Post by
production05 on Oct 01, 2009 11:07am
Some stats
1) HRG's Op cash flow in first 6 months of 2009 = C$52.5M
2) We improved our net debt/cash position by C$58M within a year.
Net of debt and cash at June 30'08 - C$170.4M (C$187.6M debt, C$17.2M cash)
Net of debt and cash at June 30'09 - C$112.4M (C$135.5M debt, C$23.1M cash)
C$112.4M = US$104.7 (using current exchange rate)
That US$104.7 was at end of June'09. It is now 3 months later. Our op cash flow was C$52.5M for first 6 months of 2009. Our operations have likely improved in Q3. The gold price was higher in Q3. It is anyone's guess how much surplus cash was generated in Q3, but it should be good (assuming no major operating surprises).
Remember, net of debt and cash is the difference between the two even if HRG held onto the cash instead of paying down debt in Q3. Let's conservatively say that US$15M surplus cash was available to be applied against debt in Q3. In this scenario, it would mean our net debt/cash position is currently down to US$90M.
3) HRG's production is 100% unhedged - fully exposed to the gold price. HRG's gold price:
Q1'09 - US$926
Q2'09 - US$924
Q3'09 - likely to be in the US$960 ballpark
Q4'09 - gold price starts the quarter at US$1,000 and good chance of averaging US$1,000 for the quarter as well
It means that Q3's gold price is US$26 higher than Q2, and if Q4 averages $1,000 then Q4's gold price will be US$74 higher than Q2.
Using 73,000 quarterly production ounces, it means we get about C$2M extra in Q3 and C$6M extra in Q4 strictly from the increase in gold price (relative to Q2).
C$2M = 2% reduction of our debt
C$6M = 6% reduction of our debt
It means that the increase in gold price alone could provide an opportunity to reduce our debt by 8% in the 2nd half of 2009. This is over and above the surplus cash we can get from the C$52.5M half year op cash flow level we have already demonstrated we can deliver in a 6 month period.
Comment by
ccharlwood on Oct 01, 2009 8:17pm
Good points Prodiction05. My analysis did not included cash on hand. Therefore, your numbers show that we should have enough cash to pay all debt 2 months sooner than I said - therefore, in the Feb-May range depending on debt conversion.