hawke interim review, page-3

I posted a detailed analysis of WPG Resources on the WPG thread on the 31st of October where I unveiled it as a stock to own in 2011. I have calculated a Net Present Value (NPV) over their Peculiar Knob and Hawkes Nest DSO Iron Ore Projects and the value I attribute to both these projects is $3.70 per share. With the preliminary Hawke report now out with favourable recommendations for the mining industry I believe the market will now be prepared to place a significant valuation on the Hawkes Nest DSO project. My NPV valuation for that project based on a start up in 2016 is $1.66 per share using a discount rate of 10% per year. I expect an announcement from WPG shortly highlighting the significance of the initial recommendations from the review committee for the future of WPG. My discounted cash flow valuation of $3.70 assumes no value for their 270mt coal resource at Penrhyn nor does it attribute any value for their large Magnetite and Haematite projects. The fact that a major institutional bank is prepared to debt fund 71% of the Peculiar Knob project is a resounding vote of confidence in the company and I expect a final commitment to develop the Peculiar Knob DSO Project very soon. News Due: Confirmation of US$120m facility with Deutsche Bank for the development of the Peculiar Knob DSO Project. Comments from company on the initial recommendations from the Hawke report into the Woomera Prohibited Area (WPA). Final commitment to develop the Peculiar Knob DSO Project. Price Target: Based on the positive news flow likely to come from the company I expect that the price will break through the top of the trading channel and head towards $1.30 this week. Disclosure: Holding WPG