My TakeI read through the release, the analyst reports, and listened to the podcast. Here’s my take for whatever it is worth:
- They need to sell 10,000 oz’s to cover operations this quarter. They have 3,000 in the circuit and so they need to mine and sell another 7,000.
- They processed +/- 85,400 tonnes and got +/- 5,700 oz’s in Q2 averaging +/- 2 g/t.
- They are running low on development, low grade rock to feed the mill but have started mining at Big Missouri which is higher grade. They feel they can pull 800 tonnes from Big Missouri daily. Premier will not be ready for mining until Q4.
- At some point this quarter they will run out of development, low grade rock and so the mill will only be taking tonnage from Big Missouri feeding the mill 800 tonnes per day versus capacity of 2,500 tonnes per day.
- Assuming that happens early in the quarter and also the unlikely scenario of no mill downtime, they will process 72,000 tonnes from Big Missouri this quarter (800 tonnes per day x 90 days).
- With 3,000 oz’s in the circuit and needing 7,000 more to mine and sell this quarter to cover operations, they will need Big Missouri rock to be at least 3 g/t to get the required oz’s to cover costs.
- The drill holes at Big Missouri are higher grade and as per the 2019 resource estimate had an indicated grade of 8.36 g/t but I assume there’ll be some hiccups in commencing mining of a new area.
- If Big Missouri kicks out 5 g/t and there’s some downtime or mining delays, they’ll likely cover costs, if it’s 3 g/t, they need every day of operations to cover. So this is a big quarter for Ascot and one without much of a cushion.
In the podcast Derek was pretty clear that he’s a risk averse person and so I’m assuming he’ll want to cover himself somewhat here in case there are issues (I’m thinking 2 – 3 months of operating costs). He very much values optionality in mining and right now he has none as he’s really down to Big Missouri and whatever it produces and with a mill that has had issues and may have more.