green alert to 20c- afr article

Have been following Aim for a number of months since it was at low 5c and through the various disappointments of late bfs and overpromising of delivery by management. For whatever reasons, the management was way too optimistic with delivery but in hindsight if we consider the timeframe from when Aim acquired the project in the first half of 2005 and the delivery of the bfs at end of 2005, it is reasonable time taken particularly towards the end time was expended to improve the results. I remembered the time when Oxiana went through the same process and the bfs was delayed from time to time and financing in a relatively unstable country is questionable. Then Oxiana was in the 5c to 10c range in 99 and 2000. Look at where it is today. Relative to that Aim is taking a much shorter time and also Aim is in a comodity cycle boom whereas Oxiana back then if I recall right gold price was under $300 and copper price was just as miserable. If we make a comparison, Burkina Faso with Laos, an ex BHP project with ex Rio, Laos government wanted it to work and I am sure so does the BF government, Aim has great potential and this project can be a company maker. Only difference is timing of Aim is pretty good with Zinc price at its high and potentially going higher. Being in a boom comodity cycle, Aim may be able to achieve what Oxiana achieved (only based on the Laos project) in much less the time- remember Oxr took probably about 3 years to be recognised!

The Soth African project failure was a different altogether and I dont feel that Aim should continuously be judged all that failure. This promising zinc project is nothing like the other project and should be judged on its own merits. The project was feasible when zinc price was below $1500 and the bfs used a price of $1800 which many thought was high, again in hindsight now and reading various forecasts for the year this may now seem reasonable. The bfs suggest 38c value and the numbers support that valuation, however that is not taking into account all the sovereign risks and also the risk of delays and financing problems. If we discount all that a reasonable value should be close to half of that at 20c.

With the exposure that Aim is starting to get - read the AFR today featuring under Marketwrap main zinc article there was a big mention of Aim alongside Zinifex and Kagara Zinc. Clearly, the article is displaying that Aim is lagging behind these zinc leaders. And clearly there is a shortage of zinc projects and Aim is sufficiently significant to be mentioned. How often do we get a specci being in AFR never mind in a main article. As more people read of the article this should help push the stock north, it would be interesting to see the full impact in tomorrow trading.

It is interesting to summarise the positives and negatives. Firstly the negatives:

- Management has failed in the past to deliver and overpromise: can we live that? This project is different and they deserve a chance to prove

- Sovereign risk: yes it is a risk but the returns hopefully will come good. One cannot get away from risk return- Laos for Oxiana was just as much risk. Government will try hardest to make sure it works and it is in their interest

- Management paid themselves too much- perhaps they are worth it, again they desrve a chance to prove themselves

- Financing and dilution- yes need heavy capital to develop project but this is the best part of the cycle of the commodity to get the finance. Which means the best possible negotiation for as high a debt as possible and least dilution possible- under current circumstance worthwhile taking the risk and hope for a better than expected finance package

Delay risk- there are few stages to production. Better risk that exploration I would suggest, at least we have a proven resource in the ground!

Now the positives;

- Bfs is done and results are more than encouraging. More potential with efficiencies, lower smelting costs and potential upgrade of resources in the future.

- Reasonable minelife, infrasructure considered and workable, early paybeck period and good IRR return and great positive NPV

- Great part of the commodity cycle, hopefully the offtake agreement will deliver well and assit with the financing- Aim may be able to surprise on the upside here

- Govenment trying hard to make sure that project works

- Aim is already getting good exposue at such early part of development and recognise as the few companies with a major viable project

- It is a good story and we are waiting for hopefully exciting offtake agreeements and would be interested to see majors involved and also the capital raising. we already have BHP involved on the shareholders list and that is a good sign!

I can go on and on with more positives including the other project with BHP but overall the positives certainly outweigh the negatives. And yes there are risks but the potential of a worldclass zinc project coming onstream at a time when zinc is awakening and becoming sexy has to outweigh the risks particularly the final project outcome will not only be recognised here but worldwide simply because this will probably be the few mines in the world to come onstream over the next couple of years in time to benefit during this boom zinc cycle.

It is worth researching further into this little speckki which one day may no longer be small. It is approaching 10c and certainly a green alert to 20c over the next 6 months as more interests generated and market realise the potential.