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Gold/Mining/Energy : Central Pacific Minerals & Southern Pacific Petroleum

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To: Thomas M. who wrote ()	7/22/1998 10:28:00 AM
From: The Source	of 90

Re: CPMNY & SPPTY (ADR's represent 2 foreign shares) Net Reserves: Total 24.1 Billion Barrels of which 11.502 billion are CPM & 12.598 billion SPP. This means 247 barrels per CPM(ADR) and 91 barrels per SPP (ADR). Thus, at US.$6 5/8 for CPM & US.$2 5/8 for SPP one is paying US.$0.02683 for CPM reserves & US.$0.02885 for Spp. It is believed that once Taciuk is up an running these valuations should change. Suncor will only earn 50% of Stuart, Exxon owns 50% of Rundle. There are 10 different properties most of which are owned 100% by CPM & SPP. Rundle is not yet being developed by Exxon. Costs: The Athabasca Tar Sands are supplying some 35% of Canada's oil requirement. Suncor's cash operating costs were Cdn.$12.00 (US.$8.04 at .67) in the first quarter & Cdn.$13.50 (US.$9.05 at .67) in the second quarter. Stuart Stage 1 in Australia has an excise tax exemption from the Australian Federal Govenment on 600,000 barrels of gasoline a year through 2005. Excise tax in Australia is just over A.$0.25 per litre so this is a lot of money & as a practical matter should cover the cost of production. There is NO debt on the Stuart Project. It is equity finance. Of the total of A$250.0 million which includes working capital CPM/SPP will have contributed A$114.0 million & Suncor will have contributed the balance. The restricted shares Suncor holds are a totally separate item and if exercised Suncor will have to pay about A$70.0 million between CPM/SPP. It is suggested that cash costs on Stage 2 & 3 could improve on tar sands for a host of reasons. Bechtel worked on Taciuk for a long time. There are certain guarantees in the contract and also liquidated damages related to performance.

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