cash costs will be "at or around" current levels next year as 25% of production in 2020 will be coming from contaminated stockpile. (mining costs) of this stockpile have already been expensed. That's where the reduction is planned cash operating costs will come from in 2020
The reduction of mining of 40% is for 2020 - production will therefore be lower and they are hoping to maintain a positive cash margin.
End of the day
200KTPA offtakes wont be satisfied this year - that idea is over
sales will only be 132-142K and plant is looking to produce 180K -210K, all year they said this would happen, today it was glossed over
So the opening stockpile and skewed shipments will definitely not be cleared at end of year
This substantial slowing of mining next year will result in lower production, cashflow and what was expected to be rising profits
They are not expecting any real change in recoveries from current but they are keeping their 60% target which is strange
Cashflow and profit will be lower this year for sure
Sale prices are now low 5's from mid 5's which are all below the base 577 they used in calculating their resent "one off" " non cash" adjustments that a few hear said were not significant. Expect more if low 5's continues to year end
A40 - tone has changed, will even would look at money back if it was an option, but they have to wait, money back would be just the secured debt obviously - they will never recover their equity investment in full
Liquid assets of 27.5M not mentioned , expect another major write-down here, 174.3M shares in a40 which is in admin and couldn't make profit at prices well above mid 5's - so like always they will say its "non cash" but it was just traded and wasted last financial year.
Mt C being reviewed to optimise where it should be producing in the market
They will be ending up inventory on the shelves in a falling price environment and in a market they say is stocked right across the supply chain. This despite numerous statements that it would all be cleared with their shipments all being organised and mainly skewed to second half
All jobs being kept, well of course there is some cash to keep them paid
SDV, going well but now talking smaller ponds, last time they were talking potential alternative method, but still spending money and still no real details of development costs or timeline - who develops an asset anyway when they are slowing their own existing mine because of a market they say is stocked right across supply chain.?
Unless something changes the idea of 200K sales next year is also lower, they were vague as usual
About getting sales at present not price!
They noted stocked and lack of demand .
Since q1 they said YOP finished and they heralded production/ recoveries and even at one stage released an a40 style "record" announcement: highlighting how they were running at 260K TPA above nameplate.
A few months on they are not going to realise all the shipments that were organised earlier in the year
Stockpile and all production wont be sold
Production will slow at Mt C next year
YOP finished but now spending money on optic sorter and other efficiency projects. From memory they said 8M this year ……..so they save on operating costs going forward with mining a low grade contaminated stockpile in part, but spend cash on the needed to facilitate this forward production when 25% comes from this stockpile.
Further write-downs coming if low 5's continue as 577 was used, and from liquid assets as a40 in Admin and their equity holding has been devalued.
further cash may be require to obtain a40, a 40 ,my need more money to develop as it could not make money at prices far north of mid 5's, or it need money to put on care and maintenance.
In the end the suite of assets
MT C marginal and being slowed, sales of offtakes not met, wont be met next year
SDV still spending money but development costs still not known but market is supplied across supply chain - needs money to progress - wont be bringing in any cash anytime soon
James bay- little costs, just waiting but would need cash to develop
a40 not secured yet, may or may not need more fund its not operating or producing any cash
That said, apparently Lexus is bringing out an EV for each model from 2023
Marketing costs 5%
Royalties 5%
Take that from a low 5's figure less their reported costs and you can bet that why there was ZERO disclosure on how much your business was making.
Personally I don't think its worth much more than net cash and liquid assets - and they will continue to spend the cash and produce a loss
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