what the ?, page-12

dolphin

Firstly, I vaguely remember hearing something about their long term contracts, but I don't recall... Do you have the details of these? How binding are they?

Secondly, PEN has actually estimated their operating costs will in fact be $44.58/lb (May investor update).

Here is a very (very, very) over simplified calculation taking into account their planned capex. Plus I've estimated $20m exploration for the next 3 years (probably low ball estimate really given the amount of resource upgrading they need to do).

The first table shows PEN's estimated U price going forward (starting at $62.58 and escalating 2.6% pa). The reason this final number is $429m as opposed to their reported $255m is because I obviously haven't done a 'real' DCF model here...

The second table shows roughly the same gorilla maths but at the *current* U price. In my "real" DCF model, it obviously works out worse than this, but again, this is all very rough estimates.

There are many other things that could/should be included here i.e. I doubt production costs will remain constant over 14 years. We are presuming their capex costs will not blowout (as their production costs did from ~$36 to ~$44). This was just a very rough estimate to show you why I believe lance is not economical at *current* U price.