They use the unit of production method to calculate amortization, however, that is all they state.
In FY11, they showed a combined depreciation and amortization expense of $15,033,987 and produced total ounces of 72,830. Using this method, that equates to $206.42 cost per oz, however, we know this is clearly wrong because all of the actual three mile hill costs / plant and equipment are thrown into that $15M as depreciation, and we don't know exactly how much.
If we look at 2009 and 2010 annual reports, see that exploration expenditure went from $55M in 2010 to $77M in 2011 - to be precise, it increased by $21,864,008. We also see that development assets on the balance sheet increased by 315,000 during that period.
So, my guess is, that in FY11, FML Depreciated 13.254M associated with the mill and plant and equipment and only amortized 1.778M for production of 72,830 ounces of gold. If we deduct away the 315,000 change in the development asset profile, we effectively have an amortization cost of $20.10.oz gold produced during FY11.
I know that this is not precise, but it is a starting point. As eluded to earlier in the thread, the actual amortization cost moving forward could be between $40 and $120 / ounce produced. This $20 amount above could be associated with exploration in 2008 for all i know and may be near accurate. I didn't go that far back as i am now concerned only with the future.
The actual amortization rate will vary between mines, between financial years and even between months so stating a number as being accurate would be an inaccurate way of approaching this matter.
FML Price at posting:
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