Maybe I did not express my views clarly enough. There never was a question if the royalty is included in AISC, of course it is, but irrelevant here. Let me make an example. Troy Resources Australia (incorporated in Australia) has a subsidiary Troy Resources Guyana (incorporated Guyana). Let us assume that subsidiary produces one ounce of gold at cash costs + direct overhead of US$720 and sells that ounce at US$1230. Troy Resources Guyana has to pay 8% or US$98 in royalties. Earnings are US$1230 - US$720 - US$98 = US$412. Corporate tax rate in Guyana for companies like Troy Resources Guyana is 30%. So tax for the $412 earnings is $123.60. And now the first interesting part, I've read once (I think annual report or presentation of another miner in Guyana) that royalty is deductable from tax amount owed meaning tax owed is $123.60 - $98 = $25.60. I am not sure if that is true because it would mean at normal margins gold miners would essentially be tax free in Guyana. That is why I wrote it seems tax is reduced by royalty.If that is the case then Troy would pay $25.60 on earnings of $412 = 6.2% If that is the case surely there will be tax in Australia because the tax paid in Guyana is recognized by Australia but is lower than the Australian tax rate.
Then there is the second interesting thing. Maybe Troy Resources Guyana is making a profit ($412). Once they pay that amount to Troy Resources Australia withholding tax would apply. Troy is exempted from withholding tax per special agreement. But considering Troy Australia injected lots of capital into Troy Resources Guyana the subsidiary may not make any profit at all. It may very well be the case that Troy Resources Guyana owes Troy Resources Australia a large amount of money, internal debt, and has to pay interest on that debt. It may be the whole $412 is paid to Troy resources as interest payment. Meaning Troy Resources Guyana is making losses and Troy Resources Australia is earning US$412 in interest meaning Australian tax rates apply (and no tax in Guyana).
The third issue is: Who own Troy Resources Guyana? Troy Resources Australia? Or Azimuth Resources (incorporated Australia)? I don't know. I am pretty sure Troy Resources Guyana does not own any tenements in Guyana. Tenements should be property of the Guyanese Pharsalus companies, owned by the Virgin Islands Pharsalus companies and then via Azimuth Australia. Those companies should be pledged as security for the Investec debt.
I am no accountant and I do not need to be one as any accountant would not have a better picture of the situation because he doesn't know the details either. And there are a lot of details. For instance is the royalty really deductable from the tax amount? Very favorable and essentially nullifying the royalty if that is the case. But I did never try to find out because it makes no difference as long as there are the carried losses. The easiest thing to do is to take a look at the balance sheet of the corporate parent (p 78 of the annual), opening accumulated losses + current loss = A$305.8m. That figure is not equal to carried losses as it has a slightly different meaning, but pretty close. You would need to adjust for how long losses can be carried (pretty much forever in Australia, in general), how much dividends have been paid (reduces retained earnings), how much has been paid in taxes in the past and how much would be lost/gained if the remaining assets are removed from the balance sheet via spinoff or selling. Might be easier to just add all annual losses since the last profitable year.
