RE:RE:RE:RE:Q2 Financialskha wrote
So let’s assume Q2-21 revenue = $53,387,078
Your calculation of the average costs for Q2-21 doesn’t change: :
24,122,000 (Q3-20) + 36,231,000 (Q4-20) + 35,354,000 (Q1-21) = 95,707,000 / 3 = 31,902,333
which now represents a cost/revenue ratio of 31,902 / 53,387 = 59.8% which is certainly too low. Have you ever seen a cost/revenue ratio of 59.8% in the financial reports of Largo before?
The cost/revenue ratio for Q3-20, Q4-20, Q1-21 and the average cost revenue ratio for the 3 Qs don’t change:
Q3-20 revenue = 27,474,000 thus cost/revenue ratio = 24,122 / 27,474 = 87.7%
Q4-20 revenue = 42,254,000 thus cost/revenue ratio = 36,231 / 42,254 = 85.7%
Q1-21 revenue = 39,801,000 thus cost/revenue ratio = 35,354 / 39,801 = 88.8%
The average cost/revenue ratio = (87.7% + 85.7% + 88.8%) / 3 = 87.4%
As we now assume Q2-21 revenue = $53,387,078, then the estimated average costs for Q2-21 should = $53,387,078 x 87.4% = $46,660,306
Thus
Q2-21 estimated Net Income = $53,387,078 (estimated revenue) - $46,660,306 (average costs) = US$6,726,772
BTW, a Net Income of US$6.7M is closer to my estimation of Net Income = US$7.6M - 8.5M (with no FX gain/loss expected)
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Once V2O5 avg price goes above $6 and reaches $8 I expect the very high cost/revenue ratio of 87.4% will fall dramatically.
We only have the 3 recent quarters in which we can compare costs. The Glencore years were a disaster, as the costs were all over the place because of re-measurement.
Rather than use the average costs for 3 quarters let's
use Q4-20 which had the highest total costs of $36,231.000. ($38,803,000 with no foreign exchange gain)
I honestly can't see total costs being as high as
$46,660,306.
Where will the extra $7,857,306 costs come from?
| | Q4-20 | Q2-21 |
| | | estimate |
| revenue actual sales | 42,254,000 | 53,387,078 |
| | | |
| direct mine & production costs | 18,547,000 | 18,547,000 |
| | | |
| | | |
| Total operating costs | 31,604,000 | 31,604,000 |
| | | |
| Professional, consulting and management fees | 3,229,000 | 3,229,000 |
| Other general and administrative expenses | 1,027,000 | 1,027,000 |
| Share-based payments | 450,000 | 450,000 |
| Finance costs | 380,000 | 380,000 |
| Exploration and evaluation costs | 2,179,000 | 2,179,000 |
| | | |
| costs for total production lbs | 38,869,000 | 38,869,000 |
| | | |
| Interest income | 66,000 | 66,000 |
| Foreign exchange gain | 2,572,000 | nil |
| total | 2,638,000 | 66,000 |
| | | |
| total costs | 36,231,000 | 38,803,000 |
| | | |
| | | |
| Net Income | 6,023,000 | 14,584,078 |