MML (ASX) Reason For The Rising AISC?

Originally posted by CPDLC ↑

cncventure,

Sorry for the delayed response, I have not looked in here for several weeks.

I think the comprehensive article by Seeking Alpha, posted by stevea171, has provided the best commentary on the current and future situation with MML and should therefore have answered your questions.

However, it is probably worth adding a bit more regarding the AISC as this still appears to be a bit controversial on this board!

It is pretty easy to calculate from the quarterly report. ie. Op Costs + Outflows (Exp+Capex+Dev+G&A) divided by production oz.

For Dec qtr:
Cash costs = $10.206m
Outflows = $16.3m
Result = $26.506m
Prod oz = 26,859
Therefore AISC = $987/oz (reported figure was $989/oz)

For March qtr:
Cash costs = $9.36m
Outflows = $16.4m
Result = $25.76m
Prod oz = 23,940
Therefore AISC = $1,076/oz (reported figure was $1,073/oz)

Hence, in the same way, it is reasonably easy to estimate the likely AISC going forward, although an assumption must be made for grade and tonnes milled in order to arrive at an estimate for production oz.

For June qtr I am using the following estimate:
Ore milled ~ 170kt
Grade ~ 5.9g/t
Therefore estimated production of 30,316 oz
Cash costs of $405/oz, therefore total cash costs of $12.277m
Outflows of $19.2m (inc expenditure on service shaft)
Therefore all-in costs of $31.477m
Production of 30,316 oz
Therefore estimated AISC of $1,038/oz

The production guidance for FY16 provided by MML does look conservative as it would appear to be based on 180kt ore at 5.9g/t per qtr. But it is clearly better for the new management to stick with the policy of setting targets that can then be out-performed.

Given the guidance on cash costs and investment outflows I calculate an estimated FY16 AISC of $1,014/oz, which is roughly mid-range of their quidance.

Once the service shaft is completed the AISC should fall with the reduction in Capex outlay and would be further reduced by increased milled tonnage and likely improving ore grade towards the diluted reserve grade of 7.2g/t. Hence, an AISC of sub $800/oz does look perfectly feasible for FY17.
CPDLC

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TU (as usual) for CPDLC. I too barely look at MML these days as the SP is so woeful. FY17 can't come quick enough for my holding and for MML. It's never been the same as when we had the 'Great Hamish' reef. What a money spinner that was!

TU (as usual) for CPDLC. I too barely look at MML these days as...