Alarming: Cash costs are what they are.... we will try and maintain ad $400-$500 margin - hmmmmm
Weird: Focus Minerals acquired Crescent Gold last night!!!
START Goldfields miner Focus Minerals says it can turn the corner on its high cash cost levels, which forced it to report negative operating cash flows despite record gold production during the June quarter.
Focus, one of WA's biggest producing gold plays, mined 48,222 ounces at its Coolgardie and Laverton mines during the three months to June 30, finishing the financial year with 176,632oz.
The miner was one of many WA gold producers to release its quarterly results yesterday.
Market darling Northern Star Resources was the highlight, pouring 18,114oz at cash costs of $646/oz at its Paulsens mine in the Pilbara - a 29 per cent drop in costs from the March quarter - but maintained its status as one of WA's lowest-cost producers.
Bloomberg was last night quoting Australian dollar gold $1543/oz.
Under new management, Apex Minerals managed to reduce its Wiluna mine costs from $3025/oz during March to $1522/oz in the June quarter, when its output was 9139oz.
Integra Mining confirmed a horror quarter, producing 12,554oz at $1344/oz - up from $616/oz March - because of crusher and mill problems at its mine south-east of Kalgoorlie-Boulder that bumped its full-year cash costs to $694/oz.
Troubled junior Navigator Resources said it had poured 14,780oz at $1511/oz at its Bronzewing mine, north of Leinster.
Focus produced at an average cost of $1195/oz, but the company still struggled to add to its coffers, decreasing available cash in the bank from $4.39 million at the end of March to $3.13 million at June 30.
Chief executive Campbell Baird labelled the quarter's result as "strong" and a turning point for Focus but admitted costs were still an issue. "I wish they were lower … but you're not going to see a business running at $600 an ounce," he said. "Our challenge is to maintain the margin we've got now - $400 to $500 (an ounce) - and fit capital investment and exploration into that.
"I don't hide from the cash costs, they are what they are with Focus Minerals …. but I still think it's a very strong business."
Focus' share price was stagnant on the back of the quarterly, finishing the day unchanged at 3.5¢.
The company reported a negative net operating cash flow of $6.93 million during the June quarter - down from a $3.62 million in the black during the March period.
Mr Baird attributed the negative move to expenditure at the Laverton mines of $6 million in the March quarter and $15 this quarter to open the pit. Focus acquired Crescent Gold last night.
He said Focus would reap the benefits of this expenditure in the coming quarter and move back into positive operating cash flows.
The miner had focused on milling and unit costs per tonne which had come down a long way.
"We've taken the big wins and now it's a matter of taking the small wins and chipping away at these things," Mr Baird said.
"It (the quarterly result) is beginning to show the sort of business we have."
FML Price at posting:
3.6¢ Sentiment: Hold Disclosure: Held
