annual report

Here are the things I found interesting about the annual report -

I thought a past report mentioned that cost of production decreased from ~$5.25/lb to $5.00/lb. But when I read today's annual report it says this -

2009 - 33,000T nickel, 2,350T cobalt, 378m Cost of Production
2008 - 30,500T nickel, 2,000T cobalt, 417m Cost of Production

~32,500T (nickel plus cobalt) production in 2008 then ~35,350T in 2009 means almost 10% increase in production and total cost of production fell by 10% too, so cost per LB of production must have fallen by ~11%.

~$5.25/lb to $5.00/lb is a 5% fall in cost of production but my calculations say they fell by 11%. Are my calculations wrong?

I am happy - falling costs and increasing revenue.....I project $150-200m profit for 2010. $150m is my projection assuming nickel averages $10/lb for the year, it is currently above $12/lb. EPS would be $0.125 with 1.2b shares on issue and $150m profit, a PE of 7 on the current SP.

Here is something a little weird - Commsec's chart says that the 5 year high is $5.54 yet p18 of the annual report says in 2007 the SP hit $9.53, why the discrepancy? I'd like to know the 2006-2007 market cap while profit was ~$300m so I can project a fair value assuming $150m profit.

Also their revenue breakdown - ~$400m from nickel, ~$60m from cobalt. Interesting figure to remember - Nickel is ~85% of their revenue, cobalt is ~15%.

Cost of production breakdown on p64 doesn't list anything surprising, Production Costs is the main improvement from $355m down to $318m.

Non interest bearing Financial assets - $250m, earning no interest? Odd.

Those are the things I found interesting in the annual report. I am quite confident in my projected profit figure, although it could even go higher. But I don't know how to accurately project a SP for the end of 2010 based on the profit projection. I also have confidence in MRE for 2011, they will use the ~$250m cash plus $150m profit from 2010 well and we'll see the benefits in 2011. :)

If anybody has a method for projecting the SP at the end of 2010 please share it.