Don't ask Esh about how his beloved DCN is doing - its been quite a drop from its $4.00 top - and his other hot favourite RSG which collapsed from over $2.20 to just 91 cents.
One thing that Vassie keeps repeating is that Gwalia has a life beyond 2022 to around 2031, with mining to go go to a depth of at least 2000 meters, albeit at around 1.1m tonnes of ore p.a rather than the previously hoped for 1.4mtpa. Currently they are mining 700-800k tonnes ore at around 10/tonne, but this will increase to a steady state of 1.1mtpa at a grade of around 6 g/t. There is a clear path for further production post 2022 when the higher grade ore runs out, but the fall in grade will mean output will be closer to 200k ounces pa and AISC will rise due to increased mining costs at greater depth and lower production over which to spread the cost per ounce. They expect some offsetting cost savings to be achieved from improved operating efficiencies. The bottomline is that Gwalia is likely to remain a substantial profitable operation for at least another 10 years, but IMO it alone will not justify giving SBM a market cap of $2 billion (unless the AUD POG rockets up).
loki
SBM Price at posting:
$3.32 Sentiment: None Disclosure: Held
(20min delay)
