Ann: GRR - Quarterly Report for 3 months ended 31 March 2018, page-36

My valuation approach for GRR involves taking it as given that the Property Development JV will make a $5-10 million loss per annum until either (a) ASIC gets involved; or (b) GRR requires the funds to develop further mining opportunities. It does not seem likely that the JV can scale to a level which would involve higher than a $10m downside annually.

Even with a full $10m loss on the property side, one would hope that GRR can make (conservatively) $40m p.a. net from mining operations and interest on cash held. GRR does not seem to pay much tax (31 Dec 2017 annual report indicates ~$100m in deferred tax assets) so let’s say that $30m NPBT equates to $25m NPAT; then EPS is still 2.1c and a 20c share price is easily justifiable (ignoring the large cash buffer in the valuation except to the extent that it generates interest and adds to NPAT).

I did sell 50% of my holdings at slightly above 20c post the property announcement in order to de-risk my position, but at this stage I plan to hold on to the rest as GRR is trading below what I deem to be fair value. I hope that we will be able to put pressure on the GRR board to minimise the expansion into property as it is unlikely to be in the best interests of shareholders.