Contents. Eastern Goldfields, Inc. www.easterngoldfields.com Symbol: EGDD. Investor Presentation. By Zenith Premier Limited. August 2006. Contents. Contents. Page. Executive Summary 1-5 Market Capitalization of Junior African Gold Companies 6-7 Gold Price 8
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Eastern Goldfields, Inc.
Zenith Premier Limited
Name: Eastern Goldfields, Inc. (www.easterngoldfields.com); Symbol “EGDD”
Pre-Funding New Issue Post-Funding
Restricted 1,626,160 1,626,160
Free Trading 1,495,2331,495,233
3,121,393 36.9% 3,121,393 35.2%
Restricted 1,110,087 1,110,087
Free Trading 945,511 945,511
2,055,598 24.3% 2,055,598 23.2%
Restricted 630,000 630,000
Free Trading 2,649,2563,049,256
3,279,256 38.8% 3,679,256 41.6%
Post-Funding 400,000 ?? 8,856,247
No. of Shareholders: Approximately 100
Current Price: $5.50 USD $5.00 Bid – $6.40 Offer
Capitalization: $46.51 Million US Dollars
Executive Summary - Continued
Regional Exploration (including Worcester)
RC drilling (1,500 metres) $ 735,000
Executive Summary - Continued
The Bottom Line:
The 50% increase in the gold price from $420 to $630 over the last year reflects the following profitability expectations on a full production basis:
Lily Mine 30,000 oz $320 $630 $7.9 M From Mid-2007
Worcester Mine 20,000 oz $320 $630 $4.6 M From Mid-2008
Total 50,000 oz$12.5M
Note: Lily Mine cash profit is calculated after allowing 15% BEE profit allocation and Worcester Mine is calculated after allowing 26% BEE profit allocation
Eastern Goldfields’ short term target is to become a junior gold company that produces 100,000 oz of gold annually within 3 years. It is on the way to achieving half its target with production at its Lily and Worcester mines, and, through an aggressive exploration programme on its own land claims EGI management is confident to achieve its 100,000 oz. production goal.
Eastern Goldfields is currently capitalized at only $46.51 Million.
At the projected profitability and positive outlook for Gold, it is not difficult to see that Eastern Goldfields has the potential to be capitalized at significantly higher levels than its current trading value.
P/E’s for Junior Gold Mines producing up to 100,000 oz per year vary between 20 and 50 depending upon individual company circumstances (resources and reserves, management, geography, etc.) – with the industry average at 26.
On a comparable basis, EGI is still extremely undervalued compared to its peers (see page 6). The main criteria for valuing gold companies are production, reserves, resources, exploration potential, location and management.
Companies with a similar composition to EGI are trading at between $130 to $200 million. Therefore, with an increase in production, resources, reserves and a more senior US listing added to a potential AIM listing will give EGI the momentum and exposure to take its market capitalization of $46 Million nearer to its peers.
Since EGI went public, it has benefited by the 50% increase in the gold price
EGI’s revenues are based on US Dollar spot gold and its production costs are in Rands. The 20% rand devaluation in the last year has also benefited EGI.