the cold hard facts

I sold my HGO stock a month ago after holding for almost 5 years. A shame, as a couple of years ago it looked like a pretty decent investment. I'm still keeping a close eye on news & those production costs, hoping it might be worth jumping back in.

A few people have been wanting a company announcement on whether HGO is cash-flow positive. Here are my own rough calcs that you might find handy.

I'm just some guy with a desk calculator ... I'm happy for any corrections or improvements. This is rough "ball-park" figuring.
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The COST of running the company.
Most recent Qtrly Report estimated "next quarter" (May/June/July) company cashflows at A$32M. (i.e. about A$10.7M /month).
(Page 22, Exploration & Evaluation $3M, Production $27M, Admin $2M).
Note that details on P4 imply that these costs should already include gold/silver credits as an offset.
Details on P20 indicate previous quarter had additional items (tax refunds/rebates, financing costs) totalling a million or so, but I've ignored these for this back-of-a-beer-coaster estimate.

Potential Monthly REVENUE incoming.
The July Investor Update gave the "design" figures used below,
except for the ore feed grade: the June Ops & Explor'n update gave the grade for May as 0.73% (lower than plan), and lists ore feed overall (Global Resource) as 0.8% Cu.

From the July Investor Update: sales approx 50% hedged at A$8,230/t, with other hedging at A$7,500 (pretty close to the current market price anyway). So I'll estimate average hedged sale for Cu metal at A$7,865/t
So:
Monthly Revenue at design; for global resource average ore feed grade:
Ore thru-put (tonnes) x ore grade x recovery x price
= 200,000 x 0.8% x 90.5% x $7,865 = A$11.4M

Monthly Revenue at design; for lower than plan feed grade (if we get a repeat of May, with rain forcing use of low-grade stock-pile):
Ore thru-put (tonnes) x ore grade x recovery x price
= 200,000 x 0.73% x 90.5% x $7,865 = A$10.4M

Monthly Revenue at possible future re-optimised capacity (2.7Mtpa = 225,000/month); for global resource average ore feed grade:
Ore thru-put (tonnes) x ore grade x recovery x price
= 225,000 x 0.8% x 90.5% x $7,865 = A$12.8M

Its interesting what a difference to potential company profits the $3M a quarter burn-rate on exploration makes.