comparison

Posted courtesy of zengas from advfn


re the valuation possibilities and subject to success.

If partial success is acheived, i'd expect it to come in 2-3 phases. When GKP announced their initial discovery i remember saying that we would get to a valuation (2009/10) equal or greater to DNO at the time.

Sino is valued at £110m with A$7.5m at the end of Dec
http://clients.weblink.com.au/clients/sinogasenergy/article.asp?asx=SEH&view=6622864

and raised a further A$10m in Jan 2013 (82.5m shares).

circa 1240m shares @ 14c = A$174mm = £121m m/cap.
Circa A$16m cash remaining = £11m cash.
Values the asset at £110m.

Leyshon similar adjacent analogous asset with first 2 wells identifying 9 and 15 zones worthy to test.
249m shares @ 19.5p = £48.5m m/cap but made up of circa 12p cash = circa £29m cash.

There's no value put on the Mt Leyshon gold project which is probably worth perhaps $5m-$10m+ ? - but not included.

The huge gas potential of the Leyshon asset is valued at only £19m against £110m for SinoGas asset next door.

If Leyshon are similarly successful at this early stage then they should add on a further £90m to play catch up to SinoGas which would convert to a further 36p and take us to an initial price target of circa 56p with our Mt Leyshon gold asset still in this for free - so maybe a realistic 60p target against SinoGas who incidentally have been trading much higher than present. So this is what i beleive is highly feasible just on comparative re-rating terms and it's not that long ago we were 25p.

We'd also likely get 40% of past costs to date if the partner takes up the option at a later date.

As SinoGas strive to create a 500 bcf reserve, it's this comparrison in about 12+ months imo that we could be looking to get into the major multiples in share price and if success continued, we should grow further towards the target multiples (as ever subject to success).