OGC is an example of near to "profitless" gold mining while...

OGC is an example of near to "profitless" gold mining while seeming to deliver large net cash flows. Most of the inflows become outflows on capex, exploration, interest payments/repayment of loans plus feeding the corporate overheads.

Headline AISC is nothing special at around $AUD1180-1250, but the net cashflow should actually be a bit higher then what the AISC suggests because there is around $USD125/ounce included for expensing of existing open pit ore stockpiles being processed at Dipidio.

It will be interesting to see what the OGC take is going to be in coming years under the higher tax take that has come into force under the Dipidio agreement. There is some positivity with Macreas LOM being extended due to exploration success (not sure for how long), before they have to spend heaps on to move the plant to a new site and developing a gold mine.

Haile to become a 200k ounce pa mine only in 2022 after more capex (hopefully future capex will be reduced).

I am still not sure what sort of value to place on OGC, but clearly the market likes them. Not sure if it will like this forecast.

GLA.

loki