Ann: New Scoping Study increases margin per tonne, page-13

re: Ann: New Scoping Study increases margin p... Drasius.... I misread one bit of the 23/3/2010 announcement (20% weight recovery of magnetic Fe, not magnetite). However, I think you're multiplying the %Fe grade twice (0.3, then 0.2) I'll tell you how I understand it.

1,000,000 Mtpa run of mine ore

Magnetite
Davis Tube concentrate gives 20% of total ROM mass as Fe. = 200,000tFe pa
At 69% Fe in magnetite concentrate, magnetite prod'n = 200,000/0.69 = 290,000tpa
At US$120/t magnetite, magnetite revenue = US$35M pa

To check against 25% magnetite revenue statement......
Tin
Contained tin = 30,000t (from 23/3/2010 - >0.45% cutoff)
Total resource = 7Mt
Tin in ROM ore per year = 30,000/7 = 4285t
Tin recovery = 71%. Therefore tin in tin concentrate = 4285 x 0.71= 3042t
Tin revenue = 3042 x $18,000 = $55M pa

Tungsten
Contained WO3 = 20,000t (from 23/3/2010 - >0.45% cutoff)
Total resource = 7Mt
WO3 in ROM ore per year = 20,000/7 = 2860t
WO3 recovery = 80%. Therefore WO3 in tungsten concentrate = 2860 x 0.8= 2290t
Tungsten revenue = 2860 x $17,000 = $39M pa


Revenue Summary
Magnetite = US$35M (27%)
Tin = US$55M (43%)
Tungsten = US$39 (30%)
Total = US$129M = A$161M @ 0.8 USD:AUD

Net cash pa = A$80M pa
Therefore expenses = A$81M pa

The 27% magnetite revenue is close enough to the 25% in todays announcement.

At your 86,000t magnetite prod figure and 25% revenue from magnetite, there would only be US$40M pa total revenue from all 3 streams. Not possible if net cash is $80M pa.

These are obviously rough calcs. Happy to be wrong!