just the facts

Yes, another slow day for me on the market. Due to requests for more factual debate and less bickering, the below for everyones contemplation. Please check all figures and let us know if they are factually incorrect.


Figures below based on CMR’s ASX financials announcement.

CMR predicted share of cash cost $48.5/t on 1.3Mt pa for 2009 = cash op-ex of $63M pa.
Con Notes circa $60M at 10% interest equals another $6M pa expense.
Admin costs running at about $5M pa.
Exploration running at about $10M but call it shoe string $5M pa.
Cash outgoings are thus about $79M 2009 without paying back $1 of debt.

Revenue based on annual payable production provided by CMR but using today’s pricing metrics.

..USD/Lb..AUD:USD..AUD/T…prodn (t)…….revenue
Cu…2.12……0.685…..…6824……..3279…….. $22,376,662
Ni….4.95……0.685…….15934……..341………$5,433,474
Co….30……..0.685…….96569…….431……….$41,621,387
total revenue………………………………………$69.5M

..USD/Lb..AUD:USD..AUD/T…prodn (t)….revenue
Cu…2.12……0.685…..…6824……..3279…….. $22,376,662
Ni…4.95……0.685…….15934……..341………$5,433,474
Co…25……..0.685…….80474…….431……….$34,684,489
total revenue………………………………………$62.5M

..USD/Lb..AUD:USD..AUD/T…prodn (t)….revenue
Cu…2.12……0.685…..…6824……..3279…….. $22,376,662
Ni…4.95……0.685…….15934……..341………$5,433,474
Co….20……..0.685…….64380…….431……….$27,747,727
total revenue………………………………………$55.5M

..USD/Lb..AUD:USD..AUD/T…prodn (t)….revenue
Cu…2.12……0.685…..…6824……..3279…….. $22,376,662
Ni…4.95……0.685…….15934……..341………$5,433,474
Co…15……..0.685…….64380…….431……….$20,810,643
total revenue………………………………………$48.5M


At today’s metal prices and exchange rate when running at nameplate throughput and recoveries CMR will go backwards between $10M to $30M in 2009, depending on prevailing Co price which is the most volatile an unpredictable (still the elephant on the spreadsheet). Early Oct Cobalt was quoted at US$30/Lb but it in a very illiquid and opaque market. Personally find it hard to be bullish on cobalt price moving into a likely prolonged recession with cobalt supply forecast to double by 2011 from new mines.

Actions to improve cash flow will include trying to high grade deposit and increase metal revenue, cut costs on plant operation somehow. Throughput tonnage, recoveries and metal production could be better or worse only time will tell. I am not interested in debating a couple of million here or there because a couple of million will not likely make a difference IMO.

Cash payments for Cornell note interest is no proof that operation is profitable, net debt could still be increasing while interest payments are made. Receipts from pending metal sales may not cover all costs but for market confidence and to stop Cornell selling down the share price each month it is imperative to stop issuing shares.

It’s difficult to see metal prices turning around enough to provide sufficient profit above breakeven to avoid conversion of con notes to shares. You all know my thoughts on where the share price will be if the Oxides is unprofitable and con-notes all convert.

I see cuzo has folded despite all the bullish talk and full credit to you for being honest. As much as downrampers trash a stock they want to buy into, be aware that bullish holders will not tell everyone when they have changed their mind and are selling. I wonder how many of the cheer squad have lightened up while posting a buy sentiment for the HC traders? You will all have theories about why I post, suffice to say we all like being proven right and hate being wrong.

Goodluck

Disclaimer, as usual the above could be riddled with mistakes and all must DYOR before making any investment decisions. In the short term share price can move strongly in any direction regardless of any fundamental analysis, as can all the variables involved.