OK - I'm too grumpy about this option nonsense. My reading of the main determinants of profit are as follows:
Known costs: 41,500 ounces at $A228/ounce (1344-1106 C3 cost) = $9.5m
- less $97m @ 12% interest = $2.9m (leaving $6.6m), as it doesn't look possible that the C3 cost includes the interest on the Lehman's money and royalties
+ plus interest on $32m cash @ 8% (guess) = $0.6m (total ($7.2m)
- gift to management (from management) of $0.7m for 13m in the money options (gross underestimate of real value) - (total $6.5m)
Unknown costs - exploration write-offs (?unknown $2.6m spend) - asset impairments (?unknown, $13m last year) - running costs on all the other projects
My guess is that they will be lucky to make $10m profit for July-December. I would be very happy to be corrected and find $32m profit for H1.
NGF Price at posting:
22.0¢ Sentiment: None Disclosure: Held
