CAPEX Eats Cash



Good to extent the CAPEX has resulted in reserve expansion; await Orosur’s new measurements to gauge how much.

As previously however, I can’t see a lot to revel in about the production situation.

There’s $2.4-mn in the bank v $5.4-mn at end of the last quarter and that’s after more than 3 months of full production out of SG West. So, $3-mn cash has been consumed by:
“additional development capex associate with the SGW UG mine, including ramp, access and ventilation shaft work.”
Hence the All-In-Sustaining Costs remain well above the av. POG for 2nd quarter in a row.
They were $1,345/oz the previous Qtr; $1,289/oz this one; so above $1,300/oz for the half year when the POG sold averaged more $100/oz less.

OK, so costs will almost surely come down a lot for the next Qtr and probably the one thereafter. The cash will build again. But the current estimate for SG West extractable reserve is 30,000-oz; maybe 30-35% has already come out by end of Q3.
By end of Q1 there’ll be another period of CAPEX/development starting if they are going to switch into the SG Central [or conceivably SG East?] to achieve a relatively uninterrupted Gold output in line with their 35-40k-pa target.

OMI remains a high risk, highly geared play on the POG.
Short of something spectacular emerging out of Anza, the POG v AISC for Uruguayan production will remain the price arbiter here.