RE:solid production, mediocre cost containment, awful increase in debt
You make some fair points, sb: profitability (even after adjustment for impairment etc) and cashflow from operations are poor. I will have some questions for the conference call.
However, don' t forget a couple of key factors for H2:
- Tabakoto mill expansion is complete, which should raise production and lower cost/oz significantly
- Nzema is also transitioning to new pits and higher grades meaning increased production & lower cost/oz can be expected in H2
Even without an increase in the gold price, those (together with further work on cost control)should turn a loss into a profit.
Most of the CAPEX for Tabakoto expansion and much of Agbaou has now been expended ($57m to go on the latter), so H2 CAPEX should reduce somewhat.
I take issue with "very large" interest expense: we're in a low interest rate world: LIBOR + 3.75-5.5% p.a. On $300m that's $13m - $18m p.a. Significant, but manageabe against expected profits.
It's now up to management to show that they can deliver against expectations.
Regards,
Mark