capex of 40 million to profit 200 million

Estimated CAPEX of 40 million

This company will be extremely profitable off a CAPEX cost of 40 million AUD.

I posted this info in another post on another thread but it deservers its own thread. Here is some good informaion from the recent LONSEC report.

The key to the future success of the Nullagine Prospect is rail and port access. All of BCI’s Nullagine prospects are 15 to 70kms from a rail head under construction at Cloud Break. BCI and the owner of the rail, Fortescue Metals Group, have signed an MOU signalling intent to facilitate the export of up to 5 Mtpa of iron ore, subject to completion of a successful feasibility study.

Nullagine could be a simple mine, crush and truck operation, developed at an estimated capital cost to BCI of about $A40m.

Operating costs would comprise mainly ore transport and handling. Reference to standard rates suggests operating costs of $A38/t ore FOB could be achieved.

Very preliminary risk adjusted forecasts indicate a near term BCI share price target of $2.15, with revisions due upon clearance of the key resource and infrastructure agreement risks. The preliminary valuation is dependent on the successful delineation of resources at Nullagine in line with the targets nominated by BC Iron.

The iron ore price used to arrive at a value for BCI is US67c/dltu for Yandi fines over the life of the project. This is 30% below 2008/9 forecast prices

Link to article.

http://www.bciron.com.au/images/stories/lonsec_research_bci_iron_november_2007.pdf

We know they are looking at a 3-5 mtpa DSO operation.

Numbers below

Three million Tonne operation

3000000 tonnes x $38 = 114 Million OPEX costs for a 3 million TPA Operation

If we use the current price of ironore that was recently negotiated between chinese steel mills and Vale we get

78 USD = 83.0155 AUD

We then work out Revenue. Say we use an $80 AUD price for ironore even though it is expected to rise higher for ironore produced in Australia.

Revenue = 3000000 x $80 = 240 Million

Profit = 240 – 114 (OPEX) = 126 million

Of course there is no Taxes etc placed on those figures and I would rather not attempt it but she will be profitable by a long way especially when she will only have a CAPEX of 40 million AUD.

Five million Tonne operation

5000000 tonnes x $38 = 190 Million OPEX costs for a 5 million TPA Operation

Revenue = 5000000 x $80 = 400 Million

Profit = 400 – 190 (OPEX) = 210 million

As you can see if we are working off a 3 million TPA operation she will be pulling in roughly 126 million. From a 5 million TPA operation she will pull in roughly 210 million. NPAT??? Anyone want to have a go? What will the TAX be? 30 percent?