bfs summary

My Summary of BFS
Negatives
1. Start Mining end of 2008 rather than start
2. 50,000 tpa down to 34,000
3. Set-up costs increased from 238mil to 248 mil (not including the pre-strip and the mobile fleet)

Positives
1. Confirmed mine is a go-ahead
2. Purchasing the mining fleet leaves URL immune from increased contract mining costs

Obviously on the face of the report the news was bad. Smaller numbers equal smaller returns, and for anyone with URL this is undoubtably bad. Firstly the set-back to late 2008 instead of early 2008 is annoying but should almost certainly have been expected, considering the shortage of anything to do with mining at the present time.
The reduction from 50,000 to 34,000 is also not good, but could also have been expected. The higher set-up costs required to process the extra 16,000 tpa were obviously not worth the extra costs, and perhaps the extra time. This shows me that the management are attempting to reduce debt ASAP and then assess their options ie look at their other tenements or expand the ones they are already mining within. By attempting to mine as quick as they can it should reduce the debt costs as well as capitalize on the current high copper prices.
A 10 mil increase in set-up costs in my mind is actually a good result considering the cost blow-outs that have occurred accross the board in the mining sector.
I have read a lot of talk about how they have reduced their mineable resources from ~900,000 t Cu to ~390,000 t Cu; but this is not strictly correct. What has happend is that they have upgraded their numbers from mineral resources to ore reserves. When doing this one must take into account "modifying factors." Ore reserves take into account the cost and environmental factors (feasibility) of extracting the ore whilst Mineral resources (ie inferred, indicated and measured) do not. Thus before they were saying that they had ~900,000 tonnes of copper in the ground, now they are saying we have 300,000 tonnes of copper that we will be pulling out of the ground. The best thing about this is there is plenty of upside. Cost reductions, Cu price increases (or staying up high) and technological improvements all can result into eating a bigger chunk out of the 900,000t of Cu they think is in the ground. (for more info regarding the difference between resources and reserves go to the JORC website http://www.jorc.org/main.php)

In summary I believe URL are taking a conservative approach to the Roseby project. It seems to me they are trying to get it up and running cheaply and quickly. I am a little bit worried about the lack of information explaining why the numbers have changed, and why they might be holding back. The sell-off on friday may create a take-over oppurtunity, but as soon as one of the big players jumps in, the sp will sky rocket, and not be worth it. The alliance with Xstrata might be a saving grace as it could provide cost savings, equipment and consultants to speed up the pre-mining stages. For this to occur they must exercise their 51% option in the next few months.
I am still positive of quality returns in the next few years, but the BFS has obviously rattled the short term investors and the unbelievers, hence fridays sp.

Anyways I hope this is all correct (Im sure someone will correct me if its not), and hopefully it sparks a bit of talk