presentation, page-3

Brokers report Apri 2004,
Gives base price of 10c/share
THAT AS THEN



Austpac Resources NL
Commercialisation of Syn-Rutile process adds value
RN
Year to
June
NPAT (Rep)
$M
NPAT (PAbs)
$M
EPS (PAbs)
c
PER
x
CFPS
c
P/CF
x
DPS
c
Div Yld
%
Franking
%
2003a -0.7 -0.7 -0.2 -28.0 -0.2 -28.9 0.0 0.0 0
2004e -1.0 -1.0 -0.2 -31.3 -0.2 -28.1 0.0 0.0 0
2005e -2.3 -2.3 -0.3 -13.2 -0.3 -14.5 0.0 0.0 0
2006e 2.4 2.4 0.3 13.0 2.1 2.1 0.0 0.0 0
Equities Research – Resources 1 of 21
31 March 2004
$0.04
Short Term
BUY
Long Term
BUY
Andrew Pedler
07 3212 1046
Recommendation
Austpac Resources is commercialising its super-high-grade synthetic
rutile process (ERMS SR) with a feasibility study for construction of a
30,000 tpa SR plant to treat North Stradbroke Island ilmenite under a MOU
to source feed ilmenite and market the SR product.
APG has ample scope for adding to our base valuation of $0.10/share
which considers the 30,000 tpa SR plant, through options to build further
SR plants, and participate in others through its MOU with ILU.
[email protected]
Price Performance
Mar 03 Jul 03 Nov 03 Mar 04
$0.10
$0.05
Security/Capital Details
ASX Code APG
Market Cap 32.8 $M
Issued Shares (dil) 728.4 M
Avg Mth T’over 9.63 M
12 Mth High – Low $0.11 - $0.03
Key Data/Ratios – FY 2004
EBITDA / Sales N/A
EBIT / Sales N/A
Debt / Equity 0.0%
Interest Cover -19.2 x
ROE -4.4%
EPS Growth 15.8%
DCF $0.10
12 Mth Price Target $0.10
Key Points
· Austpac Resources NL (APG) is an Australian listed minerals technology
company. APG’s processes include technology to transform ilmenite into
super-high-grade synthetic rutile, which is a preferred feedstock for titanium
dioxide pigment production.
· Their Enhanced Roast and Magnetic Separation Synthetic Rutile (ERMS
SR) technology is a robust process for upgrading low grade, ilmenite into a
super-high-grade synthetic rutile with TiO2 content between 97-98%,
compared to average SR grades of 88-94% TiO2. Rather than compete
with existing synthetic rutile markets the super-high-grade product will likely
compete in the upgraded slag market, and command a premium price to
conventional synthetic rutile product.
· The process separates and removes penalty elements and minerals
including chromite and radio-nucleides more efficiently than competing
processes. The iron content of the ilmenite feed is separated into a saleable
iron pellet product, removing the waste disposal issues of most other
synthetic rutile processes.
· After a decade of development and pilot teswork APG plans to build a
30,000 tpa synthetic rutile plant to treat low grade ilmenite produced as a
byproduct by mineral sands mining operations on North Stradbroke Island.
· We believe that the ERMS SR process will have wide application because
of its abiilty to accept a wide variety of ilmenite feed. It has sucessfully
treated Murray Basin ilmenites,East Australian ilmenites including that from
North Stradbroke Island, as well as more than eighty ilmenites from around
the world
· APG has signed a Memorandum of Understanding (MOU) with
Consolidated Rutile Limited (CRT) to take about 70,000 tpa of ilmenite feed,
and a MOU with Iluka Resources Limited (ILU) to market the super high
grade synthetic rutile.
· APG plans to expand their pilot plant and complete a bankable feasibility
study, requiring capital of approximately $5m, before progressing to the full
scale 30,000 tpa plant that is anticipated to require capital of about $49m
including contingencies.
· Our base valuation is conservative at $0.10/share as it only considers the
30,000 tpa SR proposal. We believe that the scope for APG to be involved
in construction of further plants, in which it holds equity, will provide


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