tmr mustv read my post, page-8

Crud, was in the middle of a big post and my cpu cr*pped itself. Not fun.

What was I saying? Oh yeah...

The term "additional revenue" and the effect on this to EBIT and their forecasted EBIT is what I and now I see other people are unsure about.

I took additional revenue to mean increased revenue in comparison from everyday operational activities on their cinabrio mine from the expansion of production as opposed to previously, and still see no reason to suggest this is not the case.

As the previous year's EBIT was in the black, I assume additional revenue would be greater than EBIT myself, unless other costs have increased.

The one off cost of increasing production may mean a one off cost this year whereby EBIT is not quite so favourable, but once costs for improving infrastructure for increasing production in this scenario have been completed, this is the everyday earnings from the Cinabrio mine.

Forecasted revenue if targets achieved is at 88M but additional rev is stated to be at 47.25 M. This means somewhere they have factored in a subtraction of 41Mish, leading me to believe additional revenue is much more favourable than revenue, 41M to be precise. Cannot work out where this 41M is coming from and don't have time to do so atm, any suggestions welcome, or any further explanations. The logical thing to do is contact the company IMO and ask for an explanation on this and many other matters, something I will hopefully get around to doing and see if they reply.

"i read it as meaning additional revenue from the increase in copper price. So if the additional revenue is from higher prices then that doesn't incur any extra costs to production so all of the additional income would be (pre-tax) profits."

Hello Chewy. While I would love for this to be the case I don't believe this to be so. Firstly, because the combination of doubling to tripling production is only going to produce an increase of 88M in itself, 47M of this won't come from CU price alone. Secondly, and something else I saw as possibly disturbing, depending on what exactly add rev means, they have stated in their calculations they have factord in a price of 3.50, whereas previously they had used a figure of 3.20. Given that the total revenue was at 88M, factoring in an increase of 30c I don't see how increased revenue would change so substantially, given the ratio of difference in copper price as opposed to their profit margins.

Why I find 3.50 disturbing is that if they are roughly on target with their EBIT 50M 2/2 prediction with this ann, then they have already had to factor in an increase of 30c on cost price to achieve what they had stated. This is obviously not favourable, but would suggest a $1.60 figure would be about accurate, given that their previous forecast was based on 30c less also, at $1.30. If additional revenue means an increased revised EBIT then this is not applicable. I have read TMR stated a $1.60 figure elsewhere, but have not seem this myself. Would appreciate it if anyone could tell me where this could be found.

Another point I would like to make/ask is that from my understanding these forecasts were based on the altering of grades and volume alone, and no other costs associated with other factors had been included into these projections. My reason for believing this is, if other costs were factored in it would be unfair to display such figures without first stating what these other costs are and also stating what cost price they are using from these additional cost savings. Using an increase in grade, production and recovery, you can mathematically calculate what the increase on these figures would be using only these variables for your hypothesis. If you have to factor in other variables, this would mean a lot of guess work and it would be unfair to print the results of this guess work without first stating what these estimates actually are, not to mention the fact the graphs didn't stipulate any other factors. I would hope this to be the case.

If this is the situation then this could mean additional savings besides those that can be easily calculated and displayed mathematically, and hopefully this is so, given their are numerous reasons for other cost reducing expectations.

Also, how do people feel other factors unassociated with cinabrio have been affected? Will these affect the bottom line positively or negatively from last years NP? I am talking about the figure of 0.3 eps, after litigation settlements have been taking out etc. It is my understanding that they have reduced, but this isn't credible as I have little understanding or research on this, and additional costs due to improving infrastructure would no doubt have to be factored in. I am asking to find out if this additional revenue figure would need to be altered postively or negatively due to such factors.

Finally, do people see that the timeframe with which to achieve these goals have changed or be delayed? It was my belief the EBIT from 2/2 08 meant we would see such benefits at the beginning of July, but now it appears not until the end of December? Is this how other people feel or did I misunderstand the initial statement? Or am I reading too much into this again?

These are my unchecked over musings. I am very glad my cpu didn't cark it and reset again. I also have a few thoughts on the other thread.