Did a bit more of a read and digest overnight, annoyed at myself...

Did a bit more of a read and digest overnight, annoyed at myself for not doing it prior to the conference call. Anyhow here are my musings from stewing over the numbers. Feel free to correct or provide input as you see fit as there are a number of pretty significant assumptions and they're meant to stimulate discussion.

2H Outlook / Expectations if guidance achieved

38.9 koz Gold Production

AISC 1913 to meet FY targets 2300

However based on available information, it would seem there exists an opportunity for outperformance.

Mine Discussion Points

Hera

Update Mine Plan stated 140 kt of ore to be processed prior to C and M. Approx 1/4 of this processed in month of December resulted in an output of 2500 oz. Using the MRE as a baseline for grade, it doesn't seem unreasonable to expect a further 100kt at 1.7g/t which would provide for production of approx 5k oz for the March quarter. Additionally Aurelia's best quarters have typically coincided with these high grade stopes.

Dargues

New consent means processing increases to 415kt from 355kt. If we assume only half of this increase is incorporated in the 2H, we are looking at 178kt to 207kt or possibly an approx 15% increase. Similarly they discuss increasing gold grades through 2H. MRE for Dargues states grades of approx 4g/t, 1HFY23 managed 3.28g/t. This would result in 20% upside in gold available. This is obviously overly simplistic analysis but based on 1H production of 17.7koz these two factors would suggest an outperformance to 1H and I would be hoping for 20koz.

Peak

The most significant impact on cost, was the cost of sales adjustment relating to prior quarter concentrate production. This represented almost 20.9 million within the AISC. I don't have a full grasp on the effects of this, however the reduction in mining costs seems to be positive. 1H production totalled 19.7 koz at 2.35 g/t which fits well with MRE grades depending on whether its a copper or lead/zinc drive. Its therefore not unreasonable to expect a similar performance for 2H.

With these production quotas in mind, its is definitely possible to see production the 38.9koz required to achieve guidance (figures above come out to approx 45koz). It is also positive to note that spot prices for by product of copper, zinc, lead and silver are now above the AISC assumptions

Restricted Cash

After a bit more research, this may potentially come available for use on Federation with appropriate finance backing of the environmental bonds. Aeris was able to free this catch for a debt repayment, although not sure if this is the exact same for AMI. See link attached. Any wiser heads than me feel free to add your input.

https://clients3.weblink.com.au/pdf/AIS/02400586.pdf

Tbh it would seem that Federation Funding now relies more on the release of this cash than anything else. Will definitely be an eventful 2H and look forward to seeing where we end up.