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Key Points
• Scoping study confirms economic viability of Salman project.
• Acquisition of adjacent ground potential to add high grade
feed to project.
• Expect resource base to approach 1.8-2.0moz over 6 mths.
• Bankable feasibility study to be completed by end of CY’06
• Valuation and target price $0.99/sh.
Comments
A positive scoping study, aggressive drill program and new land
acquisition adjacent to its main resource augurs well for ADU over
the coming year.
We believe Salman will become a ~ 100koz pa gold mine and with
over 500 sqkm of tenements and numerous soil anomalies to test
we believe ultimately the resource will grow to ~ 2moz and reserve
to 0.8-0.9moz.
A scoping study was completed on the Salman/Anwia deposits.
The key assumptions were:
Capex: US$57m (includes 15% contingency)
Strip ratio: 3.6:1
T’put: 1.3mtpa
Production: ~ 100koz pa @ US$286/oz
Optimised Rsc: 680koz @ 2.65 g/t Au
Mine Life: 6.5yr
Net Free CF : A$125m (using a gold price of US$550/oz)
(The Net Free cashflow is after capex, pretax and an exchange rate of $0.74).
This estimate was in line with our estimate which form the basis of
our $0.99/sh valuation, however we include a nominal value for the
remaining rsc ($10/oz) and $5m for exploration potential.
A potential timeline to development would be a feasibility study
completed by end of CY’06 (cost $6-7m) followed by construction
and first production in late CY’07/early CY’08.
We believe there is upside to our valuation with mineralisation
still open along strike and down dip and potentially higher grade
mineralisation at recently acquired adjacent prospect.
The recent acquisition of the Nkroful property for A$3.5m (cash
$1m, scrip $2.5m) appears to be a very good deal and price. This
property is located 3km S of Anwia and 10km SW of Salman.
Previous drilling has intersected some high grade mineralisation
including 6m @ 148 g/t from 50m, 14.1m @ 10.1 g/t from 1m and
35m @ 2.2 g/t from surface.
Adamus Resources
(ADU $0.80) Speculative Buy
ADU believe there is potential for a modest high grade resource,
say 100-200koz @ 8-10 g/t. This higher grade ore would obviously
enhance the Salman project and could result in the overall grade
increasing closer to 2.8-3.0 g/t (currently 2.6 g/t Au). This has not
been factored into our valuation.
ADU offers both gold price and exploration leverage. It plans to spend
$3-4m on exploration in CY’06 whilst completing the feasibility study
with the target of increasing the current 1.5moz resource closer to
2moz. It trades at a discount to our valuation and with numerous
COMPANY ACTIVITIES
Adamus Resources Ltd listed on the ASX in June 2001 on some grass root
exploration tenements in WA. In August 2002 it acquired the Salman project
located in Sth Ghana and commenced a confimatory drill program. In Jan’04 it
acquired the neighbouring Anwia deposit and consolidated its land package around
these two projects.
After an extensive drill program ADU announced its initial resource from Salman
and Anwia of 720koz. Further drilling lead to a resource upgrade of 1.2moz in
Feb’05. The bulk of this resource is oxide and defined to a maximum depth of ~
120m.
The company aims to complete a prefeasibility/scoping study by the end of CY’05
and assuming a successful outcome would immediately commence a bankable
feasibility, likely to take 9-12months. We envisage that based on a successful
feasibility study first gold pour could be late CY’07/early CY’08.
The management team is headed by Hamish Halliday, a geologist with over 10
yrs experience and the recent addition of Gary Brabham as Technical Director
strengthens the board.
AUSTRALIAN RESEARCH
TOP 20 SHAREHOLDERS AS AT 02 MARCH 2006
Shareholders Shares (m) (%)
1 Westpac Custodian Nominees Ltd 18.40 20.74
2 Mr Robert Charles Gardner 10.84 12.22
3 Citicorp Nominees Pty Ltd 7.27 8.20
4 Macquarie Bank Ltd 7.00 7.89
5 Semafo (Barbados) Ltd 4.00 4.51
6 National Nominees Ltd 3.83 4.32
7 Hightime Investments Pty Ltd 3.15 3.55
8 Hightime Investments Pty Ltd 3.00 3.38
9 Macquarie Bank Ltd 1.75 1.97
10 Aurora Sky Investments Ltd 1.14 1.28
11 Dundee Precious Metals Inc 1.07 1.20
12 ANZ Nominees Ltd 1.06 1.19
13 Mr Mark Trevor Bojanjac 1.02 1.14
14 McTavish Industries Pty Ltd 1.00 1.13
15 Macquarie Bank Ltd 0.90 1.01
16 Baygold Investments Pty Ltd 0.70 0.79
17 Osiris Investment Partners 0.60 0.67
18 Mr Paul Delius Haege 0.55 0.61
19 Dr John Leonard Daniels 0.50 0.56
20 Long Short Gold Portfolio Ltd 0.47 0.53
TOTAL 68.25 76.89
MARKET STATISTICS
Share Price $0.80A$/sh Directors
Issued Capital J.Hopkins Chairman
FP Ord 92.6m H.Halliday Managing Director
Opts (var $0.25-$0.45) 2.5m G.Brabham Director
Total Dil. FPOrd 95.1m M.Bojanjic Director
Shareholders
Market Capitalisation $74m Gardner 28.6%
Enterprise Value $68m MBL 11.2%
Debt $-m Dundee Securities 11.2%
Cash $6m African Lion 4.5%
SHARE PRICE PERFORMANCE
0.20
0.40
0.60
0.80
1.00
0
500
1000
1500
2000
2500
3000
3500
4000
ADU VOLUME ('000)
ADU SHARE PRICE ($)
Mar-06Jan-06Nov-05Sep-05Jul-05May-05Mar-05
soil/geophysical targets we believe there is further upside.
RESOURCES QUARTERLY
MARCH 2006
Copyright & Distribution: The material in this communication is prepared for the exclusive use of clients of Euroz Securities Ltd
Disclaimer & Disclosure:
(ACN 000 364 465) only. Euroz Securities is a licensed
securities dealer and participating organisation of the Australian Stock Exchange Limited.
Euroz Securities and its associates declare that they deal in securities as part of their securities business and consequently may have a relevant interest in the
securities recommended herein (if any). Euroz Securities declares that it may have acted as an underwriter, arranger, co-arranger or advisor in equity capital raisings, and will have (cont...)

Adamus Resources
Analyst
Andrew Clayton
AUSTRALIAN RESEARCH
ADAMUS RESOURCES (ADU) YEAR END 30 JUNE
ASSET VALUATION Base Case
Salman/Anwia
Hedging
Corporate
Remaining Rsc @ $10/oz
Exploration
Unpaid Capital
Cash
Total @ 10% nom
Total @ 0% nom
A$m A$/sh
55 0.60
(0) (0.00)
16 0.18
7 0.08
5 0.06
0 0.00
6 0.07
89 0.99
152 1.67
Total @ 5% nom 116 1.28
Total @ 15% nom 66 0.73
Valuation @ spot (10% nom)
Valuation @ 10 year average (10% nom)
87 0.96
(16) (0.18)
FORECAST PRODUCTION 2006f 2007f 2008f 2009f
Salman/Anwia 100% --83 105
TOTAL (koz) --83 105
Avg Cash cost
Avg Total Cost
Avg Spot Price
Avg Price Rec’d
254 254
363 364
550 555
550 555
RATIO ANALYSIS 2006f 2007f 2008f 2009f
CF (A$m)
CF / Sh (Ac/sh)
CF Ratio (x)
(2)
(2)
(23.7)
(3) 26 37
(3) 28 40
(29.0) 2.9 2.0
Earnings (A$m)
EPS (Ac/sh)
EPS Growth (%)
Earnings Ratio (x)
(1)
(1)
0%
(36.4)
(2) 7 11
(2) 8 12
0% -536% 56%
(44.7) 10.2 6.6
E’prise Val. (A$m)
EV : EBITDA (x)
EV : EBIT (x)
124
(41.2)
(41.2)
124 104 70
(49.4) 3.4 1.7
(49.4) 5.8 2.8
Net Debt / ND+Eq (%)
Interest Cover (x)
EBIT Margin (%)
ROE (%)
ROA (%)
52%
42
-
-1%
-1%
52% 35% -7%
31 4 10-29% 31%
-4% 15% 17%
-2% 17% 23%
Div. (Ac/sh)
Div. payout ratio
Div. Yield
-
0%
-
---
0% 0% 0%
0% 0% 0%
Div. Franking ----
PROFIT & LOSS 2006f 2007f 2008f 2009f
Gold Sales --62 81
Hedging Revenue
Deferred Revenue
-
-
--
--
(0)
-
Interest Revenue 0 0 0 1
Other Revenue ----
TOTAL REVENUE 0 0 63 82
Operating Costs
Dep/Amort
O/H + New Bus Dev
W/O & Provisions
EBITDA
-
-
3
1
-
-29
-12
3 3
--
34
37
16
3
-
44
EBITInterest Expense
Net Profit Before Tax
Tax
Minorities
(4)
0
(4)
(1)
-
(3) 18
0 5
(3) 13
(1) 5
-1
25
4
21
8
1
NET PROFIT
Net Abnormal Gain/(Loss)
NET PROFIT After Abn’l
(3)
-
(3)
(2) 7
--
(2) 7
11
-
11
CASHFLOW 2006 2007f 2008f 2009f
Net Profit
+ Working Capital Adj.
+ Dep/Amort
+ Provisions
(3)
-
--
(2) 8
--
-12
--
13
-
16
-
+ Tax Expense
- Tax Paid
(1)
-
(1) 5
--
8
-
Operating Cashflow
-Capex + Development
-Exploration
-Assets Purchased
(4)
-
5
-
(3) 26
76 1
2 2
--
37
1
2
-
+Asset Sales ----
Investing Cashflow
+Equity Issues
+Loan D’down/Receivable
-Loan Repayment
-Dividends
(5)
6
-
-
-
(78) (3)
25 -
65 -
1 14
--
(3)
-
-
14
-
Financing Cashflow
Period Sur (Def)
Cash Balance
6
(3)
2
89 (14)
8 9
10 19
(14)
21
40
BALANCE SHEET 2006f 2007f 2008f 2009f
Assets
Cash 2 10 19 40
Current Receivables 0 0 0 0
Other Current Assets ----
Non-Current Assets 22 98 86 70
Total Assets 23 107 105 110
Liabilities
Borrowings
Current Accounts Payable
Other Liabilities
-
1
0
60 49
1 1
0 0
35
1
0
Total Liabilities 1 61 50 36
Net Assets 22 46 55 74
RESERVES AND RESOURCES
Reserves Resources
mt g/t
Salman/AniwaEquity Share Gold (mos)
Enterprise Value / oz (A$)
moz
0.00
0
mt g/t
22.0 2.1
moz
1.5
1.50
46
RESOURCES QUARTERLY
MARCH 2006
complete, reliable or up to date, nor do we accept any obligation to correct or update the opinions in it.
(cont...) received a fee for its services, for any company mentioned within this report during the last three years. You should not act on any recommendation issued by Euroz Securities without
fi rst consulting your investment advisor in order to ascertain whether the recommendation (if any) is appropriate, having regard to your investment objectives, fi nancial situation and particular
needs. Euroz Securities believes that the information and advice contained herein is correct at the time of compilation, however we make no representation or warranty that it is accurate,