Here is a breakdown of the expected positive cash flow from ops for the year. The Q3 numbers are very conservative at 82c from zinc, because it assumes similar cost levels to be attained as in Q1 i.e. 72c. Q1 & Q2 are actuals achieved, so there is a bit of room to move here and assumes higher by-product revenue from copper and higher production but you don't allow much room for error, production delays, price falls etc if you put in the current price 87c. I think this is fair considering Europe will remain under pressure until late April or for most of Q3. Italy in Feb, Greece in March. These numbers should reflect a gradual improvement in the business from Q2 and eventually returning to Q1/11 numbers but until Q1/12 or FY13. i.e. the 2nd half of 2012 as indicated by Geoff.
Inventory numbers might also improve going forward. The 13 mill in the cash flow statement was a conservative number based on the value of commodity prices as at the end of Q2. Originally they stated 20. They also said they could save 15 mill in costs? I credited them with 5. Their EBIDTA guidance was way too optimistic last year but I guess they did it in August before Europe fell apart. Still, I think it's always better to understate then over achieve.
I am glad the finance director left. It is clear he was not performing. Geoff is a contact of mine on linkedin, so I can see the caliber of these guys at Newcrest etc he is screening for the job. They have all been added as new contacts in the last week, lol. A new hot finance guy is the last piece of the puzzle for me and the end of the old Kagara. Operationally, exploration & risk wise from a cash flow standpoint, things are looking better.
This line in the prior cash from ops sheet has a typo error:
- cash flow from ops (increasing to 31 by Q3) - 21
Should read: - cash flow from ops (increasing to 31 by Q4) - 21
Again 1-3 mill cut off these final numbers too...
KZL Price at posting:
30.0¢ Sentiment: LT Buy Disclosure: Held
