You are right they might not hit the EBIT used in the presentations or DFS as you say.
But to be fair they could actually smash it to?
Personally i think the numbers in the DFS are all very conservative to be honest, i will give you a couple of examples;
-Firstly the AISC has already come down $30 per ounce since DFS so on 100k/oz p.a this is $3m, over the 8 years this is extra $24m.
-Secondly the recoveries in the last 6 years of the DFS are at 86% which drags the recoveries down in the first 2 years, so this equates to approx extra 10k/oz over first 2 years at 93% recoveries which at $570 per oz is $5.7m just over first 2 years, then if one is to presume that over the next 2 years they will have a more up to date flotation system for transition to sulphide ore as they have suggested one could presume that recoveries may be for the last 6 years of current LOM may well also be 93% which would b e more inline with industry standards, even Agincourt achieved 94% from Wiluna? So all of a sudden there is another $15m for the remaining 6 years on current LOM?
-Thirdly there is a real strong chance that BLK will produce over 100k/oz .pa because of the recoveries mentioned above but also combined with the chance the Golden Age ore conservatively modelled at 5.1g/t will be recovered at 9-15g/t as it has done historically. This could potentially result in my view of 100-130k/oz p.a in first 2 years, so again much more $$
-Forth Apex in 2009/10 in all their reckless spending and mis management managed of producing at 60% capacity and 19,000 ounces for one quarter, a C1 cost of $890 as apposed to BLK now $840 from open pits.
So i agree there is plenty of room for error, and they do have no track record as such, but when i look at the figures e.g. EBIT i think they are safe and conservative and just thought i'd provide some point of view for upside to the operating earnings for example as apposed to downside.
BLK Price at posting:
47.0¢ Sentiment: None Disclosure: Held
