update, page-4

Hope you enjoyed the update,

From discussion with SBR, an initial Jorc for Guchab Canyon and Surrounds of 10 Mt @ 2.5% Cu & Silver Credits is looking more likely. As per previous communication, a Jorc is targeted First Quarter of Calendar 2014 (4 months away or earlier)

Lets put this into perspective,

at 2.5% Cu Grade, (placing everything else constant) I would expect a EV/Tonne Ratio of around $600 per Tonne.

Lets try and put a valuation on the Guchab Canyon and Surrounds only:

10,000,000 X 2.5% = 250,000 Tonnes Cu
250,000 X $600 per Tonne = $150,000,000

SBR Share of Guchab = 80%
$150,000,000 X 80% = $120,000,000

Lets have a look at this on a EV/Share Basis
$120,000,000 / 220,000,000 (circa) = $0.55

This is a near term 10 bagger imho...and this val is based off an initial exploration of the Guchab Canyon Area ONLY...NOT Eisernenhut, not Schlangental, not Nehlen, not...well you get my drift..plenty other highly prospective areas on the Kombat Trend..

Other Considerations to take into account which will change Valuation metrics:

(i) Infrastructure in place
(ii) Access issues upon development - this is tough hilly environments.
(iii) Silver Credits
(iv) Metallurgy – can the ore be beneficiated?
(v) Potential Recoveries - Structural Controlled Nature of the Deposit?
(v) Namibia – perceived Country Risk? Remember my previous post whereby CIBC rated Namibia higher risk than Australia, but less risk than Brazil!
(vi) Timeline to development – Perhaps in the future Management can convey a timeline? At the moment I think this is affecting the SP quite negatively, and once a Jorc on Guchab is achieved, id like to know what the path to production is...


My thoughts are that for an initial Exploration Programme of the Kombat Trend, if SBR can produce a Jorc of 250,000 at 2.5% based off Guchab Canyon and Surrounds only, and they can move to other highly prospective areas..i.e. Eisernenhut/Schlangental/Nehlen etc...you have to ask yourself, is the 5 cents per share currently enough to justify an exit?

If other readers have other opinions please feel free to discuss, I have been wrong before :P