Below is what I assumed as the "normal" cashflow for June qtr: Here is what it is like with $500K extra corporate cost: Just $17 increase to the AISC. BTW any increase in corporate cost just reduce the positive cashflow by the same amount.
My main concern is the development cost as I had drastically reduced the amount in the above feasibility study just so that LJ will keep to the budget of $55M for this FY. If more (i.e. anything more than $4M) is going to be spend in order to maintain the future extraction of the ore then the cashflow will have to reduced by the corresponding amount i.e. anything above $4M allocated to Development Cost will have to come off the ~+$8M cashflow. I hope that the person who did the feasibility study on the DoubleJay mine had done an accurate estimate on the stripping cost, etc... to come up with $55M for the FY. If not the cashflow will be below $8M. On the basis that LJ had expected reduced gold production in Mar qtr reflected the expected activity on DoubleJay i.e. lots of stripping, reduced gold extraction and therefore a huge outlay of Development Cost for the qtr. So hopefully there will be less to spend in the Jun qtr on development cost. If so, we can all be very happy about the Jun qtr financial result. Hopefully there is at least 28.6Koz of gold and if more then any increase in Development Cost can easily be "funded" by the extra gold i.e. 1Koz of extra gold is $2.4M extra or 2Koz of extra gold can provide extra $4.8M to the development cost without impact to the above projected $8M of positive cashflow.
Time will tell.
Cheers, DYOR.
DCN Price at posting:
33.5¢ Sentiment: Buy Disclosure: Held
