Ann: Boseto Operations Update June 2013 , page-36

IMO not a lot of new news. Timing of release was intriguing.
For me the key points are:

1. They are increasing production and nearing BFS targets. I have no doubt the bankers are leaning on them to achieve the random numbers included in the BFS including 23.5mt p.a Cu (5.9mt p.q) and 780 koz Ag pa (195 koz p.q). Ag there way ahead; Cu they have some more work to do.

2. It's not clear to me what inventory is where and how is it being counted.

3. I think strip ratios (waste:ore) are improving which is a great thing. I recall they had hoped to be into Pluto sulphide ores around late June

4. Cash costs are by comparison high and IMO they have until December to get them as low as possible. No doubt that consistent volumes will make significant in-roads but they will need to do more than that. A lower [and consistent] strip ratio will also be a significant cost driver. My reading is that power costs are way over the top (I'd not be surprised they were of the order 30% of C1 costs!!) and it may be simple management of these cost will make a huuuuge difference.

5. The hedge book is being unwound and so long as its alive, the bankers will do zot!

6. DML has wound back its net debt position from around $188m (12/12) to recent $153m(6/13) including $25m working capital facility. Inventory & receivables are tracking around $26m so there is probably only $128m to be 'interested' in.

7. I expect they will report a very lofty EBITDA given they have closed out a fairly lucrative Ag hedge book. Twill be a bit like peeing in your pants though!!!

IMO a good outcome from a developing [developed???] business. It seems to be a race against time ...
(a) get cash costs to early $2.00 before the hedge book is fully exhausted;
(b) establish confidence in the investor community sooner rather than later as to ability to consistently hit production targets ... especially Cu;
(c) complete a capital raising thereby diluting cash demands of financiers. This would hurt but in the absence of anything else they will need to pay the monkeys back if they are to get off their back!; and/or
(d) that the Cu price trajectory continues north before the current hedge book is exhausted. Favourably extending the existing hedge book would quell any angst on the part of financiers

Late August will be interesting.

Have a good one.