the numbers

While we watch the day traders trash themselves in an effort to see who can inflict the largest loss in a day on each other, it may be wise to take a cold shower and remember the following.

This is a copper company which is planning on going into a JV and into production in 2010.

The net margin based on the current copper price of $US3.16 lb is about $US1.20lb.

They expect to start with a small starter project which would probably have an all up cost of say $US15- 20 Million.

The ore body is very high grade, free digging, at surface with no pre strip worth talking about.

Depending on the final configuration they plan to produce 7,000 ton - 10,000 ton of copper metal p.a.

Thus the Gross Operating Profit will be in the order of $US18.5M - $US 26.4M p.a for at least the first 4 years.

But the Copper price is heading North because of demand from China and because the $US is heading to hell.

It is expected to increase significantly over the next 4 years, thus the margin will increase.

The Jv partner would be expected to stump up the equity component of the capex and basically ensure it gets funded for the balance (say 40/60 if debt is used).

Avanco's share over 4 years is in the order of $US30M after the recovery of the capex just from a starter project.

$7M + p.a. for a $10M market cap.

Yep, I don’t have enough. Time to buy some more while the Day Traders execute themselves.