rio will seek to negotiate a joint venture, page-29

Ahhhh Jeeezz I forgot something that is relevant.

All those production figures and profit figures were in US dollars but the EXT share price is in Aus dollars.

So the key variables must be:

*The cost of production per pound
*The Contract price
*The JV split with Rio
*The annual production in millions of pounds
*The number of EXT shares on issue
*The expected price/earnings ratio the market will apply
*EXCHANGE RATE US/AUS dollar

So going back to the figures:

Earnings would have been 8 x 70 = US$560 million

at an exchange rate of (say) 0.70 (is that fair?) this equates to Aus$800 million pa

At 50/50 that means 400/222 eps = 1.8

For the scenario I have painted here the price/earnings ratio (at current price of $4.30) would be 4.30/1.8 = 2.38

If the fair p/e ratio was 10 then that means a share price of Aus$18

My apologies for that confusion.

If the Aus dollar goes way higher then obviously we will earn less, if Aus dollar goes down that is more money for us.