Hi Buddy What happended was the accounting team said we think...

Hi Buddy

What happended was the accounting team said we think the aussie dollar will be worth .93 when they did the budget.

So they said to the supplier how much for pipes we are building a mine & we need to know how much we are going to need.

They said for example A$100m.

So at .93 = US$93m - This is the budgeted price in KML books & this is what they went & borrowed - They borrowed in US dollars for a Aussie dollar expense

but when came time to order & pay for it. The aussie dollar was say 1.05. Therefore the ACTUAL cost for those pipes = US$105 - Blowout of $12m

This happened at a scale of 2.5B - So the foreign exchange cost them 200m between the order estimate & the actual payment. The price of the piping never changed but the value of the aussie dollar did.

In your response you talk about repayment - They are not at that step yet they are only buying items for the build. So the cost blowout is the only relevence right now because the cost to build has increased from the budget by 200m just on foreign exchange rates. They need to get that money to buy the items. This is where S/h get cranky because they could have gone and got some @ $1+ last year or could have borrowed more on the resent raise.

The $200m blowout adds to the cost of the mine - So another $200m + interest needs to be sold before we can make any money. Therefore eating into the profitability of the mine.

When the time comes to make sales I'm pretty sure they are already in US$.

Anyway we are only working on the cost for now. Hope that helps if not please reply