Was doing some amateur analysis to work out how long it would take for CCU to repay its outstanding debt. Feel free to point out if I got anything wrong.
Assumptions:
1. Silver price averages at $24
2. CCU achieves nameplate production consistency at 200k oz per month
3. CCU does not take on more debt.
4. No further private placement / public offering (This is of course a big assumption considering the meeting going on now ... )
Analysis:
Current quarterly cash outflow:
$13,686,000 ($22.81 / oz @ 600,000 oz)
At current silver price of $24.00, it would take 9+ years to repay its outstanding $28m debt
Targeted quarterly cash outflow:
$11,400,000 ($19.00 / oz @ 600,000 oz )
At current silver price of $24.00 : 2+ years to repay its outstanding $28m debt
Conclusion:
Getting cash cost down to the targeted $19 this year, and maintained over the next few years, can allow CCU to be debt free by 2016/2017.
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