Have been wondering lately what would sustain recovery in SBM SP. Of course POG in AUD is main one that is impacted by numerous factors outside managements control. Fortunately , current trend is favourable and improving for various reasons.
The other one is management performance and the execution of strategy to generate cash flow for operating, financing and investing purposes. Applying this order of intention , SBM intending to improve or maintain future cash flow for sustainability through:-
1. Focused core asset development & sell non core assets- improving operational productivity and efficiency and reducing future obligations on non core assets.
2. Minimising future cash flow drain from non core/non performing assets. Maybe other opportunities better suited to their strengths and more profitable.
3. Additionally locking in gold hedges with comfortable margin to AISC is prudent.
Maybe more coming with current POG trend.
4. Renegotiating all cost inputs therefore improving AISC.
All of above are now geared to debt reduction of which seems to be paid on ad-hoc basis. I would like to see this paid more regularly (preferably monthly). IMO, in current volatile markets, this structured / non random payback approach would send a very clear signal to markets, reduce debt, reduce interest and create a platform of confidence to all . The reducing debt is still large and market needs consistent positive feedback. Heres to better days-GLTA.
SBM Price at posting:
55.5¢ Sentiment: None Disclosure: Held
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