Dividends, page-34

Thanks for the 2014 announcement however it simply confirms that CNNC effectively take 25% of the output and ALSO 25% of the net margin. In detail the announcement says that CNNC takes 25% of the production and pays the market price but also CNNC has a "25% joint-venture equity stake" in the LH mine. I interprete the two aspects of the agreement to say:

1. CNNC takes 25% of the production and pays the market price to a LH entity that it owns 25% of.
2. The LH entity makes a margin on the uranium sold to CNNC
3. After the LH entity has subtracted its costs it makes a margin which after considerations such as amortization & depreciation result in a profit on which it pays Namibian taxes giving a Net profit after tax which is then divided between CNNC (25%) and PDN (75%)
4. PDN is the operator of the LH entity but must account for LH separately from other operation it may manage

As I see it this is effectively saying that LH gets committed sales of 100% of production but only receives 75% of the margin (i.e not the whole margin) since CNNC receives 25% and PDN 75% of the net profit.. Of courrse (as operator) they can charge 100% of their LH costs to the LH entity but costs outside of LH (i.e all cost NOT attributable to LH) are set off against PDN alone.

All I have done in my calculation is to say that PDN can only make a profit on 75% of LH production which is correct and thus only 75% of LH production is attributable to PDN that is NOT the same as PDN making (and keeping) the net margin for all of LH production which Dazza is claiming.

It's the same as most oil companies have over oil/gas wells.