Since 1/7/08 total revenue has been $552.9m generating an accumulated income of $340.5m (ie a return of 61.6%). From that they paid dividends of $42.2m. The remainder has indeed been used to fund inward investment in plant, development and exploration.
But the P&L numbers include D&A expenses of $62.1m over that same period in line with normal tapering of capitalised costs over the life of mine.
For the 7 financial years (FY08 - FY14) they have spent $124.2m on plant & equipment of which they have depreciated $32.2m (ie 26%).
And over the same period they have spent $259.9m on development of which they have amortised $34.1m (ie 13%).
But the figures are heavily weighted to the current Co-O expansion. Over FY12-FY14 they have spent $95.6m on plant & equipment, of which they have depreciated $20.1m to date (ie 21%). And $164m on development, of which they have amortised $21.5m to date (ie 13%).
Total current carried amount of investment spend since the companies inception is $376.9m of which development (including exploration spend transferred across to development) is $231.8m. This significant amount (62% of total carried) is hardly surprising given the nature of an underground mine like Co-O as the vast majority of development work undertaken remains in use throughout the entire life of the working mine (ie by definition, all shafts, declines, haulage routes, et al, remain essential to operations).
Even after all these years in operation, the mine is still working all 8 levels. The uppermost levels are still being extended along strike and development work carried out in the early years is still fundamental to ongoing operations.
Total carried capitalised investment spend includes all cash expended on the wider tenements including Bananghilig (which may or may not eventually show a return. However, given the last reported resource base of Co-O (ie 2.2Moz) and given the current level of D&A expensed through the P&L over FY14 out of Co-O earnings, the total carried amount will take 19.8 years to eliminate (c. 111koz pa). But as the mine aims to expand it's resource base by, at least, the depletion from production, the actual life of mine may well be far in excess of 20 years.
As for AISC: well worth comparing total spend on Capital works with reported spend on non-current assets. For FY14 the difference (c. $3.376m) corresponds to c. $56/oz. G&A corresponds to $138/oz. The difference between capitalised mine development and payment for development corresponds to $150/oz for FY14. But as cash costs are reported as net of development costs it is difficult to assess how much of that $150/oz is already subsumed within cash costs during a period when the majority of the ore milled has been drawn from ongoing development activity.
A simplistic analysis of the 6-year P&L numbers on production of 421,764 oz with 406,983 oz sold, indicates an overall cost per oz of $522. But this would require a reasonable correspondence between D&A and sustaining costs over that period - which, I accept, remains subjective!
My own analysis, based on cash flows, indicate an overall cost of $404/oz over the FY09-FY14 period. Clearly, this is weighted higher during these last couple of years as poorer grade material has made up the majority of throughput.
So we are where we are!
Logically, having expended so much recent investment in plant and development, the mine should now be able to reap the benefit and produce more tonnes at higher stope grade and with improving recoveries. But the current reality is of low performance at the mine and inadequate tonnage to keep the mill working at anything like it's nameplate throughput of 2,500tpd.
Past performance under GD as MD made MML a star performer - it remains to be seen whether he can now, at least, start the turnaround.
CPDLC
MML Price at posting:
$1.21 Sentiment: Buy Disclosure: Held
(20min delay)