- Gold is high, but it's only been high for a short while (well, high and then higher). - We have not had time for the high gold price to flow through to the cashflow statement (this applies to all gold miners). If has flowed through in a small amount thus far, and a moderate amount in this ongoing quarter. - So record gold prices may not fully flow through to the SP quite yet, but 1 year of sustained high gold price may help in that regard - giving enough time to accumulate some super profits, and repay debt.
- $2650 last quarter, $2850 this quarter, $3017 spot. And adjust for proportion delivered to hedges/collars (abnormally high last quarter).
So what is the right move? I guess hold, and hope that gold is at these levels in 12 months time, so everybody can see some substantial cashflow numbers.
This stood out to me:
It's lucky that the expansion was initiated. Also luckier that gold has risen, to multiply the benefits of the expansion.
A $250/oz reduction in costs, on 250koz = $62m saving PA, on top of the other profit that you'd expect to make on the incremental ounces. Even the cost savings alone should make a quick payback of the expansion investment. So then it likely comes down to adding reserves, to extend the payback period of the investment.
BGL Price at posting:
$1.33 Sentiment: Buy Disclosure: Held
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