Lagging, page-31

I think it is largely an issue of being "once bitten (in SLR's case more than once) twice shy". One of the primary reasons given by SLR when it acquired Integra (IGR) (and also developed the ill fated Murchison) was that it needed to become a multi-site operation so as to mitigate for revenue in the event that production stopped at one (or potentially more) centres due to weather or equipment failure.

Just before IGR was taken over by SLR they had a cone crusher failure which halted Randalls mill production which resulted in an emergency CR and sharp reduction of their share price. Now SLR are in the same position and only have Randalls as their single production centre. In the event of a problem at Randalls they have a potential exposure due to revenue being interrupted due to an unforeseen problem. To mitigate for this cool hand sees a need to build up cash/bullion reserves to ride out such a contingency; frankly I agree with him and would prefer the they build in a bit of a buffer rather than pay a divvy (much as I would like that).

Another possibility (as was the case with NST when they were in the same position with only having Paulsens) is to use the reserves to make an acquisition or to build a second processing centre (SAR did this). In this way they can wait until another goldie is keen to sell or they make a "discovery" on their own tenements (or via a joint venture on neighbouring tenements) and use their cash/bullion (potentially with some debt) to mitigate their revenue in the event of a failure at Randalls.

As I said I would prefer them to retain this insurance rather than get a premature divvy; it's just being prudent. Just wish they would do something about what they pay out in overheads to reduce AISC in the same manner as their "peers" do even thou their "peer group" has a market cap of more than 5 times SLR's.