Hi westcott,Mate no worries, I appreciate your queries very much...

Hi westcott,

Mate no worries, I appreciate your queries very much - because in the process, people would be able to understand more as we deliberate and explain.

It is very productive mate.

To answer your "comparison of SDL's US$20.00 (I'm assuming that refers to the US$19.65/t) as being compared with FMG's CAPEX of US$32.44/t.

I will further explain this by going back to my example on the KIA Truck:

'If we use a KIA Truck from Korea to "do all the job" (ASSUMING you dig Iron Ore and transport that Iron Ore to Mother-Ship - and you "ONLY" need a KIA Truck to do ALL that Job or Operation), then the landed cost on site at FMG operation in WA would cost US$32,440 as compared to a landed cost of the same truck to do the "same job onsite at SDL" Cameroon-Congo which would cost US$96,000. This is just because it costs more to get the same Truck into SDL site due to the remoteness of the area.'

Now, please note that the numbers were scaled up by a 1,000 just to show a realistic comparison of the Price of a Truck for FMG and SDL Locations (as there's no Truck of less than US$100 in Price - unless it is an old junk). This is just for the sake of explaining the Point.

The Cost of the KIA Truck landed on site is Capitalised (or Capital Cost/Expenses) ie. CAPEX.

Once the Truck Driver starts the Truck, then you consume fuel, depreciate the truck, wear tyres, wear every component of the Truck, pay the Driver, pay his Super, pay the Road where the Truck would pass along, pay toll fees, etc. etc. These costs would be your Operating Costs (ie. OPEX).

Both CAPEX and OPEX are usually expressed in terms of US$/ton - which is calculated by dividing the Landed Cost of the KIA Truck by it's Loading Capacity in one year. That gives you the number - US$CAPEX/ton/year. ------------ In this case or example, the number for FMG will always be lower than the number you get for SDL, mainly because the landed cost for FMG is cheaper than SDL, and obviously the capacity would be the same per year, as it is exactly the same kind/model of Truck, ie. assuming the same length of road distance and road quality, etc.

Now, how the Accountants do their tricks in putting this CAPEX in their books, that's entirely up to the Management of the Company concerned.

Hope this helps to everyone.

Mates, I have to catch the next leg of the flight to Kalimantan Island. Catch you later.

All the best westcott.

Cheers.