potential increase mineral resource, page-7

Calling all you cashflow experts. Can I please justify some key assumptions in the DCF work I refer to. It never ceases to amaze me how many people invest without running a basic DCF model - it is just suicide without one.

Some of the key assumptions I make are:

Nominal Copper price path of:
2006: $2.10 per pound
2007 $1.90 per pound
2008 $1.75 per pound
2009 $1.50 per pound
2010 $1.55 per pound
2011 $1.65 per pound
2012 $1.70 per pound

For gold - I have assumed a price path of roughly $450 per ounce from 2006-2012

I have assumed that the Capital raising project for Phu-Kham is closer to 165million. Assumed that debt financing will be as high as 70% (yes, aware of what was said, but with quasi-debt etc - this could take it higher, also with surging gold and copper prices).

Assumed capital raising will be at 27c a share.

Assumed depreciation is SL at 9%.

Assumed the long run variable cost of gold is $230 per ounce ($200 initially, but it is noted that this will increase).

Assumed the long run variable cost of copper is at 65c a pound.

Running a 12% WACC.

For Phu-Kham - assuming 315,000 ounces of gold are pumped out - profile averaging arround 62,000 ounces per year.

For Phu-kham gold - assuming 500,000 ounces of gold - profile is choppy, as low as 20,000 ounces in the first year going as high as 90,000 in some years. This profile goes from 2006-2010

For Phu-kham Copper - assuming 490,000 tonnes per year - profile lumpy with first year around 10,000 then increasing to 50,000 tonnes and going as high as 67,000 tonnes in a year. This profile goes from 2007-2016.

This Pumps out a 46c share price. Note, this does not include any other projects which could push this higher. Anyone else done some solid cashflow modelling - would be interesting to compare.

Without Phu-Kham, I get a share price of 7c

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