what a pile of schist, page-16

Bacci, Joewolf

I think it is fair enough to debate this. Bacci, show me anywhere where gearing is measured in terms of market cap? Gearing is always measured in terms of debt to assets and on those terms Penrice is better off now than it has been since it listed. The fact that the market cap has been decimated is what makes these shares really cheap if they do get through this trying period.

Secondly I guess the best guide as to what is a fair spend on maintenance is the spend of recent years. I don't have the figures at the top of my head but I am happy to do a bit of work on them. I don't think it is appropriate to talk in terms of at $3 billion dollar plant. Nobody is building plants these days and that is because the cost makes it out of the question. As far as I am aware the soda ash plant has been depreciated pretty much in full and is not counted in the balance sheet as an asset.

It concerns me too that you always talk in terms of free cash flow which includes the capital spend. The operating cash flow was positive in the first six months and likely to be around break even for the full year. Included in the capital spend has been the expenditure in doubling the sodium bicarbonate production and the capital spend to increase production at the quarry. From 2005 to 2009 this company increased its staff from 218 to 257. This is not a sign of a company about to go under. It has been spending capital on increasing the capacity of the output and you have to give it a bit of leeway because it ran into the GFC just as it was doing it. This increased capacity is now in place and the GFC looks to be over. There is a reasonably chance that we are about to see the recovery not the demise of this Company.

GPASAS