CHACO RESOURCES (new name for GMN)

My last thought for the year is wondering about the share price at the end of 2006. Any offers?.

Using Chaco's own figures I'm going nap on a share price of 18p, assuming that Chaco get Primavera.

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Shares in issue - at 31.3.05 390m, plus shares issued re Paraguay 19m, placing 85m and options 13m. TOTAL 507M

Net assets:
1. Per balance sheet 31.3.05 - £1.3m
2. Future cash from exercise of options - £0.5m
3. Columbia, Alea, net present value end 2006 $86m - £49m
4. Columbia, Puerto Lopez, 2006 NPV could be worth $54m - £31m
5. Paraguay. CDS has areas exclusively in Paraguay and is drilling currently. It has a market capitalisation of £16.8m. I don't know how its areas compare with Chaco's but I am assuming its reasonable to equate the value of Chaco's Paraguay areas with those of CDS. Value of Chaco in Paraguay - £16.8m.

Therefore the 2006 net present value of Chaco's current assets is £98.6m.

The present net value per share of Chaco's assets is £91m divided by 507m shares, giving 19.5p.

The shares are currently priced at 7p, a discount of 61% on my projected Net Asset Value. I'm going to assume the discount will narrow to 30% as news emerges in 2006 on current assets. That gives a share price of 13.5p.

Now onto Primavera. If Chaco get a 55% stake and the resource estimate is 200m barrels, at soem 20 times the size of Puerto Lopez it implies a 2006 NPV of £310m, some 61p per share but until proven it might add 5p per share. I'm going to ignore any other new developments. Therefore, I'm going nap on a share price of 18p.