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Gold/Mining/Energy : Naxos Resources (NAXOF)

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To: Tom Frederick who wrote (8121)	1/14/1998 2:35:00 PM
From: Henry Volquardsen	of 20681

Tom, I am not disagreeing with anything you said just trying to show different possible angles. Bre-X got where it was because markets overshoot. Naxos is where it is now because the market still has a hang over from that. Yes the paltinum numbers will change a lot of these numbers but both your origional poat and my responses related specifically to the valuation of the gold not the entire company. What I was trying to do was show what a major mining firm would look at valuing the deposit. I like the dividend approach as well. As far as I am concerned I would be just as happy to never sell and trigger capital gains taxes. Just colect the dividend. But let's look at that valuation a moment. Assuming that once this is up and running it would be a very stable operation, basiclly an annuity. In this case REIT valuation is probably not to far off. Using my origional numbers again I had an assumption of an annual profit of $1 bln. That is $40 a share earnings. What kind of p/e do you want to use? I would suugest 15 for a valuation of $600. You would need a p/e of 100 to get $4000 a share. Under this approcah I think the p/e would be closer to 15 than 100. Henry

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