How should we value OBM?

Is OBM at that point where we should start to see a change in the metric of valuations for this company … more towards fairer considerations of prospective earnings and growth?

My personal view is that the time is rapidly approaching where analysts will start looking more on the 12/18/24 months forward outlook of production/costs/growth and the material cashflows expected.

Recent Company presentations indicate that in 12 months time the expectation is that OBM will be producing gold at the rate of 100,000 ounces per year at a margin of around $1,000 per ounce = $100 million+ cashflow per year (So it’s on only on 2x prospective now!)

In less than 6 months time, the current OBM deeper exploration drilling should be well advanced in understanding where the second underground development may be happening (Missouri, Riverina N or S or Callion?)

So in 18 months time, there could very well be 2 developments supplying 1.2 mtpa x ~4.3+ g/t to our operating mill that could ramp up production to ~160,000 ounces per annum = potential $160 million per year In 24 months,

I wouldn’t discount OBM having 3 underground mines able to deliver 1.8 mtpa.Plant would need an upgrade, but production rate could then grow to be ~240,000 ounces per annum.

It surprises that a company with so much potential is still trading around the $180 million replacement value of the existing plant and the related infrastructure needed to operate.

The current market capitalisation is around $220 million and when you deduct the cash in bank (no debt) you still come up with only that $180 million number.

The company shouldn’t pay tax for 3 years.

The market is clearly still needing a bit more time to digest all these changes, and waiting for cashflow positive quarters to start trusting on future execution.

The next quarterly report may very well signal the start of valuation changes.