over budget?under budget?on budget?

Apologies to those 15 or so who read my earlier post. After I sent it I started to wonder if I was misinterpreting the phrase "total forecast cost to complete".

This is what CCC said yesterday about progress at Penumbra:

"Currently the Penumbra Coal Project is 38.2% complete with a total forecast cost to complete of ZAR328m (approx. A38.5m), and is substantially on budget"

The heading of course said on budget. The development budget last given on page three of the quarterly ops report was $40m.

There are two possible meanings of cost to complete $38.5m as I see it:

1. Cost to complete normally refers to how much cash is required from now to finish the development. If there is $38.5m work left and its 38.2% completed, then the total project cost has risen to $62.3m. That is, 38.5/(1-.382). That would explain why they have had to put so much cash in first and why there is the need for another $4.5m to be funded before ABSA allows drawings under their facility. If a further $38.5m funding is required, ABSA need to know their $35m will complete the project so need extra $3.5m. Add a million for comfort.

If this interpretation is correct, it would explain the delay in drawing the bank facility and the need to issue more stock.

2. They use the word "total" before forecast cost to complete. Do they mean that the cost to complete at the start of the project was $38.5m? If so they should have called this the budget really. Still, it would fit with the development cost of $40m they gave investors. They are then 38.2% complete so have spent about $15m of their own cash. The problem I have with this interpretation is that it leaves only $23.5m left to be funded. Why then can't they just draw the $35m loan. Why are they required to put in yet another $4.5m of their own cash. That leaves expected drawing of the loan of just under $20m.

I guess this second interpretation is the right one given they are saying its on budget.

Can anybody clarify?