MF, you asked for feedback on your numbers - so here is my...

MF, you asked for feedback on your numbers - so here is my summary in reply. Please excuse the formatting!

It appears clear from the 1st and 2nd quarter statements (and subsequently verified by the 1H financials) that MML have finally turned the corner and that they will now be able to reap the benefit from the protracted expansion work and outlays.

I have attempted to may out forward estimates based on probable quarterly results and show my estimates below up to 30/6/15.

The March and June quarters are, of course, unknown but I feel that ore milled and grade should be reasonably close, recovery at 93% looks stable now, and cash costs are unlikely to have moved much over the 6 months. So production and sold oz are, I feel, a reasonable estimate.

PoG is, of course, a real unknown in these market conditions so I have opted for US$1,200/oz for the remaining 3 months of the financial year.

Therefore, revenue and OPCF are likely to be reasonably close. This leaves investment outflows as the final determinant of Free Cash Flow (FCF). However, as development of Bananghilig will remain on hold until the new mining laws are eventually published the outflows at Co-O should now just be at sustaining levels - so I have opted for a straight extrapolation of the December quarter outlays.

Hence, FCF and accumulating cash can therefore be estimated as well as the calculation for AIC (all-in costs), although without any new development spend this is actually AISC.

Quarter .............. Sep-14 ..... Dec-14 ..... Mar-15 ..... Jun-15
Ore Milled .......... 140,234 .... 160,251 .... 170,000 .... 180,000
Grade (g/t) ............. 5.0 ........ 5.6 ........ 5.7 ........ 5.8
Recovery ................ 92% ........ 93% ........ 93% ........ 93%
Au Produced (calc) ... 20,825 ..... 26,644 ..... 28,977 ..... 31,219
Au produced (actual) . 21,018 ..... 26,859 ..... 28,977 ..... 31,219
Cash Costs/oz ........... 382 ........ 380 ........ 380 ........ 380
Gold Sold (oz) ....... 22,491 ..... 28,190 ..... 28,977 ..... 31,219
Ave PoG/oz ............ 1,272 ...... 1,204 ...... 1,220 ...... 1,200
Reported AISC/oz ...... 1,238 ........ 989

Costs ($) ......... 8,028,876 . 10,206,420 . 11,011,080 . 11,863,331
Costs/t milled ($) ....... 57 ......... 64 ......... 65 ......... 66

Revenue ($) ...... 26,734,896 . 32,338,236 . 35,351,363 . 37,463,151
Margin (%) .............. 70% ........ 68% ........ 69% ........ 68%
Break-even PoG ($/oz) ... 386 ........ 383 ........ 380 ........ 380

OPCF ($m) .............. 18.7 ....... 22.1 ....... 24.3 ....... 25.6
Outflows:
Exploration (US$m) ...... 2.7 ........ 2.9 ........ 2.9 ........ 2.9
Capital works (US$m) .... 3.4 ........ 2.1 ........ 2.1 ........ 2.1
Development (US$m) ...... 9.5 ........ 9.6 ........ 9.6 ........ 9.6
Corporate (US$m) ........ 2.4 ........ 1.7 ........ 1.7 ........ 1.7
Total outflows (US$m) .. 18.0 ....... 16.3 ....... 16.3 ....... 16.3
Estimated FCF ($m) ...... 0.7 ........ 5.8 ........ 8.0 ........ 9.3
Cash ($m) .............. 15.5 ....... 13.6 ....... 21.6 ....... 30.9

Calculated AIC ($/oz) . 1,238 ........ 987 ........ 943 ........ 902

I have continued the same quarterly model out to the end of FY17 using the throughput estimates provided by MML but space here, and the likely unreliability of estimates that far out, have stopped me from going further in this post.

At FY15 year end I therefore get the following estimates for the Co-O operation:

Production (oz) ......... 108,073
Cash Costs ($) ..... 41,109,708
Revenue (US$) ..... 131,887,646
OPCF (US$) ......... 90,777,939
Outflows (US$) ..... 66,900,000
FCF (US$m) ............... 23.9
Cash Costs ($/oz) ......... 380
Average AIC ($/oz) ........ 999
FCF/share (US$) .......... 0.11
NPAT Margin (est) ......... 40%
NPAT (US$m) .............. 52.8
EPS (US$) ................ 0.25
US$/A$ ................... 1.29
EPS (A$) ................. 0.33
Share price (est) A$ ..... 4.89
Mkt Cap (A$m) ......... 1,017.1

Share price will of course depend upon the market multiple of earnings provided by the market, so the above is just a possible target for when the FY15 financials are reported.
CPDLC