Haha well thankyou and yes, hard figures talk, completely agree with you. I was in tech too for a while and made a lot of bags (4x CGS, 4x IAM), but they are so much more volatile imo. Now I see myself sticking with resource and energy sectors for the next decade.
Management have stated in the presentation a the AGM (I think?) that they aim to do two things:
- Reduce logistics and transport costs by up to 50%
- Reduce energy costs over 50%
Logistic and transport costs are half our cash cost (~$170/t). They have already indicated that their preliminary investigations show potential for this to be achieved. Seriously, even a 20-30% cut would be game changing.
Power is our second highest cost, and the PFS was basically stupid. To give you an idea, they use diesel generation (which is ok...) but there may be cheaper options here. Plus diesel is tax free for us (one of the benefits of operating in Mali) and they used 12x1MW gensets. As one astute poster pointed out, they could use bigger gensets to save on costs. Importantly, they also did not investigate the potential for the HYDRO POWER STATION 20km from the site. Obviously the hydro power is going to be a lot cheaper than diesel because we can connect to grid for part of our power.
Management have not only set these goals and made it clear it is a priority for them to reduce costs, but Hartley's also agree costs should drop.
Why can't other companies drop as well? Basically, they are largely in Australia and it is easier to conduct a PFS/DFS because the costs are easier to work out, so their costs are pretty much in line with other nearby operations. Como Engineering (the guys we paid to do the PFS) obviously have not stepped foot in Mali and did not investigate any of the real options available to us, very disappointing. It is one of the big reasons why management are redoing the PFS. The main way other companies will improve profitability/t is through either:
- Improving economies of scale by upgrading to a bigger plant (which we will also do once we upgrade resource)
- Improving recoveries in the processing stages (we have already demonstrated 80% recovery without any real difficulty, others like KDR and TAW are from memory at ~60% and should be able to improve it with increased CAPEX upgrades. Note that we could do this also (PLS uses a HPGR crusher, we don't atm), but probably not worth it. That is how good BGS' product is, and why our spod pa is much higher than many of our peers.
BGS Price at posting:
75.5¢ Sentiment: Buy Disclosure: Held
