As Liberty summarized, EPS and cash flow are inter-related, but different beasts. When exploring, you spend cash and accumulate the expense as an asset item on the balance sheet. Then, once production begins, you draw down from this asset in ratio to the percentage of the ore body that you have depleted and book this amount as an expense. It is at this point that the cash we spent for explorations will impact EPS. It is also at this point where we really start to see whether or not the investment we made in exploration and development was appropriate to generate a profit from ore production.

If we look at the Q3 2007 statements, you will see on the balance sheet an entry:

MINERAL PROPERTIES AND DEFERRED EXPLORATION AND DEVELOPMENT EXPENDITURES
$23,866,863

These are the exploration/development expenses incurred to date for our various properties. Most of this expense relates to Redstone.

In the Significant Accounting Policies section we see:

"Mineral Properties and Deferred Exploration and Development Expenditures
Costs of mineral properties and deferred exploration and development expenditures are carried at cost until they are brought into production, at which time they are depleted over the estimated useful life of the properties. Costs incurred at the Redstone Mine prior to commercial production are being depleted over a 10 year period on a straight-line basis."

If we then look at Note 5, we will see a detailed breakdown of this figure. Looking particularly at Redstone, we have depleted $385,843 in Q3. This depletion turns in to an expense item on our income statement, offsetting the revenue that we generated from the small amount ore we extracted.

If someone has an idea of how much ore we extracted in Q3 2007, we could divide that in to $385,843 and get a feel for what our depletion cost is. The mill amortization over 10 years will hurt our EPS a lot more under low production than it will at high production, as this is a fixed amount per month and will bear a lower percentage impact on a higher revenue figure. But again, we could be cash flow positive and still have a negative EPS figure, as the amortization expense for exploration and for the mill are not cash impacting figures, as we have already put out the cash for these items some time ago.

I am really looking forward to digesting and analyzing Q4 data in a couple of days.