Please be careful when interpreting the recently announced cash costs. Better to wait for the next quarterly, and check cash holdings at start of quarter, and at end of quarter. (And change in net debt).
HGO was a little clearer in how cash costs were calculated, back in last April's Quarterly. That report showed the calculation for Mining Costs as:
More recently, they've left this detail out. In the presentation just released, all they show for mining cost is the total of the above components: APR QTR Mining costs 132 JUN QTR Mining Costs 116 QTR to 30/9 93
There could be a whopping big credit in the Cash Cost figure, for stockpiled (unprocessed & unsold) ore. And that number isn't shown.
They are still stockpiling low-grade ore, and they are still subtracting the "value" of stock-piled low grade ore from the cash cost. ie. In the recent half year report:
Refer Page 7: "During the period, 6.9 million tonnes of material was mined, which included 1.0 million tonnes of ore and 0.5 million tonnes of oxide, transition and low grade primary ore that was stockpiled for use at a later date (with the payable metal content valued at more than $30 million)"
Stock-piled low-grade ore is not the same as cash, and I wish they'd account for it more clearly (as per last April's qrtly), when indicating "Cash Costs". I don't understand how/when they can turn 00.15% grade ore into cash. They are barely (un)profitable while processing much higher grade ore.
I was a holder for 5 years. I'd like to jump back in, but I'd like to see hard evidence of profits first. I'll be looking at the change in cash holdings in the next quarterly, and the change in net debt.
HGO Price at posting:
9.0¢ Sentiment: None Disclosure: Not Held
