Hi, PT.I went over the RSPT yesterday. As I posted on the gold...

Hi, PT.

I went over the RSPT yesterday. As I posted on the gold thread, it is difficult to get a handle on the details reading most of the press - mainly because they don't give you any. Business Spec gives you some good info - Kohler and Gottliebsen.

From what I understand the following is how it works (I think):

- Govt "invests" 40% of the value of mining projects. This takes the form of a RSPT fund from which miners can take 40% of the cost of their project to deduct against future profits. Included is all capex/development/exploring costs. (Interest and finance costs cannot be deducted)
- Current projects are included at full "historical" book value and indexed at the 10yr bond rate.
- State royalties will still be paid but commonwealth reimburses full amount.
- New mineral exploration rebate to begin in 2011.
- Any capex from May 2 (yesterday) is included in the scheme.

So, in a nutshell, the tax is paid after projects go into profit and all deductions, previous yrs losses AND the 40% allowance for capex (on the project) has been allowed for. The tax on these profits is 40%

Companies can also offset the RSPT allowance of one project they own against profits from another. IE: Once Coolgardie is in the black and 40% of the cost of the project has been offset, the profits from it can still be minimised by using say, capex at Nepean, to reduce tax.

There are still many unanswered questions IMO but I think that is about right.

It might make some juniors with borderline projects worth a punt now (as govt effectively covers 40% of start-up) but sentiment will be red IMO until all is known and the market comes to terms with it.

Cheers,

C12


PS: Above is how I understand it - I could have missed something - DYOR