***Value of Gazonor***NPV assuming 8% interest rate, no increase...

***Value of Gazonor***

NPV assuming 8% interest rate, no increase in Gazonor revenue, and 10 years production
$24.72688 million

NPV assuming doubling of Gazonor output and scaling of costs (which is very conservative)
$49 million 45376

Another way to value Gazonor is to capitalise their 1P reserves. I will use the QGC capitalisation per 2P reserves = $3.14 million per PJ. Please note the conservative assumption by comparing 1P to 2P.

If you capitalise the 36PJ of 1P reserves (I stress 1P reserves with lots of scope for upside) at the QGC rate for 2P reserves, Gazonor is worth aprox $111million. That is not taking account of price differences received in Europe either, which are around 3 fold I think. This should be counterbalanced by QGC advanced stage of production though.

If you assume Gazonor will convert 25% of its GIP resource (395) to 2p Reserves (I think this is reasonable), that would be worth around $314 million dollars – once again ignoring the price difference between OZ and Europe.

So Gazonor could be worth anywhere between $24 million (this is being ridiculously conservative though) and $314 million.

***Now for Lorraine
The have GIP estimate of 1000PJ for 10% OF THE PERMIT – this is very important. They have also stated that coal thicknesses were 20-80% thicker than when this GIP was made…so lots of upside here to start with. So if you assume a measly 10% is converted to 2P reserves and capitalise at QGC rates again (.1x1000PJX3.14) – that’s another $314million. If you assume 25% converted to 2P reserves – you get $640million. Once again, this is using OZ capitalisation rates with OZ gas price built in – but this is balanced by the fact the QGC is much more advanced at this stage. This also ignores the rest of the permit which Enron initially estimated to have 6000PJ. If you assume 6000PJ exists and a measly 10% is converted to 2P reserves = approximately $ 1.8 billion…you can see where this is going if you start concerting 25% of 6000PJ to 2P reserves.

Then you have Gardenne, permits in Italy and potential acquisition in Belgium….

So just taking Gazonor and Lorraine and adding together the most conservative and least conservative estimates (which I think are still reasonable given gas price differentials and talk about resource upgrades and production ramp up) I get a range of $135million (extremely conservative) to $2.1billion. So even using the most ridiculously conservative measures is worth around current market cap ($148 million) with huge upside…

Now I have to go and fix my bike…

Please feel free to provide alternative valuations…we went through the exercise 1-2 year back but might be worth doing again…Poyndexter? I know these calculations are very rough and the company has many hurdles to jump, but given the size of the resource, the good management so far, the backing of RICH people in the business, I can't see how it can't move higher...and gas prices in Europe are only going to go up too...