If guidance is for a 30% drop in revenue I really can't see that you can argue that the margin of FY19 can be maintained through FY20. At this stage there has been no substantive guidance to cost reduction apart from the aspiration to do it. I would expect cost reduction to be marginal at best certainly nowhere near 30%. The value of a company is based on it's bottom line ( NPAT) not it's operating margin before expenses are taken out. In the case of ORE the operating margin as expressed does not include royalties, export tax and head office costs so I am a little perplexed why you continue to focus on operating margin and directly extrapolate that number as the metric for company profitability.
As for the ponds, It has been apparent to me the the pond requirements for Stage1 were severely underestimated in the DFS and ORE has been playing catchup since the rain event and this was virtually admitted in the Q&A. As you pointed out, it takes 18 months to 2 years from filling a pond to achieving a concentration the can cost effectively go through the processing plant. From the Q&A ORE management still don't know the pond area required even to get to 25,000t but it will be more than originally planned to cover for the weather events experienced over the last 3 years.
P
ORE Price at posting:
$2.35 Sentiment: Hold Disclosure: Held
