Gold Micro ready to explode, page-52

OK I think I understand where the confusion is.

The $1 per tonne (if it is that, seems a bit low) is a margin per tonne, ie after processing costs. The $20-25 per tonne is the actual charge per tonne BEFORE costs. (Note the 20-25 is really arbitrary, I've seen costs up to $80pt...incidentally, a company you and I are both faimilar with, Blackham, initially looked at toll treating through Wiluna at a cost of $64 pt).

Since its a lease arrangement, probably the lessee is absorbing the processing costs. Hence the owner wont be getting the full usual toll treat payment. The amount they are paid however should closely reflect the usual gross charge per tonne less the processing costs.

However many things need to be taken into account in negotiating the cost per tonne in a lease arrangement. For example and as is the case here, who pays for refurb cost. Since lessee in this situation is paying for it, they would want to pay a lower cost per tonne.

Also, the owner may want a failsafe, ie they will charge a full amount per tonne for the capacity agreed to regardless of the amount the lessee actually puts thru the plant. So for example the agreement (simple example) may state: $x per tonne of capacity agreed to plus $x per dry tonne processed.

Cdchi1