Hi (Littlesan),"From the graph u provided, on what assumptions...

Hi (Littlesan),

"From the graph u provided, on what assumptions did you put in to project NMR share price being $1..is it based on AFR that rose from 8c to $1 post-annoncement?

The graph on NMR SP projection is based on the outcomes of my DCF valuation using the assumptions developed in Helmsec valuation report and AFR concept study.

As I mentioned before, the aim of the projections may help estimate the Net Present Value of NMR, and compare my figures with the one presented in DJ Carmichael report for NMR using Enterprise valuation (EV).

The projections assume that NMR will develop 2 projects, the first one will be for the sales of washed coal for domestic and regional markets, and the second for the export of coal thermal to India market (very likely).

Project1 : Sales of washed coal to domestic and regional markets. Expansion to produce coal sales to power stations
- It is assumed the project1 will encompass 2 phases, with a total capex of US$115M:.
- Phase 1 will see NMR delivering 1.7 Mtpa of washed coal to industrial customers, and phase 2 to supply 3.1 Mtpa to third party IPP (power stations).
- Overall, the project will mine 5Mtpa over 30 years LOM (circa 5% of current JORC resources).

Project2 : export of quality thermal coal to India
Taken a similar assumption from Helmsec valuation report, NMR project2 could export 18Mtpa over 20 years LOM, assuming 60% yield of full seam (30Mtpa ROM). The project require a Capex of US$1 billion.
Overall cash cost is US$55/t, that include on-site costs, freight, handling and ship loading.
FOB price is US$80/t.

Estimates of NMR SP for project1 and project2 = $0.21 + $0.76 = $0.97

The other graph is a simple comparison of resource and quality of coal between NMR and AFR.

The aim is to be ahead of the game before brokers will re-rate NMR with the scoping study.

Cheers,