Welcome comments on this.....current as at 08 May 07.MXR.AX...

Welcome comments on this.....current as at 08 May 07.

MXR.AX valuation in comparison to ERO.AX



MXR owns 35.4 % of the ERO shares and has a JV 30%/70% split with ERO on all the SA properties that ERO is exploring….including the Marree project which was subject of news on 9th March.

http://www.eromangauranium.com/investors/media/2007/ero_news20060309.pdf

If ERO has a 70% share of its “projects” then the ERO market Cap represents 70% of the value placed on those projects.

Today, at 62c a share, with 125M shares (as of March 2007 presentation) Market Cap of ERO is 77M AUS.
Therefore, ERO projects are being valued at $110 M, of which 70% (77M) makes up ERO Market Cap.


MXR

MXR owns 35.4% of ERO……currently 34.5% x 77M= $27.25M

Plus MXR owns 30% of ERO projects via JV…30% x $110M (from above value for ERO projects)=$33M

Plus MXR has several other projects that don’t involve ERO ranging from 50% to 100% owned, including…
Windimurra U project…WA
Woolanga (Copper/Gold)
Sellheim (Gold)
Bird in Hand (Gold)
Narndee (Nickel)


Without taking into account ANY value for these other projects we arrive at a value for MXR of $27.25M+$33M=$60.25M

With $110M shares fully diluted this equates to around 55c per share.

If we assign a very conservative 5 cents per share ($5.5M) for the other properties MXR has we arrive at a minimum current fair value of 60c per share.

(Which equates to a minimum fair value of 40c per option MXRO.AX with 20c strike.)

With the market valuing the ERO projects at $110M and ERO trading at 62c, we can conclude that MXR should be trading at almost exactly the same price per share…..and likewise should rise and fall in conjunction with ERO, until such time as the market gives some value to MXR’s non-ERO properties.
At that stage MXR share price should actually exceed ERO.

Why then is MXR trading for ½ the price of ERO?

Either ERO is overvalued or MXR is a bargain.

Are the ERO properties worth $110M??
They claim to have discovered a new 100km palaeochannel.
That is huge!!….and it’s near the existing Beverley U mine..
And they are in the right state (SA) for U mining with U prices going ballistic.
Many U companies are valued at $20 a lb in the ground…..so a tiny discovery of only 4M lbs of U would justify the M/Cap of ERO.
(AGS has a market cap around 550M with just 8M lbs….though 3 times that or more is expected in future)
But ERO haven’t found U yet….looks like they have an excellent chance of finding a lot more than 4Mlbs though.


Market awareness is focussed on ERO….perhaps ERO have better management??…..regardless, as shown above if ERO is worth 62c a share, then so is MXR!….it owns exactly the same assets that ERO does!!
(Plus a few extra of it’s own, two of which are also potential “company makers”.)
It may not be long before an analyst chomps the numbers as I have here, and comes to a similar conclusion.

Either ERO should come down, or MXR should go up…..or a bit of both.
But they should be trading at the same share price right now.