23 million ozs of contained silver - for now

Enjoyed reading the latest annual report. It's definitely "ALL SYSTEMS GO" in as much as Alcyone's current and future activities are concerned.

A few of the highlights, including my commentary:

Steady state production, importantly, is expected to be achieved this December quarter.

With nice grades, 23 million ounces of contained silver, and rising, a mine life of, at a minimum, 7 to 10 years (Mount Gunyan is expected to add at least another 2), I would expect Texas to produce considerable future cash flows (even at today's silver prices).

To add further excitement, Alcyone has recently added 900 sqkm to its landholding at Texas, quadrupling the previous amount (now some 1100 sqkm).

Throw in the potential to uncover base metal discoveries (2 drill rigs have been utilised, so there's been no slacking off), Tomcat, Vampire, Harrier, Typhoon can add significantly to Alcyone's productive capacities. Hence, if successful, I would expect them and Alcyone to come into much sharper focus - that is, with the market in general.

Financially (note: my concern has always been cash flows, which paint a more honest overall picture) $2.3 million was made from operating activities ($2.6 million loss in 2011)

Cash flows from investing activities declined ($8.5 million 2012, $14.7 million 2011).

Cash flows from financing activities declined ($5.3 million 2012, $16.6 million 2011).

A small decrease - $210,000 - in net cash equivalents (raised a significant amount of funds in 2011, thus skewing the numbers).

Cash at the end of year stood at $2.1 million, $3.0 million 2011.

Repaid $3.3 million in debt (though borrowed $4.5 million)

A $3 million commodity loan, of which $1.5 million has been repaid, will be fully repaid by the end of December 2012 (in silver). Current liabilities, i.e. borrowings, will thereafter be negligible. However, $3.3 million is owed to trade creditors (a little below 2011).

The company's has net assets of $21 million.


In summing up, when one considers the effort and funds that are needed to bring a mining venture into full production, mixed in with so many other travails, I think Alcyone deserves a strong pass mark.


Now.... if silver SHOULD ... let me rephrase that, when silver goes to $100 an ounce and beyond, I would posit that those who believed in Alcyone will emerge from this well and truly rewarded - smelling like roses, even :)

If not dollar-wise and perfume-wise, spectacularly so.