Ann: First Blast Opens Stage 2 High Grade Pit - C4 Iron Deposit, page-58

Without intimate knowledge I am sure it was done as a deal beneficial to both parties and perhaps GWR would have had far higher costs in engaging PRG or indeed another contractor without the profit sharing? Sure does work as an incentive for PRG and maybe de-risked their commitment/involvement in the project. It will be interesting to see what happens with the 70/30 split or how PRG will be remunerated beyond stage 1.

So... I have been wondering if today's shipment will be included in the current quarter. Given GWR operates FOB there was this little post #: 54099140 by JGR64 on FEX forum today re pretty much the same subject ... may be relevant depending on how GWR conciliates it's accounts ... unsure of the validity but hey sounds ok, for those that are interested ...

"I think people are confusing 'sales' with 'cash'.

For the point of view of a 'sale', for an FOB shipment, title and risk passes to the buyer the moment the cargo is loaded at Geraldton (ie generally taken to mean when it crosses the ship's rail in the port). From an accounting perspective, a sale is recognised when title and risk passes, and usually has nothing to do with payment. FOB, CFR etc therefore determine the date of sale.

From a 'cash' perspective, it is usually for the payments to be negotiated with a letter of credit (otherwise known as an "L/C". In simple terms, it operates like a bank guarantee. The buyer opens the letter of credit with his bank, usually based on 30 or 60 day payment terms which will cover the voyage time of the ship and the period required to process the ore. The buyer's bank then effectively guarantees the payment to the seller's bank on the 30 or 60 days upon presentation of the shipping documents, particularly the Bill of Lading which is effectively the certificate of title to the cargo.

However, the seller can negotiate with their bank to have the payment 'discounted' based on the interest cost and have the L/C paid out early as soon as the ship sail. If you're tight on cash you might discount the L/C to get the cash early, but if you have plenty of cash there might be no need. This can be managed on a shipment by shipment basis according to reporting periods. Eg, 'discount' June L/C's to get them paid out in the quarter, but not discount the July L/C's because it will make no difference to the quarter reporting of cash."