I have done some number crunching and amended my previous EBIDTA estimates based on new production guidance and confirmation of C1 costs & AUD impacts.
Provided the AUD does not rise above $1.10 and remain there for an extended period, and copper prices remain above $3 a pound and zinc at or above 76c, KZL will have sufficient cash to fund operations and maintain selective mine development for the next 12 months.
Going concern should not also be confused with 'ongoing' concern. Going concern is an accounting term that auditors use to confirm that the business has enough cash to continue to operate indefinitely. Confirmation can be used to justify applications to provide, extend finance etc.
Based on my estimate, I believe Geoff is correct in stating that KZL has returned to being cash flow positive and is has the ability to generate about 7-8 million in positive cash flow at moderately less than current commodity prices. This could be optimized further should KZL choose to pay down debt by 50% and reduce finance costs from 2.2 million per quarter to say half.
The calculations below are based on average prices for Q3 & Q4 at $0.87, $0.90 for zinc & $3,69 & $3,82 for copper respectively.
It's pretty brutal cost cutting that they have done but with positive cash flow and new funds in the bank, I believe analysts will applaud them for it once they do the numbers.
KZL Price at posting:
31.0¢ Sentiment: Buy Disclosure: Held
