Loki, they are not building up cash! Cash and bullion went down...

Loki, they are not building up cash! Cash and bullion went down by the same amount as the dividend so the business was cash flow neutral in the quarter. That is about where its been for some time! In the very early days of production NST generated net cash and in fact reported cash flow monthly. That changed and the cash flow reports stopped coming. Funny that!

Be wary of the headline cash flow guidance. Its just not seen in the accounts so far. What do they mean by "surplus cash" anyway? In the presentation released on 2 August the target was $65-80m surplus cash for CY2013. I can't be believe that will be met given no net cash generated so far! Has anyone asked them if they will meet that target, mmm, too late, its been switched!. The new target in the presentation dated 5 Aug is pushed out 6 months to FY14 and is for $50-70m surplus cash. Can't see it myself although depends on how they define surplus cash I'd say.

In terms of surplus cash flow for CY14, for the first 9 months by my definition of that term, its been zilch. Cash and bullion was $61m at Dec12. They paid a $11m dividend and cash and bullion is down to $50m.

NST is a story well sold, it sounds great in the presentation and trades with a big premium to its peers but for me its worth looking closely at what is really happening in terms of cash flow.