update, page-6

Agree, Sutto, and thanks for your research.

One of the problems is that investors are encouraged to value the mineral potential "in the ground". That may be a useful tool in some situations but is misleading when applied to Guchab because it should be dirt cheap to extract and relatively little capex will be required.

The Helmsec report last December (page 3) commented: "As can be seen from the table below the valuations of a broad range of copper explorers vary widely. We are perhaps stating the obvious when we say that it is apparent from the analysis is that the smaller, higher grade deposits are valued more highly than large low grade deposits."

IMO the better guide to the value of the deposit is the company's cut-off grade, because that will give an indication of the company's view of the b/e point for its anticipated cash costs of extraction. A cut-off of 1.5% for a deep Chilean Cu mine gives you an idea of just how expensive it is to mine. With SBR reporting grades down to less than 0.3% suggests a substantial gross profit on an average grade of 1%+.

Other factors are lead time before commencement of extraction (no mine shaft to dig); rate of production; topside equipment required; and health & safety (incomparable).

Helmsec suggested a valuation based on A$400/t. SBR's cut-off suggests a pre- discount/tax/minority value of over $4,000/t. If the adjustments for those 3 factors are 65%, 65% and 80%, an "in the ground" value of $1,350/t might be conservative, especially if the average grade edges up to 1.25% and the suggested gross profit therefore moves above $5,000/t.

The project value (after tax etc) of 5mt at 1.25% using those figures could be $105m. That suggests 40c+/sh.

That's at the lower end of the exploration target for Guchab. According to SBR, the idle plant in the locality could process 1mt/yr.

Helmsec's valuation at the time:

"Guchab has a large copper soil anomaly with >5000ppm (0.5%) extending over an area of about 500m x 70m. Drilling indicates that the deposit could exceed 100m in depth. These dimensions would indicate an in situ tonnage of about 10M. A copper inventory of 200kt would be indicated at a grade of 2%."

That's still within SBR's recently stated exploration target. 200kt of Cu from 10mt of ore could be worth 3x as much.