SBM has been a great ride since late 2014 and they have come a...

SBM has been a great ride since late 2014 and they have come a long way from a near death experience.

But one needs to recognise that -

1. Gwalia is a massive cash cow until it is not, ie gets into lower grade ore or runs out of ore.

2. Simberi oxide ore runs out in about 2 years, after which it will go into care and maintenance unless the price of gold rises enough to make the sulphide ore economic to process with extra capital investment, or the find more oxide ore. We are then left with one mine and a depleting resource/reserve.

3. The $100m cash in bank is great, covers the cost of extending Gwalia to 2024, but its only around $0.20/share.

SBM is doing the right thing by looking around and doing some deals. I have been wondering if a takeover of under-performing BLK would be a good fit for them. They were able to turnaround loss making Simberi and perhaps they could make a good go of BLK's assets?

Basically SBM needs to find a life beyond Gwalia, its more important than paying dividends, although a 5/share cent dividend would be a minor impost on them while Gwalia is firing.

loki