Morning Guys, Looking on the bright side ... thank goodness the...

Morning Guys,

Looking on the bright side ... thank goodness the POG is delivering otherwise it would be a bloodbath for PRU today.

The other positive is that PRU provide all the information required in their QR in black and white numbers with a narrative - investors can then decide for themselves what happened; Unlike some other companies.

My interpretation is that they kept absolute costs within guidance but the issue was that the gold wasn't mined or milled as they expected - thus per oz costs blew out.

It looks like Fetish and Chirawewa caused problems for the majority of the Q and they had to really slow down to make sure they didn't continue to fed the mill with dirt.

It was good to see that the grade of ore mined (both oxide and fresh) was closer to the reserve grade even though they had to fed the mill with increased low grade stockpiles which, in turn, reduced the head grade to only 0.85g/t - very hard to make money based on that feed grade.

Based on PRU's guidance there is a massive possible range for Q4 2016 of between 37,850-52,850 oz production. You'd be a supreme optimist, I think, to expect a +50k oz Quarter based on their progress to-date.

The problems are clearly not fixed yet at Edikan but the month-by-month graphs show that head grade and recoveries are improving (hopefully this will continue).

The key is to produce at the reserve grade or Edikan will continue to disappoint.

It looks like Sissingue is getting pushed out in the final development decision. Construction, in the last presentation, needed to start in May-16 for a June-17 first gold pour. IMO investors shouldn't anticipate gold from Sissingue until at least Q4 2017 now.

A FID, I would guess, is based on seeing a sustained improvement in Edikan during June Q 2016. Debt providers would be unwilling to provide funds if Edikan remains a material cash drain for the company.

The biggest issue that I can see in the ST is that management have again disappointed the market and risk losing credibility that they can deliver on their ambitious plans.

Investors will also now treat their revised Edikan mine plan with some warranted skepticism until results are delivered. There won't be an opportunity to do that for another 90 days or so.

For those that believe PRU is on track then it is an opportunity to buy at a better price today. For those that want to move on then the POG is providing an opportunity to exit at a price better than would otherwise be the case.

For me, I want to see that Fetish and Chirawewa are being mined effectively and that the reserve models remain intact. The narrative suggested that this may not be the case. At present Fetish and Chirawewa provide 724k oz of reserves (32%) of the new mine plan (total 2.275m oz). If they have to reduce this due to geological complexities or an inaccurate current model this could be material for the company.

Time will tell. A (much) higher gold price will solve all problems.

Cheers
John