RE:RE:Top 10 finish ! Why did they dump KARMA for basically nothing?
Because it's on it's last legs and doesn't fit with the company's strategy. If you follow the company, you'll be aware of their "magic quadrant" concept, where they want all the company's mines to have:
- Long life
- Low cost
- Meaningful production
Karma didn't fit those criteria and was a drain on management and capital resources. Production guidance for this year was only 85-100koz at an AISC over $1,200. I'd much rather they invested in Sab-Mas Phase 2 which I expect will replace those missing oz but at much lower AISC (we'll need to wait for the DFS to see exactly how much production it will add at what cost). Then we've got Fetekro on top of that, which is likely to add 200-250koz p.a. With potential expansions at Hounde and, maybe, Ity, I can see an organic growth path to 2Moz p.a., despite the Karma disposal.
Yes, it's disappointing that they got so little for Karma but that reflects the fact that it is a wasting asset, with higher costs and a limited life. The sale might also win them brownie points with the Burkinabe establishment, which could be politically useful. ;)
The likely sale was well flagged to the market, so shouldn't have surprised anyone.
Cheers,
Mark