Ann: Activity Report for Quarter Ended 31 March 2017, page-5

I am hoping this is the nadir (as long as the copper price doesn't vaporise!).

Q1 was always going to be awful in isolation. The US$2.45 / lb cost plus an additional $0.25 for the capitalised 10:1 strip back would have made that they made virtually nothing cashflow wise from operations. But management continually said that they were just trying to survive to April and they have done that.

Q2 the cashflow and lower mining costs benefits from the EHL deal start to kick in so they should be able to breathe a bit easier. They seem to have hedged the production for the quarter (4,000 tonnes) so their operational and financial risk profile should be a lot lower. Q2 wont be brilliant in itself but should show some improvement as the prestrip moves to completion and the lower mining costs kicks in.

They have maintained their guidance on costs and production so costs should fall dramatically and volumes lift significantly especially in Q3 and Q4. Maybe 6000 tonnes and US$1.50 for each of Q3 and Q4 and about US$13m gross profit per quarter ? They have indicated that the cast estimate includes an amortisation charge once the pre strip is finished so that would add another possible US$6m cashflow in the second half. They would have to payout the deferred suppliers in the second half but their cash position should be very positive if the numbers stack up.

I think we have staggered out of the desert and are heading for the milk and honey. Just need to stay the course, finish the prestrip and hope the copper prices holds up.

DYOR