the trough, page-9

Nb1 - no hard feelings here. To further probe your response; why $1 rather than $1.50 or $0.50 or $0.14?

Flevine - I disagree to some extent that you can't value APG right now. You have to be able to value it, otherwise when do you know its good value to buy or a good time to sell?

I agree that there is scarce information out there at the moment to help us value APG and that there are big differences in valuation that come out depending on what inputs you use. But you have to put some stakes in the ground somewhere, otherwise you are completely at the mercy of that manic depressant, Mr Market.

I'm not pretending to have all the answers here. I'm just trying to get a framework to use to help me make my buy and sell decisions that I feel others might find useful. I also recognise that my framework misses out large future opportunities for APG in terms of Gold, Steel other clients.

For those interested, in terms of my valuation - the key questions I'm hoping the announcement will answer are:

1. Do BHP consider APG technology proven at scale? If so, this significantly increases the likelihood of a commercial plant getting through feasibility studies - adding value to the share price by reducing my probability adjustment %s.

2. What size plant do BHP / APG intend to build? This is the most important differentiating factor, as it's this that drives the NPV figures I use to get to the share price.

If its a 60 tpa plant, I believe we are looking at a short term 0-50% share price appreciation (based on an NPV of $126m), with more appreciation possible in the longer term if gold, steel, bigger plants, iron eventuate.

If its a a 240tpa plant , my view is we are perhaps looking at several multiples of todays price (perhaps even 400% - 500% or more) based on extrapolations from the figures of the 60k plant

N.B. My inputs to the 60k plant NPB have been revised after I found more accurate projected financial information in the 2005 MD Presentation (see page 17 of the 6th December 2005 announcement). Essentially APG stated an expected NPV of $126m from a 60 tpa plant; equating to approx. 20c per share (not weighted for probabilities).

This is a higher than the 76m NPV I estimated for two reaons; (1) It uses a lower discount rate (10% vs my 11.25%) & (2) It implies a longer earnings period for the plant (approx. 14-15 yrs vs my 10 yr Horizon)

For these reasons, having reached my previous target of ~14c, I consider APG a hold until further info comes to light. The downside risk is that BHP need further tests/evaluations to move into the Banking Feasibility study.

Regards,
Fergus