Your Coke example is not the best and is more comp
Post# of 43064
Posted On: 09/27/2014 3:05:28 PM
Re: PaperProphet #14132
Your Coke example is not the best and is more complicated than you think it is. You must admit that Coke is an entirely different business than P2O.
And now you are taking my post and picking out part of the answer and saying I am reversing myself.
OK, when I did those projects in the Mining industry, I worked for a major international player and had one of the top EPCM firms performing these studies. I believe that third party validation was even required by the SEC, but that is just hearsay. The EPCM was the author of the FEL 1 and FEL 2 documents, with some input from the Owner.
So, the EPCM has liability insurance and a professional reputation. If they build something and it falls down and kills 1000 people they can be sued. Likewise, if they say something is profitable and it turns out not to be I would say they have a major problem.
You must admit, if you say the input is "We can make fuel for under $10/bbl and can sell it for $90/bbl." that is just not realistic. Estimating Cost (operating and Capital) is the EPCM's forte. They would never accept that assumption. Now, Oil prices or metals prices... yes, the assumption that certain prices would be used (WTI, gold prices, etc) would be understood. The Owner would have a fair grip on that. That is not something that the EPCM can be sued for. I am not sure if someone in the EPCM or the Owner suspected that commodities prices would be falling as they did last year, who would be responsible.
I am not sure what happened last year when gold tanked. I know that there had been 5 years of development in Mining. I was part of it. Lots of mines got built. Overdevelopment. Now the stock prices have cratered. Check out Thomson Creek Mines (TCM). I am not sure if any EPCMs were held to blame for their estimates or not. It would be interesting to find out. The profitability of these mines is pretty much directly related to the price of Gold.
So my position has not changed. Sorry I can't illuminate the whole thing. The SAIC document is suspect.
And now you are taking my post and picking out part of the answer and saying I am reversing myself.
OK, when I did those projects in the Mining industry, I worked for a major international player and had one of the top EPCM firms performing these studies. I believe that third party validation was even required by the SEC, but that is just hearsay. The EPCM was the author of the FEL 1 and FEL 2 documents, with some input from the Owner.
So, the EPCM has liability insurance and a professional reputation. If they build something and it falls down and kills 1000 people they can be sued. Likewise, if they say something is profitable and it turns out not to be I would say they have a major problem.
You must admit, if you say the input is "We can make fuel for under $10/bbl and can sell it for $90/bbl." that is just not realistic. Estimating Cost (operating and Capital) is the EPCM's forte. They would never accept that assumption. Now, Oil prices or metals prices... yes, the assumption that certain prices would be used (WTI, gold prices, etc) would be understood. The Owner would have a fair grip on that. That is not something that the EPCM can be sued for. I am not sure if someone in the EPCM or the Owner suspected that commodities prices would be falling as they did last year, who would be responsible.
I am not sure what happened last year when gold tanked. I know that there had been 5 years of development in Mining. I was part of it. Lots of mines got built. Overdevelopment. Now the stock prices have cratered. Check out Thomson Creek Mines (TCM). I am not sure if any EPCMs were held to blame for their estimates or not. It would be interesting to find out. The profitability of these mines is pretty much directly related to the price of Gold.
So my position has not changed. Sorry I can't illuminate the whole thing. The SAIC document is suspect.
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