Dividends are A$ 100 million (US$ 78m) after allowing for loan...

Dividends are A$ 100 million (US$ 78m) after allowing for loan repayments in first year of full operation and cumulative dividends for the first ten years of full operation are A$ 2257 million(US$ 1761m).
At a discount rate of 8% the NPV after tax in Year 1 for Australasian Resources’ share of the project is A$ 2683 million (US$ 2093m). If the NPV after tax is calculated at Year 5, this increases to A$ 3541 million (US$ 2762m).
It is assumed that Australasian Resources will have on issue 490 million shares following full project funding on a fully diluted basis. In principle the value of a share is the discounted value (NPV) of the future stream of dividends that it will earn. On this basis the value of the share would be A$ 5.47 (US$ 4.27) per share at the start of the project, rising to A$ 8.71 (US$ 6.80) per share in Year 10.
An alternative valuation of shares is to consider the price/earnings ratio for companies of the same type and to multiply that ratio by the earnings of the company after tax. Leading financial analysts were expecting a price-earnings ratio for major mining companies of 12.0 over the period to 20084. Using that method of valuation, and recognising that the value of ARH’s shares is effectively 50% of the value of the joint venture’s net profits after tax, the table shows that the share price in Year 10 would be A$ 7.03 (US$ 5.48)