re: no announcment today Sabretoothed,
spoke to one of the serious mining analysts who covers(used to cover). the stock.
Tarmoola on the gold side is sub-economic at spot prices, but enjoys the contango on the gold hedge. Better off shutting the mine and re-open it if they could, if the gold price spikes.In the meantime enjoy the difference between the hedge and spot-banks unfortunately would not let them do this in a hurry.The hedge book mark to market is way under water and they cannot afford to buy it back.
Gwalia Deeps is potentially viable but needs plenty of capital and someone mean like Croesus to run it. Suggested acquisition cost to someone like CRS circa $25m could be justified.
Tantalum! The stripping ratio is now going through the roof as planned, but it needs up to $60m over the next few years just to maintain output at current levels.
Grade reconciliation appears to be up the creek and way below mine plan .
Unfortunately, with the capex requirement just to stay still, they have the US noteholders (US$170m?) with a scheduled redemption programme over the same time frame.
EBIT may be slightly positive, but expect a big below the line write-off. This write-off could jeopardise covenants in the noteholder documentation. And just as important, cash flow will be seriously negative. (Guide for new players, look at the cash flow before reported profits!).
Interesting conundrum for the directors-assuming the above is true. Roll on the review!
Cheers,TAS
SGW
sons of gwalia limited
