Ann: Production Update Q1 September FY20, page-19

Hhmm interesting quarter. For me not a big surprise. When you read the presentations of SBM the results for Atlantic and Simberi are in line what was promised for the FY20 (taking into account for the 1 week delay in Canada because of the Hurricane). So they can not be interpreted as a big disappointment. I am waiting for the commentary in the Q1 report about Atlantic for the full year. I keep in mind that the POG is very helpfull for the cashflow projections. So it all boils down to Gwalia. The productionlevel in Q1 is a disappointment. But is it a big surprise when such a big project is implemented. Gwalia has a productionlevel for the FY20 of 200 - 210.000 Oz. On average a quarterly production of 50.000 - 52.500. The first quarter is clearly a miss. But explainable. I remains to been seen that in the rest of the year, with such a big project, they can speed up the production to reach the indicated year level of production. But to be honest I am more interested in what can be achieved after the project. It is not that the gold is not there it is just a question of when can we dig it up. When you have taken a "picture" of SBM, there is the question if management is up to the job. Everybody has to do that for him/herself. For me personally, I am willing to walk the road with the current managment. The acquisition of Atlantic is a bold move. The question of price is temporary and dependable of the development of the POG. I think the acquisition in Canada is paving the way to a new homeland (next to Australia) with probably more to come in the next years (it is my own opinion that the price paid for Atlantic will be attractive over a few years). The strategic move will be a platform towards a higher valuation for SBM in the coming years, because of the growth of the company in combination with the development in the POG.
The final part of the puzzle is the price of the shares. Well on this issue we can say that there is a big buffer. The SP has not done very well in the last months (because of Gwalia-project and the too expensive price of Atlantic, which I think different of). If we take a step back and look at the big picture. Management of SBM is working on a bright future of its company. They opened up a new homeland in a good jurisdiction, are working on the future of Gwalia (and I accept the possible lower production levels during the time of the project) and have a balancesheet (even after the acquisition) which is not bad an will be stronger every quarter. Finally the pay a nice dividend. I can understand that there is some disappointment about Q1, I also understand that there will be some temporary volatility in the SP. But I am confident of better times ahead after the project and clarification of the plans with Atlantic. The POG will be the cream on the cake. I would like to say to shareholders of SBM: the current level in the SP is what it is, but I have a good feeling about the future based on my opinion of the POG-development and where SBM will be in 2 years time.