EPD could this go to £40 per share ?????

JK8 - 21 Dec'05 - 00:00 - 8577 of 8584
Anom, thanks for your posts. Can you clarify just what you had to change in the spreadsheet.
Thanks

The key things that were changed were:

1. the Royalty, which was 10% and is now being negotiated at 8% ( which did alter the profit figures quite a bit)
2. the extraction cost which would drop to $10 per tonne when they fit the extra modules to allow the K5 mining (which cuts the mining costs by 25%)
3. the K5 plan itself - to extract and process a sizeable quantity of K5 ore by adding further modules to take the capacity up to 170 tph

The thing about K5 is that in order to process that much kimberlite, they either need 210 tph on 2 shifts or 140 tph on 3 shifts. The maximum capacity they can get (with the add-ons) is 170. So they either have to increase the shifts, or think about adding even more capacity. The limiting factor at the moment is the DMS. But even with the extra modules, eventually they will hit other production bottlenecks. Whilst it is good that they did 'over-engineer' the project, to be able to process the K5 ahead of the Super Pit, there are still some production problems to be solved.