Huntley's recommend OXR as a BUY!!!

OXR and OXROA

The gold stage of Oxiana's 80%-owned Sepon project in Laos is on-track for commissioning later this year. Meanwhile, the bankable feasibility study for the copper stage of the project should be finalised in the next few months. OXR appears slightly undervalued based on its gold assets alone. Once the parameters of the copper project are finalised, the market will be able to properly assess this asset and define a valuation with more certainty. The combination of first production from the gold mine and completion of the copper study could lead to share price outperformance over the next six months.

The gold project is budgeted to produce 125,000 ounces per annum at a cash cost of US$150 per ounce over an eight year mine life. This appears conservative. The reserve figure of one million ounces is contained within a 3.5 million resource base. This appears to be a low conversion ratio, however, it reflects the fact that only enough reserve definition drilling was conducted to prove the economics of the development. Once the mine is in production, further drilling is likely to boost the reserve figure which would increase the mine life. Recent drilling suggests new high grade zones may also be delineated within the project area, which would boost cashflow and improve OXR's balance sheet ahead of financing the copper project.

Pit shell optimisation drilling has just returned a number of high grade hits, including 21 metres at 8.2 grams per tonne, 10m at 12.9 g/t, 50m at 4.1 g/t and 38m at 7.3 g/t. These holes generally lie outside the pit shell defined for the feasibility study and should therefore add to the resource and reserve base.

The current resource at the copper project (the Khanong deposit) is 19 million tonnes grading 4.8% copper, using a 1.5% copper cut-off grade. This resource is likely to be upgraded following recent delineation drilling and the discovery of new zones, as well as the discovery of a new structure at Thengkham, located approximately seven kilometres west of Khanong.

The copper project should produce first metal in early 2005. Full details will be available when the bankable feasibility study is released shortly.

We retain our buy recommendation and believe the next six months could see a further solid share price re-rating.

OXIANA RESOURCES (OXR) $0.335

Copper-Gold Mine Development Buy

No. Shares: 539.8m Avg. Monthly t/o: 37.3m

No. Options: 230.2m Avg. Monthly t/o: 32.5m

Mkt Cap: $200m Last Reviewed SCG 285

52 Week High: $0.41 Low: $0.10

Metal Everywhere!

OXR - OXROA