re: zinc up she goes: taking stock Two months ago, on the 3rd of...

re: zinc up she goes: taking stock Two months ago, on the 3rd of May – before the commodities and share market corrections…and tax loss selling…and muddying of the waters we’ve seen from the Options exercise - interest in AUL was just beginning to stir.

At that time I posted the following:

“Punters might be interested to learn that at last night’s closing price, the ‘in-ground value’ of AUL’s KNOWN Manindi resource is $US269m, or about AU$353m*. That’s about 52c per share, even after dilution for the options!”


Well, here’s an update on those numbers - and following the conniptions of the past month and a half, I don’t think they stack up too badly!

1.05Mt @ 7.64% Zn is 80,220 tonnes contained metal. Multiply that by US$3260/t (Friday night’s closing price on the LME) = US$261,517,200.

Thus the ‘in-ground value’ of AUL’s KNOWN Manindi resource is $US261.5m, or about AU$352m (the $Aussie has fallen against the $US in the past couple of months)…just about at precisely the same level it was at the beginning of May!!!

The original calculation already assumed dilution for the options, which we now KNOW will all be exercised (the company thus being endowed with an impressive war chest of cash!)…so with about 680m shares on issue, Manindi’s in-ground value is still about 52c per share!!!

But consider:

- Since then the options overhang has been removed and as a result AUL is endowed with a respectable swag of cash. Also the arbitrage players will no longer influence the share price;

- A drilling program highly likely to increase reserves has been completed, and results are pending. Each incremental resource tonne has an in-ground value of around A$36 (equivalent value of approx 12.44 grams per tonne gold);

- The existing resource can be economically mined & processed at current base metal prices;

- Development options are currently pointing to a ‘self sufficient’ mining and
processing operation, with low capex and high returns; and

- Expert opinion on the outlook for Zn continues extremely robust – stockpiles continue to fall.