The Cashflow Bullet, page-48

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rosencrantz

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24/04/18

11:57

Post #: 32653006
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Originally posted by kojak78 ↑

The recent expansion in production and most likely drop to low production figures (should be 850-ish) fixed the balance sheet from very risky to weak. Maybe the market still does not like the risk profile. But I wonder if that weak balance sheet might not be a blessing in disguise. Because it means leverage. It essentially means you get 2x leverage while after that year (where still lots of hard labour is required) you end up with a low cost producer. Short LOM, admitted, but it is way easier to get additional 200k ounces through exploration than prolonging life for a large mine. If you buy a plain and simple low cost miner it means you do not get much leverage to the gold price. If you buy a high cost producer it means you make money if you are right but end up with an asset you sooner or later will have to sell. Expect strong headwinds for the US$ giving further support to Troy. This is a company you can keep after all the trouble is over. And besides Karouni Troy still has the royalties, the tax value of a gigantic sum of carried losses and the 30% Casposo stake.
Management is pulling all the right levers now by concentrating on near mine targets. Spearpoint + Larken, several more targets at both Smarts and Hicks. If my memory is not failing me I think I remember a very small high grade deposit to the south east of Hicks already modeled and that one is not mentioned in any of the presentations on the sheets regarding near mine targets.
Exploration efforts so far are district scale attempts to understand geology, only 6m + 7m spent so far. You don't get very far with that amount and even then Gold Star looks very promising. Easy to see this company getting a 10 year LOM by getting all the near mine targets into reserves, biting into some of the underground at Smarts and getting Gold Star ready (potential to be better than Smarts/Hicks, but needs negotiations with Tajiri because the deposit is likely to cross borders, hope Troy and O'Sullivan won't forget the Azimuth acquisition did not deliver what was promised...)

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If you buy a plain and simple low cost miner it means you do not get much leverage to the gold price.
Please explain.

TRY Price at posting: 11.5¢ Sentiment: Buy Disclosure: Held
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The Cashflow Bullet, page-48

Top Stories

BCI reaches close of funding facility for salt-first part of Mardie project

White Cliff jumps 24% on 'bonanza grade' copper rock chips at Rae project, Canada

Buxton projects new graphite province discovery at WA Narryer play

Week 40 Wrap: China's nonsensical stimmy hype wanes (shocking!); HotCopper's picks; oil & inflation

Recce eyes Indonesia for novel anti-infective as Indo-Aus ties grow stronger

Actinogen Medical ramps up Alzheimer’s treatment trials, targeting fast-track global approvals

Neurotech knocked back by FDA as agency declares target condition not rare enough for special status

Coda Minerals (ASX:COD) enters rights issue to further exploration in South Australia

Solstice Minerals to ramp up drilling campaign at Yarri Gold Project

Cokal upgrades infrastructure for BBM ramp-up in Indonesia

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