$ US 20 mill is based on initial production 500 000 lbs at a production cost including royalties of $US 25 and an average spot price of $US 75 per pound and then a discount of 20% for negative exchange rate movements (which is unlikely given the interest rate differential between the US and Aus is increasing) and also making provision for cost increases:
That is: 500 000 lbs x (75 - 25) = $ US 25 million less the 20% Xrate and cost increase provision = $US 20 million.
This increases to $US 35 million if the U price returns to its predicted 2008 average of $US 90 per lb for 2008.
Based on estimates from the miner Mike S.
Remember Dennison wants their uranium - they have a willing customer in the US so there are no added exchange rate factors ( ie - if rupee or other movements).
I trust this clarifies things.
cheers glow
GDN Price at posting:
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