinc and 74% lead achieved

*** aiming to increase the current resource 3 to 4 times it's current size and lift the cut off grades with the next round of drilling

*** 488km2 of land covering some of the most prospective acreage in the area including the new tennemant just 6kms from Xstrata's Mcarthur River



so i guess the question comes again - did RIO get a sneak peek at the Scoping Study to progress these negotiations & remove the road block ?

because even on what i posted above while it might seem like fair value is a long way from the current share price i think the above will be well and truly sailed passed once the next round of driling is complete and the resource upgraded further.

interesting times ahead - just gut feel but i reckon Scoping Study will be released very shortly & if it paints a similar picture to the above then she'll be off....

DYO Research.