Thanks Loki, Good point with the mill production, I had not...

Thanks Loki,
Good point with the mill production, I had not factored that in to my best case. Exactly the sort of thing I was hoping people would find. I had not included the underground either and it seems from what you are saying the two cancel out as long as everything works perfectly according to plan which given their track record is low. Also though from what you are saying if the limit is the mill then, there should still be ore from these pits to process the first quarter since the figures I used were given as the ore resource remaining in the pit which I calculated as 74koz. If they only process 18koz per quarter for FY18 then that leaves 20koz stockpiled to process while they start the next waste strip?

On the back side of this if they mine more HG ore than they can process, it is stock piled and you have higher costs because the AISC is from gold sold, but then the following quarter you mine the waste but mill the HG ore? I don't know how this will work in practice.

I think there is a line between gambling and speculation, in the later you have calculated the odds are in your favour, the former you rely on luck. While luck is a factor, I would not stay invested if I thought the odds were against me, I have posted critical of BLK and rated sell previously, when they first spun their story about the rains disrupting production, but it was clear to me that it was the capital spending. Your other points are well noted

@kyngdominion
Quite right cash cost does not paint the whole picture, which is why I also talked about the capitalised costs and showed you how I calculate them directly from the change in cash balance so nothing is hidden. As I said, the reason for this is trust and quality of the company. If you use the AISC cost for BLK and other producers to calculate their margin and calculate cash flow you end up with a higher number than if you look at how much their cash balance has gone up. The extra money can be spent in greenfields exploration or development to increase production which is good, however as in the case here it is spent on stripping and other costs required to mine the current deposit, capitalised and later increases AISC.

@spartan
I appreciate and share your frustration. I was not talking about a valuation, I was talking about a 'best case' which is only part of a valuation. As a best case it is not false. To get a valuation you weight this value by all the other factors you talk about which is your confidence in their ability to do the job. I am not much more confident in them than you are apart from one fact. All of their cash burn is consistent with what they say removing the waste, and there is not much waste left, but still most of the ore.

You are probably correct with their forecast 80 koz, it drops their production, I was referring to the quarterlies talking about the ore to be mined from the body in the current pit FY18, maybe this will not all get milled as someone else pointed out. Also not accounting for recovery so drop my figures by 10%, but I also did not include the underground. However if the production drops, this does not necessitate them losing money, that is their margin. Here it comes back to capital costs, or the stripping and being forced to mill waste ore. Without the stipping they can stand down some mining resources and cut costs, and be able to mine the maximum amount of high grade ore they can mill. Their margin stays positive, but the oz produced and sold drops. Their is still their loan repayment but I am confident, if the financiers see the any potential vs a complete loss they will allow refinancing. They are getting great interest.