E15 Shaft, production guidance, AGM.

AT comes up for re-election as a Medusa director at the next AGM. As things stand he is not at all certain of getting the number of votes required to remain in office due to catastrophic, serial failure of the company and collapse of the share price throughout his period as Chairman.

Despite this he is standing for re-election so he needs to employ sound tactics and pull a rabbit or two out of the hat to remain. With this in mind:

1. No new CEO has been appointed since BT resigned in June. AT has been acting CEO. If this state of affairs continues as expected till the AGM, institutions may think twice before voting him out which would mean the company would be temporarily without both a Chairman and CEO at the same time.

2. The E15 SS is not a complex operation and has been in use during the build stage of the shaft. It is now being re-configured for the winding and operation of the double decker 24 man steel cage that has been in use in the L8 shaft since 2015. It doesn't take 2 months or more to commission such a shaft. My expectation is that the E15 shaft will be announced to be operational on or before the AGM.

Would these factors save AT's bacon? Who knows. 

Key Date: AGM to be held on 22/11/2018.

"Practical completion" of the E15 Service Shaft expected by 31/10/2018 followed by commissioning.
"Utilisation is expected to improve in the second half when the E15 Service Shaft becomes operational."

E15 SS in service is designed to increase haul capacity by 300 tpd from L8 shaft. This is as a result of the L8 shaft currently having to alternate between skip haul for ore and man cage haul but will be dedicated to skip haul only as soon as E15 shaft is operational.

Mine output should increase from the latest Qtr to Sept of 145,000 wmt / 90 =1,600 wmt/d

ie to 1,600 wmt/d + 300 wmt/d = 1,900 wmt/d ie 18% increase.

Mill throughput should increase from 133k dmt/qtr by 18% to 157k dmt/qtr.

Gold production: 24,177 oz/qtr to 28,500 oz/qtr = 114k oz/yr.

(157k x 6 gt x 94.5% recovery / 31.1 gm/oz).

This ties in with a 2018 BT forecast of a 17% improvement in output post E15 SS implementation.

However the company's guidance for 2018/19 is 90 -100k. It seems this is too low but takes account of the uncertainty of operational issues during the first 6 months of the year in particular. The December quarter is affected by Xmas holidays for mine staff.

FY 2018/19 Possible production: 24k + 25k + 28.5k + 28.5k = 106k oz

FY 2018/19 AISC of between US$1,050 to US$1,150 per ounce. This is likely conservative. If actual production is higher than forecast AISC should reduce.

FY 2019/20FY 2019/20 Possible production: 114k oz

FY 2019/20 AISC. BT forecast was $850 oz but this is likely unachievable.

E15 SS was announced in March 2015, so more than 3 and a half years in design, planning and build. This is quite ridiculous! Umpteen completion dates were forecast during this time and none were met.

At what cost? The company won't say. If a cost estimate had ever been published it would have been subject to the same cost over runs as the time element.