Dasa, Tax credits could all be used up by the end of this year. With the very high copper price and very low C1 cash costs, P Hill is throwing off a lot of profit.
The issue is that there could be excess cash to all potential future requirements. From my understanding, they want about $1B for t/o opportunities. That leaves about $500m spare. They are spending $50m on exploration. I suspect that they are people constrained (not enough geologists) to have the time to review the data to expand any more than that. They are spending $135m on West u/g. That still leaves more than $300m in excess plus the mine throwing off more cash every month. Hence the discussion on buybacks or special dividends.
fgb, OK - misunderstanding.
P Hill cost about $1.3B to develop. A significant part of that cost was infrastructure (electricity connection to the grid, processing plant etc). TB indicated that the processing plant has been designed such that future expansion is relatively easy. So these are guesses, but I suspect that expansion of the plant could cost $200m, mine haulage equipment - $30m, overburden removal - $100m, other incidentals $20m. That is only $350m. OZL last year was making $59m profit before tax every month on mining operations. After tax, that is $40m a month. So, you can see that a new mine can be funded from cash flow with cash left over (it would take 5 years from mine discovery to selling product)
So again, from all sides, it would appear that OZL has excess cash.
Regarding your last question, fgb, it is difficult to answer, my gut feeling is a lower cutoff of 0.5% copper and 0.5g/t of AU. Others may have better knowledge in this area than me.
HT1
OZL Price at posting:
$16.95 Sentiment: LT Buy Disclosure: Held
