simple valuation example

lets assume that they manage to expand output to 20,000 tonnes per annum

lets assume avg nickel price over next few years at $15,000US and exchange rate 75USD for 1 aussie

20,000 * 15,000 * 1.33 (exchange rate in AUD/US) = $400 mill in revenue per annum

Net profit margin is around the usual 0.3

number of shares approx 130mill

EPS (based on 15,000 USD per tonne Ni price) is:

400mill revenue * 0.3 / 130mill = 0.923 cents per share

there you go, thats why guys like macquarie are saying a ball park figure around $9 per share if you give a P/E of around 10ish

Note this is very simplistic valuation though and is not the traditional DCF using a discount rate and then adding on 'exploration potential'.

Given the special nature of the land that harmanis has been harping on about , its is quite probable that reserves will be increased to the pt where they WILL BE ABLE to produce 20,000 tonnes per annum for a number of years.

In this case the figures above suggest a $9+ valuation plus the high divvys as usual.

If we use a higher nickel price than 15,000 (its around 20,000 now), do the maths (!!!!) although 15,000 US/tonne is a fair estimate over the next few yrs.

Hey im not an analyst, so dont take my figures too seriously - its just a simplistic look at valuation, but brings the pt across

adios