copper price, page-28

There will be quite a turnaround in cash availability from H1 to H2 of 2018. In the first half cash generated was used to increase inventory (+$13.9m) and pay down liabilities (-$14.3m) which explains why cash at end-June was still only $0.482m. In the second half liabilities might need to come down another $13m (creditors on 60 day terms) and inventory build-up should be slightly less (0.6mt per quarter versus 1mt in June qtr) to take up about $21m of cash generated. If HGO can produce 12,000 tonnes Copper in H2 then my estimate is that this will generate $40m in cash of which $19m will be surplus. Note that exploration and capex will require about $2m of this amount ($3.5m in H1). Management has been strained by cash availability but this will change in the current half year.
Shareholders should note that Ray Munro (a substantial shareholder) increased his holding over the last 6 months by 6.5m shares at an average of 8.7cents. As he was a member of the underwriting group in the last issue I would imagine he keeps himself well-informed.