My apologies canonman, just want to add a note to the post, re production. On March 12, following a guidance update, the SP got hammered (by about 12 cents). This was on the back of a 6000 oz drop in guidance. Predicatably AISC increased to A$1800 to A$1950 per oz. Going forward and analysing the Key Production Metrics in the MarchQ report, a couple of data sets stand out.
* Tonnes mined, stayed almost the same as Dec 19 Q. We know that 51% came from KOTH.
* Mined grade, dropped from 3.25 g/t to 2.46 g/t.
* Average Head Grade, dropped from 3.15 g/t to 2.93 g/t, interestingly not much.
* Tonnes Milled, dropped from 248,046 tonnes to 229,470 tonnes, presumably because of the maintenance issue.
So mined tonnes stayed the same, milled tonnes dropped slightly (18,500 tonnes), the only significant variable was mined grade. We also know that the amount of ore from KOTH has steadily increased to 51% this Q.
In a March 19, 2019 announcement MW stated "These bulk stopes will now form a part of our mine plan for the next 12-15 months, underpinning our production profile at KOTH and is expected to result in increase ore production rates and that will in turn allow costs to be lowered as a result of economies of scale and underground mining efficiencies." He was referring to the 'experimental' bulk stoping and "truck to Darlot" model being developed. As we can see by the mined grade for the quarter the trade off was decrease in grade and production. The 'experiment' has finished and the grades should return to normal this coming Q.
Did this 'experiment' that resulted in the downgrade deserve such a savage hammering from the market? Considering the impairment in cash flow probably. Case of unintended consequences.
Just a note to say that AISC is a function of production. If costs stay relatively the same then any decrease in production will logically increase the AISC. Another unintended consequence.
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