up 25% overnight in the usa!, page-6

Hi fletch

I dont hold any austminex...have looked at them previously, not my cup of tea.

As for price action on HER over next couple days, thats anyones guess really depending on the results released monday.

They have already flagged higher CAPEX due to the decision to go with a pipeline to the port...so this is already factored in.

One risk comes from higher mining costs which are a result of the booming metal markets. We've seen that with MRX and JML, and post feasibility action has been anything but good (though unjustifiably so with JML imo). I think this may be one of the main reasons they went with the pipeline option (to reduce cash operating costs which they expected to increase). Probably a smart move.

The other risk (though not really a risk for long termers) is HER's tendency to be overly conservative. We saw this in the prefeasibility study in 2003 where the metal prices used were very low.

But to give an idea of what we hopefully can expect, it might be useful to recap on 12 January 2004 ann re metal price sensitivity. That announcement compared the prefeasibility NPV of July 2003 to the NPV if metal prices at 12 January 2004 were used. The higher metal prices resulted in an NPV of $150mill (thats $US by the way). At 75c XR, thats around 200 million AUD...or around 3 times current market cap (66 million).

On 12 January, metal prices for zinc were $160 higher than the pre feasibility and lead prices were $220 higher than pre-feasibility. Currently, zinc price is around $200 higher than 12 January and lead also around $200 higher than 12 January.

Interestingly, the AUD/US XR is currently roughly the same as it was on 12 January, so no detriment there.

Now add to the above the fact that the current resources are higher, and most things point to a pretty good result.

However the risks from higher operating costs, and how conservative HER are in their metal prices and XR, will determine just how good the result is.

I'd be happy with a solid NPV knowing there is plenty of upside to come from other exploration in the area, such as Lae Jahe and Basuki Lode.

To put a figure around it, I'd be disappointed with an NPV lower than market cap (66 million AUD)...ecstatic with an NPV higher than 150million (AUD), and satisfied with anything in between...I know thats a fairly wide range, but there is so much uncertainty surrounding BFSs at the moment.

Cdchi1