While we wait as the drill turns, of course, it plays a bit on...

While we wait as the drill turns, of course, it plays a bit on the nerves... I have been looking at the worst case scenario, i.e. drill campaign concludes after 18/24 months and the Torrens prospect can not be justified to proceed to mining. For others who might be wondering how it will affect AIS I thought I would post a few bits and bobs for consideration...

Starting with the current copper price [source AIS website ]

AIS AISC = AUD$3.67 [from the recent AIS Dec Qrtly but that was due to some capital expenditure, previous quarter AISC was $3.41]   current Cu price = AUD$3.95 [$8692 ÷ 2200] $3.95 - $3.67 = 28 cents lb profit [=$15M profit @ current Cu price and AUD$] $3.67 is the AISC, the cash costs are around $2.90lb.

Forecast earnings [from Commsec]
Personally I think the analyst estimate of 2 cents per share for this year is a little low and it is closer to the 3.6 cents estimated for next year. The average P/E for the minerals sector is in the range of between 13 and 16 x's... AIS current P/E is 195 x but that takes into account it was loss making historically. Forecast P/E is 10.8 [1 year] and 5.9 [2 year].

Lastly a few charts on copper [source Kitco copper charts] The main concern about AIS as a business is... can they repay the outstanding debt due in about 18 months time?  [the recent quarterly reported the cash position as $21M]  The copper price looks like it has some good FA and at the very least should hold its present value [and if the EV revolution keeps ramping up, which looks likely, then you would have a hard time arguing a bear market outlook]. The other thing which impacts AIS is the $AUD ... if it stays around current levels for the next 2 years then definitely no problem.