Mine Closure discussion

So, with few stocks in the same position as SAR, I am hoping I can get a few wise posters to offer some thoughts on what is clearly becoming a real issue (versus just one that is 'only in other countries'.

@nordesmic - I was wondering if I could get your thoughts (and hopefully, you might be able to bring in other posters who you feel might have something to add) on if/when W.A or the Federal government engage in Stage 4 restrictions, similar to what New Zealand entered last night.

For those interested, here is the full list (the last part is particularly poignant) - and I will be upfront, its a pretty breathtaking, and sobering read
Stage 4 - New Zealand


Here is the main part that were added from Stage 3 -

Additional decisions and exemptions – updated 3pm, 26 March 2020

• Farmers markets are not considered to be an essential service, as alternatives are available
• Pest management may be undertaken only where required for human health and safety, and it is essential during the Alert Level 4 period. However, operators must ensure people have somewhere safe to go while the process is underway, in particular where a property is being vacated
• Backpacker accommodation providers may continue to operate under very strict protocols and management of access conditions. Eg. Contact to be maintained only with people staying in the same room; common social and recreation areas to be closed; split shift access to common areas
• Butchers, bakeries and similar small-scale food retailers are considered non-essential, as similar products are readily available in supermarkets
• Natural health services are considered non-essential
• Security is considered an essential service, even if security services are being provided in relation to a premise for a non-essential service
• Critical support services to ensure businesses and workers can continue working from home are considered to be essential. This includes functions such as IT and Payroll
• Dairies can remain open, with a one-in-one-out rule, and cannot sell cooked food
• Food delivery is prohibited. Meals-on-Wheels and alternative meals on wheels services that have been referred from a DHB, ACC or MSD may operate and whole food delivery may continue to operate (eg subscription food boxes are okay)
• Every restaurant, café and bar must close all aspects of their operation
• Self-service laundries can stay open, with 2 metre physical distancing to be enforced
• Retirement villages are included as an essential service
• The Warehouse must close
• Bunnings, Placemakers, Mitre 10 and other retailers essential to the supply chain for building and construction can stay open to trade customers for essential purposes only
• The Tiwai Point smelter is exempt from closure
• NZ Steel is to shut down in a way that allows for production to recommence easily
• Pulp and paper plants are to shut down their non-essential elements in a way that allows for production to recommence easily, and while maintaining essential production
• Methanex can remain in production, but at a scale consistent with the stability of gas supply.

Basically, the country has come to a COMPLETE STOP.
I actually think it will work, at least for NZ (and they only have 10% of the casts Australia has).

Now, back to the actual reason why I chose to post this on the SAR threads.
I note that OGC has already closed one of its mines in NZ, however, I believe they might be able to keep a few staff at their second plant, to feed it ore only... and continue commercial production.

I have looked across the sector, and the only producer that I know (and has clearly stated) has large stockpiles of ore, is SAR (although I do not have any figures for the Superpit yet).

All the other producers I have been holding over the past few months, have been culled, painfully, because none of them have sufficient stockpiles to produce at a rate for say, 1-3 months with a much reduced workforce.

I believe that in the near term, all mines in Australia will be required to shut/stand down/reduce... why, because its happening in every other country around the world. Although I note that many still seem to think that Australia is 'different'.

I note that this morning, NST came out with a fairly negative (my view anyway) update, with production decreased by 10-15%, plus they cancelled their dividend. There was little detail on what they might do if they have to curtail staff rates at their production facilities, but... surely they will have to be planning for this (as the government has stated that they will do what needs to be done, if things worsen).

SAR has 3 production centers, all relatively close to each other, which I hope means that if push came to shove, they can even move staff around to they are needed, meaning extra flexibility. As I also mentioned, they have approx 140,000 ounces in ore ready to feed the plants, or approximately 3 full months of production at a run rate of 600k ounces p.a.

I believe SAR will already be debt free as of now, they have no dividend to cancel, or postpone, and will hopefully still be able to produce when others cannot.

I know that well run mining operations will be putting into place all possible measures to protect workers, but... that may not matter if the government gives a blanket ban. I feel relatively confident that if ban on operations occurs in some form, all gold producers will take a short term hit, and as such, I have positioned myself accordingly, perhaps I am wrong, but... if the rest of the world are closing most mines, is Australia really, any different?

Quite a few posters, seem to just say that if the issue of potential closure occurs, 'it will be fine' 'the gold is not lost', which may be true, but... it will be a big hit to their cash balances, plus not filling their hedging (which I again note, NST stated they could get around doing, but don't state at what cost this avenue was achieved).

NST say it best in the update today - pretty honest I think