joel, the income is derived from 1 mine in South Africa. The costs are spread between that mine and two other exploration sites in South Africa, as well as Mozambique. Those costs related to Mozambique are quite high as they have seven drill rigs going like the clappers to do infill drilling for the bfs due by year's end. They'll then be released to drill on the 100% owned land. The half yearly was very clumsily presented, praising the $100 mill as though it was income. The loss of $17 mill was the figure to focus on as you point out, but be aware that if these guys were just running the ZAC mine, it would have been profitable without all the other costs. They're not dopes. When they bought the ZAC mine off BHP they paid 100 million rand. However they deferred settlement on that until, as it turned out, they had more than that stockpiled 9 months later, so they ended up paying nothing. Don't forget that current RIV management were the 'Mr Fixit" for Glencore, going in to fix up and turn around unprofitable mine like Mt Isa. They're some of the smartest miners in the business.
As for the only 18 million tonnes down the rail line to Beira. How much do you calculate they would make on 18 million tonne per annum of export and then add that to what they'd make on supplying the local power stations with thermal coal as well as possibly Mittal's new steel mill in Mozambique with coking coal? At costs of approxiamately $50 per tonne and an avarge sales price of about $130 at current prices (let's ignore talk from xstrata and CEY of 100% increases in prices this year) you'd be left with $80 per tonne profit on about 50 million tonnes per annum in total.
Get out your own calculator at this stage!!! If you think the resulting profit potential is too high, trim where you like but with an EP of less than $1billion, you'll come up with a minute PE whatever you use
RIV Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
