What a dog's breakfast this thread is! Can't view the interview yet but there is no way the Executive Chairman of an ASX listed company would quote a selling price per tonne for urea ($500) and a factory gate production price for urea ($109 per tonne rounded down to $100) and then imply that the profit margin per tonne is $400. No way at all. So that must mean that 19niku, Rusted and "Rocket" and possibly others have completely misinterpreted what was said. Right?
It must be obvious, if you'd thought about it, that there are many costs not covered in the $109 tonne number which must be added to the "production price" before you reach the "profit" number, or you can subtract these from the "revenue" per tonne. It doesn't matter.
Hear are most of them. I may have missed a couple:
1. Repayment of loan principal. Go from 50% financing to 100% financing and loan principal payments double from the equivalent of $14 per tonne in the PFS to $28 per tonne, for the first few years - steadily increasing over the 30 year term of the loan.
+ $14 per tonne.
2. Repayment of interest. Interest is not included in the PFS numbers. So, say, $2.5 Billion borrowed at 4.5% interest = $112 Million per year, or $112 per tonne produced [in the first few years - slowly decreasing].
3. Head Office costs - unknown
4. Rail infrastructure and track rehabilitation - Capital expenditure. Not yet costed
5. Rail operating costs - said to be $40 tonne LCK-ADL. My personal belief - much higher
6. Company tax. At 30% of say $200 per tonne 'real profit' = $60 per tonne.
7. GST based on selling price of $500 per tonne = $45 per tonne [approx]
8. Depreciation - unknown
9. Amortisation - unknown but probably zero.
Well, this looks like about $300 per tonne more expenses, to me, so the true bottom line profit may be as little as $100 per tonne.. But wait, before we get to the steak knives there's one little surprise buried in the PFS. The syngas production equipment has a lifespan of about 15 years and the replacement equipment, costing $349 Million, is scheduled to be funded from earnings, which will need about $23 million per year to be set aside for 15 years.
So at the real bottom line, there seems to be something like only $60 million p.a. actually available for dividends. I'll leave you to work out the cents per share on that.
One thing for sure won't happen. You just won't get 2 million tonnes p.a. of urea out of a 1 million tonne pa nameplate plant.
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