valuation of perkoa and mumbwa abt 4 bucks, page-6

Buyitlow , heres the step by step calc:

Assume 75,000 tonnes of Cu initially @ a long term price of $3.50/llb (per pound). Assume total costs of $1.50 per pound. Thats a margin of $2/llb. Assume parity for AUD to USD.

So 75,000 tonnes * 2200 (theres 2200 pounds in 1 tonne) * a margin of $2 per pound = an EBITDA cash flow of 330million dollars! Take depreciation of say 15-20mill and take tax of 25% and you get : circa 235mill NPAT rounding off .

Ive also ASSUMED we give up 30% of the coy to GLENCORE for their financing. You dont have to include this in your models as we CAN get DEBT financing if possible!

Ive ASSUMMED the share capital at least DOUBLES to circa 350mill. If we dont get help in financing from GLENCORE wed have to take 50% debt and raise 50% equity.

ASSUME that we need close to 1 billion incl funds for DFS / BFS etc.

**** If we DONT give up 30% to glencore, wed have to increase the equity base a little . Say 400mill in shares - remember well prob have to do another cap raising for DFS/BFS and then another one or two raisings for the project CAPEX of circa 400-500mill. The rest we can borrow. Or we can give up some of the company to GLENCORE. Remember we may need circa 1billion CAPEX .

Assumming we raise 50% and borrow 50%, lets say our equity share capital base will be 400mill (in previous calcs ive assummed 350mill

So EPS on 250mill profit will be : 250mill/400mill = 63cents per share

Thats on 75ktonnes of CU

Id imagine wed produce circa 100kt of cu per annum given the enormity of the resource

100,000 tonnes * 2200 (to convert to pounds) * $2margin per pound * 1 (parity in AUD/USD) = $440mill EBITDA

take away 15-20mill for depreciation and 25% tax in africa and you get : circa $315 million NPAT

EPS for 100,000 tonnes pa Cu prod + perkoa 15-20mill NPAT pa: 330mill/400 shares on issue = 83 cents per share

PE of say 8 : 0.83 * 7 = $5.80 valuation

PE of 8 : 0.83 * 8 = $6.64 valuation

PE of 10: $8.30 valuation

**** The above of course has the KEY ASSUMPTIONS of an extra 240mill shares added to present 160mill shares on issue, and, 50% debt financing for CAPEX close to 1billion for a 100ktpa cu operation and a 90ktpa zinc operation.

Long term Cu price assumed at 3.50/llb; costs total of $1.50/llb (low costs since its high grade and we in africa); AUD/USD is at parity.