TRY are almost never cashflow negative for a quarter (they almost see it as a corporate affront). So, I'd imagine that they'd be only borderline negative at worst.
All I really want to see is a decline in costs/oz. If that starts to happen, free cashflow will take care of itself.
Given management's impeccable record of bringing mines to production quickly, cheaply, profitably, paying dividends, generating cash, then moving on to the next profitable mine...well, you can guess what I expect.
2008-09 has been the rebuilding year for TRY. 2009-10 is (yet another) cream year for them.
* Market Cap: $86m * Cash (after Caposo purchase): $38m * Expected 2009 production: 50,000oz @ costs $US400-$US500/oz (my est.) * Expected 2009 net cashflow @$US900 gold price: $20m-$25m * New (Caposo) Project Acquired: 400,000oz reserve; 500,000oz resource (a reserve-to-resource measure like this indicates very conservative measurement); cost of $US22m. * Sale value of 400Koz = $360m @ $US900/oz. If capital costs are $20m, TRY has paid $US22m to get a project which will generate revenues of $360m, conservatively. Very cheap purchase.
TRY does best when it is generating profits which the market cannot ignore. I believe that it will start to do that this year. It is not inconceivable that TRY will generate earnings of $A20m-$A30m this calendar year. That would put them on a PE of about 3: virtually unheard-of for a gold producer.
At some stage, they must be substantially re-rated, IMO. They have just been too good for too long, for the punters to ignore forever. They are a $2.50 - $4.00 share anyday, IMO.
TRY Price at posting:
$1.21 Sentiment: Buy Disclosure: Held
