RE:sure enough....gold going up
I wonder what the net cash for Q3 will be? What about a dividend if gold goes to $1500... The UK Orosur investors are following this stock closely.... OROSUR MINING (LSE:OMI)
Below is a good post that TwoSporrans wrote!
If one values OMI's considerable assets at zero and values Orosur purely on forthcoming profits, then at current gold prices, production and costs, Orosur will make that £7m in profits, within 11 months, assuming there is no escalation in capital expenditure or borrowing over the year ahead.
The net cash postion at end of Nov. 2013 [Q2] was actually just over $2-mn; 3 months before that it was in deficit by virtually the same amount. So, net cash improved by $4-mn over the duration of Q2. There was an increase in net cash of $1.35-mn in Q1, the first full quarter with Arenal stope production.
[Cash balance rose from $5.6-mn to $8.8-mn over the 6 months to 30-Nov-13; meanwhile debt fell from $9-mn to $6.8mn.]
The average POG Orosur got paid over Q2 was a tad over $1,300-oz.
The way the POG has recovered of late, following the slump to $1,188-oz 20-Dec-13, suggests a conservative expectation of an Average $1,250-oz revenue over Q3, ending 28th February.
Say gold production is 14k-oz [14.8k in Q2]; assume total costs/oz the same.
If the revenue has fallen by 14k*$50=$700k then the cashflow will too.
Given Q2 net cash was $4-mn, a projection of $3.3-mn net cash for Q3 seems very reasonable to me.
Over a prospective 12 months hence, that extrapolates to $13.2-mn of net cash growth potential, given a POG average of ~$1250-oz and stable costs.
Hence a payback of £7-mn within 11 months looks eminently achievable to me.
If we are blessed an the POG recovers back to an average at or above $1,500-oz, Orosur's strategy of returning surplus cash to shareholders [enshrined in October 2012 strategy statement] implies a substantial dividend payout would be easily affordable.
Then you'd see the sp at a fair multiple of what it is today; my guess is above 60p.
But I'm getting way ahead of the current reality; the POG may disappoint sorely.
$3.3mn net cash for Q3 will do for me.
TS