Re: Good news & Bad news, page-43

If Spod prices hit US$2300dmt and stay there, the AUD rate stays around .72 and we hit full production of 1,000,000dmt then we will really be hitting super profits and the share price could easily be in the $6-$9 range.
When calculating the expected profit though it not just as simple as deducting the spod price from the cash cost and multiplying it by the production volume.
As the spod price increases the royalty increases and that is part of the cash cost so cash costs will increase.
Also if there is debt which there currently is you have to include interest repayments and there are also corporate overhead costs not included in the cash cost as that only includes "on site" general and Admin costs.
You also have to factor in depreciation and amortisation, other expensed costs such as exploration that might be written off each year and tax.

Have said that at US$2300 the bottom line annual profit could be around $1.7B which is amazing.
Also if you assume maybe $60M for CAPEX the net cash generated would be around $1.75B so in theory you could be looking at annual dividend of maybe 50 cents fully franked.

Below is my logic which I am sure a couple of people will no doubt say this is total garbage but this is how I am calculating my forecasts based on what I can pick out from previous actuals/presentations and quarterly reports.
I am also not saying this will happen but clearly it is possible if the demand keeps growing faster than supply.

Forecast "very nice to have"

	Column 1	Column 2	Column 3	Column 4	Column 5	Column 6	Column 7
1		Sales	Rev/Ton	Cost/Ton	Rev	Cost of Sale	EBIT
2			$	$	$M	$M	$M
3	Lithium Spod Dmt	1,000,000	3,200.00	467.78	3,200.00	467.78	2,732.22
4	Tantalite lbs (Net of costs)	750,000	45.00	(33.75)		(33.75)	33.75
5	Royalty 5%			198.40		198.40	(198.40)
6	Sub Total			632.43	3,200.00	632.43	2,567.57
7	Overhead (Non onsite)						16.00
8	EBITDA						2,551.57
9	Interest						-
10	Depreciation and Amortisation			113.00			113.00
11	Exploration/other						10.00
12	PBT			745.43			2,428.57
13	Tax						(728.57)
14	NPAT						1,700.00
15	PE Ratio						3.45