contact the co, page-13

I have not followed this stock but after the huge drop I though it was worth looking at. The most important news item that has come out is on pages 4, 5 and 6 of the presentation released to the market on 15th Aug. In summary they have said:

Using their metal price assumptions the oxide project has a NPV of A$20.7m

Cobalt sales make up almost 60% of total revenues (slide 6 under gross revenues), and they have assumped a price of US$50/lb for cobalt where as the current spot price price is US$28/lb.

Copper sales make up approx 34% of total revenues based on their price of US$3.80/lb, where as current spot price is US$3.46/lb

If you used the current cobalt price the project would present a significantly negative NPV (in the order of -$50m), and the group would be luck to break even (even assuming capex is sunk and charge is applied).

Sorry but on close inspection of the numbers this is not a project that is going to make enough cashflow to cover their interest costs uless cobalt more than doubles in the near term.

I would be very careful