Yes I have, but it not as monumental as you make it appear.

Yes, the Redstone shaft is going to cost $28 million over the next two years. This is not going to have an effect on cash flow from operations; however it will affect real cash flow.

I expect a significant part of the $28 million would be funded from the $310 million I forecast over the next 3 years.

But this has little impact on EPS, since the expected life of the Redstone Mine is 10 years. 300tpd x 365 = 109,500 tonnes/year x 10 years 1,095,000 tonnes. I expect the new NI 43-101 will show a resource of at least 1M tonnes at Redstone, which allows them to depreciate the shaft over the 10 year mine life. This equates to approximately $235,000 of depreciation expense per month, which will not commence until the shaft is operational some time in 2009.

$28 million / 10yr = $2.8M / 80.5M shares = $0.035EPS/yr

I also expect that once the shaft is complete, they will more economically drill the Inco anomaly proving up a significant resource and substantially increasing the available tonnage while still maintaining the 10 year mine life. At the Edmonton presentation GN made a point of stating how satisfied he was with the anomaly drill results, as all 9 holes drilled hit nickel. He indicated that this is more difficult at such depths and that this success rate was better than that expected at shallower depths.

I also haven’t seen the cost of developing McWatters and Hart. Both of these deposits are relatively shallow so I have used a capital expenditure amount of $5M for each mine. I have no idea if this amount is a reasonable ExSudburyGuy, but since your handle implies that you live in the mining community perhaps you can provide me with a better estimate. I don’t know the full expected mine life and over what duration the depreciation will be allowed but I have assumed 3 years. This is approximately another $140,000/mo for each mine, McWatters starting 4th qtr 2008 and Hart sometime mid 2009.

In 2009 when the Redstone mill, Redstone mine, McWatters and Hart mines are all operational and their capital expenditures are depreciable this will have approximately a $0.15 negative impact to EPS based on my projections.

I don’t know what restrictions Salman has in making their projections, but I have to believe that they are underestimating McWatters and giving no credit for Hart. It also seems as though they are not utilizing any lower grade ore in their calculations or their estimates are based on an open pit design at McWatters. There isn’t a link on Liberty’s website to Salman Partners June 22 2007 analysis, if someone has a link to their most recent analysis please post it so I don’t have to guess.

I suspect that their new projections will utilize the long-hole mine plans and the new NI 43-101’s available next year resulting in a projection more in line with mine.

My payable nickel projections are

2008 11.0 million lbs
2009 18.4 millions lbs
2010 22.1 millions lbs

And naturally their costs/lb are higher when their estimates under utilize the mill, however their 2008 cost of $3.18/lb look reasonable.

My projected costs/lb averaged $3.38 in 2008 and I used $2.75 in 2009 and 2010."