Right idea but two corrections. Your calculation gives AISC per oz of PD plus byproducts from producing that oz of PD since byproducts were included in the revenue. Since revenue is about 70% PD and 30% by-products you have to multiple your number by .70 to get the AISC per oz of PD. That gives about $1330. Then you should use produced ounces, not sold ounces since costs were incurred even if not sold in Q1. That brings it down to about $1200. Still way above market price.
Then there are various adjustments both ways that will make Q2 a little different - unusual weather related expenses, pre-payment interest expenses, forex adjustments.
All in all, I estimate Q2 to be -.03 to -.04 /share based on 366M shares. Maybe a bit larger per share loss depending upon the true average outstanding shares during Q2.
Since mid-May my tea leaves show a descending triangle with the horizontal base around .29 and the downsloping top line starting at about .38 and slopijg down to about where we are now. This pattern (usually) resolves to the downside. A break under .28 IMO would take it to low twenties. But Q2 report more important then the tea leave.
What is your point? Back then there were only 38M shares outstanding and today 120M (3x). And it was before they threw away 1/2 BILLION dollars on Peregrine and Marathon.
Why the relentless selling after the conference call?
Here’s my take. The street has realized that splitting the company is a bad move. IMO the BOD panicked and reacted to a problem (shareholder value) that didn’t exist. As a shareholder I was very happy. Post-split here is what I see:
Generates huge amounts of cash it doesn’t know what to do with. They have been growing at 24%. No way is that sustainable – that’s a double in three years in a business where growth is determined by the airplane builders an buyers, not by BEAV. They already supply seats, lights, oxygen, galleys, toilets.
Cash will be used to pay a modest dividend and/or buyback. Growth will slow down to maybe high teens and market will punish MCo for that.
Has to grow by acquisition but little cash to do so. Will have to take on debt or equity offering. Market will then punish them also. As part of BEAV it shared a high valuation. Alone it will not.
So where some thought SCo was a drain on MCo, IMO was a good fit. Nothing wrong with using one segment to help grow the other. Maybe after a few years when service operations a bigger and better organization, then split or spin off.
This is a case where the whole was more than the sum of the parts. Market seems to agree. Looks like a turf war gone bad.
Hard to tell. I'm sure there were hedging activities related to debs, not simple shorts, db buyers who shorted and covered with lower priced shares from conversion of dbs. They didn't have to cover in the market. For all the ranting about shorts here it is still only about 2.5 of o/s shares. Not terribly significant. Take a look at ARIA, over 20% , looks like there have been a few squeeze skirmishes there - have been trading them.
"Another 31M share's warrants are pending at 0.50 to 0.65 about."
FYI: Stock equivalents (convertibles, warrants, options, etc) are not counted as outstanding shares unless they are in the money. So if price rises above wt exercise price then they will be counted.
"and cash costs could easily drop below $400"
Unlikely unless and until they get the volume up close the 5000TPD target.
Hope they publish all-in and all-in sustaining costs as well. Other miners are starting to do that. What is holding some back is that there is a slight disagreement over exactly what AISC should include. Once the regulatory folks agree I would hope it will be mandatory to report. Companies like to report non-GAAP earnings because it usually looks better than GAAP. Not so with AIC and AISC they are always higher than simple (and misleading) cash cost.
I think they panicked and jumped to solve a problem (shareholder return) that didn’t need solving. I would gladly continue with the old BEAV + a small dividend.
Let me use a freight train analogy (using MCo = Manufacturing Co and SCo = Service CO as BEAV refers to them)
There’s this powerful engine (MCo) pulling this heavy train (SCo) and someone watching this train says if only they would disconnect the cars from the engine, that engine would really surge ahead.
But I don’t think so – Mco has grown recently at 24%. That is a very high rate = doubling every 3 years. Do you really believe that sales will double in 3 years ? They are not in control of their sales , the airline builders and buyers are. They will not double in 3 years. IMO growth will slow to maybe 15-20% (still pretty good) but market will punish MCo. Mco generates all this cash and really hasn’t much to do with it other than dividend , maybe buyback, reduce debt. The latter two may boost earning a bit but MCo becomes ordinary good growth company. Now what about the cars – Sco. They are short of cash to acquire (as they said they will) so will issue debt or more shares. While long term 5+ years they can grow , market will be impatient and mark them down as they do financing. So in this case I think that the whole is worth more than the parts.
I know you think the SCo was just a drag on MCo. MCo already supplies seats, lights, galleys, toilets, lighting – what else can they do to continue to grow at 24%. Very hard IMO. So I don’t see MCo surging ahead as the SCo is dropped from Mco.
I think a better plan would have been to continue to use the MCo cash engine to grow SCo over the next few years and then split or sell it. The big unknown is whether there will be suitor for SCo once it is clear just what they are – what debt, what cash do they inherit? Clearly on the day of the split, MCo + SCo will be = BEAV. What happens in the fews days afterward will be interesting. As far as someone buying MCo, several of the likely buyers have already said they were not interested
I think they panicked and jumped to solve a problem (sharehol
Not even close.
In 2013 (in metric tons)
South Africa 82
US 12.5 (SWC)
Canada 6 (PAL)
Not an opportunity for PAL since it likely costs them more (all-in cash price) per ounce than market price.
I say likely because PAL refused to divulge all-in cost or all-in sustaining cost.