valuation, page-9

A projection for 2012.

This is based on the current figures. Obviously who would know what the real assumptions for 2012 will be. Also, I'm not suggesting that the SP will be this projection on the 1st of January 2012. It's just a reflection on what we might be receiving in the form of revenue and what sort of projected Net Profit After Tax we maybe looking at. At the end of this post will be a Share Price projection based on EPS times 10, the considered norm. If that happens in the year 2012 is obviously up to the market. Don't take this post too seriously, it's just a bit of fun.

Who knows, if BCI management can find the time to do lots of drilling, and we receive some major good news from drilling, that could be the thing that drives the SP up a lot. I get the feeling some times that BCI management aren't too interested in rushing into the drilling. They only drilled enough to make the NJV feasible for FMG. I guess the resource isn't going anywhere, but it would be good to know what lays under the BCI tenements as well. BCI managements number 1 focus at the moment seems to be having the funds to start production. Further drilling seems to depend on time and money available after starting up the project is taken care of.

Same assumptions for 2011, except 5Mtpa for 2012 (BCI 50%), rather then the 3Mtpa for 2011. I've also lowered opex from $42 to $40. BCI management and Argonaut expects opex to come down to $40 or even $39 by 2012. Although I'm expecting opex to come down before then, anyway -

SAME ASSUMPTIONS USED FOR 2011 :-

AUD $78.28 per tonne - AUD $40 opex = $38.28 FOB
$38.28 times 2.5Mtpa = AUD $95.7M Revenue
$95.7M plus interest $3.9M = $99.6M
$99.6 minus depn + amort $3.4M = $96.2M
$96.2M minus admin 1M = $95.2M (EBIT)
$95.2M minus tax @ 30% = $66.64 (NPAT)
$66.64 divided by shares on issue 83.711M = 79.61 cents (EPS)
79.61 cents times 10 = $7.96 (PE RATIO OF 10)

Projection, if a PE RATIO of 10 is considered true value of a producing mining company,

$7.96.

I'll say it again, this is just a very rough estimate. I haven't allowed for the fact that an un-named Hong Kong company has lent BCI - US$50M for capex. They may also take up there options for $1.50 which will dilute the number of shares on offer as well. Even if it is Money up front for off-take, that favor will need to be returned over 8 years. As I have said, I'm not sure how to treat the un-named Hong Kong company in a valuation. However no matter how you look at it, these figures do suggest that BCI maybe undervalued ...... ALOT!