Emed Mining
Applying a multiple of US$29.10/t, we value the remaining copper resource potential at Rio Tinto at US$9.5m or 0.59p/ share.
Slovakian value We have also valued the current NI43-101 compliant resource at the Detva gold deposit in Biely Vrch, Slovakia. We calculate differentiated market average values for inferred and indicated resources listed in London of US$39.40 and US$106.78 respectively.
Applying these values to Biely Vrch’s resource suggests a valuation of the additional 1,057,000oz of £45.9m or 4.4p/ share on an attributable basis. EMED’s 16% stake in KEFI Minerals amounts to 0.15p/share which would suggest a total valuation for EMED of 25.7p/share.
Valuation upside If EMED converts c 28.2% of the remaining indicated resources to probable reserves using a conversion rate of 72% (calculated as the average of the current measured resources to proven reserves, 82.9%, and the indicated resource to probable reserves, 60.7%), then we would expect this to add c 2p/share to the value of the theoretical stream of potential dividends to shareholders for FY12-30 (discounted at 10% per year to reflect general equity risk) for the Rio Tinto project. This would equate to 22.5p/share.
82 www.financial-spread-betting.com | July 2012
Exhibit 7 shows the possibility of extending the proposed pit at a shallow depth and to the north (right hand side of diagram) so as to increase this mineable reserve. It should be noted, though, that any increase in mineable reserve and copper production would negate the base case valuation of the remaining copper resource potential of US$9.5m or 0.59p/share thereby raising the sum-of-the-parts valuation to 27p/share versus a base case sum-of-the-parts valuation of 25.7p/share.