Joewolf,I just listen to the company conference call and I think...

Joewolf,

I just listen to the company conference call and I think I can answer your question on topsoil. The company is required to provision for the remediation of the quarry site. A part of this requirement would be the provision for topsoil and if they were to have to buy that outside the company then the costs would be much larger than providing it themselves. They bought a neighbouring property to the quarry a short while ago to store the landfill on and apparently the top soil on that site is of greater quantity than anticipated so they can provide the topsoil themselves for remediation rather than having to buy it from an outside source. Thus they are holding that quantity as an asset. That was my interpretation for what it is worth.

Here are some of the other things I picked up from the conference call: The two main reasons for the profit being lower than originally anticipated were the rise in the Aussie dollar which cost them about $4m and the drop in demand from their soda ash customers. They indicated that soda ash demand has picked up again and they are hopeful for the demand to continue improving over the next twelve months. Residential construction is a major part of the demand for flat glass and Guy quoted expected house starts to be 155,000 for the current financial year versus 128,000 for last year. I think this is worth a follow up check as it sounds like an optimistic increase to me.

He mentioned that the soda ash contract with Goro is still in place and that they sent a shipment to New Caledonia recently. They are the sole contractor for the supply of soda ash to that nickel production plant.

In regard to Sodium Bicarbonate they are anticipating a better local dairy and stock season and expect to perform better than last year. They have registered a dumping claim with Customs in regard to overseas supplies of Bicarb and the MD said that they have received a favourable reception from the Minister and expect to report more within a week in this regard. He did say though that local sales of Bicarb tend to be of lower quality and used for Stock feed and that the bulk of their bicarb revenues came from higher quality product which they export.

One concern raised was a spike in the price of coke (not the drink!) used in the soda ash plant and they are looking at trying to replace some of the fuel with alternatives such as anthracite which they are importing from Vietnam for trial purposes.

They are highly conscious of shareholder concerns in regard to schist (which they now call landfill). He said that the company had purchased equipment to crush the schist enabling it to be eligible for use in new markets within Adelaide. They have quoted for projects requiring 2-3m tonnes of landfill and he named the south road superway interchange for which the contracts are expected to be announced in the early fourth quarter. He also mentioned a landfill contract at Port Adelaide which they are chasing and that should also be announced in the fourth quarter. Clearly a decent landfill contract would clear the air and make a big difference for Penrice.

He mentioned a small but profitable contract win to supply soda ash to a uranium mine in South Australia.

We have had discussions about the amount of money needed to maintain the Osborne plant and I think Guy said that they spend around $8m a year maintaining the plant. Certainly he said that the depreciation was $8m but I took that to mean that they have to spend that amount just to maintain it.

They recently rolled over their debt contracts which have been renegotiated out to March 2013 with new covenant provisions in line with budget forecasts.

They have recently reopened the chemical plants after closing them down for the annual maintenance requirements. As a consequence of this close down, the first half is traditionally not as good as the second and it was clear that they don't expect great improvement in the current half but are hoping for steady improvement in the second half

GPASAS