The conclusion that the Ariadne-related note conversion is not...

The conclusion that the Ariadne-related note conversion is not fair but reasonable is probably a sensible conclusion if you make some very conservative assumptions. The valuation on current circumstances of 15.5 cents per share would not change, in the minds of most investors, with Ariadne moving from 22% equity ownership to 26%. However a closer analysis of the valuation shows that only Proved and Probable Reserves are extracted for recovery of 46,238 tonnes of copper (Reserves of 56,000 tonnes) and other resources are ignored. On this basis all mining ceases in 2018 and remaining mined ore is processed. The valuation allows for sale of plant and redundancies. However the copper price estimate varies from $A8228 per tonne (now) to $A8108 per tonne (2020). Today's LME 3 month price is $A8929. The gold price assumption at $US1200 is similarly low
I would be surprised if a Board of Directors would have spent $70m on the Giant Pit cutback if this was the expected return. At least the cash flow generation for the final 2 months of 2017 ($8.1m) and FY 2018 ($82.7m) is in the right ballpark.
The report supports a higher HGO share price but some of the upside will now have to come from drilling new targets (which will happen in 2018).