The liquidity position is certainly a bit lower than expected but a good chunk of debt has been paid in the last quarter.
Considering the position for the next 12 months, TRY has given guidance of 65-75 koz. They have also stated that the AISC from the last quarter are indicative of costs going forward. If we further assume that gold price received for the year will be in line with the current average hedging price of $1228 ($333/oz. margin) then:
Operating profit will be between $21.6 and $25 million.
With current liquidity of $3.8 million and debt payments of $11.192 million, TRY could bring down the operational creditors to $4 million and still break even at the lower end of guidance. Top end guidance would allow a nett profit of $3.33 million.
I have assumed $4 million as the desired value for operational creditors based in the break even point.
If we can see good numbers in the reserve and resources update in a few months, the $25 million in debt payments this year should mostly convert to profit in future years.
For a bit of sensitivity analysis, a $50 increase/decrease in the operating margin per oz. will give a $3.5 million increase or decrease to the operating profit (at mid-point of the production guidance).
I think this is an attractive enough proposition to stay in the stock.
TRY will clearly need to manage their funds carefully but it looks as though they have already started considering that otherwise they may not have reduced the operational creditors by the amount they did in this last quarter.
(All numbers US$)
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The liquidity position is certainly a bit lower than expected...
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