jack lifton article, page-20

Jan, sorry about the late reply.

You are absolutely right, there were many factual errors in that article. Enough to give a reasonable person pause and wonder about the author of the article.

Recently he wrote about Moly and didn't seem to know the source of their heavies, but has it on his chart now. More mistakes.

This gives me reason to doubt that Jack has done a serious break even analysis in this area. WE would actually welcome a glut in the lights, because it will shake out less than marginal operations that don't have the heavies. But we want to get good cash flow going for a while first. In the old days we could collude and blow out marginal competition, then increase price on lights some.

One day I worked the costs backwards just for fun. I took the basic cost per ton and spit that among the various elements by their percentages.

Then I looked at the JP Morgan flow chart and guessed at how to allocate the cost per additional step and roughly came up with costs per element for each step. It became clear that we could could process the lights at a loss to defray the cost of the heavies. It looked like we could go very far down in the price before they stopped contributing to lowering the costs of the separation for the pricey metals.

It was a sloppy guess work analysis, but I don't worry about the selling price of the lights as much as the selling price of the heavies because of it.