Scod,

Original projections were for us to be near or at full production this summmer. This has been rolled to later this year with full production forecast for November 2008. This, of course, has a very significant impact on 2008 earnings. I was being conservative with my analysis, given the delays thusfar, and pushed full production to 2009 which only a month after Nov 2008. You're right to say that if we do indeed hit full production in November, our EPS won't be as bad for 2008 and we might make enough profit to offset the losses in the first 3 quarters. If we can arrive at the end of 2008 with $0.00 EPS, I will certainly be celebrating and looking toward 2009 with great excitement.

You are right about the mine depletion/amortization. This is not a cash cost. It is significant, however. This is the built-up cost of building the mine(s) and is not expensed until production begins. We need to produce enough cash from our nickel sales to cover mining/refining costs plus enough to cover the initial cost of the mine itself. What is left is profit. We are producing positive cash from Redstone even at these low production levels but are not earning enough to offset all of the costs associated with building the mine and mill. This will change once we reach full production.

A (simplified) example:
CASH:
Raise capital: $20mm cash+
Spend capital on new mine: $20mm cash-
Mine and sell nickel: $30mm cash+
End of day: $30mm cash in our hands

PROFITS:
Financial statements during building phase: $0 profit/loss
Mining and selling nickel: $30mm - $20mm depletion = $10mm
Net profit: $10mm

So at the end of the day, we have $30mm cash, $20mm of which was from investors, plus the $10mm cash from profits.

We need to return enough cash to cover all of our development/operating costs plus return a healthy investment on our share capital.

I don't see things as doom and gloom. What we are able to produce margin-wise at 200 tpd is encouraging and translated to higher volume and lower costs, we should do quite well. I know $0.50 EPS isn't pie in the sky, but it's not bad either. We should create more than enough cash at full production to be able to completely finance Hart development and further exploration at our other properties. Rome wasn't built overnight.