Flip with 30 years of experience in the finance industry (as I believe you have stated in discussions in the past) I'd *hoped* you'd address not just the side line diversions that inevitably come up in a forum such as this, but also the original question. i.e. What is included in the 2.6 "capex" figure of the original slide. How is the principal of the loans covered? Or how is the recoupment of the original principle on FMG's loan accounted for in financial accounting terms. And shouldn't break even costings necessarily include some provisioning for the repayment of the principle on debt?
You put together a scenario in which, to show how a pe of 10 could be achieved with a share price of 13 dollars, you assumed away all of FMG's existing debt in a period of months not years. Well, that's interesting, but FMG in fact does still have all that debt. And that debt does matter.
Now, you have absolutely no obligation to educate anyone (including me) in financial analysis. But "Capex" Capital expenditure clearly is an expenditure or an expense that must be covered before profits are reckoned to have been made.
Clearly there is a difference between sustainable capex of 2, which FMG talks about, and "capex" of 2.6 (in the original slide in the first post in this thread) as an element in the production of an FMG forward cost estimate of 28.3.
Should I interpret your silence on that as you don't know? Or perhaps that perhaps you do know but its too hard to explain. If so, that's okay. I can seek answers elsewhere including perhaps asking FMG themselves.
For me, irrespective of an financial accounting jiggery pokery, it is bleeding obvious, that the cost of building mining infrastructure has to be recouped from the results of selling the products of that mining infrastructure. What is not anywhere near as obvious is the extent to which tax deductions may resolve those costs in practice.
I have had personal experience of being asked to make a list of R&D related expenditure in a business because the tax deductability of that expenditure was 175%. That seemed nuts to me, but such is the nature of tax and incentives.
(20min delay)