xstrata to pull plug on tampakan, page-28

Melua,
I tried to reverse engineer the Highlands Frieda numbers to make a comparison with the in-ground Cu valuation that you have mentioned for Tampakan.

A combination of Frieda (H+I+T) plus KOKI gives me an in-ground valuation of 5.11c/lb and 5.91c/lb fully diluted. Adding Nena, I get an in-ground valuation of 4.3c/lb and 5.1c/lb fully diluted. I am happy to see that this falls within the range of 5.5-6.0 c/lb which you quoted.


HOWEVER, this assumes that:

1.Nena and Frieda are the only Highlands assets and ignores (assigns zero value)for the $1.4billion Ramu nickel project where Highlands (8.5-11% interest)is free carried to production which commences 4Q2009

2.Does not take into account the terms of the farmin deal with Xtrata where Xtrata has to source and guarantee HIGs share of taking Frieda to production.

i.e. $0 value for the above is assumed in my calculation.

There is then also the matter that production cash costs for Tampakan (46c/lb) are double that of Frieda (22c/lb)

I will look to develop a valuation for the Ramu nickel project to offset against.

While Frieda (pre-feasibility Jun 2010' and feasibility Dec 2011)is certainly not as far progressed as Tampakan, I think I noted that Tampakan was slated to commence production at the same time as Frieda ... i.e. 2016 ??