Banter and general comments, page-24310

Perhaps its time for a stess test for CXO, the general habit on these forums is to use the maximum price and deal only in blue sky so how does CXO stack up with prices considerably lower and enjoy any upside. It stacks up quite well as it so happens...

Using 170,000 tpa concentrate at $US 3000t ( around $4800t currently)and AISC production cost of $US500t leaves Gross revenue based on $US2500t which = $US 425m over 12 months or more to the point $A630m, less 30% tax is $A440m NPAT (more or less there will be some depreciation and some tax losses to be used but no dept or interest to repay).

$A440m ÷ 1.85 b shares on issue = 24 cents per share , apply whatever PE ratio you like but let's use 6 x 24c = sharepricd of $1.44.

The main unknown other than the usual suspects , Lithium prices ,exchange rates and production rates , is the terms of the original Yahua contract which had a floor and a ceiling and from my reading gets renewed in Nov this year.

The new additional Yahua contract which is based around market prices and 80% paid in April will be the first time we get a true indication of what market prices are in the real world , no guessing.
Most contracts are worked on average prices over a 1-3 month period with an initial main payment and a final payment taking into account final Lithium content 2 or 3 months later.

Cheers Whisky