Sonny ... (and the gang)
The Excel WB I emailed is incorrect.
I was projecting apprx $5.0 million in EAT for the
2nd quarter.
Note:This is a BIG SCREW-UP on my part.
One of the places I screwed up was that I forgot
that - in effect - CMM has sold off some of its
gold at lower prices using CALL OPTIONS.
Note:this is nothing more complicated than if
you purchased a Call Option or Sold a Call Option
on stock XYZ. In our case we sold them such that
the holder of the call option could get gold
from us @$550 an oz.
See here
Message 22496394
In part it says ... in terms of calculating 2nd qtr
revenues ... that they will consist of
(oz times price = revenue)
14,000 x $550 $7,700,000
7500 x $625 = $4,687,500
-------------------------
$12,387,500 x $1.11 USD/CND exchange rate =
C$13,750,000 total revenues
I have modified my P&L to reflect this scenario ...
I am NOT using all the same numbers as
the author above
.
.
Total Gold Production Oz 24,000
.
.
Part A - Sold at Market
--------------------------
POG - USA $ 645
Conv Rate 1.1543
POG - Canadian $ 745
Oz Sold 10,000
----------------------------------------
Revenue 7,445,306
.
.
Part B- Sold at Call Option
Strike price of $550
--------------------------
POG - USA $ 550
Conv Rate 1.1543
POG - Canadian $ 635
Oz Sold 14,000
----------------------------------------
Revenue 7,700,000
.
.
Canadian Dollars
Part A + Part B
-----------------
Revenue 15,145,306
Other Rev 100,000
----------------------------------------
Total Revenue 15,245,306
========================================
.
.
.
What it says and means:
There are 14,000 OZ that we might have sold @645 an oz
but will sell at @550 and oz. OUCH!
The difference in price (645 -550) is $95 dollars
an oz.
If we multiple this $95 dollars an oz times 14,000 oz
that equals $1,330,000 USA dollars.
And if we multiple the USA dollars times a conversion
rate we get:
$1,330,000 dollars Times 1.1543
$1,535,324 in lower or MISSING CANADIAN revenues.
So in summary - the revenues in my Excel WB are overstated
and have to be reduced. I will forward a revised copy
sometime this week.
But THATS NOT ALL ......
I am NOT certain of this but I think we will have to
take into the P&L that MISSING revenue as a
REALIZED LOSS ON PRICE WE SOLD AT VERSUS MARKET PRICE
Actual Price - Market Price = Loss on sale versus
market price ....
per oz:
(550 - 645 ) is $95 dollars loss ....
the amount of the loss would be:
$1,535,324.
Again, I am NOT certain of this but I think if the
CALL HOLDER demands we give them the 14,000 oz then
we have to .... and the accountants will take
the difference between the price we got and the avg.
market price we sold the NORMAL oz at.
In summary, my original EAT projection of $5.0 million
falls to $917,470 (Canadian dollars)
IOW - big screw up on my part - and another 1 step
forwards and 2 steps back ....
Things to ponder:
We don't know how long the CALL Options are good for.
This (might be significant) because (just maybe) it
might cost the Call Holder alot of $$$ to take the
gold off our hands and resell it.
If the Options expire by 5/31/06 there might be
little profit in it for the call option holders ...
i.e. they have to get a truck or trucks and drive there
and haul it and store it etc.
I do not know what is involved ... but certainly there
is some cost involved.
If it is just ONE CALL OPTION HOLDER ... then no doubt
it probably would be profitable for him to call the
call option ....
I am really sorry about this ...
In summary, my original EAT projection of
$5.0 million
falls to $917,470 (Canadian dollars)
(John - lets leave mommy out of this one ... Dad)
regards,
John |
