There were (at last) some further details in the latest presentation around the refinancing to look at what BLK is predicting compared to the best case above.
Their estimates for this half (until Jun 18) seem fairly close to what I got for the mining and gold production with higher grades and recoveries. Unfortunately this drops significantly for the 3 year period after that to only 70koz per year or 18koz per quarter which is not much better than what they did earlier. The AISC they give is about right, since it includes some non cash items, and more importantly it is forecast to remain at that level for the following 3 years. That is enough AISC margin to give $10M per quarter, but I think that will be eaten up by other costs from what they describe.
The biggest concern is the $20M blow to working capital, which shows that even the cash figures they have given for the last quarter and before were not telling the whole story, their debts were building up and poorly managed. Hopefully the change in management will fix this.
After reading all the information in the presentation and the (still unfinalised) refinancing proposal I have to say I am still not really convinced. The discount at 4c is a lot steeper than I anticipated, and the $20M working capital repayment absorbs most of the capital raising. This means even if they do well with their plan it is still taking them a year to get out of debt. They have also not proven anything yet, this last quarterly was most likely break even only because they did not pay their debts as was previously hinted at.
So summary, best case looks possible for next 2 quarters, then production back to 18koz per quarter, even on an ok margin it is not a lot of breathing space.
BLK Price at posting:
10.5¢ Sentiment: Hold Disclosure: Held
