Mate, if you are going to quote me, I'd appreciate it if you could include the whole quote otherwise it can be taken out of context.
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Also my point about cash flows was forward looking, not FY18. Ie when stripping ramps up they are likely to face similar cost pressures as 2017, with a genuine possibility of negative CF for a few months. When people buy the stock expecting AISC of 1000-1200 as far as the eye can see, they are going to get shaken out when they report 1600, 1800, 2000. This "step change in economics" rhetoric is just that until proven otherwise."
I completely stand by that statement, there could easily be
a few months where ASIC hits that range when stripping new pits. See below
June QTR:
Strip ratio:
The H2FY18 projection was 4:1 to 5:1 (Jan presso). Let’s take middle ground at 4.5:1. March qtr had a SR of 2.5:1. I don’t think it’s been published how much ore has been mined during March qtr (correct me if I’m wrong), but let’s say they are 50% of the way through the H2FY18 projection. That would indicate we can expect a SR of 6.5:1 for the June qtr.
Also, I believe they are meant to start stripping M1 this qtr. Will be interesting to see how that progresses. I suspect they might leave that as late as possible given the fall out this week from a minor miss…though to be frank I think this week is more to do with the register than the miss.
Grades and recoveries:
We know that grades are increasing as the pit goes deeper but BLK admitted the recoveries are also decreasing as they go deeper. Given they appear to have mined a fair bit more from galaxy based on the SR’s (which makes sense as this was slated to run out of ore in March), I’d say the bulk of the June Qtr ore will come from M4, which is also lower grade than galaxy. Stockpiles are even lower grade again at 1.5gt, so it’s hard to see where the uplift in grade or recoveries are coming from. I think 1.5-1.6 at 88-90% would be much better numbers to model on for the June Qtr. Your forecast appears too optimistic to me.
AISC:
If we use your calc here:
https://hotcopper.com.au/attachments/blk-jpg.1020931/
Using 1.55gt and 6.5:1 it comes out at 4.2, with ASIC around the 1400-1450 mark…assuming all goes well.
FY19 H1:
Strip ratio:
Obviously they are expecting to wind down in Galaxy and m4 this half, moving onto M1&M2,
There is still going to result in high front ended numbers as there was in 2017 (albeit hopefully to a lesser extent). Let's assume they learned their lesson from Sept last year and avoid SR of 27:1. Let’s be generous and say 12:1 for a few months.
Grades:
Hopefully they will have some stockpiles from M4 to keep processing at 1.5gt. Matilda OP proven reserves are 1.2gt so I suspect M4 was their best pit. Let’s meet in the middle and say they are processing 1.35g/t (which is above their 3.5 year forecast)
AISC:
If we use your calc again = 8.8 = AISC around $1700-1800 for a few months while opening up M1&2.
Beyond:
From the Jan Presso
If you believe their numbers (which would seem a stretch if history is any guide), their 3.5 year "step change in economics" has a projected strip ratio of 7:1 with a processed grade of 1.3gt at 90% recovery.
AISC:
Again using your calc = 5.38 or AISC of around $1600
