ann out!, page-23

Shaneom,

Talking about numbers in annual rates and estimating on 120/t. Numbers aren't perfect but they are close enough to explain the point.

Currently 8mtpa at $130/t is 1130 mil in revenue. Costs are 1070 so currently near break even.

Need 10mtpa at full grade for $1610 in revenue. Costs are pretty much fixed so let's say cost is still 1070 as you can see, finished product profit is highly dependent on the things they haven't done! But possibly eps of $0.11 so possibly stupidly great value.

The reason this isn't good is because the delays take away from gbg's earning (approx 2c per month of delay by my calcs assuming one cent of delay costs and 1c of lost profit). On top of this, the question is can they finish something that is profitable because a messy operation like this normally has other issues. For example, They probably forgot to design crushers so you could easy replace crushers which leads to longer maintenance shuts and we know they didn't add enough pumps to handle the water involved in processing the ore. They then find quick fixes for these problems that normally push up operating costs and reduce profitability in the long term.

Finishing the project isn't an issue. It's the cost of finishing and the cost of producing afterwards. Ansteel have taken the cost of completion risk so our only real risk is a blowout in operating costs or a dive in iron ore prices. Still, not something I am willing to place more than 10% of my portfolio in and I wouldn't want 10 shares of this calibre in my portfolio. One is enough

As Rdd said, those in this stock for a while knew this "suprise" delay was coming.