Sum of the parts valuation
On a sum of the parts valuation, it can be seen from Figure 2, Regency Mines Valuation, below, that Regency should
be trading somewhere in the range of 1.79 pence per share to 29.51 pence per share. In this calculation the listed
assets are taken at their market value as of 18 January 2012 and the cash and debt are taken at their book value as
of the latest final results (30 June 2011). Hence it is only Regency’s interest in Direct Nickel Limited and Oro Nickel
Exploration Limited that are given a low, medium and high value.
In the low valuation Oro Nickel Exploration Limited is valued at its book value as at 30 June 2011, that is those
exploration expenses invested in the project to date that have been capitalised, and Direct Nickel Limited is valued at
Regency’s cost of acquisition of the shares.
In the medium valuation Oro Nickel Exploration Limited is valued compared to its peers on an enterprise value per
resource basis and Direct Nickel Limited is valued at A$100 million, which was the value ascribed to it by its IPO
brokers (when it was looking to list early last year). As noted below, given the small size of the peer group we have
included this valuation for comment only and will not use it in determining our target price.
In the high valuation Oro Nickel Exploration Limited is valued on a net present value basis and Direct Nickel Limited is
valued at 50 percent of the Mambare Project net present value, plus A$25 million. The latter amount equates to the
approximate value of funds that has been invested in the technology to date.
These calculations then give us a value per share range of 1.79 pence to 29.51 pence. Averaging out the low and high
valuation we attain a target share price of 15.65 pence
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