RE: For Caveat Emptor27 Mar 2019 10:23
9. To me this seems quite obvious but I understand to some it may not...
Produced gold is our “stock” or “finished goods” element of the business.
Gold is a liquid asset, I.e easily converted into cash but it is also an asset with the ability to increase or decrease in value, if you are invested in a gold company it’s likely you’re bullish on gold, a stance with which the management would be aligned.
In simple terms, what I’m getting at is that if you think the gold price will be higher in the future then why would you sell stockpiled gold now if you didn’t need to?
The only reason we might “need to” is for the sake of cash flow, which brings me to point ii) our unsold gold is a safety net in case we have any short term issues with production, for arguments sake, if we suddenly produce 100oz’s less than expected this quarter, we simply sell and extra 100 oz’s of the last few quarters surplus to keep cash flow consistent.
That is the reason for us having a quantity of unsold gold and i’d suggest you need to understand the importance of a consistent cash flow and the impacts of a bull market on gold price if you still can’t get your head around why we haven’t sold that gold.
10. As far as I’m aware the main impact of Cyclone Idai was suffered in Beira, a major city on the coast of Mozambique, our project is situated pretty much on the other side of the country (circa 180 miles away) right next to the border with Zimbabwe. I believe we may have had some pretty heavy rain but nothing (to my knowledge) like what was witnessed in Beira.
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