I'm not sure of the point of the new thread, you made the point about the change to the reporting date in the other discussion.
I have tried pretty hard to explain that guidance is really the last issue an investor should be concerned about at the moment. The next two quarters will be pivotal quarters for the company as the Syama mine ramps up and investors should be watxhimg the tonnage coming out of the UG mine carefully and for the expected improvements to the recovery of the sulphide circuit as we transition to feeding the circuit from UG ore alone. The rest is a sideshow as RSG's value is floated off the back of that mine development, none of its other assets will float its current value so the UG mine at Syama must succeed.
Previous company announcements have estimated ~310kt (July estimate) of production and ~355kt (Dec estimate) for the first quarter of CY2019.
I have estimated that the company will be likely to produce between 75,251 to 78,333 ozs during this quarter (the March 2019 quarter). Operating costs for that quarter will still remain high as the mine will not yet be at steady state production but given the rise in gold prices to US$1,290/oz that production will still represent significant sales revenue of about US$97 million (A$135 million).
I said I didn't want to forecast any further than this but we might as well try and look forward a little more.
In the Dec SLC announcement the company is forecasting achieving the steady state production from Syama UG mine of 200kt/month (2.4Mt/annum) at the end of June 2019 (see figures 3 and 8 of that announcement).
Figure 8 shows forecast production from Syama UG of ~534kt for the June 2019 quarter, which at the reserve grade of 2.7g/t and recovery of 75-85% represents between 34,770ozs and 39,406ozs.
Oxide production for that quarter will depend on production from Namakan pit at Tabakoroni for that quarter. We don't have any guidance for the oxide at this deposit that I know of, only descriptions and photographs given in past announcements and the published resource at Tabakoroni.
"of 778,000 ounces (oz) at 10.2 million tonnes (Mt) @ 2.4 grams per tonne (g/t) Au and a current Ore Reserve of 296,000oz (3.16Mt @ 2.9g/t Au)."
The estimate above includes the depletion from mining from the Dec 2018 quarter which at maximum represents 34,653ozs (after recovery). Basically there are still plenty of reserves remaining at Tabakoroni but I just don't know how the resrves are distributed in terms of oxide and sulphide ores or how much of the Namakan starter pit represents of the accessible reserve. I simply can't estimate how much oxide this pit may or may not produce in the June 2019. The company may give us more colour in the quarterly. Since holding shares in this company I have found that details in announcemenst about the mining on satellite pits has been pretty thin. Tabakoroni is an important satellite pit so hopefully we get more visibility on that pit going forward.
In the "Outlook" commentary for Ravenswood in the Sept 2018 quarterly the company said that mined ore tonnes are expected to continue at Mt Wright through FY2019, so based on this we should expect production continuing at Sept and Dec levels up until around June 2019 by which time we will here the outcome of the companies review, potential sale process. I am in favour of selling this mine to strengthen the balance sheet and so that FCF from the fully functioning Syama UG mine can be fully unleashed. I prefer a company producing less ounces with more FCF than one producing more ounces with less FCF. The Syama UG mine has a reserve life of 14 years and is scalable to 4Mt/annum, let's take advantage of this.
As I said it all depends on the Syama UG ramp up going according to plan and the targeted sulphide recoveries being achieved. The rest is a sideshow being drummed up by the naysayers, downrampers.
To give an idea of how scalable the Syama UG mine is, in the September quarter NST hoisted a total of 1,425,006 tonnes of ore from all its Kalgoorlie operations plus Jundee plus Pogo. At steady state Syama will produce 600,000t or 42% of NST's total mined tonnes. Consulatants have said Syama is scalable to 4Mt/annum which is 1,000,000t per quarter or 70% of NST current mined ore production. Of course NST's mines are hoisting higher grade so the actual production is much larger but this is just to give an idea of the scale we will approach with the success of this development. Esh
RSG Price at posting:
$1.13 Sentiment: Buy Disclosure: Held
(20min delay)
