Hi Mgm1a, I have tried to work out why your numbers are...

Hi Mgm1a, I have tried to work out why your numbers are different numbers to mine. Maybe its related to the period of repayment of finance and interest rate, not sure though.

I had previously used US$1,150/oz Au, and US$18.00/oz Ag - that was the prevailing gold price when I did the numbers, and an extended repayment schedule.

I have change model inputs to current Au/Ag prices, now $1,100/oz and $17.00/0z. I've also brought forward repayment of finance over a 4 year period, obviously that changes completely the cashflows, but I still get more than you (EPS). What is your finance interest rate? I have assumed a realistic (maybe conservative?) 10%pa.

My new EPS are: 2.6 cps --> 9.1 cps (years 1 ---> 4).
P/E based on that look ridiculous and prove to me that it won't be staying anywhere around 15 cents for long!

(Using US1,000/oz and US15.00/oz gives EPS of 2.0 --> 7.7 cps, yrs 1 --> 4. Even at that level the P/E are ridiculously low, I don't believe that 15 cents current price will be around when RED moves closer to production!

By the way, note that the RED production profile assumes a ramped up start through a part year, and that start up entirely depends upon when first production occurs. It now appears that production in the first financial year 2010/2011 will be less due to start up being slightly later in that first year, but the following financial year will increase considerably and in line with the full year production flows forecast for the BFS. (Maybe you have changed that production profile?).

Also note, from what I saw of the Southern Cross Equities model, they have not used the Base Case RED opex schedule, but increased it and also reduced following years gold price to get their (conservative) estimates!