Hi mitis,Now you have found the crux of the issue!(permit me to...

Hi mitis,

Now you have found the crux of the issue!
(permit me to correct your last post - the $100million sale produced an 83.3 million profit). So thankfully, they are not 'in the red' by 17 million.

Where you can find the facts
Page 12 of the Half Yearly report.

If you want to understand the financials of the company - take the time necessary to understand the cashflow report. Remember that it's your money - so its your responsibility to understand the financials of the company that you invest in. Don't expect a broker to do this for you.

The problem
The CURRENT mine is 'barely' profitable even with coal prices so high:
1. Revenue from selling this coal was 33million
2. The cost of extracting and selling it was 27 million. (Hardly a high profit margin).
3. The mine is producing less profit than it was last year! Operating cashflow is lower.

Yes..there were exploration costs, but why would the company include these in 'costs of extraction'? You can't pin the blame on exploration.


The misconception
1. Having a 'resource' - however big it is - does not mean you will have a profitable mining operation.

Examples:
(a) TAM - a gold company in production that cannot turn a profit.
(b) SGW, and BDG are both miners who made a loss - even though they had very large reserves.
(c) EMP - a miner with continual infrastructure problems. All the while they were 'upgrading' their resource base.

2. The circumstances surrounding RIV is of course "different" to these 4 companies, i have no argument there. It is the general point about mining profitability that I am making.

3. Yes RIV has 300mill in the bank - but the market cap is almost 1.2billion. That means you believe that the 'reamining 900 million' in market cap represents value that is yet to be realised in its future mining operations. Current operating cashflow of $7million per year means it would take over 100 years for the company to catch up with the value that market has assigned to it. - don't jump down my throat yet!!!


The belief
Management clearly have a problem running a profitable operation. However, some people have a belief that the "next mine" will be different.

Everyone is entitled to their opinion - however I'd be interested as to why you think the next mine will be 'cheaper' to run.

When you think about the answer, I would suggest you consider not just the size of the resource, but also think about: 1. Capital Expenditure, and 2. Operating Costs.


I have to agree that with mitis frustration that some people on this thread who are negative about RIV are acting like school children. It really doesn't help the conversation.

All constructive feedback welcome.


Joel