Ann: O'Callaghans Mineral Resource - Competen, page-4

re: Ann: O'Callaghans Mineral Resource - ... Hi Timoshev,

Had a pretty good look over the accounts and reports, current and past .

I am a bit lost on your fourth paragraph.

Notwithstanding the above this is what sticks me in the eye..

Sales are down and cash are down resulting in NEt Debt increasing substantially from the previous period. Whilst overall gearing is very low (3PC) I am ingnoring that because so much fresh equity was goven to the company. I am not happy about this.

NCM is stating that sales were down and inventories up due to cyclonic weather action,,,,,if I take the time to look at the announcments the mine was closed for 24hours only with no damage or disruption really stated,,,,the reasoning does not make sense to me and I think they have had other problems in generating the sales,,cyclonic interuption was nothing according to thier notices so for the first time I am questioning managment information....

PRevious reports state that

Telfer and Total Costs exclude the impact of the additional costs associated with the Varanus Island Gas Disruption of 36.9M.....NCM said it was claiming on its insurance to recover these costs and has been saying that all the way through,,,it seems they did not have appropriate insurance and the despite the claims they would "pursue vigourously" they have quietly taken the hit 33.9M in the preious period but claim final additional cost of 8.6M after insurance proceeds......

If the Hedge Book was closed WTF are NCM playing around with PUT OPtions and derivative GOld and Copper Contracts,,,this is hedging in my view just in a different manner, it worked last time amounting to a large amount of profit to the bottom line but this time despite the fact they were only doing it once to manage thier position after the close out they got nailed 4.5M...

What is this fair value gain on Copper and Gold Derivatives,,,it represents 13% approx of the bottom line,,,is NCM unhedge Gold and Copper producer or only in the sense that it doesnt sell all of its production forward,,,,,whilst it was positive if they get it wrong (they are not supposed to be playing this market just mining) it could be a 13% impact next time or worse....

To make their numbers this year prices need to hold at these levels, AUD needs to hold but they must make production numbers,,,,,,,this would require them to make numbers not seen before and higher than their record in 2008. NCM is confident in thier ability to deliver with new production coming online this quarter,,,,hence this quarter will be the clincher for me and as we all know things can happen in mining which are unforseen....

Sensitivites have changed considerably from previous reporting..and changes to short term trading need to be adjusted
Movement PAST EBIT Change NOW
GOLD UP $10 Increase 17M NOW 24M
COPPER FALL 5c/p Decrease 9M NOW 13M
FX RATE FALL AUD1c FAll 20M NOW 30M
THis is big
OIL FAll $10US/b Increase 6M NOW 1M
OIL

Looks to me that they may have some hedging going on in theiroil and FX contracts.........not sure yet how to read this but changes now in these variables can make significant changes to the bottom line regardless of production........

As a result of this cocktail napkin overview I am nuetral