My thoughts on Q2/H1 resultsExcellent production, as previosuly reported. Big positive surprise in a v strong quarter from Nzema, with nearly 36,000oz produced there.
Neverthless, disappointing that the company barely turned a profit and is still burning cash, albeit at a modest rate ($16.2m over the first half), though it has good financial headroom with $70m of cash & a further $50m of credit available to be drawn.
Notable that 122.5k oz produced but only 118.7k oz sold in the quarter, which might have distorted profitability for the quarter, but over H1 as a whole 230.5k oz sold vs 228.4k oz produced.
As I mentioned in a previous post, I'm expecting better results next quarter. The company has previously stated that H2 should be stronger, as the costs of transitioning to owner-mining at Tabakoto drop out and Segala ramps up, with some non-sustaining development expense at the latter dropping out. Cashfow was also impacted in H1 with a working capital build of some $16m. I wouldn't expect that to be repeated in H2 - and there might be room to reduce WC, leading to much stronger cashflow.
Clearly, bottom line results and cashflow are highly sensitive to the gold price, until/unless costs are lowered significantly.
I'll be in the conference call later today and intend to live tweet any interesting points & Qs on @marben100
Cheers,
Mark