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Gold/Mining/Energy : Canmine resources

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To: Marshhawk who wrote (2295)	1/27/2000 6:52:00 PM
From: Marshhawk	of 2769

Digging a little deeper in Preston Production from October 1 up until November 16 was 244t nickel and 9t. Total Dec qtr Ni production was 1328 tonnes, so they were able to crank out 1084 tonnes of Ni in 6 weeks, and cobalt production in 2nd 6 weeks was 49 tonnes. Production costs A$12,396 (after cobalt credits) per tonne, or total production costs in quarter of $16.5 mil Oz, which appears in line (eg no improvement) with October production costs of 5.6 mil and July 1-Oct 30 operationg costs of 23.2 mil. Monthly production targets remain 806 tonnes Ni and 54 tonnes cobalt. So, Dec quarterly Ni production is 54% of target (How do they get 59%), while cobalt production is 35% of ramp up target (approx 18 months after commissioning). All of these costs, of course, do not take account of financing charges of 12.5% on approx 250 mil US (267 mil Oz capital costs + some borrowed money for expenses of Oz 5 mil per month for 18 months) or 2.5 mil US or 4 mil Oz per month interest charges. Then there is the nasty issue of 806 tonnes Ni x 18 months projected production forward sold 1 year ago for $2.40/lb. At $ 3.80, that leaves them another 45 mil US (approx 60 mil Oz) in the hole. No wonder their refinancing deal hasn't been worked out. ÿ

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