SmugglerThis is an amazing statistic, but the cash cost of...

Smuggler

This is an amazing statistic, but the cash cost of production is from memory around 70cents per lb. There are some deliveries (circa 30%) into hedges at, again from memory about USD2.72lb. The balance is at spot which as we know is about USD3.60lb. Let's just say the average receipts are USD3.00 lb (conservative)with the cash cost of AUD0.70cents lb....calculations....

Revenue pa USD3.00 * 19,000tonnes * 2200 = USD125.4m pa / 0.90 AUD/USD conversion = AUD139m

Cash Costs pa AUD0.70 * 19000 tonnes * 2200 = AUD29.26m pa.......All before tax

Approx Net Cash = AUD110m pa....

I think all up costs are estimated at AUD0.90 lb which would equal total pa costs of $37.6m. So at current prices, we are talking about an EBIT number of about AUD100m pa. After tax say AUD70m pa.

This is a company with a market cap of only $530m and already planned increase in prodiuction next year by 30% and possible year after (2009) by another 40%.

Simple arithmetic says this is a buy....please do your own research.

regards
DF

assume that is an EBIT figure