News: HGO Hillgrove Resources Updates To Rock Fall Which Occurred On 19 Dec 2018, page-21

Hi Hio 

Lets hope it turns out well and there are no more negative surprises.

If your interested in numbers, I have been trying to get my mind around whether there will be enough cash to get the franking credits out before 30 th June.

With $ 21.4m  (3.7 cents) of credits we would need $50.6m (8.9 cents) of dividends.

We would probably need to have the $50m in the bank by the end of the first quarter to make it happen.

We have been told that by the end of December we would be debt free with all the creditors up to date and a healthy cash balance. As long as a bit of string but at least a start. The valuation forecast a cash surplus of $46m but thats not going to happen. A ball park could be ($40m) lost production ($12m) mining cost over-run $19m hedging cost gain so maybe something less than $13m.

On top of that we have the first quarter and the cash payment for the PHES. The PHES is not certain and also as long as a piece of string.

What I think we know about the first quarter is that we will continue to process grades that are delivering 2KT a month until we recover the shortfall from the valuations 2017 and 2018 production and then drop to lower grades producing 1 Kt a month although this will likely be a tapering off. If we assume it's a flat 1 KT/month then we should produce 5.5 KT in this qtr. We should have about $22m in costs if my assumption that the overrun mining cost with one machine is $10.5 m for the qty.

On that basis I think there will be at least $25m surplus cash from the 1st qty.

By way of a check  the valuation has $51m surplus for the 2019 year.  Thats $12.75m a quarter. To that we need to add an additional 2.5 kt of production because of the carried forward higher grades increasing the first qty production That's  $22m less the mining overrun ($10.5m) plus the hedging benefit  $4.4m which indicates $28.65m 

The big question is will two pieces of string deliver the other $20M to $25m

If they don't the royalty stream from the PHES would need to be pretty flash.