a great coup!, page-44

You would never offer shares if you had the cash and believed your shares were going to be worth more in the future. That is like throwing money down the drain. Better to hold the shares. You then have the option of selling them in the future for more money if you wanted. By issuing shares it just makes NST's short term cash position look $9 million better for next quarter. That is spin not substance in my book.

Remember their cash out flows are building up, $50 million exploration budget over the year (call it $12.5 million for quarter) , $11 million for CTP (plus legals which seem to be building call it $12 million for the minute), $1.45 million Hermes acquisition, 592million x 2cents = $11.84 million, current bank debt $20 million (probably reduce another $10 million this quarter), Plutonic operating at a loss over last half (assume this continues to be on the safe side) = $1.68 million cost for the quarter, Kundana probably to produce less profit as mine development ore of lower grade (half the grade) replaces normal ore reserves as progress is made accessing the Pegusus deposit (call it a 10% drop in NPAT) = cost to cash flow of $2.4 million. Then their are losses on their hedging position which will have to be realised at some stage (I won't include any for this quarter).

All up, $50.87 million of potential cash out flow for the quarter (assuming all other operations remain static). Last half free cash flow was $106.6 million, so on a quarterly basis $53.3 million.

The company's cash out flows for this quarter seem to be hitting the limits of their past quarterly cash in flows. Could be wrong, maybe some else with accounting skills could try and do a proper job of it.

Eshmun