DJ Gladstone Pac.Nickel FY EBITDA $712M Down $307M

Fri. October 03, 2008; Posted: 03:49 AM

Gladstone Pacific Nickel said Friday that gross revenue in the first year of full production, assuming a two year ramp up, is expected to be $1,332 million per year, $711 million lower than previously announced whilst EBITDA is $712 million, down $307 million.

The Chief Executive Officer, John Downie, said, given the current state of both capital and commodity markets it is important that investors understand the strong economics of the Project using long term assumptions.

It is the Directors' belief that the current share price of the Company does not highlight the underlying value of the Project.

"Capital markets and commodity prices are generally under pressure but our Project continues to show its economic viability at both current and long term pricing", he said

Projected profit after tax and interest in the first year of full production has been revised from $538 million to $297 million in real terms at a gearing ratio of 70% debt for a 15 year loan period and an interest rate of 8.5%, he said.

Cash operating cost for the Project has been revised from $2.38 to $2.13 per pound of nickel due to a lower nickel price, exchange rate movements and sulphur price assumptions offset by a reduction in cobalt credits due to a lower cobalt price.

The Project net present value (NPV) is $1,168 million using an 8% discount rate and commodity prices and exchange rates as at May 30, 2008.

This compares to an NPV of $2,331 million reported in June.

The capital cost, also reported in the June 20, market release has been revised to $3,518 million from $3,840 million.

The Directors believe that the Company's association with China Metallurgical Construction (Group) Corporation (MCC), based on MCC's prior experience, will reduce the capital cost.

The Project shows a nominal IRR on equity of 17.8% and a nominal NPV of $979 assuming a 12% discount rate and a gearing ratio of 70% debt for a 15 year loan period and an interest rate of 8.5%, he said.

These changes are not expected to affect planned production and the plant can expect to produce, in its first year of full production, up to 64,753 tonnes of nickel and 6,164 tonnes of cobalt in 2014 following a 3 year construction program and 2 year ramp up of operations.

(END) Dow Jones Newswires

10-03-08 0349ET

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