Aggregate Profit
The following paragraph is from the May 31, 2012 Financial Statement:
22. JOINT ARRANGEMENT
On June 2, 2011, the Company’s wholly owned infrastructure subsidiary, PDI, entered into a joint venture agreement (“Joint Venture”) with Constructora Meco S.A. (“MECO”) for the construction of the by-pass road for a third party, in the Petaquilla district. PDI has a 40% interest in the Joint Venture, which is a jointly controlled operation.
MECO is the operator of the Joint Venture and is required to carry out all the earthworks, while PDI is responsible for the provision of construction aggregates, a by-product from its Molejon gold mine. Personnel from both PDI and MECO provide administrative and other services to the Joint Venture.
The following amounts represent the Company’s assets it controls, and liabilities and expenses it incurs related to the jointly controlled operation, as well as its share of the revenue for the year ended May 31, 2012:
Revenue $1,387,404
Cost of operations 656,436
Income $ 730,968
The total fixed price for the by-pass road is $6,326,343, and the revenue is recognized according to the percentage of completion method. The Company’s portion of the revenue is recognized based on its 40% share of the Joint Venture’s revenue.
Posters Notes: The above represents a profit margin of 53 percent. Roughly the same profit margin should apply to the $100 million in sales to Cobre Panama or $53,000,000 in profit. Not bad at all. Based on the Mojolon NI 43-101, there will be approximately 29,000,000 tons of aggregate produced. Don't know how many tons will be used in the above joint venture. If someone knows the tonnage amount it could be used to project overall profit on the 29,000,000 tons.