Phoghan, no one has a crystal ball, but a good starting point would be to use the best current info, plus some assumptions on expenditures for 2016.
For example, my back of envelope estimate is….
At 90 million pounds of copper, 80 million interest, 20 million SG&A, and say 35 million capital expenditures, and assuming moly business is break-even, I estimate the neutral FCF at $2.20/# Cu.
I hope I did not omit anything major.
How much cost reductions can Perron attain? At what copper price will TC become FCF neutral in 2016? Will moly business be self-sustaining in 2016?
xtim40 - collars covering 21,500 oz of gold with expirations between April and December 2015. TC is still vulnerable to dropping gold price.
Carl, what about the revenue from gold in your $3 copper calculation?
Another perspective…..TC would not be BK if they were only in moly. They would not have spent 2 billion on MM, and would be cash rich with no debt, and there would be a much smaller number of outstanding shares….and I would have less grey hair.
Moly price $4.20/pound.
This is insane. This price crash cannot last forever, but I thought that was the case at $6/pound.
Time to stop stripping at TC mine?
The Company's target is to reduce its debt over time to approximately three times earnings before income taxes, depreciation and amortization ("EBITDA") for a twelve month period.
What is a normal debt to EDITDA for a mining company? I feel it 3x is a little high. Perhaps it is a first target.
With MM operating at full capacity with "reasonable" copper prices, EBITDA should be at least $200 million. This translate to $600 million debt.
Cash build? Perron says $10 million cash build. I am not sure it is as good as Perron states. They got $27 million dollar for the fourth Q1 shipment in Q2. One can say the cash buildup actually dropped $17 million dollars during Q2. Comments?
The expected average recoveries for the first 6 years are 87.3% for Cu and 73.6% for Au.
The expected average recoveries after the first 6 years are 82.8% for Cu and 70.1% for Au.
TC had 85.5% for Cu and 72.7% for Au in Q2. Not bad, but the head grades during Q2 was much higher than the average expected for the first 6 years…..ie: much room for improvement on recoveries.
They did a SAG reline in April. I thought the downtime was for implementation of a newly designed screen-deck at the SAG.
Seems like the markets want more evidence TC is on the correct path before SP appreciation will commence.
Markets want better production progress at MM. Markets want to see action on cost reductions.
Perron also re-stated there will be significant downtime in the future quarters to implement changes at the mill. This will hurt throughput, but will enable them to increase production.
I calculated June production rate was 49,114 tpd, a little less than 50,686 in May.
Head grades were up a little for both Cu and Au. Cu and Au recovery were up nicely.
This should help support SP.