The Ravenswood CapEx will be a drag on Syama cash flows and as the article said the value of Ravenswood isn't reflected in the company's market capitalisation so monetising it somehow resolves this anomaly. Syama is potentially scalable so the production lost at Ravenswood can be potentially made up by bringing Syama UG from 2.4Mt/annum to 4Mt/annum (as the consultants have indicated is achievable with upgrades to the processing plant, which is the bottleneck of this mine based on feasibilty).
Expanding the mining rate at Syama by 100kozs per annum with increasing FCF is more efficient than developing a separate mining operation which may produce between 100 and 150koz/annum over 14 years. Remember the mine life at Syama is already 14 years based on reserves, you can either increase the mine life or increase production or both should more resources be discovered at depth. Better all your eggs in one basket as you maximise return on assets.Esh
RSG Price at posting:
$1.17 Sentiment: Buy Disclosure: Held
(20min delay)
