Missing quite a bit for someone thinking of investing in mining. It is the margin and the production that make money. 15koz gold with a margin of 600 AUD (like top gold mines get) is still 10 million a quarter! 15koz with a negative margin is ...
This quarter production was sub par, but they give a annual forecast production and costs which is equivalent to 25-30koz per quarter with a margin of 400-500 AUD which would see them make 50 million in a year - enough to pay off debt and start upping production. But this is only if they do what they say they can, which they haven't been able to so far.
The reason they did not produce 25-30 koz this quarter was mostly because they were not mining higher grade pits (delayed 1 month due to rain) and underground (technical difficulties not yet explained). So the investment case is not in the forecast production making lots of money for the next few quarters, but rather can you trust the management do what they say ...
If they do then you could expect the share price to go up 100% at least after a good quarter. Two other turn around gold miners I invested in currently have in fact gone up more than 100%, they have gone up 1000% when gold also increased. One other miners I invest in halved in price, another one nearly went out of business and I lost 80% ...
The thing is if you do your own research well and pick a miner that is about to turn around, you can make 500%, that can pay for 2 others that go bust... High stakes, and you need to read a lot of reports and do a lot of mathematics, study charts, and still be prepared to loose most of your money.
BLK Price at posting:
40.5¢ Sentiment: Hold Disclosure: Held
