More info about the production sharing agreement. I'm not an...

More info about the production sharing agreement.

I'm not an accountant so I've probably made a mistake in my calculation (happy to be corrected) but I think it's consistent with Argonaut's assumptions, which still resulted in a post-tax IRR of 244%

The agreement looks like it's 50% of the after-tax margin for a concentrate (for example, if the margin is 70%, it's 50% x 70% x after mineral tax income).

Using Argonaut's assumptions on pg4 of their first report.

Revenue = $710m
Production cost = $241m
Mineral tax @ 4% = $28m
Income after mineral tax = $682m

After mineral tax margin = 65%

Production sharing = 50% x 65% x $682m = $221m

Assume income tax of 25%
Gross profit = $710 - $241 = $469

Operator = $682m - $221m (ps) - $241m - (other ex & depreciation) - $117m (it)

Total tax =  $28m + $221m + $117m = $366m
Effective tax rate = 366/710 = 51%