Bullsrule,Many thanks. We appreciate you being quick off the...

Bullsrule,

Many thanks. We appreciate you being quick off the mark finding this report on the website.

I think the analysis is useful as background reading to the copper market and China's role. That Chinese bought up big during the low price of the GFC, stockpiling, to use those stockpiles during periods of higher prices. (As such, looking at the LME stockpiles is not as informative as it use to be - the real truths about surplus/deficit and stockpiles remain closely guarded behind the Great Wall, for which only good estimations can be made.)

About HGO and its value - Intersuisse's valuation is 43 cents. Their Cu price assumption is a flat US$3.41 for every year for the next 10 years. Their AUD/USD assumptions are $1.01 for 2012, dropping to $1.00 thereafter.

IMO, these Cu assumptions are reasonable (the reality will be different, but no one has a crystal ball); but I suspect that the forex assumptions are on the generous side - if commodity prices remain robust, will the A$ only be at parity with the US$? I suspect not, and that these assumptions are a bit on the generous side.

They do say, however, that their 43 cents is based on estimated EPS of 3.5 cents in 2012, putting HGO on a P/E of less than 6 (based on a price of 19 cents).

I have to agree with a P/E of no more than 6 if you are going to measure value using earnings. As Kanmantoo has a current mine life of only 6 years, it only makes sense to use P/E of 6 or less. If reserves upgrades extend the mine life to 10 years, the market market can factor in earnings over a longer period and hence imply a greater value.

This is a better report than the Wilson one, IMO. Well worth a read.

Yaq