So, I've been long for a long time now and I've been following this board closely . . . I was hoping Ultra or Foggie or someone on this board could help me figure out what I'm missing. My model shows about $200 million +/- income from Milligan in 2015. However, when I factor in $90 million debt interest, $30-$40 million SG&A, and $60-$70 million capex, I don't get much left over for debt payments/adding to cash reserves through 2017 when payments are due. Am I looking at it wrong or is this accurate? Can we not expect much cash flow until after 2017/2019? Thanks for any clarification.
Taking into account most people on this thread, here's what I have for 2104 and 2015.
2014 Earnings after all expenses: Dirk NA; Gov 96mil; Carl 45mil; Super 80mil
2015 Dirk 100, Gov 88, Carl 115, Super 80mil
We are all using the same interest (90), SGA (30-40), and capex (60). Some taper all 3 expenses in the out years. It seems our sales at MM must be a little different and how we treat moly. I think Dirk and Gov have moly sales for half of '15 while Super has zero. I have sales for the whole year at $50mil net of costs. I believe they will do something with the TC mine, especially if moly goes over $11/lb. Our estimates of commodity prices are similar.
Here's my take on 2015 - Gold(RG) - 60m (135k oz), Gold(TC) - 165m (120k oz), copper 265m (81m lbs) for total rev of 490m. Less 240mil costs = 250m. Plus 40 mil net Moly (from inventory/Endako) and 10m from silver and Langloth = 300.
Less 90m interest, 60m capex and 40 SGA for net earnings of 110mil.
I think others may have higher earnings. If so, how does one get there?
This is somewhat rudimentary and I had to make some assumptions on metals pricing, leaving the results questionable, at best, but below is how I see the major cash flow through 2019. The 2017 debt is due in December, while the 2018 and 2019 are due mid year. The Cumulative is that cash in the bank at the certain intervals throughout the next few years. I had gold ranging from $1,350 this year up to $1,600 through 2019. Copper from $3.30 this year to $3.5 in 2019. The interest is calculated based on the rate per year. I DID not take into consideration changes in grade . . . obviously, some serious room for discussion, but this paints a bit of a picture. Feel free to pick it apart. I don't see any kind of squeeze until 2019, or 2018 at the earliest . . . by which time, they should be refinanced without a problem.
In Bank 234 234
2014 20 254
2015 144 398
2016 127 525
2017 133 658
2017 -350 308
2018 75 383 Through June
2018 -350 33 June
2018 105 137 June to December
2019 68 206 Through May
2019 -200 6 May
2019 137 143 May to December
I will take a stab but please don't take it as gospel.
You seem about 40 million light on your Milligan figure at current prices at design capacity and even assuming the 280 estimate holds (Ultra thinks it will come in lower, time will tell). Capex this year is estimated 60 mill company wide, but some of that includes completing the residences at MM, and will not recur. If you really think TC and Endako are going on care and maintenance, capex will not be ongoing concern there either. On going capex at MM is not going to be 60 mill, maybe half that.
240-90-40-30=80M at current prices (from MM alone). Perron has indicated (from memory) TC can service its debt at 2.75 and 1000 (which would be about 160 CF from MM and would about match my expenses here). In that environment, TC would be treading water but still might be able to refinance debt on better or equivalent terms when the debt is due, buying more time for metals to recover and cash flow to permit reduction of debt in the future. In the event metal prices maintain these low levels we will be experiencing a low inflation/deflation environment with persistent low interest rates, so refinancing might improve interest expense. Think we get an extra 10M or something from Langeloth, too.
That's if Moly doesn't recover and both mines go on care and maintenance. If prices do recover, Moly starts contributing again. Is this ideal? No, but if it were TC wouldn't be trading at well below half of book value (even after recent write-downs!). If we can manage to pay off 1/3-1/2 of debt, net book value is gonna surge as will free cash. You can see as time passes how TC could be a really really nice play as nearly a billion in debt is taken off the books (more than twice current market cap), but it will take years (and cooperative metal prices, etc) for this to unfold.
My two cents. Ultra had some detailed posts on 2014 CF in a recent thread with Superlithe, dig through his posts and you can find them.
Thanks Papa, I think I was too conservative on some assumptions. I agree with you; capex will likely be halved. We'll also see a little kickback from Silver. My question came up from one of Perron's recent comments where he mentioned that he should be able to service the debt BY 2017. This is a major confidence booster - but I had trouble connecting the dots. Here's what I'm getting:
$515 mil rev and say $265 cost at Milligan = your $250 mil (at current metals prices). Maybe another $10 mil in silver puts you at $260 mil.
-$90 mil interest
-$30 mil cap ex
-$40 mil SG&A
-Possibly -$10 mil C&M TC
Leaves +/- $90 mil each for 2015, 2016, and 2017. + $234 mil in the bank = $504 million in the bank in 2017. Halfway there. That's why I asked the question. It's going to make significant cash, no doubt. Obviously, best case scenario is a significant appreciation in metals prices (which, I am anticipating). I also know with that kind of cash, they'll be able to refinance.
But to say, "liquidity is a non-issue" is incorrect. Maybe it's true in the short term, but the debt is obviously what is weighing down the stock price. $1,600 gold, $4 copper, and $14 moly will erase all of our problems . . . that would be nice.