"In 2003 detailed evaluation of the economics of underground mining of both Sandiego and Onedin, with treatment through the then existing Pillara mill (allowing suitable capital expenditure for modifications to that mill) was completed. The model, which used then current prices (copper US$1,725/t, zinc US$850/t, exchange rate 0.66), had projected revenue of A$155 million. As the modelled capital and operating costs totalled about A$175 million, cash flow was negative and the project was sub-economic.
In mid-December 2005 the model was updated for then current commodity prices alone (copper US$4500/t, zinc US$1,770/t, exchange rate 0.75). The projected revenue essentially doubles and exceeds A$300 million and the projected cash flow is obviously strongly positive.
Since December copper and zinc prices have risen again to US$4,877/t for copper and US$2,250/t for zinc on January 27, 2006 and at those prices modelled projected revenue would be well above A$300 million.
The radically changed economics reflects the record levels to which copper and zinc prices have recently risen and the profound effect of the price increases on projected revenue."
Well guys, copper now stands at $8,000/t and zinc at $3,400/t. The development of Koongie Park is literally a dead certainty.
If it was developed what sort of $$ are we talking though? Using the above model and the resource statement given in the most recent quarterly, this is what we can expect... this is all my own work so expect errors (if you see one please correct it)...
KOONGIE PARK INDICATED TOTAL = USD$1,474,127,170 AUD/USD CONVERSION = AUD$1,720,704,062
Before I go on, note that: "Anglo Australian Resources N L concludes that the mineralisation at Sandiego remains open to the north and possibly to the south. Consequently, drill testing of the possible extensions is a priority. " and in the most recent quarterly... "A program of drilling, for the collection of further metallurgical samples and for testing various exploration prospects is planned for mid-to-late 2007." In short, this could get a whole lot bigger than it already is...
Anyway, moving along...
OPERATING COSTS FOR KOONGIE = A$225MILLION (Assumes 'risen operating costs' from the 2003 A$175 million operating cost figure pitched).
$1,720,704,062 - $225,000,000 = A$1,495,704,062
Now... the CAPEX? I don't have any leads... do you guys know what the CAPEX would be for this? Any old announcements giving us some sort of indication? Well im just going to use $495,704,062... for arguements sake...
(1 - (1.1)^-10) / 0.1 = 6.14457 1bill / 10 = 100mill $100 million p.a. discounted at 10% over 10 years = 6.14457 * 100,000,000 =$614,457,000 NPV
Current market cap is $50,000,000 In other words, an easy ten bagger JUST BASED ON THE INDICATED RESOURCES OF KOONGIE PARK. Yes, AAR at $1/share if this project comes to fruitation. Numbers done lie :-)
Lets not even mention Mandilla and the fact is pumping out $3,000,000 in profit a quarter, or even the fact that we still have 30,000t of ore still await treatment with an expected 11g/t is worth another $5million to be conservative! And already with $5million cash on hand...
And then there are all the other tenements I haven't even looked at... maybe I should do that... lol, its like cream on the cake.
Wow if any of you are still reading this far you have done very well... but anyway in conclusion AAR = NO BRAINER and DYOR!! And please if you guys know what the capex is it would be much appreciated instead of me just using $480mill.. (I suspect the CAPEX would actually be half of that... but it always pays to be conservative...). I hope you guys can add to this thread to post more info on this tenement which is considered "potentially one of the better currently undeveloped base metal projects in Australia."
Cheers guys!!!
AAR Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
