some basics - sdl vs. fmg, page-59

Hi RVINTL,

Firstly great post and discussion. This thread is Hot Copper at it's best IMO and you have presented and explained this really well.

I have a question for you which is coming from a slightly different angle, however it is a key consideration in this process.

Both FMG & SDL according to your numbers provided early estimates of $63.12 for estimated selling price.

Now we know that they have both taken a conservative approach to this calculation, but I am interested that they use the same figure.

Do you know how they come up with this figure? Is this a historical average, a calculation based over consensus long term forecasting (which is virtually impossible in reality) or just an industry standard that is quite arbitrary, but weighted towards the lower end to provide a good margin of safety for the calculations?

This in some ways is the most important figure, as a large move to the upside, or downside will blow every future profit calculation out the window.

Cheers,
Andrew