numbers questions from a newbie, page-8

G'day 123.

I worked out the cash profit as follows:
JV Sell price US$120 = A$115 (at 1.044).
State royalty 7.5% (8.5% from July ’13), WEG marketing fee 3%, royalty to Pelican for acquisition 1.5%; all up $15.
FOB cost $51, so margin to JV = $49.
Margin to 50/50 JV partners is $24.50/ton each.
Add back $5/ton PLV management fee for $29.50/ton to Pluton.
Based on their shipping schedule, I calculated they would ship around 900,000 ton (I said 860,000 in my post, slight calculation error on my part) in first 12 months, which is around $27m. Their stated admin for next quarter is $1.5, so $500,000/month or $6m/year. Thus my approx. $21m.

If I have it wrong, please let me know. Btw, math isn’t my strong suit, so I may well have more errors in there.

As I said in my post, I don’t know if there are other cash costs. We’ll need to wait for the half yearly for that, unless they advise in a quarterly or update. Then we need to understand the development, exploration & any other costs to see what the bottom line profit might be (after D&A of course). Then we can start talking about valuations down the track, based on EPS & that’s what the market will be looking for in a producer. Then it will be looking for that EPS to be growing. From what we can see, that should be the case, as they start with 1 ship/month, then go to 2, then eventually 3. But for now, the market will just want to see them deliver to their projected shipping schedule as seen in last couple of presos. Once they’re seen a a reliable producer, the market will shift to their EPS & growth of that going forward.
Early days, but looks promising.

as usual;
CAVEAT EMPTOR - risk in all Investments.
Everyone should make their own investment decisions & not base them on what they might read on an Internet chat site, or receive from me (who is just an enthusiastic amateur).
Remember, this information is probably worth what you paid for it.

Cheers.

Ned, way past wine-o-clock; time for some of the good stuff.