Let's have a detailed look at the last three months results for BLK in an attempt to get a reasonable handle on it's underlying performance.
The numbers for Jan, Feb & the Q are BLK's actual numbers. Mar's numbers are actual except for the numbers I have highlighted. These I have calculated based on Jan/Feb/Q actual numbers.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 1 |
|
Units |
Jan |
Feb |
Mar |
Q |
| 2 |
Stripping Ratio |
|
3.6:1 |
1.5:1 |
2.5:1 |
2.5:1 |
| 3 |
Ore Milled |
kts |
163 |
150 |
165 |
478 |
| 4 |
Mill Feed Grade |
g/t |
1.4 |
1.5 |
1.6 |
1.5 |
| 5 |
Plant Recovery |
% |
91.2 |
90.6 |
86.5 |
89.4 |
| 6 |
Gold Production |
ozs |
6498 |
6713 |
7419 |
20631 |
| 7 |
AISC |
A$/oz |
1158 |
912 |
1200 |
1092 |
| 8 |
ROM Stockpile ME |
Kts |
108 |
144 |
127 |
|
| 9 |
ROM Stockpile Grade |
g/t |
1.5 |
1.7 |
1.5 |
|
Comments:
1. The March Stripping Ratio ("MSR") was higher than Feb but lower than Jan. It was considerably lower than 2017.
2. The plant recovery was lower at 86.5%. I don't know why.
3. AISC was higher than the previous two months. The MSR was partly to blame but there were other factors at work which I don't know. At A$1200/oz it was at the top end of their FY2018 H2 forecast.
4. I am disappointed that BLK did not explain in greater depth their March numbers. This had been done in previous months but in the ASX latest release BLK focused on the Quarterly results and not March's
5. The ROM stockpile normally provides the mill feed for the following month. The ROM stockpile grade at Feb month end equals 1.7 g/t. The mill feed grade for Mar was 1.6 g/t which suggests that the ROM stockpile was mixed with lower grade ore from mining in March. This is supported by the ROM stockpile grade at March month end of 1.5 g/t. This suggests that the mill feed grade for April is likely to be 1.5 g/t.
Now my financial forecasts for J/F/M and Q 2018.
|
Column 1 |
Column 2 |
Column 3 |
Column 4 |
Column 5 |
Column 6 |
| 1 |
|
Units |
Jan |
Feb |
Mar |
Q |
| 2 |
Gold Production |
ozs |
6498 |
6713 |
7419 |
20631 |
| 3 |
Realised Gold Price |
A$/oz |
1663 |
1670 |
1675 |
1669 |
| 4 |
AISC |
A$/oz |
1158 |
912 |
1200 |
1092 |
| 5 |
Mine Operating Margin |
A$/oz |
505 |
758 |
475 |
577 |
| 6 |
Mine Operating Cashflow |
A$m |
3 |
5 |
4 |
12 |
| 7 |
Working Capital Adjustment |
A$m |
|
-22 |
-2 |
-24 |
| 8 |
Equity Raised |
A$m |
|
36 |
|
36 |
| 9 |
Debt Repayment |
A$m |
|
|
-4 |
-4 |
| 10 |
Company Cashflow |
A$m |
3 |
19 |
-2 |
20 |
| 11 |
Opening Cash Balance |
A$m |
7 |
10 |
29 |
7 |
| 12 |
Closing Cash Balance |
A$m |
10 |
29 |
27 |
27 |
| 13 |
Cash & Bullion (BLK's number) |
A$m |
12 |
31 |
29 |
29 |
Notes:
1. I have assumed BLK's AISC= C1 + Royalty + Corporate Costs + Sustaining Capital
2. The Working Capital Adjustment is my estimate on the catchup on outstanding bills which were substantial at 31/12/17 (Refer Financial Accounts 2018 H1 Actual)
3.I have assumed that the Bullion component in BLK's reported Cash & Bullion number is a constant A$2m. The actual will be different but I am hoping not significantly so..
Comments:
1. BLK's statements regarding strong operating cashflows referred to Mine Operating Cashflow only.
2. BLK's Company Cashflow was A$20m BUT if we exclude the Equity raising of A$36m it was NEGATIVE A$16m.
3. Trade & Other Payables at 31/12/17 were A$42m whereas Cash & Bullion were A$10m. A working Capital deficit = A$32m. This explains the Equity Raising of A$36m. Without it BLK would be in a very difficult place. It looks like BLK has dealt with around A$24m of the A$32m deficit so there is around A$10m to be met from future Mine Operating Cashflow along with regular debt repayments.
Some concluding remarks:
1. BLK's AISC in CY2018 Q1 has improved substantially over 2017 driven by reduced Stripping Ratio and increased mill feed grade.
2. However the reported AISC numbers are not yet consistent and so it is hard to precisely forecast what the future holds. BLK are forecasting AISC CY2018 H1 = A$100 to A$1200. I suspect that they will be closer to the top end of the range.
3. BLK's mine operating cash will be used to service the working capital improvement and debt repayments over the foreseeable future. My feeling is that it is going to be very tight over the next 6 months and BLK could very well experience further Quarters of negative company cashflow before the situation improves.
4. So in my view BLK it not out the woods yet and BLK will have to work hard & efficiently to get the ship back on an even keel. There is now very little wiggle room for poor performance.
5. I suspect the market is very well aware of the above, hence the reason for the recent SP movement.
Now please remember this is my analysis only and could contain significant errors so please always DYOR
