Ann: High Grade Koolan Island Ore Reserves Increase, page-19

Fair question, and in truth it takes some work to benchmark this company because the mountain of cash hides the answer somewhat.

Point one you already know and that is if one deducts $477m cash from market cap you get the share market market not ascribing any value to the underlying business. That is the first indicator there is something wrong here.

NPAT for the December half year was $15.7m for ongoing operations. This includes $6.6m of interest income from holding all that cash. So, we are left with a business with an actual profit of less than $10m per half. Compared to that approx. $10m actual profit, we have head office expenses of $7.9m. That seems high to me relative to total net profit after tax.

This seems like a candidate for an activist shareholder to buy enough shares to agitate to change the capital structure, and release value for shareholders. One problem is that the mountain of cash actually acts as a defence, because the value released is small relative to the cash, maybe $100m or so, so not worth spending half a billion dollars to go through the anguish and trouble for a 20% return over probably a few years fighting management lawyers.

Anyway this is my opinion from looking at financials and other company releases. If you see it differently that's fine too, and I'm open to suggestion.

The Koolan Island feasibility study update, in my opinion, increases substantially this potential value uplift, as perhaps surplus cash over the maximum project draw down could be paid out now (approx. $300m), and still have a $500m market cap company if spot prices are realised in the next five years.