OXR oxiana limited

OXR worth A$400 Million

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    Most heavy weight brokers attribute a low end valuation of A$400 million to OXR. Obviously, the market does not yet agree. If these brokers are correct (chances are they eventually will be correct), the lower the price goes, the more profit the lucky buyers will recieve, particularly if they are patient and I believe this one requires plenty of patience. Its possible in years to come, this $400 million valuation could look cheap.

    At a gold price of US$270, OXR have approx A$1.7 Billion worth of gold in the ground. At a copper price of 65cents/lbs, OXR have A$2.4 Billion worth of copper in the ground and this just includes the initial 0.9 million tonnes of discovered copper. The company tells us this could be significantly expanded through an upgrade to its resource model due out soon and also good potential from Thengkham.

    With those sorts of figures, a market cap of A$500 Million seems feasable. Working on a fully diluted capital base (770 million shares), you start to get share price targets around the 65 cent mark. It makes the current share price look pretty cheap. The CEO reckons it worth A$1.8 Billion. If his dream comes true, the share price will be well above 2 bucks. He has got plenty of reasons for it to get there since he has a significant holding in the company. I think a material re rating will come when cashflow starts from gold. i.e next year sometime.

    Hopefully the day will come and we will look back to OXR at these levels and kick ourselves for not buying more! I think its a good story but not without risks. Because there is potentially so much blue sky ahead, its an 'all' or 'nothing' stock. i.e, hide it in the draw and hope for the best in a few years time. That is my strategy anyhow. I think if the LAO Govt buys 10%, that should boost the share price nicely and its also reassuring to think the Lao Govt fully supports the project.

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Currently unlisted public company.

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