Ann: Accounts Lodgement Update , page-79

Jessielivermore you said:

"SO nice get to buy their ore at $55 off us. Do the maths - 2.4mil / 43000 tons = $55 per ton. Guessing thats some nice fat action if you can get it for an up front loan (shark). We are giving away 430,000 tons of ore at cost to stay alive is the other way of looking at it so maybe just cop it. I'm out."

Note 12 to the accounts states:

"On 26 April 2013 GNR has provided a loan of USD 24million to Pluton. Pluton shall repay this loan in instalments of USD2.4million for shipments 1 to 3, USD 1 million for shipments 4 to 19 and USD 0.8million for shipment 20 in the form of delivery of iron ore as per an agreed shipping schedule of twenty shipments of 43,000 tonnes of iron ore;"

On the basis of your understanding Jessie, the 20th shipment of 43,000 ton is sold for $0.8m or around $19/ton. We would be selling substantially below production costs. It clearly doesnt work the way you state.

You should take note of 123enen's post for a more correct understanding of how it works. He is 100% correct. Note also that US$120 used in the cashflows is A$126.32 (120/0.95) given the A$1=$US0.95 currently. Our revenues are $US and our costs are $A and thus the exchange rate is working in our favor by offsetting some of the recent price decline. We are also selling at the Platts premium price, not the contaminated/62% fe price frequently reported in the press.

Cheers
Bleasby