Hi AJ. I listened to the NST qtr report broadcast this morning and overall I thought it was very bland. BB sounded tired to my ears and might need to recharge his batteries. I might post a summary under the qtr report thread later today.
Regarding Plutonic. It suffered a significant flooding event. So much so that I'm surprised and also disappointed that it was not announced to the market as a 'material event'. It was very interesting to hear that neighbours Doray and Sandfire helped out with the fix (???). Anyway, NST could have done so much promotion about the future of the new mine plan for Plutonic at the same time as providing details about the short term impact of the flooding in the lower levels. That is what I would have done if I was a director.
On the operational side, some things worth noting.
The increase in AISC has been caused by a combination of the lower grades mined and the significant increase in sustaining capex. It seems that a lot of that sustaining capex increase was caused by the remediation of the flooding event of the lower levels; from what I could glean from the NST broadcast today. The 2 key indicators to consider before understanding the financial performance fully are:
1. The drop in total grade mined down to 3.3g/t. Down from 3.8g/t last quarter. Apparently caused by the need to mine the upper levels of remnant ore until the dewatering of the lower levels was complete. Wow, over 6 inches of rain in one day with over 5 inches in 2 hours!
2. The sustaining capex increased by $330/oz QoQ. Part of that is the capex on Hermes work, but it seems that a significant portion was due to fixing the flooding in the lower levels. Shareholders should take note that this large amount of sustaining capex is an anomaly due to a one off event.
The positive from Plutonic is the good improvement is the Cash Costs. Down to $1303/oz from nearly $1700/oz 6 months ago. The improvement in Cash Costs is the financial metric to pay close attention too. That is a good sign. Especially when one remembers that both Cash Costs and the holistic AISC are measured against ounces sold. When the grades improve again then there will be more ounces sold and both the Cash Costs and hence the AISC will improve. Further decreasing sustaining capex will make another dramatic improvement in the AISC.
Finally, it is noted that BB stated that the sale process for Plutonic is still under consideration with strong interest being shown by third parties. I might say a bit more about this if I post a summary of the qtr report later on.
Bottom line for now regarding Plutonic financial metrics. It is not as bad as first appearance might indicate due to the one off anomaly caused by the massive rain event.
Cheers
(20min delay)