rcr report on pnn

Despite its image as a potential medium term uranium producer from Crocker Well (14.9mlb resource, PNN 40%), PepinNini is staking its future on major exploration projects for copper-nickel, gold, uranium and base metals in strategic ground in SA and N Qld. These projects have the potential to be primary value generators - the PNN share price suggests little value is currently placed on them.

Key investment points are:


* A diversified minerals company with a uranium, gold and base metals project focus, A$6mpa exploration budget.

* Our valuation is A$0.67/share (current price is A$0.35) - strongly leveraged to future exploration success.

* As a uranium stock (with other assets), enterprise valuation of US$1.89 per lb resource is modest.

* Crocker Well uranium project (60% Sinosteel) - 14.9mlb U3O8 resource - BFS release is imminent, possible production early 2012.

* Musgrave Province - PNN is the prime explorer in this unexplored region with the potential to contain major Proterozoic-hosted nickel-copper and base metals systems.

* Gold exploration in North Queensland is gaining pace with drilling of high grade targets expected in 1H09.

* Sinosteel to fund A$6m of base metals exploration in the Curnamona Province (PNN 40%) - 30 priority targets.