Interested to listen to Dr Giles’ comments regarding a potential...

Interested to listen to Dr Giles’ comments regarding a potential sell-down of HAV’s stake in the Kalkaroo project, citing the June 2016 AOH deal with China’s SRIG as an example.

I’ve since had a quick look at the AOH June 2016 Investor Update.

Comparing the pair, at a glance:

	Column 1	Column 2	Column 3
0	Metric	HAV - Kalkaroo	AOH - Cloncurry
1	Location	SA	QLD
2	Au resource	2.0M oz	0.4M oz
3	Cu resource	620kt	1.65Mt
4	Capex	A$310M	A$294m
5	AISC	US$1.38/lb	US$1.96/lb
6	NPV	A$295M (PC) A$309M (SO)	A$346M
7	Discount rate	10% (PC & SO)	7.5%
8	Split	Current: HAV 100%	AOH 34%, SRIG (China) 66%
9	Consideration	Current: N/A	US$213.5M for 66% (= US$323.5M for 100%)

You can make up your own minds as to the relative metrics of the two projects e.g product mix, capex, opex etc

It’s worth noting the respective discount rates used to value HAV and AOH. Given the prevailing low interest rate environment, the discount rate used to value HAV could be subject to conjecture. Were the HAV discount rate reduced, this would materially increase Kalkaroo’s NPV (as the future cashflows would be discounted by less).

It would be a great achievement if HAV could line up a similarly credentialed partner as SRIG.

DYOR.

Sources:
AOH:
June 2016 Investor Update 2/6/16 (see ASX announcements)
HAV:
PhillipCapital (“PC”) 8/9/15 research report (see HAV website)
StateOne (“SO”) 30/11/15 & 12/7/16 research reports (see HAV website)