TGS-Investors should read this carefully!

Hi everyone,

I have 2 points you should read very carefully!

Point 1)

At the beginning of my invest here in tgs I thought that the reported AISC from tgs is like it should looks like (picture below / AISC)!

So all my past calculation based on an AISC of <1.70/lb which is what tgs have forecasted/reported and I get a min. gross margin of around 20% with a min. sales price of 2.10$/lb!

I also believed that a forecasted AISC from tgs-mgmt would been reflected in their p&l report (actuals). But in the h1 report their AISC is clearly out of range of what they have forecasted!

Well to understand what I mean you should know first what AISC and COGS really are:
AISC costs includes "direct prod. costs (COGS) and SG&A" (pic. below)!

This means that COGS should always be lower than AISC costs:
COGS are only "direct production costs"!



So if you calculate the COGS out of the h1 report you would get about ~2.0$/lb instead below AISC of 1.70$/lb as you can see in my new calculation here based on the h1 report (link below)!:

P&L fc 2016 (fy):
Sales avg. ~2.15$/lb
AISC still ~ 2$/lb (93% of sales as h1.16)
Prod. ~26kt
- EBIT would be around 5.1 Mio$
- EBT (w/o impairment!) would be around -17 Mio$ (high interests because of drc bank loans!)
   for detailed calculation click here:
   TGS - P&L Forecast 2016

The big thing is, that we would have a net profit if their AISC of <1.70 would be correct (=cogs actuals!). And every further prod. of 1kt would add a further 1Mio$ in NP! So the question is how accurate is tgs' AISC calculation???! IMO their AISC is just reflecting ~3/4 of real AISC!

Mining cost rules:
COGS (cash costs!) are always lower than AISC but tgs shows us a the opposite!

Point 2)

They quoted Mr. Griffiths and that tgs will draw down the remaining loan of 19.5 Mio$ in the 4th quarter! The other 9.7Mio$ draw down will be shown in the 3rd quarter.
Please read this article which is very interesting (its in german but google helps!).
http://www.goldinvest.de/index.php/...suchungsergebnisse-zur-kobaltproduktion-34622

So if they have used the whole loan till YEND '16 I just wonder how they will survive the 1st quarter of 2017. But as you know tgs stated that they do not need additional cash for the next 12 month with their forecast.. Well I really don't believe that myth!

Well now we need a very good 2nd cobalt survey for the next steps! And hopefully we see a better financing/production scenario than just 1t/yr for capex of 14-30mio$!

Also we can just hope that big companies will begin to cut their copper production significantly or current cu-lvl will fall further...