I dont think its such a bad report . Although very disappointing...

I dont think its such a bad report . Although very disappointing to see that as per usual GBG release "sweet sfa" detail on Karara.

Sales on 2, 095 of magnetite are approx $1.99 billion

Gross margin excluding depreciation, financing costs , shipping , sales royalties , general administration & corporate costs have been stated at approx $27 per ton ( ref direct costs quoted at $71 / ton - so that should include all extraction , processing and maintenance costs )

Thus gross margin for the quarter equates to some $566 million

If we assume the following :

a) Depreciation on the plant - must have started at at least 10% in year one ....reducing now at year 6 or so ....so probably annualized now at some $150 - 180 mill p/a ( say $40 mill per quarter )

b) Financing costs at say 7% - and lets say on the full 2.5 bill $170 mill p/a ( say $40 mill per quarter )

c) Shipping costs - ???? no idea but say $10 per ton ( so say $ 20 mill for the quarter )

d) Other costs corporate & admin , exploration ( exploring what ?? ) $20 mill )

My guesstimate is that the total "other costs" might equate to $120 mill for the quarter

If that is correct then the free cash flow for the quarter from Karara would be some $400 mill

Question ??? I wonder why the price achieved was only AUD $ 98 per ton .

Other magnetite producers like Grange Resources for instance achieved an average price id about $133 per ton for the same quarter .

Is the price being paid by Ansteel being held down by some internal deal ? .....because those extra dollars would equate to another half billion of bottom line revenue .

In summary I think Karrara must now be profitable , and its only a matter of time before the public stance on valuation of the investment changes form zero to "quite a lot "

cheers

VA