CALM BEFORE THE STORM, page-8

unfortunately this is true for the moment. But after reading the AGM-presentation is am still positive on SBM for the coming year. Especially the redemption of the debt (they said the company will be cash positive by the end of december'16) is spectacular. This will "save" the company quite some millions on the interest-bill this year (by 5% interest some A$ 15 mln). For the coming year they have a quidance of some 355.000 OZ, slightly less from last year. the AISC will be higher because of the higher investment budget for drilling etc.. What does this brings us for the FY17. With a production of 355.000 OZ with a gross marging of A$ 550 (1580 (POG) -/- 1030 (AISC)) this will deliver a gross free cash-flow of A$ 195 mln. there are about 497 mln shares outstanding, so per share the free cash-flow will be 195/497 = A$ 0,39. What is the right valuation for SBM with these figures? I for myself put a cash-flow yield of 10% for SBM (but if you want a higher or lower cash-flow yield, be my guest), so a cash-flow PE of 100/10 = 10. This will generate a "fair valuation" of A$ 0,39 x 10 = A$ 3,90. When the POG will fluctuate or the AISC then the calculation can be done quite easily with the new parameters. For now it looks like SBM has quite some potential going forward. For the moment the negative sentiment rules. But when it turns, SBM has some catching up to do; just like other Australian miners.