sp value, page-2

Going by the various media reports they are not looking at buying 50% of MAK but rather 50% of Wonarah. If that proves to be the case then the price paid will likely have no grounding in the MAK price but rather be a debate/negotiation about perceived value of the net present value of the Wonarah asset between MAK management and NMDC management.

You simply have no information that would enable you to accurately calculate the present value of Wonarah or the long term value of Wonarah to a buyer like NMDC. However the starting point will be how much has been spent proving up the asset to date and how much is reasonably currently estimated to develop the asset since it seems likely that NMDC are going to be the lead funder if they prove true to the articles.

Allowing your starting point as the share capital structure and using your 50% basis I would say it is extremely unlikely that NMDC will pay the equivalent of $1 per share at current stage of development. The current market cap for the whole company at 50 cents is $114 million and you would be effectively advocating paying twice that, $228 million, for half of Wonarah. Given that the current market cap includes the Sandpiper project and other assets this would seem to be a massive price to me and one I would be challenging if I were an NMDC shareholder.

The bargaining advantages are on NMDC's side apart from one thing - India is so dependant upon phosphate imports you could argue they basically have no phosphate of their own thus security of supply is of major importance. With that in mind I would be punting they'll pay a premium but it won't be outrageous. My gut feel would be that $50 million for half of Wonarah at current stage would be getting close to topping it out (plus financing support of course).