Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
It is so confusing, I had to relisten to the presentation many times. DB talks about the hedge in two places.
In the first one he says
"From this position where we are now, we have 55 thousand ounces of forward looking gold hedged at a variety of cost collars prices from $2100 up"
That is where I thought the cost collars would be higher. In the old hedge it was up to $2150. Now he says $2100 up, without giving limit to the up. If it was the same collar prices, he should have said $2100-$2150 instead of saying up with no limit. Because the change was being done at a higher gold price of maybe $2300, I assumed he would be making a higher collar when the gold price is higher. Plus they were adding new q4 and q1 2025 which I assumed would have a higher collar.
He said "we have restructured some so we've paid down ... the first quarters uhhh", saying loudly restructured and paid down, with pauses and uh ums, which made me think they used cash to pay down the hedges. Those pauses and ums add to the confusion.
In the second place in the presentation he says
"and it gives us more exposure to gold at 23,500 right now" which made me think the collars were closer to 2300.
But I am now thinking Jux is right. This assumes DB is dumb, when he has a chance to restructure, he chooses not to raise the collars.
The other possibility is that DB is smart and raised the collar when the gold price is higher. This obviously is impossible because DB can never be smart!
I am still confused by his saying collars $2100 and up.
From listening to the presentation they used cash in q1 to buy back their old hedge. Their new hedge starting from q2 is 15k oz for the next 4 quarters (total 60k oz) at a price around $2300. Any production above 15k per q will be sold at market price. Is that right?
If that is the case, that explains the extra cash used in q1 in order to get more cash in future quarters. Their previous $2100 ceiling is removed and their forward gold sale prices can average $2300+.
Regarding DB never doing anything right, they did meet guidance for last year 2023, guidance for high grade in q1 and q2 2023, contractor replacement for yan resulted in sucessfully meeting 2023 guidance.
Hard for DB or any ceo to stop fire at fuel depot or underperformance of a contractor. Step-In Notice gives them control now, with third party contractors who maybe did not want to stop work. Anyone know how much more of that $6.3 million they can draw down? The last debt restructuring refinanced 55 million to longer term and added $20 million more debt available so is that the $20 m that is being drawn down?
If Coris bank really wanted 100% of hum, they could have just refused to restructure the debt the last time. Banks do not have the manpower and knowhow to run mines.
5m deep sounds small but over 1km long and hundred m wide of pit is a lot of tons to remove. Digging a small 5m by 5m does not give the volume.
The last financing said it was used for Dugbe, underground yan, exploration drilling of both yan and kou, so not all was used for kou.
Kou grade mined of 1.97g/t is now higher than Yan grade 1.6g/t. All they have to do is increase the volume mined at that grade and Kou production would be higher than Yan which was the plan from the beginning. Bonus is any increase in Kou production can be sold at the much higher 2300+ gold price.
BushyTailed, your prediction of Yan Q1 18.5k AISC 1500 production seems high especially when they said underground does not go into commercial production until H2 2024. Last Q4 without underground they produced only 14,419 oz.
2024 guidance was Yanfolila: 75,000 - 85,000 oz at AISC below US$1,500 oz.
If production is weighted to H2 because of underground, wouldn't Q1 production be closer to Q4 production with AISC US$1,701 as in Q4?
There could be another dissapointment if people believed your 18.5k number. Unless you expect their open pit mining to change in some way to suddenly jump in production?
Vote to not give them any more options. Giving them more options is rewarding them for driving down the share price!!
Anyone else not get their voting instructions yet? I still have not gotten it yet. Sending out instructions late and not giving shareholders a chance to vote is criminal.
Don't tell me DB panicked and locked in a gold sell price of $1900 before gold went up.
In the q&a he also said that they did a lot of drilling and grade control which would make it hard to miss. Unless the "they" he refers to are the sellers of the deposit who faked all the drill results!
I just listened to the latest webcast and yes he did mention the artisinal miners in the q&a.
Take 4 g/t which is considered high grade for open pit, and say a 1 meter x 1 meter block is one ton. If the artisinal miners mine 100 tons without any waste, that is only 13 oz gold. If they mine 1km or 1000 tons it is 130 oz. 10km or 10,000 tons is 1300 oz. 100km or 100,000 tons is 13,000 oz. Still a relatively small percent of the deposit oz. Can artisinal miners with pick and shovel mine 100km or 100,000 tons?
007 I was the one who mentioned artisinal miners mining out all the high grade gold in a post of the worst case scenario. I made all that up :-) I did not hear them mention it in a webcast. Although that has been known to happen for some miners.
That should be China decides to create a central bank crypto.
That is not near the worst case scenario Bushy! Worst case is more like the artisinal miners already mined out most of the high grade gold. They were sold a scam deposit. Not being competent enough, they did not do a proper job of calculating reserves. So they continue digging and digging hoping to find that elusive high grade. China decides to create a central bank currency so they start to sell their gold. Russia does the same. Soon all the central banks start dumping their gold. Like the last time this happened in 2000 when gold dropped to $200/oz, this time gold drops to $400/oz. DB gets desperate for cash to stay alive and clueless as he is, takes out a 1 year floorless convertible loan which gives the seller an option to convert the debt into shares at the end of one year at the then market price of the shares. The seller obviously is unscrupulous and massively shorts shares down to 0.001 p. During all that time DB makes rns saying all is good and on track, full production is coming soon, any time now, any time. Eventually he gives up and declares bankruptcy which is the real worst case scenario for shareholders.
Just the fact that they are complaining about the hiring of other subcontractors and executive management means that there are still people willing to work. How often is it successful for a group of youths to call for the firing of management personel. In any other company I would think the youths would be fired.
The pictures do not look like they are at a mine site and with no mining equipment. Small group of people under tent with hand written letter does not look too sophisticated.
"The Company is currently supporting a transition of mining activities to a new contractor, with the ongoing support from Corica Mining Services (West African contract mining specialist, and Kouroussa's contract miner)"
Previous news said Kouroussa's contract miner was Corica Mining Services CMS. That name is different from KGM in the link. Is KGM complaining about the new contractor Corica? Are Corica and KGM the same or different?
They used debt to build the second mine, same as every other miner using debt to build a new mine. Any dummy would know that. Payback is less than two years at $1900 gold.
that is not a best case. other people best case is gold way over $2000.
normal case is exploration drilling finding more gold to mine. best case is exploration drilling finding a lot more high grade to mine.
Yanifolia they already told you they are returning to profit this quarter mining the higher grade east pit.
EV of $175m - $70m FCF = $105m EV The share price will have to rise rapidly in the first year to get back to $175m EV
sell and leave if you hate them so much. Why hold onto something you hate.