npv valuation, page-7

Article in SMH should help.

NPV $70M

Looks to be shaping up a real new mine in the Philippines

The island of Rapu Rapu can be found about 350 kilometres south-east of Manila in the Philippines and apparently got its name from the word "yapu-yapu", which means an object that is distant and scarcely visible.

This sense of isolation may be tested soon if Lafayette Mines's recent $8.5 million placement is any guide.

The Melbourne miner had no trouble raising the funds at 9.3c a pop with the help of Euroz securities to repay a $3 million bridge loan and begin construction of its Rapu Rapu gold, copper and zinc mine.

About 85 per cent of this found its way to institutions believed to include David Paradice's Paradice Cooper Investors, Colonial First State and Peter Morgan's 452 Capital, which are already sitting on nice paper profits with the shares closing at 12c yesterday.

Put simply, the big boys are investing in a planned $US43 million ($67 million) open-pit project with a six-year mine life and a payback of about two years.

With a somewhat delayed deal on debt financing promised in the coming weeks, Lafayette chief Andrew McIlwan hopes to begin serious construction in time for the dry season in January with the commissioning of a gold plant planned by the end of 2004 and a base metals plant two months after that.


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McIlwan estimates the miner's net present value at $70 million compared with a market capitalisation of roughly $40 million (some of the placement requires shareholder approval).

There are 600 million tonnes of reserves to begin with but there should be some upside because Lafayette has the right to explore about 80 per cent of the island.

The Philippines has never been the most predictable place and the unrest in July - a shortlived mutiny of young military officers - took the wind out of the share price.

However, McIlwan argues that Rapu Rapu is out of the way - as its name suggests - mainly Christian and unlikely to suffer the same kind of commotion