Posts from the other side23 Sep 2018 08:21
King Suarez22 Sep '18 - 10:53 - 15737 of 15754
0 7 0
@Celeritas
Where are you getting the forecast of FCF being double (or near double) next year? Isn't the comment from SP Angel/Proactive investors just referring to the fact that we are getting one 3 cent (interim) divided for 2018, but 2 x dividends for 2019 (interim and final)?
I expect increased production for H2 to something like 43.5k geo oz in order to hit the FY target, countered by an average gold price lower by c$100 oz. An extra $1m or so FCF due to the lack of interest expense and a little interest income from cash at bank.
In H1 18 AAZ produced 37.5k geo oz and recorded $25m operating CF and $16m FCF at an average gold sales price of $1,319. So operating cashflow at a margin of c$667 per geo oz. So FY 2018 likely to be in line with H1 2018 at these gold prices, I think.
For 2019 say we are now producing at 87k geo oz for the whole year, with the 2nd crusher. The margin will likely be around $550 per geo oz at $1,200 oz gold price = $48m operating cashflow. Finance costs were $1m in H1 18. We won't have those anymore so add $2m to the 2019 forecast and call it $50m operating CF (corp tax will be a bit higher, but there will be some interest income from cash in bank).
On average over the last couple of years AAZ seem to spend c$10m p/a on Capex and we know $6m is earmarked for the exploration budget, so that should leave FCF of c$34m. $34m x 0.25 = $8.5m. $8.5m with 114m shares in issue = 7.4 cents per share?
Interesting to note every $100 increase in the price of gold adds c$8.7m revenue or $5.9m FCF (after tax), which could add another 1.3 cents per share to the annual dividend and would put AAZ on a yield just over 10% at the current sp. Obviously, things could look even better if Capex is lower than I have forecast and/or cost of production continues to fall due to the efficiencies made an economies of scale through raising production levels.
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