. $0.32 $0.57 $0.89 Share Price $1.13 Positive Neutral Negative RECOMMENDATION: NEUTRAL (WAS SPECULATIVE BUY) Orbis was recently approached by Semafo with a proposed offer for the company of $A0.65. The proposed offer price is close to our current valuation, and whilst we would hope for a sweetener to potentially lift the offer to circa $A0.70, we do not feel there is sufficient premium left to retain our BUY recommendation. Accordingly, we reduce our recommendation to NEUTRAL. Trading Data Last Price $0.56 12 month range $0.24 - $0.70 Market cap. $140m Free Float $102m (73%) Avg. daily volume 0.2M Avg. daily value $0.1m 12m return (historical) 124.0% Valuation (DCF - $ps) $0.71 Share Price History Emerging West Africa high grade play. Orbis offers two quality high grade projects in Burkina Faso (Natougou and Nabanga). One has already progressed to Bankable Feasibility stage (due for completion mid 2015), the other currently under scoping study (due for completion December 2014). Combined production is targeted in excess of 250k ounces, elevating the company to one of the more significant Australian listed gold companies. A grade tenement package. Orbis holds over 2,700km 2 exploration tenements. Very large licenses surround its two advanced projects, with over 1000km 2 surrounding a third project to the West of Burkina Faso (Bantou). The company recently acquired acreage in the Ivory Coast. 2.5 years to production? Management forecasts key project, Natougou, to come into production in CY17 (we have assumed CY18 for conservatism); with production peaking at over 200k ounces, and low all-in costs averaging $US634/oz. Execution and funding the key risks. There remains considerable risk associated with the group given the relatively early stage of the company s key projects. The company has a modest cash balance, and still requires full funding for the circa $240m project. The low cost nature of both advanced projects does partially mitigate these risks. Yearly Gold Production vs Cash Cost (k oz) ($/oz) 500 2,500 450 400 2,000 350 300 1,500 250 200 1,000 150 100 500 50 0 0 2014 2015E 2016E 2017E 2018E 2019E 2020E 2021E 2022E 2023E 2024E Nabanga Natougou All-in cash cost ($/oz) Gold Price (AUD) Source: EAP estimates, Company PAGE 1 OF 5
FINANCIAL SUMMARY Orbis Gold OBS As at: 1/12/2014 Recommendation: Neutral DCF Valuation $0.71 Year end Jun 2014A 2015E 2016E 2017E 2018E Year end Jun 2014A 2015E 2016E 2017E 2018E INCOME STATEMENT VALUATION METRICS Total Revenue $m 0 1 3 1 576 PER x NM NM NM NM 1.3 Operating Costs $m 0 0 0 0 (152) Dividend Yield % 0.0 0.0 0.0 0.0 NM Royalty $m 0 0 0 0 (38) P/FCF x NM NM 33.3 45.1 0.8 Exploration W/off $m (3) (4) (4) (4) (4) ROA % -10% -2% -3% -3% 34% Total Op. Costs $m (3) (4) (4) (4) (194) ROE % -10% -3% -5% -6% 43% D&A $m 0 0 0 0 (48) Net Debt to Equity % -14% -77% 8% 89% -25% Interest Exp. $m 0 (2) (9) (9) (9) Debt to Assets % 0% 45% 45% 45% 21% Corporate $m (3) (3) (3) (3) (4) Other $m 0 0 0 0 0 Directors Total Costs $m (6) (9) (16) (16) (254) Chairman John Bovard Pre-Tax Profit $m (6) (8) (13) (15) 322 Managing Director Peter Spiers Tax Provision $m 2 2 4 5 (96) Executive Director Nicholas Mather Net Profit $m (4) (6) (9) (11) 225 Executive Director Michele Muscillo Minorities $m 0 0 0 0 0 Non-Executive Director Kevin Tomlinson Attrib Net Profit $m (4) (6) (9) (11) 225 Abnormal $m 0 0 0 0 0 Substantial Shareholders % Reported profit $m (4) (6) (9) (11) 225 Greenstone Resources 16.0% Daguilar Gold Ltd 13.5% CASH FLOW 14A 15E 16E 17E 18E DGR Global 13.4% Operating Cashflow $m (3) (0) 9 7 391 The Bank of Nova Scotia 9.1% -Capex $m (4) (4) (144) (132) (53) Tenstar Trading 6.7% -Exploration $m (9) (10) (10) (10) (10) Acorn Capital 4.8% Free Cashflow $m (15) (14) (145) (135) 328 -Dividends $m 0 0 0 0 (48) Valuation Summary BEAR BASE BULL +Equity Raised $m 11 140 0 0 0 $AM A$/share $AM A$/share $AM A$/share +Debt Drawdown $m 0 140 0 0 0 Operations -Other $m 1 0 0 0 0 Nabanga 0 0.00 43 0.08 86 0.16 Net Change in Cash $m (4) 266 (145) (135) 280 Natougou 93 0.17 187 0.35 592 1.10 Cash at End Period $m 5 272 127 (8) 271 Exploration 15 0.03 15 0.03 25 0.05 Sub Total 108 0.20 245 0.46 617 1.15 BALANCE SHEET 14A 15E 16E 17E 18E Cash $m 6 272 127 (8) 272 Financial Total Assets $m 44 314 312 309 661 Forward sales 0 0.00 0 0.00 0 0.00 Total Debt $m 0 140 140 140 140 Cash* 149 0.28 149 0.28 149 0.28 Total Liabilities $m 3 143 143 143 143 Total Borrowings 0 0.00 0 0.00 0 0.00 Shareholders Equity $m 41 171 169 166 518 Corporate/Other -17-0.03-17 -0.03-24 -0.04 Total Valuation (A$) 241 0.45 377 0.71 742 1.38 Production 14A 15E 16E 17E 18E Natougou Ore Milled (k t) 0 0 0 0 1,600 Head Grade - Au (g/t) 0.0 0.0 0.0 0.0 7.8 Recovery - Au (%) 0.0% 0.0% 0.0% 0.0% 94.0% Reserves (100%) Tonnes Au Gold Production - Au (k oz) 0 0 0 0 375 M g/t k oz Profit and Loss Cash Cost Total Attributable 0 Cash Cost ($/t) 0.0 0.0 0.0 0.0 85.3 Cash Cost (A$/oz) 0 0 0 0 364 Resources (100%) Tonnes Au Gold Total Cost (A$/oz) 0 0 0 0 582 M g/t k oz Natougou 18.0 3.4 2,000 Nabanga Nabanga 1.8 10.0 570 Ore Milled ($/t) 0 0 0 0 250 Admin/Gen ($/t) 0.0 0.0 0.0 0.0 8.7 Total Attributable 19.8 4.0 2,570 Recovery - Au (%) 0.0% 0.0% 0.0% 0.0% 85.0% Production - Au (k oz) 0 0 0 0 59 Assumptions 14A 15E 16E 17E 18E Gold Price (US$/oz) 1,248 1,198 1,202 1,210 1,226 Profit and Loss Cash Cost Exch Rate (US$/A$) 0.93 0.88 0.84 0.84 0.84 Cash Cost ($/t) 0.0 0.0 0.0 0.0 130.2 Gold Price (A$/oz) 1,337 1,365 1,423 1,449 1,467 Cash Cost (A$/oz) 0 0 0 0 707 Total Cost (A$/oz) 0 0 0 0 777 GROUP ATTRIBUTABLE Gold Production (k oz) 0.0 0.0 0.0 0.0 390.8 Cash Cost (A$/oz 0 0 0 0 411 All-in Cost (A$/oz 0 0 0 0 425 Source: Company data, E&P Research estimates Valuation fully diluted to assume 50% equity funding, with the equity component added to the cash balance. Bear assumes 15% grade dilution and 15% higher operating costs. Bull assumes a 2 year extension to mine life. PAGE 2 OF 5
Positive Neutral Negative Speculative Buy Suspended Not Rated Stock is expected to outperform the S&P/ASX 200 over the coming 24 months Stock expected to perform in line with the S&P/ASX 200 over the coming 24 months Stock is expected to underperform the S&P/ASX 200 over the coming 24 months Stock has limited history from which to derive a fundamental investment view or its prospects are highly dependent on event risk, eg. Successful exploration, scientific breakthrough, high commodity prices, regulatory change, etc. Stock is temporarily suspended due to compliance with applicable regulatory and/or Evans & Partners policies in circumstances where Evans & Partners is acting in an advisory capacity. Stock is not included in our investment research universe. Research Criteria Definitions Recommendations are primarily determined with reference to how a stock ranks relative to the S&P/ASX 200 on the following criteria: Valuation Earnings Outlook Earnings Momentum Shareholder Returns Rolling 12 month prospective multiples (composite of Price-to-Earnings Ratio, Dividend Yield and EV/EBITDA), or long-term NPV for resource stocks. Forecast 2 year EPS growth. Percentage change in the current consensus EPS estimate for the stock (rolling 1 year forward basis) over the consensus EPS estimate for the stock 3 months ago. Composite of forecast ROE (rolling 1 year forward basis) and the percentage change in ROE over 2 years. Debt Servicing Capacity Rolling 12 month EBIT Interest Cover ratio. Cyclical Risk Industry Quality Qualitative assessment of the 2 year outlook for a stock/industry s profit cycle. Qualitative assessment of an industry s growth/returns potential and company specific management capability. Financial Transparency If we don t understand it, we won t recommend it. For stocks where Evans & Partners does not generate its own forecasts, Bloomberg consensus data is used. Analysts can introduce other factors when determining their recommendation, with any material factors stated in the written research where appropriate. PAGE 3 OF 5
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