Cha
I caught up with this thread around 3 pm on Thursday and have yet to form a solid view of PRU's quarterly report, but I think you will have noticed a lot of negative comments on the PRU thread with some former supporters exiting or reducing their position on the open. That was clearly the safe approach in the face of a disappointing report. The main concerns were around
1. the speed with which PRU can get back on track given some issues with ore grade at the new pits (has the reserve grade been over-estimated is the fear and/or the use of the proper grade control method so as to ensure ore grade does not get excessively diluted (obvious implications for gold production level, revenue and cost/ounce),
2. the almost $30m/quarter drawdown of the cash balance (see page 12 of report)
http://www.asx.com.au/asxpdf/20160128/pdf/434m1fr2bcsqwt.pdf
PRU has taken action to address the low grade ore issues and they have reported that the mining grade had improved from the average of 0.68 g/t to around 0.8 g/t (which is still too low given the LOM reserve ore grade of 1.16 g/t), but already indicates a potential increase of 5668 ounces which at the average sale price USD1247 would generate an additional USD7.07m in revenue and a reduction in costs by around $195/ounce to USD1213/ounce. I expect the average grade to be higher than 0.8 g/t but no idea if they are going to be at planned levels, although their production projected in the report is that things will be back on track.
In relation to the large drawdown in cash balance, I need to do more digging to understand what is going on. Clearly the Admin costs is too high for a one mine company, they need to stop spending on the Ivory Coast project (except to maintain their ownership rights), I need an explanation of what movement in working capital means, find out how they derived the $27m on investing in Edikan/VAT, and I note that the $7m forex gain is fortuitous). I will probably have to speak with the company to clarify things, eventually.
At this stage I do not see PRU being in any near term danger, but there will be heightened market concern and the share price will stagnate until their reports improve.
As far as RSG is concerned, I provided some comments on the RSG thread and I think RSG are on track. We will know more once they release their DFS on Syama underground and get final govt. agreements on the outstanding power grid connection issues.
If anyone is interested, I posted some comments on the MLX thread about what seems like a pretty lousy quarterly report. I sold out a while ago, and mentioned that. Not sure if anyone here (HP?) still holds.
Good luck all.
loki
(20min delay)