A balanced view, page-23

HI q9,

I will very cautiously wade into this debate, but before I do I'd like to thank early1 for the time and effort that has been put into the spreadsheet that was put forward, and I'm sure that some of my constructive criticism will help evolve the model that was put forward. Items where additional cost estimates should be included, if it is earnings per share that is desired, are:
(1) Depreciation and Amortisation
(2) Administration and overhead expenses (generally only production related expenses are included in $/tonne costs)
(3) Exploration costs
(4) Interest expenses on $16.5m note and perhaps additional loan for working capital.

Much of these would have to be guesses at this stage. q9, the implication behind your request seems to question the validity of an analysis that is not based on actual figures, which are unknown to the market. I feel there is benefit in analysis of this type as long as there are suitable caveats as to their accuracy and the assumptions used. Indeed, ALL analyst analysis on all companies on the ASX is only based on publically based information, and have many underlying assumptions (hence the large divergence between analyst valuations).

Two other areas of concern are:
(1) The $130 per tonne running costs for the mill. Without looking up the documents that early1 used, I would guess that these would be based on the mill running at full capacity. If the mill runs at half capacity, what would the costs be? Perhaps a 20-30% guestimate for additional processing costs could be included.
(2) Using PE multiples to imply the value of the shares. Unless the company has 10 years worth of MEASURED resources in their mining plans, and at least another 10 years of PROBABLE resources (using JORC categories) then a PE of 10 might be a bit optimistic. Discounted cash flow (DCF) analysis is far more reliable in trying to value a company, and hopefully the Independent Expert will give us (and early1) a lot more information to work with.

Anyway, all of this is before the mill is converted to tin etc, so is somewhat academic. However, CSD would not bother converting to tin unless the economics are at least as profitable as the current processing, so there is still significant benefit to early1's estimates.

In the interests of impartiality (or trying to be) some other observations on items that q9 has made:
(1) Generally off-take agreements are beneficial to a company, usually in terms of helping with funding. I don't see how off-take agreements would contribute to an increased number of shares.
(2) I don't think that the conversion of the $16.5m note, or any other loan for that matter, should be included in the number of shares.

My immediate concerns that I hope will be answered by the Independent Expert are:
(1) Is the current operation generating FREE cash flow
(2) How will the working capital be funded once the mill assets are purchases. Have bank loans been approved?
As the market is VERY hard on companies with cash problems, clarification of these items might help improve our share price.

I hope my OPINIONs are helpful to all. I have no wish to further polarise this debate, so if my opinions are not helpful to Moorpett (as suggested by your last post), I will simply not engage any further. I think personal attack is out of line.

Cheers,
Pecs