rrso - experts would value them at 2.3c with rrs a

Here is an extract from the Annual Report on the valuation of options for the directors - these need to be independently valued for shareholders -

"2.8.6 Valuation of Director Options
The Director Options have been valued by BDO Consultants (WA) Pty Ltd using the
Black & Scholes pricing model and based upon the following assumptions:
(a) the Director Options are exercisable at $0.05 each;
(b) the market trading price of the Shares at the time the Company agreed to
grant the Director Options was $0.026 (being the Share price as at
4 October 2005);
(c) annualised standard deviation of 110% (based on historical data from the
Australian Graduate School of Management’s Risk Measurement Services);"


Note they use a volatility rate of 110% which if you plug into an option pricing model using current variables you get a valuation of around 2.3c for the options (I used 5c strike, 4.4c current price, 670 days , 110% vol and 5% riskfree rate).

I personally think that volatility is a little high as it would be skewed by the false spike early in 2005 but it just highlys just how cheap the options really are.