Hi Tasmania .Interesting article.HGO is certainly the dark...

Hi Tasmania .

Interesting article.

HGO is certainly the dark horse, a champion that's lining up to start at unbelievable odds.

Veritas suggested a company name change. How about "Fine Copper" A champion in losers clothing.

The big takeaway for me in the article is the section on cash flow problems and payback period.

Hgo has nothing to pay back and heaps of cash flow coming very soon to put all the punters on free carry .

"Normally, we'd talk about the fundamentals and outlook for each company, but there's a far more pressing issue.The cash flow problem.

......Copper is proving to be one of the most capital intensive resource industries on the ASX and that’s taking a massive toll on company cash flows – both big and small.

Take Oz Minerals FY22 results for example:

*Operating cash flow: $647.6 million
* Investing cash flow: -$951.0 million
*Financing cash flow: $224.5 million
*Net cash flow: -$78.9 million
....If BHP is paying $9.6 billion for Oz Minerals … When exactly is it going to make its money back?

The same goes for Sandfire Resources, which acquired the Spain-based MATSA operation in February 2022 for US$1.865 billion.

*Sandfire’s flagship DeGrussa operations generated $68.6 million in earnings for the half-year ended 31 December 2022.
* This would be offset by a $34.3 million loss from MATSA and an additional $36.2 million associated with various exploration and employee benefit expenses.
*Sandfire failed to make operating cash flow for the first-half of FY23, with outflows of $6.8 million.
* When combined with financing and investing activities, cash outflows ballooned to $188.4 million.

29 Metals is very much the same, with its 2023 guidance pointing to another year of weak cash flow.

*The midpoint of all its mining, processing and capital costs add up to approximately $850 million.
* When other costs such as leases, interest and debt repayments are added on, the figure is likely to be north of $1 billion.
* the 2023 guidance points to unchanged year-on-year copper and zinc production but gold and silver production is expected to be lower.
* From an earnings perspective, the company generated $720.7 million in revenue in 2022.

..... the US 6 month Treasury bond is yielding 5.0%, why would I want exposure to a copper miner that doesn’t even produce positive cash flow, at least in the near-term?

If financials are so underwhelming, does this mean copper prices must head north in the medium-to-long term to incentivise more supply?

If copper prices and miner fundamentals remain underwhelming, does this not exacerbate the long-term supply crunch

Well, that was a rather thought provoking way to finish the copper feature. "

Hgo the Dark horse indeed !