SHARE VALUATION: Take 2(I am out of town at the moment but...

SHARE VALUATION: Take 2

(I am out of town at the moment but rejigged my previous post on a train trip this arvo. I thought that the costs looked a bit 'light on' with my previous effort which was tapped out in a hurry, hence my disclaimer at the time.

Apologies if the following approach has already been covered as I haven't time to read the threads just now.)

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After a re-think and a clarifying phone call, the following should be closer to the market.

Btw, the Lycopodium study is a comprehensive 226 page document which is conservatively based and takes into account absolutely everything related to running the proposed mining operation at Rocklands. I have based the following on a debt funded mining operation with no further dilution.

Resource: 30 mt @ 1.24% Cu equiv

Mining Costs: $3.40 per tonne
Processing Costs: $14.07 per tonne
Copper price: $AUS 8,000 per tonne
Borrowings: $150 mill

Amount of copper: 372,000 tonnes
Strip Ratio: 2.5 to 1

Waste Tonnage: 30 * 2.5 = 75 mt
Ore Tonnage: 30 mt
Total Mining Tonnage: => 30 mt + 75 mt = 105mt

REVENUE: 372,000 x $8,000 = $2.976 Billion

COSTS:

- Mining Costs => 105 mt x $3.40 = $357 mill
- Processing Costs => 30 mt x $14.07 = $422.1 mill
- Admin Costs => 10 * $5 mill = $50 mill
- Interest: $20 mill (Principal repaid after 1 year)

Total Costs: $849,100,00

NET before Tax: $2.127 Bill

NET after Tax (30%) and Royalties (2.5%): $1.436 Bill

NET after Borrowings Repaid: $1.286 Billion

EPS per annum: $0.94 (Based on 137 mill shares)

Future price target: $7.51 (PE of 8)

The PE of 8 is justified because of the 1 mill tonne resource inventory even though initial mining is based on only a third of it, plus production will very likely to be timed to coincide with a vigorous commodities boom where there will be sever imbalances in supply and demand and inflation will be a key theme. Also, the reality of Rocklands is that it will be a multi decade mine.

Again, the above valuation makes no allowance for:
- the expansion of throughput for existing lower grade ore,
- further exploration success along the various strikes,
- mining at depth,
- success with Wilgar and/or
- success with the SW anomaly.

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The above valuation also makes no allowance for the likely event that actual mining head grades will be much higher than the theoretical estimates provided by the company's independent consultants.

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As the thread header suggests....not too shabby eh!

Especially when the market has irrationally trashed the stock down to $2.08 and the company is looking like a bargain basement proposition.

Maybe 'irrationally' should be replaced by 'purposefully' as I sense there is an obvious agenda at play here with a cleverly orchestrated 'sting operation' that looks to have taken place as per previous commnetary?

If I am right, IMHO we will see action quite soon now, with the company's wares on display with the DATA room open and with BIG players who are fully capable of doing their own resource numbers getting really excited about getting involved with an impressive copper project.

After all, why wait for the share price to recover before making a move. The hard work will have been all for nothing!

Cheers
Nev

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