WAF valuation, page-21

Davo

I have not tried to rework your table to see if it is basically right. I prefer to accept that the fund providers found the FS reasonable before committing to a $USD200m loan.

We will find out how reasonable the FS assumptions are once they have commissioned the plant and are producing gold over several quarters. However, I note the comments above by Nordesmic about the need to get your costs right wrt the plant operations.

I just would like you to check again if you are correct in assigning any take by the government in the first 5 years of operation (other than perhaps gold royalties) as I believe there is some sort of a tax holiday, plus I thought the BF govt did not receive a 10% cut of the profits until WAF had recovered its capital costs. Also, I am not sure if your figures include deductions from operating profits for plant and exploration depreciation/amorisation which leads to a much lower take by the govt and a much higher net cashflow to WAF. Basically I suspect your table is likely to be wrong and vastly understate the take by WAF.

I agree that once the high grade ore has been processed there will not be much if any profits from this project, which is why finding more higher grade ore will provide a major boost to the NPV.

What puzzles me is why you hold shares in this company if you have placed such a low NPV on the project? What was your entry price and when did you buy? My current average is around 31.5 cents and I will think about buying more shares as we get closer to production, if circumstances are right.

loki