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20.5¢ wiluna mining corporation limited.

Gold Turnaround Story of 2018, page-723

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iamagenius

6,601 Posts.

475

16/03/18

10:37

Post #: 31800319
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Originally posted by nihilism ↑

I think you're mistaken or you're interpreting things in a negative way. If you look at the trending costs you'll see it isn't directly related or proportional to strip ratio (although it is a factor) but there a range of other factors such as grade control, mine startup efficiencies, debt overheads, capital development expenditure etc. This is what most miners don't really get a handle on and the smart strategy for most is to hit the sweetest most profitable sections first (which BLK didn't do) to make sure any additional costs don't land them into debt trouble. BLK has been through that now and out the other side.

NPV is one measure but that's a discounted project value for investment, you're better to look at positive real cash flow because we aren't being discounted 8-12% per year on current cash and the gold prices are currently higher than the DFS and the AISC is in line at least for the last 3 months.

If you use the original NPV from 2 years ago and assume it was optimistic then ofcourse you're going to get a bad valuation. You'd be better off looking at real value (i.e. an updated NPV) for the project based on your own figures and what they can achieve.

Currently they have stated their AISC will remain at 1100-1200 for this year and so far they have delivered below that because of the strip ratio. As time moves on, this will fluctuate as strip ratio changes, it may go up to 12:1 and AISC may hit 1300-1400. That's the mine plan.

Asking how did they get lower strip ratios than that sounds like a smart question but fundamentally it shouldn't even need to be asked. In an open pit mine, there are a few different styles but all go through this as they get into the deposit. Some months they will have to dig a lot of overburden while mining at a different face so that the following months they can dig the deposit under the overburden. You cannot fully have a constant strip ratio all the time for a lode-style deposit, that's just nonsense.

The average of the deposit will be one value but the month the month will vary and last june and september quarter were 13 and 22, so we have already had higher than this. Those high strip ratios combined with over-spending on the plant and poor capital management led them into the debt problems they had and have now resolved.

Your answer, or what I think you're implying is that they diluted the ore with rock and thus you need to account for a lower grade is simply incorrect and a mistake of misunderstanding the mine plan.

Currently they are making between 6000 and 7500 ounces per month and have an AISC prediction of 1100-1200 with sale prices currently at 1700. This means the mine (excluding corporate overhead, royalties and taxes) is making 3-4.5million per month in profit or 36 to 54 million EBITDA this calendar year (given their AISC prediction).

There is upside and downside with gold, production delays/improvements, recoveries etc etc as per any mining stock but the truth is at 111million MC and 123million EV, that's a cash cow right now.

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he sure is looking at BLK IN A negative way , same mentallity when BAL got smashed to $3 now its $20 , many other stocks i can name , it happens to the best of us.

best way too look at it , think of your fridge as half full with beer not half empty

BLK Price at posting: 9.4¢ Sentiment: None Disclosure: Held
1 Upvote

0 Great analysis

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