Firstly, I am a moderator but I am still allowed to post as a user whenever I deem appropriate. Including right now.
Secondly, my moderator status means I won't moderate on this thread, and thus the two are not connected.
Finally, you completely MISSED my point, the variables ALL went wrong and yet the company still made profit. I think that it's quite positive that it's the case.
You could (and I believe Captain already has) that the strip ratio may tend to get worse, as the overall strip ratio (by my calculations) going forward should be just over 10 (given the massive pre-strip completed in the first year). It may be worse than 10 if they adapt the mine plan for longer life.
These are things we cannot control, the ore is where it is, if you want to get it then you need to mine that much. Similarly, Gold price we can't control, nor can we control grade. Even the dam lift, while the company should be able to predict it, it is an environmental requirement and thus they will have an independent consultant force them to do this, regardless of timing if the situation calls for it (and rightly so).
The company can somewhat control recovery, but the metallurgy is what it is also. Your plant will usually do what it is designed to do if run well, not more. Recovery cannot magically be 100% if the management are brilliant. Just doesn't work that way. However if the plant is doing below what it is designed, and the metallurgy hasn't changed, then it is an operational issue.
So given all these factors that are out of the companies control, for them to come back at $1500 AISC and make money when previously they would be out at 1700-1800AISC, it is a good announcement.
Don't forget this also* (assumes all other variables remain the same):
If recovery was 85%, then AISC would be 1376 or 90% would be 1300. If strip ratio decreased we know that costs decrease massively.
If the grade had been 1.5 then AISC would be 1380
They already stated without the dam lift it would of been 1141 for the half, meaning just over $1200 AISC for the quarter of operational costs (excluding sustaining capital).
They've stated 1250-1450 for this FY, which means continued profit (if achieved) and lower debt. Net debt is currently 8million, so the value hasn't decreased, just the perception of it.
BLK Price at posting:
5.4¢ Sentiment: Buy Disclosure: Held
