Nordesmic I agree that SBM's Gwalia is a cash cow for now....

Nordesmic

I agree that SBM's Gwalia is a cash cow for now. However there may be two factors that hold SBM back -

1. They will put Simberi on care and maintenance once the oxide ore runs out in about 2 years, unless they find more (but perhaps they would mine the sulphide ore if the gold price were much higher); and two

2. Gwalia's reserves/resources ore grade seems to be declining as they go deeper - that would mean less future production and higher costs, all else being constant. I think the high grade ore lasts for another 2-3 years. Their mill has spare capacity so they could mine more ore to maintain current production levels, but AISC would be higher and perhaps it would deplete the ore body too quickly.

Is that how you read SBM?

I do not know how one factors those into a valuation for SBM, but I expect the broker analysts have done that, and is the reason the share price crashed back, including the fact that gold price went down and HHL was selling out.

I have been in and out of SBM since late 2014, and held it a few times before that.

The consensus target is $2.65 (see link), but I suppose if the gold price takes off then it will go higher - this current run seems to be partly based on recent presentations given by SBM.

https://markets.ft.com/data/equities/tearsheet/forecasts?s=sbm:ASX

The AUD POG has done nothing over the last 5 weeks but our local goldies keep heading upwards - its a bit of an anomaly and I hope we do not crash back down.

loki