valuation, including penumbra, and misc notes, page-2

Great work and effort again Mihal. A couple of questions/points though so that we can get these near term sp predictions close to the mark :

1. Are those figures for salable coal of ROM, as I was under the impression that presentations quoted ROM? For example, with Ferreira, the presentation states 0.7mtpa. As we know, the quarterly production is 120kt export + 45kt domestic = 165*4= 0.6mtpa. Is 40ktpa non salable and lost through ROM?

2. In relation to the BEE not taking profits before capex is paid, I think that this can only be per mine eg once Penumbra has been constructed, 26% of the capex outlay for Penumbra will be deducted from the BEE's share of the profits from Penumbra and the rest will be paid to the BEE.

What I am getting at is that each mine may be individually considered when paying out profits to the BEE. Imagine a situation where Conti is going to pay $200m in capex for a massive project in 2014. 26% of this $52m. Are we saying that the BEE won't be receiving a penny until this mine is paid for? I'm not so sure about this but would like the company to confirm this.


3. On the subject of P/Es which related to the above point. If the 26% of the BEE's profits are to be withheld from all mines until all capex for all of the mines have been paid for, then accordingly the P/E expectation would have to be revised downwards as there becomes a liability in the accounts to the BEE. For example, 26% of the $311m 2013 operating profits which you have stated is a liability (its not our money). Therefore you would have to calculate the p/e on Conti's share of the profits irrespective of whether they have been paid out to the BEE yet or now

4. P/E is always on NPAT. So after calculating the operating profits, then you have to go one step further to calculate EBITDA, and then after this take out the tax. Only then should a P/E be applied.

Even after taking all of the above into account, the profits will be very large, especially considering that this year we will probably have a multi-billion tonne Botswana JORC which will have to have an in-situ value applied to the share price. On this note, the same applies for all of the 2011-2013 non producing mines.