Interesting subject for those who aren't bored to death by numbers.
The following note and screen shot clarifies that the $47/t includes all the cash flow for the mine plan as a stand alone project.
As mentioned below there will be significant additional development cost incurred to support further mining which for accounting purposes will be capitalised and charged against the revenues received for that additional mining.
Using equity funding the free cash flow returned will be higher than the $205m in ES2 because the $25m equity that is spent on mine development comes back to HGO and isn't a loan that has to be repaid..
The note also explains that additional mine development expenditure of circa $13/t which on 4.5mt is $58.5m will be spent on mine development to extend mine life and increase through put. Hopefully the increase in throughput will occur early and add to the free cash flow generated during the first 45 months to increase cash available for dividends.
The note also tells us the Stope Mining cost which is the cost that really drives the cut off grade. Reducing mining cost to $30 will drop the cut off grade in my spread sheet. I'll have to look at that later its time to head down to the marble bar.
"The mining operating cost of $47/t is low compared to Australian mines of similar scale. This is predominantly due to the short mine life, which has a period of ~15 months at the end where development ceases and only stoping/production mining costs are incurred (~$25-30/t). The mining operating cost, when development is ongoing, is closer to $60/t during steady state operations."
HGO Price at posting:
4.5¢ Sentiment: None Disclosure: Held
