31 Dec 16 - Half year report, page-12

Interesting times ahead. Read the director's report. A lot of potential if they can a) capitalize on upcoming green shoots b) seal the acquisition and c) take up some of the alternative work such as that of the South Fremantle turnkey luxury townhouses.

The issue is they've been talking about the acquisition for so long, and green shoots are out of our control/hands - e.g. no one expected a resurgent iron ore price, and no one knows if in 12 months it will be a dead cat bounce gone limp.

At this stage I would be more concerned with them sealing an acquisition, finding alternative work etc. such as the South Fremantle - ultimately they need that recurring revenue stream in the short term until leverage can be utilized in the mining space.

The positive I take out of it is that they appear to be quite proactive in reducing management and executive salaries, working capacities in line with the softening conditions. It is rare to see some pay cuts for the 'greater good' by management. If it means turning over a small (albeit still) profit, then they can make up for it when the times get better.

The question is now where does value lie? 631,404,067 shares. Net equity of $19,408,280. Currently 2.7 c a share. Being convervative, a 3c a share price puts market cap at 18,942,122.01.

On a very simplistic comparison net equity covers the market cap. P/E will obviously be abysmal with the current profit figures. Cash backing/share is 12,458,231 = $0.0198 a share. Round that to 2c per share. Assume 1.8c if erosion of cash continues going forward in the short term.

Perhaps others would like to weigh in on what sort of value they see in these numbers.