Australia's largest stock trading and investment forum Australia's #1 stock forum

WMC

Click for more information

0.00%

20.5¢ wiluna mining corporation limited.

Gold Turnaround Story of 2018, page-2711

First 2711 Last

Graphite101

3,333 Posts.

436

13/04/18

08:39

Post #: 32426959

Originally posted by mmoore1957 ↑

Let's have a detailed look at the last three months results for BLK in an attempt to get a reasonable handle on it's underlying performance.
The numbers for Jan, Feb & the Q are BLK's actual numbers. Mar's numbers are actual except for the numbers I have highlighted. These I have calculated based on Jan/Feb/Q actual numbers.

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6

1 Units Jan Feb Mar Q

2 Stripping Ratio 3.6:1 1.5:1 2.5:1 2.5:1

3 Ore Milled kts 163 150 165 478

4 Mill Feed Grade g/t 1.4 1.5 1.6 1.5

5 Plant Recovery % 91.2 90.6 86.5 89.4

6 Gold Production ozs 6498 6713 7419 20631

7 AISC A$/oz 1158 912 1200 1092

8 ROM Stockpile ME Kts 108 144 127

9 ROM Stockpile Grade g/t 1.5 1.7 1.5

Comments:
1. The March Stripping Ratio ("MSR") was higher than Feb but lower than Jan. It was considerably lower than 2017.
2. The plant recovery was lower at 86.5%. I don't know why.
3. AISC was higher than the previous two months. The MSR was partly to blame but there were other factors at work which I don't know. At A$1200/oz it was at the top end of their FY2018 H2 forecast.
4. I am disappointed that BLK did not explain in greater depth their March numbers. This had been done in previous months but in the ASX latest release BLK focused on the Quarterly results and not March's
5. The ROM stockpile normally provides the mill feed for the following month. The ROM stockpile grade at Feb month end equals 1.7 g/t. The mill feed grade for Mar was 1.6 g/t which suggests that the ROM stockpile was mixed with lower grade ore from mining in March. This is supported by the ROM stockpile grade at March month end of 1.5 g/t. This suggests that the mill feed grade for April is likely to be 1.5 g/t.

Now my financial forecasts for J/F/M and Q 2018.

Column 1 Column 2 Column 3 Column 4 Column 5 Column 6

1 Units Jan Feb Mar Q

2 Gold Production ozs 6498 6713 7419 20631

3 Realised Gold Price A$/oz 1663 1670 1675 1669

4 AISC A$/oz 1158 912 1200 1092

5 Mine Operating Margin A$/oz 505 758 475 577

6 Mine Operating Cashflow A$m 3 5 4 12

7 Working Capital Adjustment A$m -22 -2 -24

8 Equity Raised A$m 36 36

9 Debt Repayment A$m -4 -4

10 Company Cashflow A$m 3 19 -2 20

11 Opening Cash Balance A$m 7 10 29 7

12 Closing Cash Balance A$m 10 29 27 27

13 Cash & Bullion (BLK's number) A$m 12 31 29 29

Notes:
1. I have assumed BLK's AISC= C1 + Royalty + Corporate Costs + Sustaining Capital
2. The Working Capital Adjustment is my estimate on the catchup on outstanding bills which were substantial at 31/12/17 (Refer Financial Accounts 2018 H1 Actual)
3.I have assumed that the Bullion component in BLK's reported Cash & Bullion number is a constant A$2m. The actual will be different but I am hoping not significantly so..

Comments:
1. BLK's statements regarding strong operating cashflows referred to Mine Operating Cashflow only.
2. BLK's Company Cashflow was A$20m BUT if we exclude the Equity raising of A$36m it was NEGATIVE A$16m.
3. Trade & Other Payables at 31/12/17 were A$42m whereas Cash & Bullion were A$10m. A working Capital deficit = A$32m. This explains the Equity Raising of A$36m. Without it BLK would be in a very difficult place. It looks like BLK has dealt with around A$24m of the A$32m deficit so there is around A$10m to be met from future Mine Operating Cashflow along with regular debt repayments.

Some concluding remarks:
1. BLK's AISC in CY2018 Q1 has improved substantially over 2017 driven by reduced Stripping Ratio and increased mill feed grade.
2. However the reported AISC numbers are not yet consistent and so it is hard to precisely forecast what the future holds. BLK are forecasting AISC CY2018 H1 = A$100 to A$1200. I suspect that they will be closer to the top end of the range.
3. BLK's mine operating cash will be used to service the working capital improvement and debt repayments over the foreseeable future. My feeling is that it is going to be very tight over the next 6 months and BLK could very well experience further Quarters of negative company cashflow before the situation improves.
4. So in my view BLK it not out the woods yet and BLK will have to work hard & efficiently to get the ship back on an even keel. There is now very little wiggle room for poor performance.
5. I suspect the market is very well aware of the above, hence the reason for the recent SP movement.

Now please remember this is my analysis only and could contain significant errors so please always DYOR

Expand

A holistic and multi facet viewpoint and honest snapshot as numbers dont lie ( unless you have crooked auditors lol ) however there are other key drivers now coming into play that will change the game potentially

1) BLK have clearly shown they have it under control as past 3 months they are producing record numbers and containing OPEX ( Good sign ) - With May just around the corner we should see similar result or better based on recent results - this will be the key going forward.

2) Gold price is projected to go much higher in 2018 which would dramatically increase economies of scale and ultimate profit EBIT (HOWEVER not guaranteed )
Personally I think they are now getting themselves into a very strong position to get back and blitz previous recent highs- give it a few months of production and will be different story IMO

3) We have targeted expansion ASIC which will produce more at a minimal cost
BLK on track to produce approx. 80Koz and our production costs contained around $1,150. oz
So all these add up to a much higher valuation and recent monthly announcements now showing we trucking along =nicely with continual improvements

4) Our Resources
Resource of 6.5Moz
Reserve of 1.2Moz and we have been adding to this resource for past couple years where as other gold miners cant and havent achieved this

so for me its purely a game of patience AND TOP UPS AT THESE LEVELS
Cheers G101

Last edited by Graphite101: 13/04/18

BLK Price at posting: 7.1¢ Sentiment: Buy Disclosure: Held

2 Great analysis

Top Stories

EVN

Evolution shares up 3% on quarterly results for June showing rise in gold production

FMG

Andrew Forrest was seemingly possessed by the spirit of hydrogen – now he's cut 700 jobs and canned FFI

AI stocks: What to expect in 2024-25

Talking Australia's very competitive property landscape: Realty Talks

NRX

Noronex joins forces with South32 to look for copper in Namibia

There are more pages in this discussion • 482 more messages in this thread...

First 2711 Last

Add WMC (ASX) to my watchlist