company aiming to reduce operating costs

Recent posters have been right to identify doubts about operating costs as the biggest drag on the current share price. How else can we explain SBL's pitiful EV/oz relative to even its non-producing peers and the fact that the SP is hitting year-lows?

I score management poorly for communication skills but do take some heart from the following excerpt from the recent Investor Presentation where they cite the 'opportunistic outright purchase of capital equipment to reduce operating costs' and a 'larger crushing plant being installed which can run at rates to suit plant expansion.' The presentation stated that they were ramping up throughput of tailings to 1000 tonnes / day with recovery rates of 1.95 g/t i.e. 1,950g per day.

To reverse the slump in the share price, the market needs to hear that the 'reduced operating costs' have been achieved (reduced from what? is the current question) and that the ramp-up to optimum production has progressed smoothly. This would reassure holders that operating costs are being covered and that no further dilution is required after the two recent ones which butchered the share price.

The kicker would be good assays the long-awaited results of recent drilling or further news on the tasty manganese deposit.

This is a company already producing gold and targeting production of 100,000 oz within 3 years. Assuming they reach that target and with a gold price of $1,800, that would be revenue of around 180m / annum and (if costs come in around expectation) profit of approx. $100m per annum. That PROFIT would be nearly 3 times the current market cap. Factor in even a conservative P/E ratio and with that production, we should be nearer 20 cents than 1.4 cents.

A market cap of $35m for a producing company with a JORC-approved resource of 1.47m ounces would be risible normally, but this indicates the degree of fear within this market. Come on Bill. Dispel the gloom!

DYOR

Gupper