RE: Is this correct?.....sebastianSebastian,
You asked: "Do you think that the total costs will increase in 2007 or do you think that it will decrease as a result of an increase of production?"
Response 1: I expect that total costs per pound will be lower in year 2007 due to (a)improved operating efficiencies by mid-year 2007 as processing ramp-up by Ivernia reaches steady-state production close to full design target capacity ; (b)current operating cost reduction activities such as fuel substitution of Gas for Oil and (c) Spread of "fixed costs" component over higher production volume.
You asked: "Do you think that a production of 90 000 tonnes in 2007 is a realistic target?"
Response 2: I expect you are well aware that, in addition to milling, that head grade and recovery are significant elements of production, as is the drying issue. I suggest that a range is a wise approach in developing potential operating scenarios. Given the company current 2007 guidance, I suggest that a range from 82,000 to 95,000 tonnes would be reasonable.
You asked: "What do you think would be a realistic lead price in 2007?
Response 3: I have no way of creating a credible response to this question. Again using a range for commodity price and monitoring inventory(less reliable these days IMHO due to hedge fund transactions in direct commodities), supply changes from mine opening/depleting/industrial strife, demand changes from vehicle sales in China and India, etc... can help locate boundaries to a range.
You wrote: ....."my question to you is which P/CF multiple you think that Ivernia should be valued at?"
Response 4: First issue here if over what period are you considering the C/F per share ...... Q4, 2006 annualized; year 2006 actual; or future projection? and is it fully diluted shares or current basic shares ?
Some specific aspects of Ivernia are important here.....single product(Lead) and current stage of commodity cycle, reporting figures are in U.S. dollars and some observers anticipate that currency exchange on Australian expenses may suffer foreign exchange losses in 2007, management ongoing operating track-record, potential that Ivernia at some point may use C/F to diversify in product/location, etc...
The more general environment(interest rates, investor sentiment, trading momentum, etc., etc.,) also contribute to making P/CF "measure of value" elusive and volatile.
I suggest that X8 on annualized Q4,2006 net earnings(not cash flow) would make Ivernia's closing price of $1.39 on Jan.5,2007 appear quite good value over the next couple of months,
Peace,
Good Decision-makin to All,
ElJ