Using figures from the recent Announcement re: Jun09 HalfMy FY10...

Using figures from the recent Announcement re: Jun09 Half

My FY10 Projections (DYOR)

worst case:

Gold Production (koz): 205
Cash Cost (A$/oz): 820
Capital Expenditure (A$m): 95
Other Costs* (A$m): 60
Payment for Conv. Notes (A$m): 77
Key Assumption: Gold Price (A$/oz): 1200
Cash inflow (A$m): 246
Cash outflow (A$m): 400
Net Cashflow* (A$m): -154
Capital Required (A$m): 100
Cash at Jun30 2009 (A$m): 78
Cash at Jun30 2010 (A$m): 24

best case:

Gold Production (koz): 240
Cash Cost (A$/oz): 745
Capital Expenditure (A$m): 85
Other Costs** (A$m): 60
Payment for Conv. Notes (A$m): 77
Key Assumption: Gold Price (A$/oz): 1200
Cash inflow (A$m): 288
Cash outflow (A$m): 401
Net Cashflow* (A$m): -113
Capital Required (A$m): 60
Cash at Jun30 2009 (A$m): 78
Cash at Jun30 2010 (A$m): 24

* Net Cashflow includes payment for Conv. Notes (DYOR)

** Cash costs are based on Gold institute production cost standard and these other costs are for non mining costs which is my own estimate based on previous Income Statements e.g. FY09 I calculated this to be aprox. 90 $Am i.e. worst case using an average cash cost 850 A$/oz and Gold Price 1,200 A$m and includes 27 $Am write-off in Dec08 Half (DYOR).

One of the key assumption is a Gold Price 1200 A$/oz. If this were to increase to say 1500 A$/oz in FY10 then re-financing or re-capitalising would be at worst minimal if at all.

In my opinion, the fact that they met there June09 Qtr targets with 27.9koz and 7.2 g/t at A$/oz 434 for Gwalia in May/June alone and with significant cost reductions across the board underlies the potential and indicates that they are heading in the right direction. Combine this with a huge Resource, a new CEO making good decisions with a 3 year plan and potential upside in the price of Gold will ensure they meet there obligation in FY10 and beyond.

Current EV/oz (Resource) is approx, 27 A$/oz vs current market Average for Producers 140 A$/oz and EV/oz Production is $A/oz 1,236 vs current market Average $A/oz 4,170 making them one of cheapest and definitely the cheapest in the top 20 Gold Producers in the ASX.

PS: I hold this stock and will look to add in the coming weeks/months, cheers

kbxk508