March Quarter 2018 (Speculation): Guidance from Dec Quarterly:...

March Quarter 2018 (Speculation):

Guidance from Dec Quarterly:
"A deferral of some high grade ore of >2 g/t gold from late December 2017 into 2018 due to minor operational factors negatively impacted the total gold produced"

Estimation:
Head grade: 1.5g/t (Speculation; from guidance & previous quarter results)
Gold ore mined: 621,736t (= March 2017)
Gold ore milled: (621,736t + 187,082t stored from Dec 2017) = 808,818t
Strip ratio: 6.4 (= Dec 2017)
Total material moved: 6.4 * 621,736 = 3979110t
Recovery: 91% (Speculation; from previous quarter)
Gold ounces: 808,818 * 1.5 * 0.91 / 31.1 = 35500 ounces
Gold price achieved: $1330

Operational Expense = $38m + ($3.06m * 3.97) = $50.14m (See Appendix 1)
Net cost per ounce = $50m/35500 = $1408
Net operational cashflow per ounce = 1330 - 1408 = -$78
Net operational cashflow = -$2.77m = -A$3.58m
A$3.225m debt repayment (from Dec 2017 quarterly)
A$9m plant upgrade (Speculation; from previous quarters)
A$1.5m exploration (Speculation; from previous quarters)

Estimate (See Appendix 1):
-A$17.3m net cash balance change (ignore new loans and capital raising)

Current yearly operational cashflow estimate:
2 * (March 2018 Wet season quarter + Dec 2017 Dry season quarter) = 2 * (-A$3.58m + A$11m) = A$14.84m
Current yearly production estimate:
2 * (35500 + 48739) = 132978 ounces
with plant (+ 4%)
+ 5319 ounces

Hypothetical yearly operational cashflow estimate, with plant
A$14.84m + 1330 * 5319 * 1.3 = A$24.03m
This uses a $1270 gold price in the dry season and $1330 gold price in the wet season, and assumes high grade ore availability; we use +4% recovery for the plant instead of +7% as detailed in presentations.

At $1408 gold price, net operational cashflow estimate:
2 * (0 + (48739*1408-53.7*1m)*1.3) = A$38m

At $1408 gold price, net operational cashflow estimate, with plant:
2 * (0 + (48739*1408-53.7*1m)*1.3) = A$47.7m

The operational cashflow is cashflow before exploration, before construction of new plants or tailing dams, before debt payments. It describes cashflow from current gold mining and milling operations.

Spoiler : Appendix 1

Appendix 1

This section reviews historical figures, calculates the net operating expense, and creates an estimate for March 2018.

Dec Quarter 2017:
Head grade: 1.65g/t
Gold ore mined: 1,184,112t
Gold ore milled: 997,030
Total material moved:  7,583,446t
Recovery: 92.1%
Gold ounces: 48,739 ounces
Gold price achieved: $1278
A$1.8m increased cash balance
A$7.8m plant upgrade
A$1.5m exploration
Net operational cashflow = 1.8m + 7.8m + 1.5m = A$11m
Net operational cashflow per ounce = 11m / 48739 = A$226 = $175 (USDAUD: 1.29)
Net cost per ounce = $1278 - $175 = $1103
Total operational expenses = (1103 * 48739) = $53.7m
Gold ore stored: (1,184,112t - 997,030t) = 187,082t

March Quarter 2017:
Head grade: 1.16g/t
Gold ore mined: 621,736t
Gold ore milled: 862,538t
Total material moved:  3,331,239t
Recovery: 88.8%
Gold ounces: 28,558 ounces
Gold price achieved: $1221
A$19.4m increased cash balance
A$14.2m debt repayment
A$2.47m tailings dam (March 2017 USD:AUD = 1.3)
A$2.3m exploration
-A$46m capital raising
Net operational cashflow = (19.4 + 14.2 + 2.47 + 2.3 - 46)m = -A$7.63m
Net operational cashflow per ounce = -7.63m / 28558 = -267 = $347
Net cost per ounce = 1221 - (- 347) = $1568
Total operational expenses = (1568 * 28558) = $44.8m

March Quarter 2016:
Head grade: 1.16g/t
Gold ore mined: 599,612t
Gold ore milled: 995,207t
Total material moved: 5,813,339t
Recovery: 89.6%
Gold ounces: 32,074 ounces
Gold price achieved: $1188
A$15.4m increased cash balance
A$6.5m debt repayment (March 2016 USD:AUD = 1.3)
A$1.4m tailings dam
A$0.2m exploration
-A$23.4m capital raising
Net operational cashflow = (15.4 + 6.5 + 1.4 + 0.2 - 23.5)m = A$0
Net operational cashflow per ounce = A$0
Net cost per ounce = $1188
Total operational expenses = (1188 * 32074) = $38.1m

March Quarter 2015:
Head grade: 1.14g/t
Gold ore mined: 604,295t
Gold ore milled: 941,854t
Total material moved: 3,784,666t
Recovery: 90.0%
Gold ounces: 30,939 ounces
Gold price achieved: $1,224
-A$16m decreased cash balance
A$1.5m tailings dam
A$2.5m exploration
-A$15m sold machinery to MACA
Net operational cashflow = (-16 + 1.5 + 2.5 - 0.2)m = -A$12.2
Net operational cashflow per ounce = A$394 = $300
Net cost per ounce = $1224 + 300
Total operational expenses = (1523 * 30939) = $47.1m

March 2018 Operational Expense Assumptions:
1. Net operational expense is a fixed cost and variable cost in BRL, the variable cost consists of tonnes moved.
2. The model equation is (A * USDBRL = B + v * C), v = million tonnes moved
Dec 2017: 53.7 * 3.28 = B + 7.58 * C
Mar 2017: 44.8 * 3.15 = B + 3.3 * C
Mar 2016: 38.1 * 4 = B + 5.81 * C
Mar 2015: 47.1 * 3.22 = B + 3.78 * C
(Dec 2017, Mar 2017) => B = R$114.121682, C = R$8.18130
(Dec 2017, Mar 2016) => B = R$74.486915, C = R$13.410169
(Mar 2017, Mar 2016) => B = R$126.289721, C = R$4.494024
(Mar 2017, Mar 2015) => B = R$68.64375, C = R$21.9625
(Mar 2016, Mar 2015) => B = R$150.287793, C = R$0.363547
(Dec 2017, Mar 2015) => B = R$127.316811, C = R$6.440526
The model is extremely inaccurate - but to make our best guess we will pick the following numbers:
B = R$125
C = R$10
On March 2018, USDBRL = 3.27
B = $38m
C = $3.06m