St Barbara - maybe not interested in buying Peel, page-3

Aeris Resources' USD$575 million dollar bid for the CSA mine provides an opportunity to extrapolate a value to Wagga Tank/Southern Nights. I recall Barry Fitzgerald (respected resource commentator) had estimated a total resource tonnage of 1.5 to 2.0 million tonnes at 25% Zinc equivalent. I also recall that many on this site felt that the 25% grade estimate was too high. Let's suppose it is 15% instead. Also assume the resource is 1.75MT, being the mid range of Fitzgerald's estimate.

Glencore's December 2018 declared Measured + Indicated resource for CSA is 6 million tonnes at 5.53% Cu and 23 g/t Silver (overall equates to 5.7% Cu equivalent).

The CSA mine infrastructure would probably cost close to a billion dollars to replicate in this day and age - it's one of the deepest mines in Australia and the capital has been spent progressively to enable the ore to be extracted at increased depths. I will take a wild guess and say that of the USD $575 million, Aeris are assigning USD $200 million for the mine/plant/rail infrastructure. Based on that assumption the resource is worth USD $375 million.

Comparing the estimate of the WT/SN resource of 1.75MT @ 15% Zn, this equates to 6.5% Cu equivalent which is a 14% premium to CSA's grade of 5.7% Cueq. The 1.75MT at WT/SN is 29% of the CSA tonnage of 6MT. Therefore to assign a value to WT/SN based on Aeris' bid for CSA the following calculation applies ($575 million - $200 million) x 1.14 x 0.29 = USD $124 million (AUD $175 million).

The above doesn't account for the fact that CSA is a producing mine which makes it more attractive. Nor does it account for the fact that WT/SN is relatively shallow and would therefore have lower operating costs.

If Fitzgerald is correct and the average grade is closer to a Zn equivalent of 25% then the AUD $175 million figure becomes AUD $292 million.

It's all speculation but in the context of PEX's AUD $100 million market cap it goes to show the upside, especially given the other assets the company holds.