I'm with you, F&B. That was a disappointment.
The worry is that there were no excuses last Q. Full (over) capacity achieved at the mill and still couldn't turn a profit. Estimated cash outflows for the Q of $20.8M, actual spend closer to $30M.
"Normalised" costs (after considering the impact of toll treating) for June Q were $750, for Sep $832 but, without t'treating, last Q we get $877.
How they spent $22M on production with a forecast of $8M is beyond me and needs clarification.
I don't think they are hoarding ozs. It was probably just milled late in the Q.
Plenty of potential positives re: development but I think the market might run out of patience if we don't see some significant profits soon. The POG looks (IMO) to be in the middle of a correction that might see sub-1300. (Although I still think we are going higher in med to L'term).
It has always been my opinion that the market saw FML as a marginal producer going over old ground that required significant capex - i have always bet that it was wrong. But, while I understand the expediture required to provide for future profits, the market will, IMO, think it has been right all along if FML continue to need all (or more) of its profits to facilitate growth. It is fine for mgmt to have L'term plans to grow the company but the time for significant results (profits) is now. They don't need to hoard cash - they DO need to show the market that they can produce profitably on a consistent basis. I expected that to happen this Q and it did not.
IMO
Having said all that, I will buy more if the SP gets near 5-5.1 - as I expect it might... although holding up well right now.
PS: I try to think of Jesse Livermore at times like this... but he did blow his brains out in the end ;-)
Cheers,
C12
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