new edison report on alk website, page-2

"We use a gold price of US$1,350/oz and prices for the DZP basket of products as supplied by Alkane (see page 7). On this basis we value Alkane at A$2.44/share (at a 10% discount rate).... For the purposes of our model we assume Alkane sells its A$73.5m interest in Regis Resources and record this as revenue."

Garbarge in, garbage out ...

I mean, gold will be hedged around $ 1600. RRL is trading way above 4,20 and will be worth a lot more, soon. The DFS was based on REE concentrate. Now they and S-E will produce single elements. Part of that is mentioned in the text. Why doesn't it show up in the numbers??? Analysts ...

At least the text is really positive. E.g.
"Alkane believe it will significantly increase revenue over the base case assumption for sale of the two rare earth concentrates. Alkane has not yet announced the cost of treatment to market, but management states that the current pricing method where DZP concentrate prices are based on 70% of each pure metal’s value provides an indication of future rare earth revenue generation."

Maybe the boss of the guy writing it said something like "nobody will believe it if we put in $4 - better to play it safe and factor in huge dilution ..."

Fake edit: well, I was right, reading along comes the explanation:
"Due to the potential complexity of financing the DZP (see Financials section), the as-yet un-finalised hedging facility of up to 163koz Au from the TGP to Credit Suisse and the US$45m loan facility, we have opted not to include our interpretation of these financing arrangements and will adjust our financial model as the company releases more data on these agreements."

Nowhere mentioned is the great likelyhood that we'll have higher REE recovery from ore.

And of course, they only use 20 years of production for their models. No matter that the great thing about Alkane is exactly its long minelife which distinguishes it from almost all the other HREE prjoects out there.

OTOH, Q4/2014 for DZP production seems a tad optimistic. Not impossible, but considering how long it took to get the Tomingley permit ...

ANALYSTS ...!!!


P.S. "we estimate that a hypothetical dividend stream to investors from 2012 to 2033 will be worth A$2.44 per share in current money terms (using a 10% discount rate to reflect general equity risk). This then rises to A$4.11 in 2019 as the maiden dividend is paid, as depicted in Exhibit 9."
2019 ? Why should they wait till 2019 ?? ANALYSTS !!!